ExamFx Life practice exam

In North Carolina , the commissioner serves a term of how many years? A. 1 year B. 2 years C. 4 years D. 6 years

C. 4 years

If a licensee is convicted of a criminal violation, the licensee's insurance license is A. automatically revoked B. not affected C. suspended after a hearing D. automatically suspended

D. automatically suspended

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? A. it will remain the same for the new 5-year term B. it will decrease for the new 5-year term since the insured is now a lesser risk to the company C. it will increase each year during the next 5 years as the face amount increases each year D. it will increase because the insured will be 5 years older than when the policy was originally purchased

D. it will increase because the insured will be 5 years older than when the policy was originally purchased

If a policy allows a policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A. guaranteed insurability rider B. paid-up additions option C. cost of living provision D. nonforfeiture option

A. guaranteed insurability rider

The type of term insurance that provides increasing death benefits as the insured ages is called A. increasing term B. flexible term C. interest-sensitive D. age-sensitive

A. increasing term

Which of the following is NOT true about a joint and survivor annuity benefit option? A. payments stop after the first death among the annuitants B. a period certain option may be available C. the option guarantees income for two or more recipients D. the surviving annuitant may receive reduced payments

A. payments stop after the first death among the annuitants

Which special policy combines decreasing insurance with whole life insurance to provide the insured's family with a monthly income upon the death of the insured , while maintaining permanent coverage until the end of the income payments? A. survivorship life B. family income policy C. Family protection policy D. family maintenance policy

B. family income policy

In life insurance policies, cash value increases A. are only taxed when the owner reaches age of 65 B. grow tax deferred C. are income taxable immediately D. are taxed annually

B. grow tax deferred

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A. those who have no history of claims B. those who have been insured under the plan for at least 5 years C. those who have worked in the company for at least 3 years D. those who have dependents

B. those who have been insured under the plan for at least 5 years

What kind of policy allows withdrawals or partial surrenders? A. variable whole life B. universal life C. 20-pay life D. term life

B. universal life

Which of the following life insurance policies allow a policyowner to take out a loan from the policy's cash value? A. decreasing term life B. variable universal life C. increasing term life D. credit term life

B. variable universal life

The premium of a survivorship policy compared with that of a joint life policy would be A. as high B. half the amount C. lower D. higher

C. lower

Which nonforfeiture option provides coverage for the longest period of time? A. paid-up option B. accumulated at interest C. reduced paid-up D. extended term

C. reduced paid-up

What is the primary purpose of a 401(k) plan? A. to receive dividends over a certain period B. life insurance distribution C. retirement D. education funds

C. retirement

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used? A. life income B. fixed period C. fixed amount D. lump sum

D. lump sum

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? A. 401(k) plan B. tax-sheltered account plan C. HR 10 plan

D. profit sharing plan

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A. the primary beneficiary will receive the death benefit and secondary beneficiaries will share the interest payments B. the beneficiary will only receive payments of the interest earned on the death benefit C. the beneficiary must pay interest to the insurer D. the beneficiary will receive the lump sum, plus interest

the beneficiary will only receive payments of the interest earned on the death benefit

Failure to notify the commissioner of changes to a licensee's address within 10 business days may result in an administrative fee of A. $50 B. $75 C. $100 D. $500

A. $50

Insurance companies are required to provide proof of loss forms to the claimant within how many days after the receipt of notice of loss? A. 15 B. 30 C. 31 D. 45

A. 15

What would be the advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? A. it determines who receives policy benefits if the primary is deceased B. it allows the creditors to receive payment out of the proceeds C. it ensures the policy proceeds will be split between the primary and the contingent beneficiary in a life insurance policy D. it requires that someone who is not the primary beneficiary handles the estate

A. it determines who receives policy benefits if the primary is deceased

What is the main purpose of the Life and Health Insurance Guaranty Association? A. protect the consumers against insolvent insurers B. schedule claims hearings C. resolve customer complaints D. propose new laws and regulations

A. protect the consumers against insolvent insurers

A 27-year old professional has limited income and can only budget for $15 a month for life insurance. Which of the following life insurance policy would provide him with the largest face amount for that of premium? A. term insurance B. universal life C. ordinary whole life D. 30-pay life insurance

A. term insurance

Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is A. unfair trade practice B. mandatory C. only required in some lines of insurance D. permitted

A. unfair trade practice

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? A. variable B. term C. securities D. stock

A. variable

The commissioner reports any violations of insurance laws and regulations to A. NAIC B. attorney general C. guaranty association D. governor

B. attorney general

Which of the following is an eligibility requirement for all Social Security Disability Income benefits? A. be at least years of age B. have attained fully insured status C. be disabled for at least 1 year D. have permanent kidney failure

B. have attained fully insured status

All of the following statements are true regarding installments for a fixed period annuity settlement option except A. an insurer determines the amount of each payment B. it is a life contingency option C. it will pay the benefit only for a designated period of time D. the payments are not guaranteed for life

B. it is a life contingency option

In Modified Life policies, what happens to the premium? A. it varies at the beginning, but levels out by the end of the third year B. it is level at the beginning and increases after the first few years C. it always remains level D. it is higher during the first policy years

B. it is level at the beginning and increases after the first few years

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? A. rebating B. twisting C. switching D. false advertising

B. twisting

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called A. decreasing whole life B. multiple protection insurance C. credit life D. credit health

C. credit life

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A. stocks, securities, or bonds B. an offer to share in commissions generated by the sale C. dividends from a mutual insurer D. an offer of employment

C. dividends from a mutual insurer

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A. most term policies contain a convertibility option B. upon conversion, the premium for the permanent policy will be based upon attained age C. upon conversion, the death benefit of the permanent policy will be reduced 50% D. evidence of insurability is not required

C. upon conversion, the death benefit of the permanent policy will be reduced 50%

What is the name for the owner of a life insurance policy who enters into a viatical settlement contract ? A. viatical settlement option B. viatical settlement purchaser C. viator D. policyowner

C. viator

Which of the following is NOT true regarding an annuitant? A. the annuitant's life expectancy is taken into consideration for the annuity B. the annuitant receives the annuity benefits C. the annuitant must be a natural person D. the annuitant cannot be the same person as the annuity owner

D. the annuitant cannot be the same person as the annuity owner

which of the following would qualify as a competent party in an insurance contract? A. an applicant is intoxicated at the time of the application B. the applicant is a 12-year-old student C. the applicant is under the influence of a mind-impairing medication at the time of application D. the applicant has a prior felony conviction

D. the applicant has a prior felony conviction

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A. insured B. policyowner C. the insured and the policyowner D. beneficiary

B. policyowner

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A. disclosure rule B. replacement rule C. reinstatement rule D. conversion rule

B. replacement rule

A man decides to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finish college. He discovered his policy A. decreased death benefit at each renewal B. required a premium increase each renewal C. built cash value D. required proof of insurability every year

B. required a premium increase each renewal

What is the advantage of reinstating a policy instead of applying for a new one? A. the cash values have gained interest while the policy was lapsed B. the original age is used for premium determination C. proof of insurability is not required D. the face amount can be increased

B. the original age is used for premium determination

When an insurer requires written proof of loss after the notice of such a loss has been given by the insured or beneficiary, the company must A. submit the loss claim to underwriting for premium review and resolution B. request a police report from the Department of Motor Vehicles C. furnish a blank form to be used for that purpose D. document the request for further investigation

C. furnish a blank form to be used for that purpose

Which of the following statements is TRUE concerning the Accidental Death Rider? A. the insured is only available insured over the age of 65 B. it is only available in group insurance C. it will pay double or triple the face amount D. it is also know as the triple indemnity rider

C. it will pay double or triple the face amount

Annuities can be used to fund which of the following? A. group life insurance B. estate creation C. retirement plans D. variable life insurance

C. retirement plans

All of the following are true regarding a decreasing term policy EXCEPT A. the contract pays only in the event of death during the term and there is no cash value B. the face amount steadily declines throughout the duration of the contract C. the payable premium amount steadily declines throughout the duration of the contract D. the death benefit is $0 at the end of the policy term

C. the payable premium amount steadily declines throughout the duration of the contract

If a insured continually uses the automatic premium loan option to pay the policy premium, A. the cash value will continue to increase B. the insurer will increase the premium amount C. the policy will terminate when the cash value is reduced to nothing D. the face amount of the policy will be reduced by the automatic premium loan amount

C. the policy will terminate when the cash value is reduced to nothing

Which of the following is NOT a characteristic of variable annuities? A. the contract owner bears the investment risk B. benefits are dependent on the performance of securities C. the cash value is adjusted for inflation D. they offer guaranteed stock performance

D. they offer guaranteed stock performance

Under an extended term nonforfeiture option, the policy cash value is converted to A. a lower face amount than the whole life policy B. a higher face amount than the whole life policy C. the same face amount as in the whole life policy D. the face amount equal to the cash value

C. the same face amount as in the whole life policy

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? A. term life B. limited pay C. universal life D. adjustable life

C. universal life