WFG

A $10,000 Life insurance policy with a Triple Indemnity clause has been in force for three years. The insured is injured in a train wreck and dies in a hospital five months later. The death proceeds payable under the policy would be:

$10,000

Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment.The maximum amount that Mr. Metz will be able to convert is which of the following? A$1,500 B$2,000 C$500 D$1,000

$2,000

The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is: A$200,000 B$ -0- C$100,000 D$2,000

$2,000 (one year exclusion) If an insured dies by suicide before the suicide exclusion has passed by, there is no coverage. However, the insurance company will refund the premium paid to the beneficiary.

A customer buys a $25,000 Life insurance policy with a $25,000 Accidental Death Benefit rider attached. If he dies of cancer, how much will his policy pay?

$25,000

John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: 60 B30 C100 D70

100

At age 30, Tom Morris wishes to purchase a Whole Life policy. His producer explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response? A"Straight Life will accumulate cash value faster." B"20-Pay Life will accumulate cash value faster." C"The rate of cash-value accumulation depends on the profitability of the insurance company." D"Both plans will accumulate cash value at the same rate."

20- Pay life will accumulate cash value faster

Which of the following is an example of a Limited-Pay Life policy:

20-Pay Life

Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage? A31 B21 C15 D28

31

Traditional IRAs have a premature distribution penalty for distributions taken prior to age: A 59 1/2 B 70 1/2 C55 D65

59 1/2

Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year-amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay? AA $50,000 Whole Life policy BA $50,000 Decreasing Term policy for 20 years CA $50,000 Level Term policy for 20 years DA $50,000 20 Pay Life policy

A $50,000 Decreasing Term policy for 20 years

An insurable interest must exist when: AA life insurance policy is issued BCash values are borrowed CA policy is surrendered for cash DDeath proceeds become payable

A life insurance policy is issued

A producer submits a completed and signed application to the underwriter along with the first premium check. After checking the results of the physical exam, the underwriter issues a 'rated' policy. Which of the following will not be required:

A new completed and signed application

An insurance company will grant an advance from the cash value of a Life insurance policy when the policy owner requests which of the following?

A policy loan

A business owner with a fluctuating income who wants a life insurance policy that can be changed to suit economic conditions should buy: AModified Whole Life BInterest-sensitive Whole Life CVariable Life DAdjustable Life

Adjustable Life

You have a client that is a real estate agent. Which of the following types of permanent protection is best for this type of client?

Adjustable life

Which of the following contracts requires that a series of benefit payments be made at specified intervals? A20-Pay Life BModified Whole Life CAnnuity DOrdinary Whole Life

Annuity

Insurable interest must exist:

At the time of application

A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is:

Automatic Premium Loan

The provision in a Life insurance policy that provides protection against unintentional policy lapse is known as the:

Automatic Premium Loan provision

A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a: ADeferred Compensation plan BBuy and Sell Agreement CKey Employee Life policy DSurviving Shareholder plan

Buy and Sell Agreement

All of the following are considered to be owner's rights under a Life insurance policy, EXCEPT:

Changing an irrevocable beneficiary

If an applicant for a Life insurance policy is found to be a substandard risk, the insurance company is most likely to:

Charge an extra premium

To add coverage for a child to your Whole Life policy you would purchase which of these riders?

Child Term Rider

All of the following are a part of a Life insurance policy, EXCEPT the:

Conditional Receipt

A prospect's statements made in the application for insurance constitute a part of which of the following?

Consideration Clause

When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group: AParticipatory BContributory CNonparticipatory DNoncontributory

Contributory

A producer completes an application for Life insurance and sends it to the underwriter who approves it and issues the policy. When is coverage effective:

Correct Answer: When the producer delivers the policy and picks up the premium

A client buys a Life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will:

Deny the claim, but refund the premium

The life insurance policy provision that prevents the insurer from modifying a policy after it has been issued is the:

Entire Contract Clause

Which federal law governs consumer investigative reports:

Fair Credit Reporting Act

Which of these is a rider that would ensure you can purchase additional insurance coverage, at specified ages, regardless of health?

Guaranteed Insurability Rider

If an existing client of a producer wants to buy another Life insurance policy, the producer should:

Have the customer come in and complete and sign a new application

Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Tim Watson II. Mike Carson III. Deborah Carson

I and II

An Annuity is designed to provide which of the following financial features? I. The liquidation of principal and interest II. Favorable tax treatment III. The creation of an estate

I and II Life insurance proceeds create an estate. Annuities are designed to liquidate an estate over a period of time with a high degree of safety. They are the opposite of Life insurance, in that you do not have to be in good health to buy one and they pay you as long as you live. All annuities are for the lifetime of the annuitant; they do not have a death benefit. You must have a life insurance license to sell Fixed Annuities, which have a guaranteed minimum rate of return. To sell Variable Annuities, you need both a life insurance license and a FINRA (NASD) securities licenses. Variable Annuities are backed by stocks. Interest, paid by insurance companies on Annuities, accumulates on a tax-deferred basis and is not taxable until the money is withdrawn.

Which of the following statements is true about exercising a Guaranteed Insurability option: I. The new insurance is available at the original issue age rate II. Evidence of insurability is not required III. The insured can exercise the option at any time after the age of 21 IV. The maximum purchase is specified in the contract

II and IV

Once completed and signed by the applicant, a producer may change an application:

If the applicant initials the change

Which of the following statements about the Misstatement of Age provision in a Life insurance policy is true?

If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable

A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a: AVariable Annuity BDeferred Annuity CImmediate Annuity DEquity Indexed Annuity

Immediate Annuity An immediate annuity has no accumulation period. For example, if Aunt Mary died and left you 1 million dollars, you could buy an immediate annuity and start to receive monthly payments right away for as long as you may live. On a deferred annuity, you would pay money in now, but take it out later, perhaps at retirement. Immediate annuities are often used to fund state lottery payouts.

The Life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the:

Incontestability clause

When someone other than the insured is the owner of a Life insurance policy, the owner may do all of the following without the insured's consent, EXCEPT: ASurrender the policy for its cash value BIncrease the amount of insurance CChange the beneficiary DMake a policy loan

Increase the amount of insurance As owner of the policy, this "third party" has the right to control the policy, including the beneficiary designation, taking a loan, or even surrendering the policy for cash. However, under the Doctrine of Insurable Interest, the policy owner would need the written consent of the insured to increase the policy limits. Remember, Life insurance policy limits may not usually be increased once the policy is in force, unless the policy contains the Guaranteed Insurability Rider (GIR).

The clause that states the insurer's promise to pay the policy benefits in accordance with the contract's provisions is the:

Insuring Clause

A beneficiary designation that prevents the policy owner from making certain changes in the policy is:

Irrevocable

Most Term Life insurance: AIs convertible to permanent Whole Life without a physical exam BIs renewable to age 100 CHas a guaranteed cash value DIs renewable with evidence of insurability

Is convertible to permanent Whole Life without a physical exam

In the formation of a Life insurance contract, the special significance of a Conditional Receipt is that it:

Is intended to provide coverage on a date earlier than the date of the issuance of the policy

Which of the following is true about the Misstatement of Age provision:

It allows the insurer to adjust benefits

Which of the following is true about the Insuring Clause?

It contains the insurer's enforceable promise to pay covered claims

Which of the following is true when the insurer issues a 'rated' policy:

It is considered to be a counteroffer

Which of the following statements about the Reinstatement provision is true?

It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated

Which of the following statements is true about a policy assignment? AIt is the same as a beneficiary designation BIt transfers the owner's rights under the policy to the extent expressed in the assignment form CIt permits the beneficiary to designate the person or persons to receive the benefits DIt is valid during the insured's lifetime only, because the death benefit is payable to the named beneficiary

It transfers the owner's rights under the policy to the extent expressed in the assignment form

Which of the following Settlement Options might provide payments that exceed the proceeds of the policy and the interest earned?

Life Annuity

Which of the following is an example of a Limited-Pay Life policy? AWhole Life BLife Paid-Up at Age 65 CUniversal life DRenewable Term to Age 70

Life Paid-Up at Age 65

On Life insurance, the purpose of the Entire Contract Clause is to:

Limit the policy to the contract plus the application, if attached

On May 8th a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approved the application on May 14th and issued the policy on May 15th. The producer delivered the policy on May 26th and collected the first premium. The coverage became effective on:

May 26th

With proper notice and authorization, insurers may report underwriting information that an applicant lists on their application for Life insurance to the:

Medical Information Bureau (MIB)

A Life insurance policy of which the cash value is over-funded according to IRS rules is known as: AA Modified Endowment Contract BA Universal Life Contract CA Variable Life Contract DA Variable/Universal Life Contract

Modified Endowment Contract

A client applied for Life insurance on October 1st. The application was approved and the policy was issued on October 10th. It was delivered to the customer on October 18th. When did the Free Look start?

October 18th

Premature distributions from a Traditional IRA prior to age 59 1/2 are subject to: ACapital gains tax plus a 6% penalty BA 50% IRS penalty COrdinary income tax plus a 10% penalty DOrdinary income tax

Ordinary income tax plus a 10% penalty

A client buys a $50,000 Whole Life policy on himself and wants to add $25,000 in Term coverage for his spouse. He should add which of the following riders to his policy?

Other Insured Rider

Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add?

Other Insured Rider

A parent who wishes to have complete control of their son's life insurance policy until the son reaches age 25 can do so through the use of which of the following? AOwnership provision BConsideration Clause CInsuring Clause DPayor provision

Ownership provision

If the insured understated his age and the error is discovered after the insured's death, the insurance company will:

Pay the amount that the premium paid would have purchased at the correct age

If the insured dies 5 years after he bought a Life insurance policy and the insurer determines that there was material misrepresentation on his application, they will:

Pay the claim

Grandma owns a policy on her grandchild. Which rider would kick in if Grandma should die tomorrow?

Payor Benefit Rider

In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments?

Payor Benefit Rider

Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the: APolicy owner's children BPolicy owner's estate CPolicy owner's wife DPolicy owner

Policy owner....This is an example of Key Person insurance. The beneficiary is Mr. Burk, the policy owner. His wife, the key person, is the insured. Mr. Burk apparently feels that if his wife should die, he would need the funds from the policy proceeds to retrain someone capable of assuming her business duties. This type of policy is often written with the business as the beneficiary as well.

An insurable interest must exist when:

Policy ownership is transferred

Which of the following statements is true about the premium payment schedule for a Whole Life policy? APremiums are payable for a designated period of time only, after which coverage is no longer provided BOne premium, in the amount of the insured's choice, is payable at the time of application, and the balance of the premiums is deducted from the face amount of the policy at the time of the insured's death CPremiums are payable until the insured's retirement only, after which coverage is continued automatically until the insured's death DPremiums are payable throughout the insured's lifetime, and coverage continues until the insured's death

Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death

The purpose of the Grace Period is to:

Protect the policy owner against unintentional lapse

Which of the following is a Non-forfeiture Option that provides continuing cash value buildup?

Reduced Paid-Up

A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should:

Refuse to deliver the policy or to accept any premium offered

What Life insurance policy provision applies if a policy lapsed last year and the insured wants it back?

Reinstatement

Statements made by an applicant for a Life insurance policy that are supposed to be true are referred to as:

Representations

Margaret May wants to name her husband as the beneficiary of her Life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as:

Revocable beneficiary

An insured's premium for Life insurance is based mainly upon their:

Risk classification

Which of the following is not considered to be a 'qualified' plan? AIRA BSplit Dollar CKeogh D403b Tax Sheltered Annuity

Split Dollar

Which of the following statements about a typical Suicide clause in a Life insurance policy is true?

Suicide is excluded for a specific period of years and covered thereafter

A life insurance policy that covers two parties, but only pays when the last party dies is known as: Joint Life BContingent Life CSurvivorship Life DOther insured Life

Survivorship Life

An insurance producer selling a Variable Annuity whose cash value depends on the performance of an underlying investment account must be registered with:

The Financial Industry Regulatory Authority (FINRA, formerly the NASD)

In order to sell variable life insurance you must be registered with which of the following? AThe SEC BThe State CThe NASD DThe NYSE

The NASD

An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation, EXCEPT:

The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report

Which of the following is NOT correct regarding Ordinary Whole Life policies? Coverage lasts for your own life BOrdinary Whole Life is a type of permanent insurance CThe cash value grows more quickly in the beginning years of the policy DThe premiums payments are owed annually until you die or reach age 100

The cash value grows more quickly in the beginning years of the policy

When giving a client a conditional receipt, which of the following is true?

The coverage will begin at earliest as of the date of application or when the client passes a physical, whichever is later

An insured died during the Grace Period of her Life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary?

The face amount of the policy less any earned premiums

If an application for Life insurance is not complete:

The insurer will return it to the producer

A client with a participating Life insurance policy receives both interest and dividends. What are the tax implications? AThe dividends are taxable, but the interest isn't BNeither are taxable CThe interest is taxable, but the dividends are not DBoth are taxable as ordinary income

The interest is taxable, but the dividends are not Participating Life insurance policies sold by mutual insurers often pay dividends, although they may not be guaranteed. If a dividend is declared, the policy owner may choose from several dividend options. Although cash dividends received are not taxable, if the policy owner elects to leave the dividend with the insurer to earn interest, the interest paid on the dividend is taxable as ordinary income.

The contingent beneficiary will receive policy proceeds when:

The primary beneficiary pre-deceases the insured

Dividend projections may be included in a proposal for Life insurance when which of the following is true?

There is a clear statement that payment of future dividends is not guaranteed

If a person wants to invest a lump sum in an annuity that may appreciate along with market and economic conditions, they should buy a: Deferred Annuity BVariable Annuity CFixed Annuity DFlexible premium Annuity

Variable Annuity

If a client wants cash value life insurance with a flexible premium and an adjustable death benefit that will allow the policy owner a choice of various cash value investment options, he should buy: AUniversal Life BVariable/Universal Life CAdjustable Life DVariable Life

Variable/Universal Life Variable Life has a fixed premium and a minimum guaranteed death benefit, but since it allows customers to self-direct their cash value into several non-guaranteed sub-accounts, it is considered to be a securities product which requires the producer to have both a state life insurance license and a federal securities license. Although Universal Life (also known as 'Interest-Sensitive' Whole Life) is not considered to be a security, it does offer 'current' rates of return, flexible premiums and adjustable death benefits. If you combine the two products, you have Variable/Universal Life, which offers the best features of both contracts.

The Life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness is:

Waiver of Premium

Life insurance becomes effective when:

When the conditions in the conditional receipt are satisfied

The time period covered by the Free Look provision of a Life insurance contract starts:

When the insured receives the contract and makes the first premium payment, if needed

A producer sends a completed and signed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When would coverage start?

When the producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health

Dividend projections may be included in a proposal for Life insurance:

When there is a clear statement that they are not guaranteed

Which of the following individual policy conversions is usually permitted without any evidence of insurability?

conversion from term to whole life

Which of the following statements about a Renewable Term policy is true? It is renewable at the option of the insured, with proof of insurability BIt is renewable at the option of the insurance company, with proof of insurability CIt is renewable at the option of the insured DIt is renewable at the option of the insurance company

it is renewable at the option of the insured If most Term policies (except Decreasing Term) were not renewable, no one would buy them. This option allows the insured to renew the policy for another "term" without proving good health. Of course, the insured does not have to renew, it is at his option. Annual Renewable Term (ART) is a good example. It must be renewed every year. The rate goes up as the insured gets older, but no proof of good health is required. However, most Term policies are renewable only up to a certain age, usually age 60 or 65, depending on the company.

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? AAnnuity BWhole Life CLimited Pay policy DTerm

term

A life insurance policy that combines term insurance protection, a flexible premium, and cash value accumulation is:

universal life

A life insurance policy whose cash value will fluctuate depending upon the performance of a separate account is:

variable life

Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation? ATerm BLimited-Pay Life CAnnuity DWhole Life

whole life