Primerica Practice test part 2

What is the purpose of the buyer's guide? a) To allow the consumer to compare the costs of different policies b) To provide the name and address of the agent/producer issuing the policy c) To list all policy riders d) To provide information about the issued policy

a

Which of the below statements is FALSE concerning a Modified Endowment Contract (MEC)? a) The policyholder can receive distributions at any time without being penalized. b) Distributions before age 59 1/2 have a penalty tax of 10% on the gain in the policy. c) Policy loans are taxable distributions. d) MECs lose some of the favorable tax treatment of distributions

a

Which of the following best describes the aleatory nature of an insurance contract? a) Policies are submitted to the insurer on a take-it-or-leave-it basis b) Exchange of unequal values c) Only one of the parties being legally bound by the contract d) Ambiguities are interpreted in favor of the insured

b

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? a) The insurer will pay a reduced death benefit to the beneficiary. b) The insurer will pay the death benefit minus one month's premium. c) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. d) The insurer will pay the full death benefit from the group policy to the beneficiary.

d

Which policy component decreases in decreasing term insurance? a) Face amount b) Cash value c) Dividend d) Premium

a

What describes the specific information about a policy? a) Illustrations b) Buyer's guide c) Producer's report d) Policy summary

d

All of the following are duties and responsibilities of producers at the time of application EXCEPT a) Explain the nature and type of any receipt the producer is giving to the applicant. b) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. c) Check to make sure that there are no unanswered questions on the application. d) Change any incorrect statement on the application by personally initialing next to the corrected statement

d

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.

d

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The beneficiary must pay interest to the insurer. b) The beneficiary will receive the lump sum, plus interest. c) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. d) The beneficiary will only receive payments of the interest earned on the death benefit.

d

What is the benefit of choosing extended term as a nonforfeiture option? a) It matures at age 100. b) It allows for coverage to continue beyond maturity date. c) It can be converted to a fixed annuity. d) It has the highest amount of insurance protection.

d

What is the waiting period on a Waiver of Premium rider in life insurance policies? a) 30 days b) 3 months c) 5 months d) 6 months

d

Which of the following is true about the mandatory free look in a Life Insurance policy? a) It commences when the policy is delivered. b) It commences when the application is signed. c) It applies only to term life insurance policies. d) It is optional on all life insurance policies

a

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? a) Ownership provision b) Collateral assignment c) Insurable interest d) Modification clause

b

When an employee terminates coverage under a group insurance policy, coverage continues in force a) Until the employee can obtain coverage under a new group plan. b) Until the employee notifies the group insurance provider that coverage conversion policy is issued. c) For 31 days. d) For 60 days.

c

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? a) Paid-up additions b) Dividend Accumulation option c) Paid-up option d) Accumulation at Interest

c

Which of the following best describes what the annuity period is? a) The period of time during which accumulated money is converted into income payments b) The period of time from the accumulation period to the annuitization period c) The period of time during which money is accumulated in an annuity d) The period of time from the effective date of the contract to the date of its termination

a

If an annuitant dies before annuitization occurs, what will the beneficiary receive? a) Cash value of the plan b) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount c) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount d) Amount paid into the plan

b

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

c

The Ownership provision entitles the policyowner to do all of the following EXCEPTa) Assign the policy. b) Designate a beneficiary. c) Set premium rates. d) Receive a policy loan.

c

If an agent fails to obtain an applicant's signature on the application, the agent must a) Sign the application, stating it was by the agent. b) Send the application to the insurer with a note explaining the absence of signature. c) Return the application to the applicant for a signature. d) Sign the application for the applicant.

c

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a) Medical exam and parents' medical history b) Proof of insurability is not required. c) Medical exam d) Her parents' federal income tax receipts

b

Which of the following statements regarding HIV testing for insurance purposes is NOT true? a) HIV testing is regulated at the state level. b) Insurers are barred from requesting HIV testing. c) Positive test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant. d) The testing practices must meet the criteria of the U.S. Department of Health and Human Services.

b

Which two terms are associated directly with the premium? a) Renewable or convertible b) Level or flexible c) Fixed or variable d) Term or permanent

b

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT a) Explain the policy provisions, riders, and exclusions. b) Collect any premium due. c) Explain the rating procedures if the policy is rated differently than applied for. d) Disclose commissions earned from the sale of the policy.

d

Which is TRUE about the cash surrender nonforfeiture option? a) After the cash surrender, the insured is covered for a grace period of 1 month. b) The policy remains active for some time after the policyholder opts for cash surrender. c) The policyholder receives the original cash value of the policy. d) Funds exceeding the premium paid are taxable as ordinary income.

d