Primerica Licensing Practice Tests

premiums paid by the employer in a business life insurance policy

tax deductible by the employer

An insured requests a loan from her life insurance policy to pay a premium that is due. The insurer may delay that request for how many months?

6 months

Indemnity provision

Restores an insured person to the same financial state as before the loss.

Loss

The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against.

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? 1. False advertising 2. Defamation 3. Coercion 4. Misrepresentation

False advertising

Which of the following types of insurance covers the whole family in a single contract?

Family Policy

Retention

Planned assumption of risk by an insured through the use of deductibles, co-payments, or self-insurance.

Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid?

5 months

What percent of participants is required in a contributory group plan?

75%

What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences?

Section 457 Deferred Compensation Plan

reciprocal

an insurance option that is considered to be a risk-sharing arrangement?

Section 457 Deferred Compensation Plan

Allows employees of state and local governments, as well as for employees of nonprofit organizations, the ability to defer compensation similar to a 401(k) or 403(b) plan. Plan contributions and earning are not included in gross income and grow on a tax-deferred basis until the funds become available upon retirement. An employee contributes through a deduction in income that is deposited into the retirement fund.

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's ___________ 1. Prior insurance. 2. Ancestry. 3. Credit history. 4. Habits.

Ancestry

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material

Who would be eligible to obtain SGLI? 1. Small employers 2. The elderly 3. Low-income individuals and families 4. Military personnel

Military personnel

Which of the following is the basic source of information used by the company in the risk selection process? 1. Consumer report 2. Application 3. Agent's report 4. Warranty

Application

What type of insurance would be used for a Return of Premium rider?

Increasing Term

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?

The cash value will be paid to the annuitant's estate.

competent party

a person of legal age, not under the influence of alcohol or drugs, and someone who is mentally competent to understand the contact.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

conditions

type of business when producers sell policies on themselves, their family, or their coworkers. (it is legal as long as the premiums paid do not exceed premiums paid on other businesses.

controlled business

An insurance producer just sold a policy to their sister. what kind of business is this?

controlled business.

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must

respond to the consumer's complaint

consideration

the most essential part of a contract. something of value that is transferred between two parties to form a legal contract

Mortality tables are statistical tables used by life insurance companies to help predict

Life expectancy and the death rates for specific groups of individuals.

An insurance organization that does not issue insurance policies but provides a meeting place for underwriters to conduct business is known as a...

Lloyd's Association

All of the following are examples of social insurance EXCEPT: 1. Medicaid. 2. Social Security. 3. Medicare. 4. Long-term care.

Long-term care

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... 1. Survivor protection. 2. Life planning. 3. Survivorship insurance. 4. Juvenile protection provision.

Survivor protection.

In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this?

The right to determine the wording of a policy

In a life settlement contract, whom does the life settlement broker represent?

consideration

categories of insurable risk

due to chance, definite and measurable, statistically predictable, not catastrophic, randomly selected, and have a large loss exposure

If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?

fixed period

An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?

interest continues tax deferred.

Under what type of insurance plan is the cash value of a permanent policy used to pay the policy premiums through policy loans?

minimum deposit

foreign

same country

domestic

same state

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

the insurer will pay a reduced death benefit