primerica chapter 2

Before he died an annuitant had received 12,500 dollars in monthly benefits from his $25,000 straight life annuity. he was also insured under a $50,000 paid up whole life policy that named his wife as primary beneficiary. considering both contracts how much will the annuitian spouse receive in benefits?

$50,000 ( the life policy would pay the face amount, but because of the settlement option selected on the annuity, payments would cease upon the annuitant death. straight life annuity payments stop at death of the annuity regardless of the principle left in the account)

In order for a debtor group to qualify for group life insurance, what should be the minimum number of participants joining the plan every year?

100

Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of

12 months.

Under special circumstances, continuing education requirements may be extended beyond the 2 year period for a maximum period of

6 months

A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?

60

If a claim is made on a policy during the grace period, an insurer is allowed to deduct the overdue premium and to charge interest. What is the maximum allowed interest rate?

8%

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed.

Which of the following is not true regarding an annuity certain

Benefits stop at the annuitiants death ( annuity certain are short-term annuities which limit the amount paid to a certain fixed period or until a certain fixed amount is liquidated there are no life contingencies)

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

Concealment

an agents client needs additional insurance which the agents own insurer cannot provide. the agent has to solicit additional coverage from another authorized insurer. this coverage is known as what

EXCESS

What does "level" refer to in level term insurance?

Face amount

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

Which of the following is true regarding an annuity certain?

It is a short-term annuity, it will pay until a fixed amount is liquidated, there are no life contingencies

Which of the following best describes annually renewable term insurance?

It is level term insurance

Which of the following is true about the premium on the children's rider in a life insurance policy?

It remains the same no matter how many children are added to the policy.

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?

Monthly premium waiver and monthly income

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual

Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses?

Nonforfeiture values

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government.

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

Which option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option b ( option b the death benefit includes the annual increase in cash values so that the death benefit gradually increases each year by the amount that the cash value increases at any point in time the total death benefit will always equal to the face amount of the policy plus the current amount of cash value)

Traditional IRA contributions are tax deductible based on which of the following?

Owner's income

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

When an insurer terminates an agent's appointment, the insurer must do all of the following EXCEPT

Provide a 30-day advance notice to the Commissioner.

What form of the annuity settlement option provides payments to an annuitant for the rest of the anointed life and ceases at the annuities death?

Pure Life

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

Rebating.

What method do insurers use to protect themselves against catastrophic losses?

Reinsurance

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?

Spendthrift provision

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection.

Which of the following would prevent a universal life policy from lapsing?

Target Premium

If an agent is in the military, which of the following is true?

The agent cannot sell a policy to another active military person who is of a lower rank.

All of the following statements about Equity index annuity are correct except

The annuitant receives a fixed amount of return

Who bears all of the investment risk in a fixed annuity?

The insurance company

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

The insured may choose to convert to term or permanent individual coverage.

Which of the following are true of being an annuity owner ?

The owner is the party who may surrender the annuity, the owner pays the premiums on the annuity, the owner has the right to name the beneficiary

All of the following statements are true regarding installments for a fixed amount EXCEPT

The payments will stop when the annuitant dies.

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

Which of the following is TRUE regarding the premium in term policies?

The premium is level for the term of the policy.

Which of the following is an example of a producer's fiduciary duty?

The trust that a client places in the producer in regard to handling premiums.

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

Social Security was created to provide all of the following benefits EXCEPT

Unemployment income.

Which of the following policies would have an IRS required Corridor or Gap between the cash value and the death benefits?

Universal life option A ( universal life option A ( level death benefit option ) policy must maintain a specified Corridor or gap between the cash value and the death benefit, as required by the irs. it is Corridor is not maintain the policies no longer defined as life insurance for tax purposes and consequently loses most of the tax advantages that have been associated with life insurance)

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

which of the following persons is required to hold a producer license?

a person who negotiates insurance contracts

how often must domestic insurance companies be examined by the chief financial officer in florida

at least every 5 years

Under a straight life annuity, if the annuitant dies before the principal amount is paid out the beneficiary will receive what?

nothing; the payment will cease

What statement about Equity index annuity are correct?

the interest rate is tied to an index such as the standard and poor's 500 They have a guaranteed minimum interest rate, they invest on a more aggressive basis aiming for higher returns

All of the following are true of an annuity owner except

the owner must be the party to receive benefits