Primerica Study Questions
A producer who fails to separate premium monies from his own personal funds is guilty of
Commingling
Under which non forfeiture option does the company pay surrender value and have no further obligations to the policy ownder?
D. Cash Surrender
What limits the amount that a policy owner may borrow from a whole life insurance policy?
D. Cash Value
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)?
D. Executive bonus
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
D. Joint Life Policy
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured it is called a?
D. Joint Life annuity
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?
D. The insurance company's general account
Which of the following is NOT an example of a valid insurable interest?
Debtor in the life of the creditor
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Decreases
Who assumes control over an insurance company's funds and management if they become insolvent?
Department of Insurance
The Automatic Premium Loan Provision is activated at the end of the?
Grace period
What provision in an insurance policy extends coverage beyond the premium due date?
Grace period
In life insurance policies, cash value increases
Grow tax deferred
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
Guaranteed surrender value
In insurance transactions, fiduciary responsibility means
Handling insurer funds in a trust capacity.
What is the main purpose of the seven-pay test?
It determines if the insurance policy is an MEC.
Which of the following is NOT true regarding a non-qualified retirement plan?
It needs IRS approval
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives . When the wife dies, payments stop. What settlement option did they select?
Joint and Survivor
A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?
Joint and survivor
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
which of the following is an example of a limited-pay life policy?
Life paid up at age 65
Which of the following is the basis for a claim against an insurance policy?
Loss
An out-of-state producer wants to start selling insurance in this state. What type of license should the producer obtain?
Non resident
What is a definition of a unilateral contract?
One-sided: only one party makes an enforceable promise
A rider attached to a life insurance policy that provides coverage on the insured family members is called the
Other-insured rider
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
Permanent
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?
Permanent
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policy Owner
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death
The policy owner pays for her life insurance annually. Until now, she has collected a non taxable 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?
Reduction of Premium.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT?
SEPs are suitable for large companies
which of the following statements concerning a Simplified Employee Pension plan (SEP) is incorrect?
SEPs are suitable for large companies
Which 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 with out creating adverse tax consequences?
Section 1035 Policy Exchange
The Ownership provision entitles the policy owner to do all of the following EXCEPT?
Set premium rates
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?
Spouse
Which of the following insurers are owned by stockholders?
Stock
All of the following would be different between qualified and nonqualified retirement plans EXCEPT?
Taxation on accumulation
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?
The insurance company's general account
All of the following are true of an annuity owner EXCEPT?
The owner must be the party to receive benefits
All of the following are general requirements of a qualified plan EXCEPT?
The plan must provide an offset for social security benefits
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
The policy owner can specify the way proceeds are split in the policy
All of the following would be eligible to establish a Keogh retirement plan EXCEPT?
The president and employee of a family corporation
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
which of the following insurance options would be considered a risk-sharing arrangement?
reciprical
Which of the following is true regarding variable annuities
the annuitant assumes the risk on investment
Which of the following authorities is responsible for determining whether an insurer is financially stable enough to safely conduct business?
the commissioner and the Departement of Insurance
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
the type of investment
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100,000
An insured purchased a 15-year level term life insurance policy with a face amount of 100,000 . The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitilization, died from the injuries. What amount would his beneficiary receive as a settlement?
$200,000
Which of the following documents delivered to the policy owner includes information about premium amounts , cash values, surrender values, and death benefits for specific policy years?
A policy summary.
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
A. 50% tax on the amount not distributed as required
The authority granted to an agent through the agent's contract is referred to as
A. Express authority
According to the nonforfeiture law, if the owner decides to surrender a deffered annuity prior to annuitization, the owner is entitled to which of the following?
A. Guaranteed surrender value
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
The LEAST expensive first-year premium is found in which of the following policies?
Annually renewable term
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
An individual was involved in a head-on collision while driving home one day. His injuries were not serious and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe?
Avoidance
How many days does an insurer have to file a notice of appointment for a producer?
B. 15 days
If a company has a Simplified Employee Pension plan, what type of plan is it?
B. A qualified plan for a small business
An insured purchased and individual life insurance policy with a face amount of $15,000. He pays a premium each month. What type of policy is that?
B. Ordinary life
A rider attatched to a life insurance policy that provides coverage on the insured's family members is called the
B. Other Insured rider
An insured purchased a life policy in 2010 and died in 2020. The insurance company discoveres at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
B. Pay the death benefit
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT?
C. At distribution, all amounts received by the employee are tax free.
An insurance company assures its new policy holders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?
C. Fraud
The interest earned on policy dividends is
C. Taxable
Which of the following defines the "owner" as it pertains to life settlement contracts?
C. The policy owner of the life insurance policy
What is a foreign insurer?
B. an insurer with a home office in another state
Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance?
B. race
Which of the following life insurance policies allows a policy owner to take out a loan from the policy's cash value?
C. Variable universal life
What does liquidity mean in a life insurance policy?
Cash values can be borrowed at anytime
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?
D. Direct response marketing
An insurance company sells an insurance policy over the phone in response to a TV ad which of the following best describes this act?
Direct Response Marketing
A producer agent must do all of the following when delivering a new policy to the insured EXCEPT?
Disclose commissions earned from the sale of the policy
Which of the following best describes an insurance company that has been formed under the laws of this state?
Domestic
An insured has a Modified Endowent Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?
He will have to pay a penalty if he is younger than 59 1/2
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insureds death.
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
Which of the following is true regarding a waiver of a surrender charge on an annuity contract?
The charge may be waived if the annuitant is confined to a long term care facility for at least 30 days
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?
income tax on distributions and no penalty
The insurer may suspect that a moral hazard exists of the policy holder
is not honest about his health on an application for insurance
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
The primary purpose of licensing is to
Ensure high standards to the insuring public
The authority granted to an agent through the agent's contract is referred to as
Express authority
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
B. Permanent
During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?
B. Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2
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?
B. The annuitant must be a natural person.
In an adjustable life policy all of the following can be changed by the policy owner EXCEPT?
B. The type of investment
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the
Entire Contract
The authority granted to an agent through the agent's contract is referred to as ?
Express authority
When handling premium funds in the conduct of their business, insurance producers act in a(n)?
Fiduciary capacity
Which of the following statements about group life is correct?
The cost of coverage is based on the ratio of men and women in the group
Which of the following statements about group life is correct?
The cost of coverage is based on the ration of men and women in the group.