Exam C 1-25

Cliff, who is 44 years old, falls while mountain climbing on vacation. He is left paralyzed. After a year, doctors feel he will never recover from his injuries. Which of the following programs will he be able to collect disability income?

Social Security

The Social Security system has four main benefit programs. Disability, Retirement, & Medicare are three of them. The fourth program is:

Survivors

Which of the following is a true statement about contibutory group life insurance?

Participating employees will contribute towards the payment of premiums.

An insurer owened by the parent company to provide insurance to cover the parent compan's loss exposure only is called a :

Captive insurer.

In which of the following qualified plans are the benefits linked to the employee's number of years of service and/or the amount of compensation they earned?

Defined benefit plan.

Which of the following best describes the reduced paid-up non-forfeiture option?

The insured exchanges the current whole life policy for another whole life policy with a lower death benefit. A reduced premium is charged. No additional premium is required.

A variable annuity applicant invests his premiums immediately into the stock portfolio chosen for his annuity. He then returns his annuity during the free look period when the stock market drops significantly. What will the client receive?

The policy account value on the date the returned policy is received by the insurer.

The insured buys a non-participatin whole life policy. Many years later the insured is disabled and cannot afford the premiums anymore. She exercises the Extended Term Non-forfeiture option. Which statement is not true?

The policy will accure cash value, but with a lower death benefit coverage.

Group members that are covered by group life insurance policies are required to be issued which of the following?

A Certificate of insurance.

All of the following are true about the Social Security System exept:

The system is fully funded

Which department or division of an insurance company is responsible for the selection, evaluation, and distribution of risks?

Underwriting

Which of the following benefits is never included in a LTC policy?

Hospice Acute Care.

Which of the following are members of and financialy supports the Medical Information Bureau?

Insurance companies.

All of the following are not true about the Social Security program, except:

It is mandatory for most workers to pay FICA taxes.

Keith has pruchased a variable annuity. He has not waived his rights during the free-look period. Where will the premiums be initially invested during the free-look period?

A fixed income or money market account.

Which statement about federa income taxation of life insurance settlement payments is true?

A lump sum settlement is paid out tax free when paid to a natural person.

A representation in an insurance contract qualifies as:

An implied warranty.

Agent Bill has decided to use a new time management strategy while making sales presentations. To save time he decides to not answer a client's question the first time it is asked. Instead he answers them only if they are asked a second time. This way he can make it to his next appointment on time. Professional insurance organizations would consider this to be:

An unethical practice

All of the following are true regarding the taxation of life insurance products, except:

Annuity death benefits are paid out totally tax free.

Concerning federal tax treatment of life insurance payments, which of the following statements is/are correct?

Death benefits paid to the beneficiary are generally tax exempt.

When determining life insurance premium rates an insurer may not legally use which of the following?

Nationality.

When policy illustrations are used with senior citizen clients in California, which include non-guaranteed elements, a statement to that effect must be included with the illustration. Which of the following is true regarding this statement?

Non-guaranteed elements must be printed in bold type.

What happens to the insurance license of a corporation when the corporation ceases to exist?

It terminates

Which of the following best represents what the phrase "life insurance creates an immediate estate" means?

The face value of the policy is payable to the beneficiary upon the death of the insured.

In a group life insurance plan, unmarried children may be covered as eligible dependants untill they reach the age of:

age 21