Rhode Island insurance exam
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?
family maintenance policy
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
family maintenance policy
Taking receipt of premiums and holding them for the insurance company is an example of
fiduciary responsibility
the purpose of the _______ period clause is to avoid an unintentional lapse of a life insurance policy
grace
industrial insurance sold by home service or debit insurance companies
home service insurers
In regards to representations or warranties, which of these statements is TRUE?
if material to the risk, false representation will void a policy
a long-term care rider in a life insurance policy pays a daily benefit. in the event of which of the following?
inability of the insured to perform more than 2 activities of daily life (ADL's)
when must insurable interests exist for a life insurance contract to be valid
inception of the contract
a life insurance policy would be considered contract without?
insurable interest
when 3rd party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
Quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
level term
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
life income
a whole life insurance policy owner doesn't wish to continue making premium payments. which of the following enables the policy owner to sell the policy for more than its cash value
life settlement contract
which of these factors do not play a role in underwriting of a life insurance policy
martial status
Which of these life products is NOT considered interest-sensitive?
modified whole life
organized and incorporated under state law. but they have no stockholders. instead, the policyholders own the company. owners get paid a share of the companies profits through dividends. participating or par companies bc policy owners do not participate in paid dividends
mutual insurer companies
process of a stock company being converted into a mutual company
mutualization
which of these is not considered to be an element of an insurance contract
negotiating
in a life insurance policy which provision states who may select policy options designate and name a beneficiary and be the recipient of any financial benefits from the policy
owner rights
which statement is true in regards to a policy loan
past due interest on a policy loan is added to total debt
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
pay face amount minus the past due premium
which of the following provisions guarantees that premiums will be waived if a juvenile life policy owner becomes disabled
payor clause
which best describes a warranty
statement guaranteed to be true
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0 because T is still alive
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
which of the following types of term life policies most likely contains a renewability feature
10 year convertible term
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20 pay life
which of the following type of policies pays a benefit if the insured goes blind
AD&D
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
what is the purpose of a policy summary
It highlights the critical parts of the policy issued
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?
Jan 26
an association formed to underwrite and issue insurance like coverage on certain items and areas that might otherwise be uninsurable
Lloyds of London
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be
converted to an individual permanent policy at an individual rate
which of the following statements about noncontributing employee group life insurance is false
a minimum # of employees is required to participate
which statement is true regarding a variable whole life policy
a minimum guaranteed death benefit is provided
a policyowner may generate taxable income from which of the following dividend options
accumilation of interest
a cost of living rider gives the insured
additional death benefits
which is correct regarding the tax treatment of a lump sum payment paid to a life insurance policy primary beneficiary
all proceeds are income tax free in the year they are received
Which premium schedule results in the lowest cost to the policyowner?
annual
group life insurance policies are generally written as
annually renewable term
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the
applicant's physician
An incomplete life insurance application submitted to an insurer will result in which of these actions?
application will be returned to the writing agent
what action can a policy owner take if an application for a bank loan requires lateral
assign policy ownership to the bank
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
at the time of application
the automatic premium loan provision is designed to
avoid a policy lapse
all of the following (bilateral unilateral aleatory adhesion) are considered to be typical characteristics describing the nature of an insurance contract except
bilateral
the insurance company transferring the risk
ceding company
Which rider provides coverage for a child under a parent's life insurance policy?
child term rider
which of the following consists of an offer, acceptance, and consideration?
contract
what type of group insurance plan involves employees sharing cost
contributing plan
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
daughter
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
decreasing term
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
decreasing term
process of a mutual company being converted into a stock company
demutualization
what is the purpose of the USA patriot act
detect and deter terrorism
a variable insurance policy
doesn't guarantee a return on investment accounts
Under a trustee group life policy, who would be eligible for a certificate of coverage?
employee
P owns a $25,000 life policy that pays the face amount to him if he lives to age 70. or to his beneficiary if he dies before age 70. what kind of policy does P own
endowment at age 70
which of these statements in incorrect regarding the federal income tax treatment of life insurance
entire cash surrender value is taxable
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
equity index insurance
which of the following is an important underwriting principle of group life insurance
everyone must be covered in the group
a(n) ____ contained in a life insurance policy states that the policy will not cover certain risks
exclusion
in a life insurance policy, which features states that the policy will not cover certain risks
exclusion
Term insurance has which of the following characteristics?
expires at the end of the policy period
which non forfeiture options offers the highest death benefit
extend term
on a life insurance policy who is qualified to change the beneficiary designation
policy owner
which is true concerning a variable universal life policy
policy owner controls where the investment will go and selects the amount of the premium payment
When an employee is terminated, which statement about a group term life conversion is true?
policy proceeds will be paid if the employees dies during the conversion period
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?
policy was returned within the free look period, premium will be fully refunded
a policy owner is able to choose the frequency of premium payments through what policy feature
premium mode
All of these are considered sources of underwriting information about an applicant EXCEPT
rating services
Which of these Nonforfeiture Options continue a build-up of cash value?
reduced paid up
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called
reinstatement
which of these provisions require proof of insurability after a policy has labled
reinstatement
are a specialized branch of the insurance industry that insurers other insurance company's risk. *is an arrangement by which an insurance company transfers or sells a portion of the risk to a reinsurance company
reinsurers
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
a(n) ____ beneficiary may be changed by the policy owner without the consent of the beneficiary
revocable
which factors are taken into consideration when an insurance company determines the premium rate for a whole life policy on an applicant
risk classification
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
set up meeting with applicant to answer the questions
organized and incorporated under state law owned by stockholders who get a paid share of the company's profit through dividends. also referred to as a nonparticipating or non-par bc policy holder do not participate in paid dividends
stock insurance company
K is shopping for a permanent life insurance policy that will offer her the most protection per $. of annual premium. which of these policies best fits her needs?
straight life
a(n) _____ rider may be used to include coverage for children under their parents life insurance policy
term
J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?
the gross premium is higher on a monthly payment mode as compared to being paid annually
a policy of adhesion can only be modified by whom
the insurance company
under a graded premium whole life policy
the premium increases each year during the early years of the contract and remains the same after that time
a level premium indicates
the premium is fixed for the entire duration of the contract
the advantage of reinstating an original life policy is
the premiums are based on a younger age
the common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which is true?
this clause provides the payment of proceeds to the insured estate
The reason for backdating a policy is
to obtain a premium rate based on an earlier age
the role of insurance is to
transfer the risk of financial loss from an individual or business to an insurance company
in an insurance contract the insurer is the only party who makes a legally enforceable promise what kind of contract is this
unilateral
life and health insurance policies are
unilateral contracts
When is the face amount paid under a Joint Life and Survivor policy?
upon death of the last insured
A(n) ________ life policy combines investment choices with a form of term coverage
variable universal
if a 10 year term life policy contains a renewability in provision, the policy will renew
w/o evidence of insurability
a life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached
waiver of premium
The part of a life insurance policy guaranteed to be true is called a(n)
warranty
which is considered a statement that is assured to be true in every respect
warranty
a $20,000 life insurance policy applications is completed, however the producer does not collect the initial premium. at what point does the coverage go into effect
when the applicant receives the policy and pays the initial premium