primerica Exam IV

c)4 years Each agent and agency must keep a file of all advertising printed, published or prepared by the agency along with records of the advertising's distribution. Files must be maintained for a period of 4 years.

#18. For how many years is an insurer required to maintain a complete file of its advertisements? a)1 year b)2 years c)4 years d)5 years

a)Grace period Provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force

35. The automatic premium loan provision is activated at the end of the a)Grace period b)Time period c)Ending period d)Policy period

b)Express Authority Express powers are written into the contract between the insurer and the agent.

31. The authority granted to an agent through the agent's contract is referred to as a)Absolute Authority b)Express Authority c)Apparent Authority d)Implied Authority.

1. It is a level term insurance

32.Which of the following best describes annually renewable term insurance? (Choose from the following options) 1. It is a level term insurance 2. It requires proof of insurability at each renewal 3. Neither the premium nor the death benefit is affected by the insured's age. 4. It provides annually increasing death benefit.

4. Only the annuity owner If the need arises, a deferred annuity contract may be surrendered only by the annuity owner. At surrender the owner receives the value of the annuity minus a surrender charge.

38.Which of the following can surrender a deferred annuity contract? (Choose from the following options) 1. Only the insurance company for nonpayment of premiums 2. The beneficiary after the owner's death 3. Deferred annuity cannot be surrendered 4. Only the annuity owner

1. They earn lower interest rates than fixed annuities. Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities

46.Which of the following is NOT true regarding Equity Indexed Annuities? (Choose from the following options) 1. They earn lower interest rates than fixed annuities 2. The insurance company keeps a percentage of the returns 3. They have guaranteed minimum interest rates 4. They are less risky than variable annuities.

d)$50,000 The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee.

#6. An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds a)$10,000 b)$15,000 c)$25,000 d)$50,000

d)Business Entity Business entity means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

#8. Which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer? a)Natural Group b)Stock Company c)Mutual Company d) business entity

a)Limited pay whole life insurance

#9. 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)Limited pay whole life insurance b)10-year endowment c)Life annuity, period certain d)Increasing term insurance Premium payments will cease at her age 65, but coverage will continue to her death or age 100.

1. An index like Standard & Poor's 500

33.The equity in an equity index annuity is linked to (Choose from the following options) 1. An index like Standard & Poor's 500 2. The returns from the insurance company's separate account 3. The annuitant's individual stock portfolio 4. The insurance company's general account investments.

2. Policyowner

37.Who controls changes in premium payments, face value, loans, and policy plans? (Choose from the following options) 1. Agent 2. Policyowner 3. Insurer 4. Beneficiary

4)The illustration must stay exactly as it is. If an agent uses the illustrations of an insurer, it must first be approved, and the agent may not alter the illustrations in any way.

44.An agent wants to include an illustration written by his insurance company. Which of the following best describes the conditions under which he may use the illustration? (Choose from the following options) 1. The illustration can only be used for a month before it requires re-approval 2. Illustrations must accurately portray what would be included in a potential contract 3. All changes must be submitted to the insurer before approval 4. The illustration must stay exactly as it is.

3. Single Premium

45.Which type of life insurance policy generates immediate cash value? (Choose from the following options) 1. Decreasing Term 2. Continuous premium 3. Single Premium 4. Level Term

2. The policyowner can specify the way proceeds are split in the policy

47.The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? (Choose from the following options) 1. The proceeds will be split evenly between the two beneficiaries 2. The policyowner can specify the way proceeds are split in the policy 3. The way proceeds are split between beneficiaries is decided by which type of policy is chosen 4. Life insurance policies may have only one beneficiary.

d) Apparent

#5. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?a)Express b)Implied c)Assumed d)Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power.

d)Increases annually.

11. Annually renewable term policies provide a level death benefit for a premium that a)Decreases annually b)Remains level c)Fluctuates d)Increases annually. Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.

2. Indemnity

40.Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? (Choose from the following options) 1. Reasonable Coverage Expectations 2. Indemnity 3. Loss-at-Cost 4. Limited Benefits Provision

d)Business Entity Business entity means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

#15. Which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer? a)Natural Group b)Stock Company c)Mutual Company d)Business Entity

a)Annuitant The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.

#23. When an annuity is written, whose life expectancy is taken into account?a)Annuitant b)Beneficiary c)Life expectancy is not a factor when writing an annuity d)Owner

a)They earn lower interest rates than fixed annuities Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities.

10. Which of the following is NOT true regarding Equity Indexed Annuities? a)They earn lower interest rates than fixed annuities b)The insurance company keeps a percentage of the returns c)They have guaranteed minimum interest rates d)They are less risky than variable annuities.

c)The board of directors is chosen by a state-based election board In a stock company, the board of directors is elected by the stockholders.

25. All of the following attributes are found in stock insurance companies EXCEPT a)Earnings from operations may be kept as retained earnings b)The Stockholders may receive a dividend at the end of the year c)The board of directors is chosen by a state-based election board d)The company is owned by the stockholders. In a stock company, the board of directors is elected by the stockholders.

d)Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power.

27. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?a)Express b)Implied c)Assumed d)Apparent

a)Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

28. Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Option A b)Juvenile life c)Term insurance d)Option B

d)Warranty A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicant's knowledge.

3. Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?a)Concealment b)Indemnity c)Representation d)Warranty

1. An index like Standard & Poor's 500

30.The equity in an equity index annuity is linked to (Choose from the following options) 1. An index like Standard & Poor's 500 2. The returns from the insurance company's separate account 3. The annuitant's individual stock portfolio 4. The insurance company's general account investments.

3. Apparent Authority

31.The authority granted to an agent through the agent's contract is referred to as (Choose from the following options) 1. Absolute Authority 2. Express Authority 3. Apparent Authority 4. Implied Authority.

2. The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges

34.A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity? (Choose from the following options) 1. The surrender value will not be more than 80% of the cash value in the annuity at the time of surrender 2. The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges 3. A deferred annuity cannot be surrendered prior to annuitization. The owner must wait until the annuitization period begins to receive any payments 4. The surrender value will be based on current interest rates.

4. Until the beneficiary's death The Single Life Option can provide a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop.

36.How long will the beneficiary receive payments under the single life settlement option? (Choose from the following options) 1. Until the insured's death 2. For a specified period of time 3. Until the insured's age 100 4. Until the beneficiary's death

4. Misrepresentations Making false or misleading statements with the intent to defraud another is misrepresentation.

39.A producer who omits a statement which may mislead or deceive the persons addressed has committed (Choose from the following options) 1. Defamation 2. Twisting 3. Coercion 4. Misrepresentation.

4. Beneficiary

41.If the annuitant dies during the accumulation period, who will receive the annuity benefits? (Choose from the following options) 1. Owner 2. Insurance company 3. Estate 4. Beneficiary

4.The type of investment. Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection.

42.In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT (Choose from the following options) 1. The length of coverage 2. The premium 3. The amount of insurance 4. The type of investment.

3. Changing Michigan Insurance Code

43.Which of the following functions may a producer with a temporary insurance license NOT perform? (Choose from the following options) 1. Collect premiums 2. Countersign policies 3. Changing Michigan Insurance Code 4. Solicit applications of insurance

2. A new Commissioner or Director is put into office.

48.All of the following events will terminate a producer's certificate of appointment EXCEPT (Choose from the following options) 1. A producer's license is suspended or revoked by the Department of Insurance 2. A new Commissioner or Director is put into office 3. A producer's license expires and is not renewed 4. A termination issued by the appointing insurer.