Guaranteed practice questions

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?

Children's term rider

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will

Continue to increase.

How does insurance distribute the financial consequences of individual losses?

It transfers the risk to all persons insured.

Which of the following could be used to prove that a person applying for a license is in the country legally?

A bureau of Indian affairs affidavit of birth

An insured purchases a nonparticipating whole life policy. This policy includes all of the following EXCEPT

Dividends.

If an applicant submits the initial premium with an application, which action constitutes acceptance?

The underwriters approve the application.

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability.

When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true?

joint life has a lower premium than the total of the two individual policies

Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?

Use it for emergency expenses

Which of the following will NOT be included in the buyer's guide?

Specific information about the policy

With Adjustable Life, the owner can change all of the following EXCEPT

The insured.

If the annuitant dies before the annuity start date, which of the following is true?

The interest is taxable.

Which of the following is true regarding a joint life annuity?

The payments stop at the first death.

Who is the annuity owner?

The person who purchases the annuity

All of the following are true of annually renewable term insurance EXCEPT

Proof of insurability must be provided at each renewal.

What is the maximum license suspension period in this state?

12 months

Most domestic insurers must be examined at least once every

5 years.

An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement?

Level

Which of the following is NOT a component of an insurance policy premium?

Number of beneficiaries

Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT

Only accepting a small percentage of applicants.

Key person insurance can provide protection for all of the following economic losses to a business EXCEPT

Pay the death benefit to the estate of the insured.

Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)?

An MEC must always pass the 7-pay test.

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Being permanently disabled

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out.

Which distribution(s) from a Modified Endowment Contract would be taxable as income at the time received to the extent that the cash value of the contract immediately before the payment exceeds the investment in the contract?

Both partial cash surrender and policy loan

An adjustable life policy can assume the form of

Either term insurance or permanent insurance.

When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as

Estate conservation.

Which of the following best describes the difference between joint life and joint and survivor annuity payment options?

In joint life option, the benefits stop after the first death.

An insurance agent who represents multiple companies on a nonexclusive basis and earns commissions on personal sales is working in what kind of marketing system?

Independent Agency System

Which of the following terms refers to the nontaxable portion of each annuity benefit payment?

Cost base

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?

Insurance application

All of the following are true about Group Life insurance EXCEPT

The employer is the beneficiary.

Regarding a policy loan, which of the following is correct?

The insurer may charge interest on a policy loan up to 8% per year.

All of the following are true of the Survivorship Life policy EXCEPT

The premium is based on the age of each insured.