9. Life Insurance Practice Exam

The "pay in" phase of the annuity is known as what period

B. Accumulation period

For an insurance contract, the principle of utmost good faith means

B. Each party relies upon the truthfulness of the other

An annuity in which investment growth is a dependent on the performance of an index such as the Standard and Poor's 500 is called an

B. Equity Indexed Annuity

The MIB is a nonprofit trade association that maintains

B. Medical information on applicants for life and health insurance

Which type of policy allows the insured to change the amount of the death benefit, the amount of premium, or the type of coverage as their needs change

D. Adjustable life

If it is determined that a violation of the insurance laws or regulations has occurred, the Insurance Department may issue a

A Cease and desist order

All other factors being equal, which of the following types of policies will accumulate cash value at the fastest rate

A. 20-pay life

The transfer of a possible financial loss yo another party refers to

A. Insurance

Which type of annuity settlement stops when the annuitant dies

A. Life income annuity

At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty

D. 59 1/2

How long does an employee have to convert group policy coverage to an individual policy without evidence of insurability

A. 31 days

The legal transfer of all or part of a policy owners rights, title or interest is all an

A. Assignment

Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the surviving partner to use the death benefit to purchase the deceased's business intrests

A. Buy-sell agreement

Each of the following is a typical characteristic of group life insurance EXCEPT

A. Evidence of insurability is usually required

A life insurance death benefit paid in a lump sum to a beneficiary is

A. Not subject to any taxes

An annuity that purchased with a lump-sum payment, and that begins income payments within one year is a

A. Single premium immediate annuity

If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered

A. The portion that exceeds the premiums paid is taxable

What is the purpose of the grace period in life insurance policies

A. To protect the policy owner against an unintentional lapse of the policy

What do employees covered under a group contract receive

B. Certificate of insurance

A life settlement option that pays out the death benefit incrementally, in a specified amount until all of the proceeds are exhausted, is called

B. Fixed-amount insteallments

Statements in the application for insurance that are believed to be true to the best of the applicant's knowledge are called

B. Representations

What statement is INCORRECT concerning policy dividends

B. The insurer may guarantee dividends

Which of the following retirement plans is a special tax favored plan for nonprofit, charitable, educational or religious groups

C. 403 (b) Tax-sheltered Annuity (TSAs)

Information collected from employment records, credit reporters or other sources that includes written or oral information concerning credit, character, reputation or habits is called a

C. Consumer report

At age 25, an individual purchased a deceasing term policy. What happens to the coverage and the premiums as the insured gets older

C. The coverage decreases but the premiums stay the same

London Mutual Life is an insurer incorporated in England, and is transacting business in this state. London Mutual would be considered what type of insurer

D. An alien insurer

Betty is the only beneficiary named on her husband Bob's policy which has a Common Disaster provision. They are in a car wreck, and Bob dies instantly. Betty lives for 29 days. Who will receive the death benefit

D. Bob's estate

An insurer mails an insurance policy to a new policy owner. When the insurer relinquishes control of the policy , the policy is considered

D. Delivered

Underwriting is the process of

D. Determining the company's risk regarding a proposed insured

If a misstatement of age is discovered during the processing of a life insurance claim, what will the insurer do

B. Adjusts the death benefit based on the premiums that were paid

The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called

C. Continuous premium (straight) life

A whole life product that covers two lives and provides for payment of the death benefit on the death of the first insured is called

D. Joint life

Any insurer who is NOT approved to do business in this state is considered

D. Nonadmitted

Money borrowed from the policy's cash value is

D. Not taxable

A producer represents the

C. Insurer

Which of the following types of annuities would be best suited for a retired couple who are seeking income for as long as either lives

D. Joint and survivor

The unfair trade practice of making an oral or written statement with the intent of injuring a person engaged in the insurance industry is called

C. Defamation

If an annuitant dies during the accumulation period, what will the beneficiary receive

C. Either the cash value or the premium paid, whichever is greater

The policy and a copy of the application, along with any riders and amendments, is called the

C. Entire contract

The premium payment mode can be best described as the

C. Frequency with which the policy premium will be paid

An annuity is considered fixed when it does all of the following EXCEPT

D. Provides the annuitant

When adverse selection exists among a group of risks assumed by an insurance company, it means that the insurance company is likely to

D. Suffer a disproportionate amount of losses

What does the payor benefit rider protect

C. Premium payments for a juvenile policy

What is the risk classification for those who are insurable, but have a higher than average risk

C. Substandard

To prevent people from profiting from a loss, insurers must be certain

D. Insurable interest exists

Which settlement option guarantees an income for 2 or more recipients for as long as they live

D. Joint and survivor

The receipt given to a life insurance applicant when the application is completed and the initial premium is received is called a

B. Conditional receipt

An agent delivers a policy to an insured, and 9 days later the insured returns the policy and wants a complete refund. What provision covers this circumstance

C. Free look

What type of permanent insurance allows the policy owner to pay for a policy in a specified period of time, and the policy owner does not have to make any more premium payments for life of the policy

C. Limited payment

What type of policy fails the 7-pay test

C. Modified endowment contract