Primerica Life Insurance State Exam RI
What is the maximum loan amount a policyowner may withdraw from a variable universal life insurance policy? 1)Nothing; loans are not allowed under variable universal life 2)An amount equal to the first year of premium payments 3)An amount not exceeding the cash value 4)An amount up to the face amount of the policy
An amount not exceeding the cash value
A producer's spouse was issued a temporary license after the death of the producer. She sold the insurance business 20 days later. What will happen to the temporary license? 1)It will remain in effect for 30 days after the sale of the business 2)It will become permanent at the Commissioner's discretion 3)It will remain valid for 60 more days 4)It will terminate upon the sale of business
It will terminate upon the sale of business
A married couple purchases a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend? 1)Automatic premium loan 2)Waiver of premium 3)Payor benefit 4)Guaranteed insurability
Payor benefit
To which of the following would the disclosure rule apply? 1)Annuities 2)Group life policies 3)Solicitation of whole life policies 4)Variable life insurance
Solicitation of whole life policies
When term insurance is added to the main policy to enhance the policy to provide added benefit or coverage, it is called a 1)Term rider 2)Nonforfeiture option 3)Future income rider 4)Guaranteed insurability rider
Term rider
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as 1)Fraud 2)Concealment 3)Misrepresentation 4)Twisting
Twisting
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner? 1)When policy is delivered 2)Within 15 days of the application date 3)Within 30 days of policy issue 4)When the policy is issued
When the policy is delivered
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application? 1)The application contains a correction 2)The application contains material misstatements 3)The insured died too soon after applying for the policy 4)The insurer has already paid out the expected amount of benefits for the year
The application contains material misstatements
Which of the following individuals would be a likely candidate to purchase a deferred annuity? 1)Someone who needs to start receiving benefit payments within 6 months of the annuity purchase 2)Someone who wants to leave the death benefit to the beneficiaries 3)Someone who cannot afford life insurance 4)Someone who wants to grow retirement funds tax deferred
Someone who wants to grow retirement funds tax deferred
Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to 1)30 Days 2)90 Days 3)6 months 4)9 months
6 months
At what point would an automatic premium loan be generated? 1)Once the policy is delivered 2)Upon the surrender of the policy 3)Following the grace period 4)Upon the insured's death
Following the grace period
Variable life insurance is regulated by all of the following entities EXCEPT 1)The Financial Industry Regulatory Authority (FINRA) 2)The U.S Department of Treasury 3)The Securities and Exchange Commission (SEC) 4)The Department of Insurance and/or Financial Services
The U.S Department of Treasury
The Life and Health Guaranty Association will cover the contractual obligations of an insolvent insurer to an individual up to what amount? 1)$300,000 2)$150,000 3)$250,000 4)There is no upper limit for coverage
$300,000
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of 1)Unfair discrimination 2)Illegal inducement 3)Coercion 4)Misrepresentation
Coercion
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of 1)Defamation 2)Twisting 3)False advertising 4)Misrepresentation
Defamation
The reduction of premium option uses the dividend to reduce 1)The premium on any other policy owned by the policyowner 2)Next year's premium 3)This year's premium 4)The previous year's premium
Next year's premium
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT 1)Reports may be sent to anyone who requests one 2)Insurers are not required to give customers a copy of the report 3)It applies to credit reports ordered in connection with insurance, banking and employment 4)The customer must be notified if adverse action is taken as a result of a report
Reports may be sent to anyone who request one
An insurance producer got married and changed her last name. When must she alert the Commissioner? 1)Immediately 2)Within 10 days 3)Within 30 days 4)Within 6 months
Within 30 days
A fraternal benefit society 1)Is open to anyone 2)Sells insurance, but its representatives don't have to be licensed 3)Is operated for the benefit of its members 4)Is open only to men
is operated for the benefit of its members
Which of the following indicates the person upon whose life the annuity income amount is determined? 1)Owner 2)Insured 3)Annuitant 4)Beneficiary
Annuitant
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy 1) A covered Peril Rider 2)An accidental death rider 3)A double indemnity rider 4) A guaranteed insurability rider
An accidental death rider
Guaranteeing future dividends is considered to be an unfair or deceptive act known as 1)False financial statements 2)Rebating 3)Misrepresentation 4)Twisting
Misreprensentation
What happens to the face amount of a whole life policy if the insured reaches the age of 100? 1)It is paid to the insured's estate and the policy is terminated 2)It is paid to the beneficiary in full 3)The cash value and the face amount are paid to the insured 4)The face amount is paid to the insured
The face amount is paid to the insured
The policy summary must state the effective policy loan annual percentage interest rate for 1)The first 15 policy years 2)The first 20 policy years 3)The first 5 policy years 4)The first 10 policy years
The first 20 policy years
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? 1)Employers looking to provide cost effective group life insurance for their employees may choose annual renewable term 2)Applicants who may require a larger death benefit in the future should buy convertible term insurance 3)Applicants concerned with the increasing cost of living should purchase increasing term 4)Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan
Applicants who may require a larger death benefit in the future should buy convertible term insurance
In order for a business partner to be eligible for a Keogh plan, he/she must work full-time and own at least how much of the business? 1)50% 2)10% 3)25% 4)33%
10%
A purchaser of an individual life insurance policy has the right to return the policy for a full refund of the premium if within 1)45 days of its delivery 2)15 days of its issue 3)30 days of its issue 4)20 days of its delivery
20 days of its delivery
How many continuing education hours must licensees complete on a biennial basis? 1)12 2)15 3)24 4)30
24
For how many years after the date of authorized use is an insurer required to maintain a copy of each document authorized by the insurer in solicitation of insurance policies? 1)2 years 2)3 Years 3)4 years 4)5 years
3 years
How often must the maximum rate for each rate for each policy be determined when a policy loan has occurred? 1)As often as the insurer deems appropriate 2)Every 2 months 3)At regular intervals, at least once every 12 months 4)At least once every 3 months
At regular intervals, at least once every 12 months
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value? 1)Automatic Premium Loan Option 2)Mode of Premium option 3)Past Due Premium option 4)Application to Reduce Premium Option
Automatic Premium Loan Option
Which of the following is NOT an indicator of a competent party? 1)Business profession 2)Legal age 3)Mental proficiency 4)Comprehension of contract
Business profession
Which of the following outlines the features of various policies and outlines the advantages and disadvantages to both? 1)Comparative Policy Analysis 2)Applicant's guide 3)Buyer's Guide 4)Policy Summary
Buyer's Guide
An IRA contribution can be made from which of the following? 1)Stocks and bonds 2)Cash 3)Life insurance 4)Collectibles
Cash
In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT 1)Face amount reserves 2)Incidental benefit amounts 3)Cash surrender values 4)Mortality reserves
Cash surrender values
Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination? 1)Charging different premium rates to the insureds in different insuring classes 2)Charging the insured higher premiums based on life expectancy 3)Charging the insured higher premiums based on her race 4)Making malicious statements about the insured based on his race
Charging the insured higher premiums based on her race
An important factor about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action? 1)Twisting 2)Loading 3)False Financial statement 4)Defamation
False financial statement
An annuity owner receives the same guaranteed payment every month. What type of annuity is it? 1)Guaranteed 2)Single 3)Fixed 4)Immediate
Fixed
All of the following information needs to be included on an application for life insurance except 1)Health insurance policies in force 2)Life insurance with other insurers 3)The agent's statement, if applicable 4)Medical information about the applicant
Health insurance policies in force
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death 1)Last survivor 2)Survivorship life 3)Joint life 4)Second-to-Die
Joint life
For a contract to be enforceable by law, the purpose of the contract must be 1) For the benefit of the general public 2)Of pure intent 3)Legal and not against public policy 4)For financial gain
Legal and not against public policy
Agents may be found guilty of defamation if they make a false statement that is intended to? 1)Maliciously criticize another insurance company 2)Deceive a policyholder 3)Misinform prospective clients about policy coverage 4)Misrepresent the benefits payable under policies
Maliciously criticize another insurance company
Insurance contracts are unilateral in nature. What does this mean? 1)A promise is made only at the time of policy application 2)Only one party makes a promise 3)The insured must make a promise to pay the premium 4)All parties to the contract exchange something of value
Only one party makes a promise
J's Retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes j's retirement plan? 1)Deferred 2)Qualified 3)Unqualified 4)Variable
Qualified
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have? 1)Primary 2)Revocable 3)Irrevocable 4)Contingent
Revocable
S set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does S have? 1)SIMPLE 2)Simplified Employee Pension (SEP) 3)401k 4)HR-10 (Keogh)
Simplified Employee Pension (SEP)
In contrasting stock insurers with mutual insurers, which statement is true? 1)Nonparticipating policies can pay out dividends to the policyowners 2)Mutual insurers are owned by the shareholders and issue participating policies 3)Stock insurers are owned by the shareholders and issue nonparticipating policies 4)Stock dividends are tax free while policy dividends are taxable
Stock insurers are owned by the shareholders and issue nonparticipating policies
If an applicant's health is poorer than that of an average applicant, the policy may be issued 1)Standard 2)Ordinary 3)Preferred 4)Substandard
Substandard
In life insurance, which of the following is NOT required to have an insurable interest in the insured 1)The insured 2)The applicant 3)The beneficiary 4)The policyowner
The beneficiary
According to the Insurance Code regulations regarding life insurance policy proceeds, interest of a death claim must begin accumulating on what date? 1)30 Days after the insured's death 2)Policy maturity 3)The insured's death 4)When the claim is submitted
The insured's death
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement? 1)Flexible 2)Lump sum 3)Single 4)Level
Level
Any insurance company offering that requires an individual to be tested for HIV infection for the purpose of determining insurability must give that individual prior written notice of those requirements and proceed with that testing 1)Within 10 days of notifying the individual 2)Only with the Commissioner's approval 3)Only upon the written authorization of the individual or the individual's parent or guardian 4)Upon the oral or written authorization of the individual
Only upon the written authorization of the individual or the individual's parent or guardian
The purpose of the Fair Credit Reporting Act is to 1)Ensure coverage for all applicants 2)Protect consumers against the circulation of inaccurate or obsolete personal or financial information 3)Protect the insurer from adverse selection 4)Ensure the consumers receive a copy of investigative consumer reports
Protect consumers against the circulation of inaccurate or obsolete personal or financial information
In order to get a nonresident license in this state, a producer must 1)Apply and pay a fee to a nonresident state that reciprocates 2)Pass the nonresident state exam and satisfy their continuing education requirements 3)Represent an agency located in this state 4)Surrender their license in their state of residence
Apply and pay a fee to a nonresident state that reciprocates
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? 1)Policy Summary 2)Insurance Regulations Summary 3)Buyer's Guide 4)Insurance Index
Buyer's guide
An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount? 1)Spouse term rider 2)Children's term rider 3)Payor rider 4)Guaranteed insurability rider
Children's term rider
When an insurer tries to discourage a policyholder from replacing an existing policy, this is called 1)Adverse selection 2)Conservation effort 3)Negotiating 4)Retention effort
Conservation effort
An adjustable life policy can assume the form of 1)Only permanent insurance 2)Either term insurance or permanent insurance 3)Neither term insurance nor permanent insurance 4)Only term insurance
Either term insurance or permanent insurance
Which of the following statements is TRUE regarding an Agent's Report during the policy application process? 1)It is a required element of the contract 2)It provides the agent's personal observation concerning the proposed insured 3)It is only used when the initial premium is not paid with the application 4)It becomes part of the entire contract after the policy is issued
It provides the agent's personal observations concerning the proposed insured
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select? 1)Joint and survivor 2)Fixed-amount installments 3)Fixed-period installments 4)Life income
Joint and survivor
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure? 1)Prior notice is not required 2)Prior to performance of the test 3)Prior to ordering a physical examination 4)Prior to solicitation of the policy
Prior to performance of the test
All of the following are true of annually renewable term insurance EXCEPT 1)Proof of insurability must be provided at each renewable 2)The premium increases each year 3)The death benefit remains level 4)The policy renews regardless of the insured's health
Proof of insurability must be provided at each renewal
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? 1)Paid up additions 2)Cash surrender value 3)Reduced paid up 4)Extended term
Extended term
Cash value guarantees in a whole life policy are called 1)Living benefits 2)Cash loans 3)Dividends 4)Nonforfeiture values
Nonforfeiture values
Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses? 1)Cash value 2)Payor benefit 3)Nonsurrender guarantees 4)Nonforfeiture values
Nonforfeiture values
What is the purpose of the agent's report in the application process? 1)To provide additional information about the applicant to the underwriters 2)To explain policy features and benefits to the applicant 3)To provide medical information about the applicant to the underwriters 4)To give disclosure to the applicant
To provide additional information about the applicant to the underwriters
What is the maximum fixed interest rate for a policy loan? 1)10% per year 2)2% per year 3)5% per year 4)8% per year
8% per year
What is the minimum annual interest rate on death claim proceeds paid from an annuity contract? 1)3% 2)5% 3)9% 4)10%
9%
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the 1)Declarations 2)Consideration 3)Insuring clause 4)Payment of claims
Insuring clause
According to the life insurance replacement regulations, which of the following would be an example of policy replacement? 1)Term insurance is changed to a Whole Life policy 2)A lapsed policy is reinstated within a specific timeframe 3)A policy is reissued with a reduction in cash value 4)A term policy expires, and the insured buys another term life policy
A policy is reissued with a reduction in cash value
As it relates to life settlements, the term "owner" means 1)Life settlement broker 2)Life settlement provider 3)The owner of the original life policy 4)The owner of the insurance company
The owner of the original life policy
How long is the grace period for an individual life insurance policy? 1) 2 weeks 2) 7 to 10 business days 3) 3 months 4) 1 months
1 month
How many days before a hearing must the Commissioner issue the accused person a notice that the hearing is taking place? 1)5 Days 2)10 Days 3)15 Days 4)20 Days
10 days
A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? 1)3 yrs 2)5 yrs 3)7 yrs 4)The life of the policy
7 Years
The entire contract includes all of the following EXCEPT 1)A buyer's guide 2)The life insurance policy 3)A copy of the application 4)Any riders or amendments
A buyer's guide
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will 1)Deny all claims because of the misrepresentation 2)Adjust the back premiums for the proper age or gender 3)Adjust the death benefit to what the premium would have purchased at the actual age or gender 4)Pay the face amount specified at the time of policy issue
Adjust the death benefit to what the premium would have purchased at the actual age or gender
Policies written on a third-party ownership basis are usually written to cover: 1)Policyowner's estate 2)Policyowner's minor children or business associates 3)Policyowners who are not insured 4)Insured's estate
Policyowner's minor children or business associates
An annuity would normally be purchased by an individual who wants to 1)Provide a death benefit to the insuring party 2)Earn a higher rate of interest 3)Create an estate 4)Provide income for retirement
Provide income for retirement
Which of the following are characteristics of term life insurance? 1)Adjustable premiums and automatic increases in face amount at any given age 2)Coverage to age 100, cash value, and high premiums 3)Nonforfeiture provisions and living benefits 4)Temporary protection, renewability, no cash value
Temporary protection, renewability, no cash value
Who is responsible for covering the expenses associated with the examination of domestic insurers? 1)The Insurance Guaranty Association 2)The examined insurer 3)The Commissioner 4)The Department of Insurance
The examined insurer
Which method of dealing with risk is applied when insurance is purchased 1) Transfer 2)Sharing 3)Avoidance 4)Reduction
Transfer
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan? 1)Immediately 2)Within 10 days 3)Within 30 days 4)Within 90 days
Immediately
Which of the following best describes a rebate? 1)A producer misrepresenting policy provisions or coverages at issue 2)A producer requiring an insured to buy insurance from her as a condition to a loan 3)A producer selling insurance primarily to himself, his family and his friends 4)A producer returning part of her commission to her client, as an inducement to buy
A producer returning part of her commission to her client, as an inducement to buy
While completing a life insurance application the applicant realizes that she should have answered an earlier question differently. What should the agent do to make the necessary change? 1)Nothing, only a company officer can make any changes 2)Cross out the incorrect information, write in the correct answer, and have the applicant initial the change 3)White-out the information, make the change, and have the applicant initial the change 4)Cross out the incorrect information and provide an explanation to the insurance company
Cross out the incorrect information, write in the correct answer, and have the applicant initial the change
In this state the owner gets a "free look" of a specified number of days from 1)The date of application 2)Acceptance of the application 3)Delivery of the policy 4)Acceptance of the risk by the insurer
Delivery of the policy
All of the following are requirements to obtain an insurance producer license in this state EXCEPT 1)Be at least 18 years of age 2)File a $10,000 surety bond with the state 3)Be of good moral character 4)Pass a written examination on the line of insurance for which a license is sought
File a $10,000 surety bond with the state
Which of the following statements describes one of the reasons individuals purchase life insurance? 1)It provides income an insured cannot outlive 2)It creates an immediate estate 3)It helps liquidate an estate through death proceeds 4)It always accumulates cash value
It creates an immediate estate
How do premiums in variable universal life policies vary from those in variable whole life policies? 1)Premiums automatically increase over the life of the policy 2)Premiums are flexible 3)Premiums are level 4)Premiums automatically decrease over the life of the policy
Premiums are flexible
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles? 1)Declined 2)Preferred 3)Standard 4)Substandard
Standard
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes 1)Guaranteed insurability benefits 2)Facility of payment clause 3)Nonforfeiture options 4)Waiver of premium rider
Waiver of premium rider
Contributions to Roth IRAs are 1)Always subject to a 6% tax penalty 2)Paid with pre-tax dollars 3)Not tax deductible 4)Tax deductible
Not tax deductible
Which of the following is required in order for a plan to be qualified? 1)The plan's contributions formula is allowed to discriminate in favor of officers of the company 2)The plan must be formally written and communicated to the employees 3)The plan must not be permanent 4)The plan must be for the exclusive benefit of the employer
The plan must be formally written and communicated to the employees
An insured decides to replace his life insurance policy with one offered by a new insurer. After receiving the policy, he is unsatisfied with the provisions and decides to return it. Within how many days must he return the policy in order to receive a full premium refund? 1)15 2)30 3)60 4)None. Free-look provisions do not apply to replacement policies
30
The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called 1)A unilateral agreement 2)An absolute assignment 3)A collateral assignment 4)An insurance pledge
A collateral assignment
The purpose of the Life Insurance Guaranty Association is to 1)Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company 2)Encourage life insurers to write substandard business 3)Allow producers to continue to solicit insurance, even if the company they represent is financially impaired 4)Protect the reputation of the Insurance Department if they issue a Certificate of Authority to a company that becomes insolvent
Help protect policyowners and the beneficiaries against financial loss caused by the insolvency of an insurance company
