Primerica Exam General
In a life settlement contract, whom does the life settlement broker represent? a) The owner b) The insurer c) The beneficiary d) The life settlement intermediary
The owner
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of policy delivery b) The date of issue c) The date of application d) The date of medical exam
The date of medical exam
According to the Entire Contract provision, a policy must contain a) A declarations page with a summary of insureds. b) Buyer's guide to life insurance. c) Listing of the insured's former insurer(s) for incontestability provisions. d) A copy of the original application for insurance
A copy of the original application for insurance
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? a) Paid-up addition b) Accumulation at interest c) Cash option d) Reduction of premium
Reduction of premium
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a) The contract can be issued without an annuitant. b) The annuitant must be a natural person. c) A corporation can be an annuitant as long as it is also the owner. d) A corporation can be an annuitant as long as the beneficiary is a natural person.
The annuitant must be a natural person
Which of the following is NOT the consideration in a policy? a) The application given to a prospective insured b) Something of value exchanged between parties c) The premium amount paid at the time of application d) The promise to pay covered losses
The application given to a prospective insured
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? a) The insurance company b) The insured's estate c) The primary beneficiary's estate d) The insured's contingent beneficiary
The insured's contingent beneficiary
When would a 20-pay whole life policy endow? a) After 20 payments b) In 20 years c) When the insured reaches age 100 d) At the insured's age 65
When the insured reaches age 100
What is the term for how frequently a policyowner is required to pay the policy premium? a) Consideration b) Mode c) Schedule d) Grace period
Mode
Which nonforfeiture option provides coverage for the longest period of time? a) Paid-up option b) Accumulated at interest c) Reduced paid-up d) Extended term
Reduced paid-up
Which of the following must an agent receive in order to sell variable life insurance policies? a) Variable products license b) Certificate of authority c) SEC registration d) FINRA registration
FINRA registration
Which policy component decreases in decreasing term insurance? a) Dividend b) Premium c) Face amount d) Cash value
Face amount
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a) Variable life b) Universal life c) Whole life d) Decreasing term
Decreasing Term
When an annuity is written, whose life expectancy is taken into account? a) Beneficiary b) Life expectancy is not a factor when writing an annuity. c) Owner d) Annuitant
Annuitant
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a) Consideration b) Good faith c) Representation d) Adhesion
Consideration
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? a) Annuitization period b) Pay-out period c) Liquidation period d) Depreciation period
Depreciation Period
Which of the following statements is TRUE concerning irrevocable beneficiaries? a) They can be changed only with the written consent of that beneficiary. b) They may be changed at any time. c) They can never be changed. d) They may be changed only on the anniversary date of the policy.
They can be changed only with the written consent of that beneficiary
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? a) Unidirectional b) Aleatory c) Conditional d) Unilateral
Unilateral
Who is a third-party owner? a) An insurer who issues a policy for two people b) An employee in a group policy c) An irrevocable beneficiary d) A policyowner who is not the insured
A policy owner who is not the insured
The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a a) Decreasing Term Policy. b) Whole Life Policy. c) Convertible Term Policy. d) Renewable Term Policy.
Convertible Term Policy
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) As high b) Half the amount c) Lower d) Higher
Lower
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? a) $8,000, 30 days b) $10,000, 60 days c) $10,000, 30 days d) $8,000, 60 days
$8,000, 60 days
Which is TRUE about the cash surrender nonforfeiture option? a) Funds exceeding the premium paid are taxable as ordinary income. b) After the cash surrender, the insured is covered for a grace period of 1 month. c) The policy remains active for some time after the policyholder opts for cash surrender. d) The policyholder receives the original cash value of the policy.
Funds exceeding the premium paid are taxable as ordinary income
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.
$50,000
Variable Life insurance is based on what kind of premium? a) Decreasing b) Graded c) Level fixed d) Increasing
Level fixed
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a) The death benefit can be increased by providing evidence of insurability. b) The death benefit cannot be increased. c) The death benefit can be increased only when the policy has developed a cash value. d) The death benefit can be increased only by exchanging the existing policy for a new one.
The death benefit can be increased by providing evidence of insurability
Which of the following is called a "second-to-die" policy? a) Juvenile life b) Joint life c) Survivorship life d) Family income
Survivorship Life
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount a) In lesser amounts for the remaining policy term of age 100. b) Equal to the cash value surrendered from the policy. c) The same as the original policy minus the cash value. d) Equal to the original policy for as long a period of time that the cash values will purchase.
Equal to the original policy for as long a period of time that the cash values will purchase.
An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do? a) Sue for the right to not pay the death benefit b) Pay the death benefit c) Refuse to pay the death benefit because of the fraud d) Pay a decreased death benefit
Pay the death benefit
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? a) The insured must provide evidence of insurability to renew the policy. b) The insured may only convert the policy to another term policy. c) The insured may renew the policy for another 10 years at the same premium rate. d) The insured may renew the policy for another 10 years, but at a higher premium rate.
The insured may renew the policy for another 10 years, but at a higher premium rate.
All of the following are true regarding a decreasing term policy EXCEPT a) The payable premium amount steadily declines throughout the duration of the contract. b) It has a lower premium than level term. c) The contract pays only in the event of death during the term and there is no cash value. d) The face amount steadily declines throughout the duration of the contract.
The payable premium amount steadily declines throughout the duration of the contract
All of the following are general requirements of a qualified plan EXCEPT a) The plan must be communicated to all employees. b) The plan must be for the exclusive benefits of the employees and their beneficiaries. c) The plan must be permanent, written and legally binding. d) The plan must provide an offset for social security benefits.
The plan must provide an offset for social security benefits
If an insured continually uses the automatic premium loan option to pay the policy premium, a) The policy will terminate when the cash value is reduced to nothing. b) The face amount of the policy will be reduced by the automatic premium loan amount. c) The cash value will continue to increase. d) The insurer will increase the premium amount.
The policy will terminate when the cash value is reduced to nothing
An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? a) Unilateral b) Conditional c) Personal d) Adhesion
Adhesion
What required provision protects against unintentional lapse of the policy? a) Payment of premiums b) Reinstatement c) Grace period d) Assignment
Grace period
In a survivorship life policy, when does the insurer pay the death benefit? a) Upon the last death b) Upon the first death c) Half at the first death, and half at the second death d) If the insured survives to age 100
Upon the last death
In a direct rollover, how is the money transferred from one plan to the new one? a) From trustee to the participant b) From the participant to the new plan c) From the original plan to the original custodian d) From trustee to trustee
From trustee to trustee
A life insurance policy has a legal purpose if both of which of the following elements exist? a) Policyowners and named beneficiaries b) Insurable interest and consent c) Underwriting and reciprocity d) Offer and counteroffer
Insurable interest and consent
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an a) Credit Life. b) Annual Renewable Term. c) Adjustable Life. d) Interest-sensitive Whole Life.
Interest-sensitive Whole Life
What happens when a policy is surrendered for its cash value? a) The policy can be reinstated by paying back all policy loans and premiums. b) The policy can be converted to term coverage. c) Coverage ends and the policy cannot be reinstated. d) Coverage ends but the policy can be reinstated at any time.
Coverage ends and the policy cannot be reinstated
If an annuitant dies before annuitization occurs, what will the beneficiary receive? a) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount b) Amount paid into the plan c) Cash value of the plan d) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
What is the purpose of a conditional receipt? a) It is intended to provide coverage on a date earlier than the date of the issuance of the policy. b) It guarantees the applicant that a policy will be issued in the amount applied for in the application. c) It serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company. d) It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue.
It is intended to provide coverage on a date earlier than the date of the issuance of the policy
Which of the following statements is TRUE about a policy assignment? a) It authorizes an agent to modify the policy. b) It transfers rights of ownership from the owner to another person. c) It is the same as a beneficiary designation. d) It permits the beneficiary to designate the person to receive the benefits.
It transfers rights of ownership from the owner to another person
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a) Life annuity with period certain b) Increasing term c) Limited pay whole life d) Interest-sensitive whole life
Limited pay whole life
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called a) Modified Endowment Contract (MEC). b) Level term life. c) Graded premium whole life. d) Single premium whole life.
Single Premium Whole Life
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a) The insurer may deny coverage later, because of the information missing on the application. b) The policy will be interpreted as if the insurer waived its right to have an answer on the application. c) The policy will be interpreted as if the insured did not have an answer to the question. d) The policy will be void.
The policy will be interpreted as if the insurer waived its right to have an answer on the application
Which of the following is the best reason to purchase life insurance rather than annuities? a) To liquidate a sum of money over a lifetime b) To create an estate c) To liquidate a sum of money over a period of years d) To create regular income payments
To create an estate
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT a) The employer can receive a current tax deduction for any contributions made to the plan. b) The plan is a legal method of accumulating money for retirement needs. c) The plan can discriminate as to who may participate. d) The plan is not approved for favorable tax treatment by the IRS.
The employer can receive a current tax deduction for any contributions made to the plan
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a) Term insurance only b) Permanent insurance only c) Universal life insurance only d) Any form of life insurance
Any form of life insurance
Employer contributions made to a qualified plan a) Are subject to vesting requirements. b) May discriminate in favor of highly paid employees. c) Are after-tax contributions. d) Are taxed annually as salary.
Are subject to vesting requirements
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 a) Survivorship insurance b) Juvenile protection provision c) Survivor protection d) Life planning
Survivor protection
Which of the following best describes what the annuity period is? a) The period of time from the accumulation period to the annuitization period b) The period of time during which money is accumulated in an annuity c) The period of time from the effective date of the contract to the date of its termination d) The period of time during which accumulated money is converted into income payments
The period of time during which accumulated money is converted into income payments
What is the purpose of a fixed-period settlement option? a) To provide a guaranteed income for life b) To provide a guaranteed amount of money each month c) To provide a guaranteed income for a certain amount of time d) To settle the insurance company's liability
To provide a guaranteed income for a certain amount of time.
Which two terms are associated directly with the premium? a) Fixed or variable b) Term or permanent c) Renewable or convertible d) Level or flexible
Level or flexible
Which of the following types of insurance policies would perform the function of cash accumulation? a) Increasing term b) Whole life c) Term life d) Credit life
Whole Life
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? a) $0 b) $200 c) $9,800 d) $10,000
$9,800
Both Universal Life and Variable Universal Life have a a) Flexible premium. b) Level fixed premium. c) Decreasing premium. d) Increasing premium.
Flexible premium
A Return of Premium term life policy is written as what type of term coverage? a) Renewable b) Level c) Increasing d) Decreasing
Increasing
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a) Until the policyowner's age 65. b) For 20 years. c) Until the policyowner's age 100, when the policy matures. d) For 20 years or until death, whichever occurs first.
For 20 years or until death, whichever occurs first.
In an annuity, the accumulated money is converted into a stream of income during which time period? a) Conversion period b) Annuitization period c) Payment period d) Amortization period
Annuitization period
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a) Upon conversion, the death benefit of the permanent policy will be reduced by 50%. b) Evidence of insurability is not required. c) Most term policies contain a convertibility option. d) Upon conversion, the premium for the permanent policy will be based upon attained age.
Upon conversion, the death benefit of the permanent policy will be reduced by 50%