GA Life Insurance Exam

The date of the medical exam

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit a medical exam. If the policy is issued, what would the effective date be?

Refund the premiums paid only; no death benefit if insured commits suicide within 2 years of policy purchase

An insured committed suicide one year after his policy was issued. What will the insurer do?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean for the beneficiaries?

$20k

An insured owns a $50k whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20k. What would the face amount of the new term policy be?

Mutual

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did she purchase the policy?

Inspection report

An underwriter may obtain information on an applicant's hobbies, financial status, be habits by ordering a ___________

Adjusted each year to insured's attained age

Annually Renewable term policies' premiums are...

Equity indexed

Between equity indexed or fixed, which one of the two has a higher interest rate?

purchased with either lump sum or periodic payments; benefits start sometimes after 1 year within the date of purchase

Describe a deferred income payment under an annuity

multiple payments; the principal is created over time (used for deferred annuity only)

Describe a periodic (flexible) premium payment in an annuity

one lump sum payment; the principal is created immediately (both immediate and deferred)

Describe a single premium payment in an annuity

purchased with a single premium; income payments start within 12 months from the date of purchase

Describe an immediate income payment under an annuity

Fixed rate of return; general account

Describe the cash value in adjustable life

Guaranteed at a minimum level; general account

Describe the cash value in universal life

Not guaranteed; separate account

Describe the cash value in variable life

Coverage gradually decreases at a predetermined time

Describe the coverage under decreasing term

Flexible; set by policy owner with proof of insurability

Describe the face amount in adjustable life

Can increase or decrease to a stated minimum

Describe the face amount in variable life

Premiums paid until a certain time; coverage in effect until age 100

Describe the premium payments in limited payment whole life

Premiums paid in one lump sum; coverage continues to age 100

Describe the premium payments in single premium whole life

Can be increased or decreased by policy owners

Describe the premiums in adjustable life

Flexible; minimum or target

Describe the premiums in universal life

Fixed (if whole life); flexible (if universal life)

Describe the premiums in variable life

They increase due to attained age

Describe the premiums under Annually renewable term

Through and investigation and interviews with associates, friends and neighbors of the consumer

How is information from investigative consumer reports obtained?

Based on the joint average age of the insured

How is the premium determined in joint life and survivorship life?

5 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

The balance of the loan will be taken out of the full death benefit

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

To purchase a single premium policy for a reduced face amount.

If a whole life policy lapses or is surrendered prior to maturity, what can the cash value be used for?

Premium

The more frequently the premium is paid, the higher the _______

True

True or false: Annually renewable term renews each year without proof of insurability

False

True or false: Illustrations must be part of a contract.

True

True or false: In an equity indexed annuity, the insurance company keeps a percentage of the return.

False

True or false: In variable products, the premiums are invested in the insurer's general account.

False - the premium can be flexible

True or false: You have a fixed premium in universal life

True

True or false: an agent may not erase an answer on the application and put a correct answer

False

True or false: term policies develop a cash amount.

Cash surrender

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner?

Level fixed

Variable whole life insurance is based on what type of premium?

Basic policy, level death benefit, insured pays premium for life or until age 100

What are the characteristics of ordinary whole life?

Agreement, consideration, competent parties and legal purpose

What are the elements of a legal contract?

Pure protection, lasts for specific term, no cash value

What are the general characteristics of term life?

Permanent insurance with renewable term protection component

What are the key features in universal life?

Can be term or whole; can convert from one to the other

What are the key features of adjustable life?

Permanent protection, guaranteed face amount, guaranteed premium, guaranteed cash value, guaranteed elements until death or age 100, level premium, cash value and other living benefits

What are the main characteristics of whole life?

guaranteed, fixed payment amount, premiums in general account

What are the main features of a fixed annuity?

payment not guaranteed, premiums in separate account, and invested in stocks and bonds

What are the main features of a variable annuity?

interest rate tied to an index, earn higher rate than fixed, not as risky as variable or mutual fund

What are the main features of an indexed annuity?

Mortality, interest, and expense

What are the three factors in premium determination?

Level, increasing and decreasing

What are the three kinds of death benefit under term life?

Standard, substandard, preferred

What are the three risk classifications?

Fixed, variable, and indexed

What are the three types of annuities?

Straight life or guaranteed minimum

What are the two benefit payment options under annuities?

Insurance and cash account

What are the two components of a universal policy?

Option A: level death benefit / Option B: increasing death benefit

What are the two death benefit options in universal life?

Single premium and periodic premiums

What are the two options for premium payments under annuities?

Fixed and variable

What are the two underlying investments under an annuity?

Renewable and convertible

What are two main features of a term policy?

General information and medical information

What are two parts that make up an application?

When the need for protection declines from year to year

What circumstance is best for decreasing term?

The agent must obtain the premium and a statement of continued good health at the time of the policy delivery

What do you do if the premium isn't paid with the application?

Return the application to the applicant for completion

What do you do when an application is incomplete?

Face amount

What does "level" refer to in level term insurance?

FINRA registration, securities license, and a life insurance license

What does an agent need in order to sell variable life insurance?

Right to convert a term policy to permanent without evidence of insurability

What does it mean when a policy is convertible?

Able to renew policy without proof of insurability

What does it mean when a policy is renewable?

How often a premium is paid

What does mode mean?

Protects consumers against circulation of inaccurate or obsolete information

What does the Fair Credit Reporting Act protect?

It provides that at death prior to any given age, not only is the original face amount payable, but also premiums previously paid are payable to the beneficiary

What does the return of premium rider mean when added to a whole life policy?

Federal government, The SEC, The Insurance department

What entities regulate variable life policies?

Application, consumer reports, MIB, and risk classification

What goes into company underwriting?

Application completed and signed, agent's report, premiums with application and conditional receipt

What goes into the field underwriting by the agent?

payments are made into the annuity

What happens during the accumulation phase of an annuity?

payments are made to the annuitant from the annuity

What happens during the annuitization phase of an annuity?

Death benefit and premium

What is "level" under a level premium term?

Permanent insurance

What is a key feature in variable life?

Only one party is legally bound to do anything

What is a unilateral contract?

One party prepares the contract, the other party must accept it as is

What is an adhesion contract?

An exchange of unequal amounts

What is an aleatory contract?

Insuring one's own life, family member, or business partner

What is insurable interest?

$2,500

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

It is intended to provide coverage on a date prior to the policy issue

What is the purpose of a conditional receipt?

Agent's observation about the applicant that can assist in underwriting

What is the purpose of an agent's report?

Single life or Multiple life (joint/joint survivor)

What options do you have for how many lives can be covered under an annuity?

Immediate or deferred

What two options are there for when payment begins under annuities?

Increasing Term

What type of insurance would be used for a return of premium rider?

Flexible

What type of premium do both universal life and variable life policies have?

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

What will happen if an insured continually uses the automatic premium loan option to pay the policy premium?

Term rider

When attached to a permanent life insurance policy, what allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

When the policy is signed and a check is given to the agent

When is the earliest a policy can go into effect?

At the time of application

When must insurable interest exit?

Fixed and equity indexed

Which annuities have guaranteed minimum interest rates?

Equity indexes annuities

Which annuity invests on an aggressive basis in order to yield higher returns?

Equity indexed

Which annuity is the less risky option?

Joint life

Which combination plan receives the death benefit upon the first death only?

Survivorship Life

Which combination plan receives the death benefit upon the last death only?

Standard

Which risk represents the majority of people?

Variable Universal Life Insurance

Which type of policy allows for a flexible premium and a variable investment component?

Annuitant: insured (must be a natural person) / Beneficiary: will receive any amount contributed to annuity / Owner: has all rights to policy (can be corporation or trust)

Who are the three parties involved in an annuity?

Limited Pay Whole Life

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would the right policy be for this client?