Life

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

An insurance company that is organized or chartered in a country other than the United States is defined as

alien

The automatic premium loan provision is designed to

avoid a policy lapse

A life insurance application must be signed by all of these EXCEPT

beneficiary

A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of

coercion

An insurance company may be judged guilty of false advertising if it

exaggerates its dividends in a newspaper advertisement

All of these are characteristics of an Adjustable Life policy EXCEPT

face amount can be adjusted using policy dividends

An insurance company that publishes misleading information about insurance coverage may be found guilty of

false advertising

Credit Life insurance is

issued in an amount not to exceed the amount of the loan

Under the Unfair Trade Practice law, agents may be found guilty of defamation if they make a false statement that is intended to

malign another insurance company

An agent who intentionally makes an untrue or incomplete statement in the course of an insurance transaction may be guilty of

misrepresentation

An agent who tells a client that dividends are guaranteed may be guilty of

misrepresentation

Which of these is NOT considered to be an element of an insurance contract?

negotiating

What type of policy would offer a 40-year old the quickest accumulation of cash value?

20-pay life

A Limited-Pay Life policy has

premium payments limited to a specified number of years

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine

probability of making timely premium payments

What does the insuring agreement in a Life insurance contract establish?

An insurer's basic promise

When must insurable interest be present in order for a life insurance policy to be valid?

At the time of application

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child

S is covered by a whole life policy. Which insurance product can cover his children?

Child term rider

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Employee

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

Which of the following is an important underwriting principle of group life insurance?

Everyone must be covered in the group

Term insurance has which of the following characteristics?

Expires at the end of the policy period

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)

Insuring agreement

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level term

Which of these is an element of a Single Premium annuity?

Lump sum payment

Which of these factors do NOT play a role in the underwriting of a life insurance policy?

Marital status

Which of the following would be considered an unfair claim practice?

Misrepresenting insurance policy provisions affecting a loss

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called

representations

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

"$0". The mother receives $0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary.

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?

$50,000 minus any outstanding policy loans

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

Which of the following is an example of defamation?

A brochure including an untrue statement regarding a competitor's ability to pay claims

Which of these is an element of a Variable Life policy?

A fixed, level premium

Which provision is NOT a requirement in a group life policy?

Accidental

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment provision

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

Which of these require an offer, acceptance, and consideration?

Contract

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

Which of the following is an unfair claims practice?

Failing to effectuate prompt, fair, and equitable settlements of claims

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

Which of the following would be considered misrepresentation by an insurance agent?

Stating that dividends are guaranteed

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten-Year Endowment

What type of life insurance are credit policies issued as?

Term

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Term life

What kind of life insurance product covers children under their parent's policy?

Term rider

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

A policy of adhesion can only be modified by whom?

The insurance company

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

How long does the coverage normally remain on a limited-pay life policy?

age 100

Which of the following is an example of rebating?

returning a portion of a premium as inducement to purchase insurance

A noncontributory group term life plan is characterized by

the entire cost of the plan is paid for by the employer

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed Deffered

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)

Immediate Annuity

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

Which of these is NOT a type of agent authority?

Principal

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be paid to K's estate if P dies within a specified time.

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?

Risk classification

Which parts of a life insurance policy are guaranteed to be true?

Warranty

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?

Whole life policy with other insured rider

To be eligible for Social Security disability benefits, an employee must be unable to perform

any occupation

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

A person who is insured within a group contract will be given a

certificate

The incontestable clause allows an insurer to

contest a claim during the contestable period

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be

converted to an individual permanent policy at an individual rate

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

daughter

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made?

irrevocable

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?

"Irrevocable". An irrevocable designation may not be changed without the written consent of the beneficiary.

A level premium indicates

"the premium is fixed for the entire duration of the contract"

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a

$25,000 individual whole life policy

One becomes eligible for Social Security disability benefits after having been disabled for

5

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

50,000

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

591/2

When does a life insurance contract become effective if the initial premium is not collected during the application process?

After application has been approved by the underwriters

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

Collateral assignment

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

Conversion

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?

Each partner must own a policy on the other partners

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Exclusion

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?

Fair Credit Reporting Act

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

ABC Life Insurance company's home office is located in Massachusetts and is incorporated in Massachusetts. In Georgia they are considered to be

Foreign

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

Annuity

Which type of contract liquidates an estate through recurrent payments?

Annuity

When an insurance application is taken by a producer, which of these statements is true?

Any changes made on the application require the applicant's initials

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

Policy Proceeds

Which of these do NOT constitute policy delivery?

Policy issued with a rating

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement

A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?

Company X

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

Contributory

What type of group plan involves employees sharing the cost?

Contributory plan

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance policy

Who elects the governing body of a mutual insurance company?

Policy Holders

A policyowner is allowed to pay premiums more than once a year under which provision? Insuring

mode of premium

On a life insurance policy, who is qualified to change the beneficiary designation?

policy owner

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

time of application With life insurance, insurable interest must exist only at the policy inception.

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

"Insured's contingent beneficiary". Under the Uniform Simultaneous Death Act, if both insured and primary beneficiary are killed in the same accident and there is insufficient evidence to show who died first, policy proceeds will be paid as if the insured died last. In other words, the proceeds will be paid to the secondary or contingent beneficiary.

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will be fully refunded

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?

Variable

What is the purpose of the U.S.A. Patriot Act?

detect and deter terrorism

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

The Consideration clause of an insurance contract includes

the schedule and amount of premium payments

All of these are considered to be a benefit under Social Security EXCEPT for

unemployment

An incomplete life insurance application submitted to an insurer will result in which of these actions?

writing agent

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)

Accidental Death and Dismemberment rider (AD&D)

Any changes made on an insurance application requires the initials of whom?

Applicant

Before a life insurance policy is issued, which of these components of the contract is required?

Applicant's signature on application

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Automatic Policy Loan

An applicant for an insurance producer's license in Georgia MUST meet which of the following requirements?

Be 18 years of age or older

Which statement about a whole life policy is correct?

Cash value may be borrowed against

Which of the following violations is considered an unfair trade practice?

Coercion

Which statement is true regarding a minor beneficiary?

In most cases, insurers require that a guardian be appointed in the Beneficiary clause of the policy or that a guardian be designated in the will.

Which of these actions should a producer take when submitting an insurance application to an insurer?

Inform insurer of relevant information not included on the application

If a contract of adhesion contains questionable language, to whom would the interpretation be in favor of?

Insured

Who makes the legally enforceable promises in a unilateral contract?

Insurer

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

Which of these arrangements allows one to bypass insurable interest laws?

Investor-Originated Life Insurance

What type of life policy covers 2 lives and pays the face amount after the first one dies?

Joint Life Policy

Which of these are NOT an example of a Nonforfeiture option?

Life Income

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at Age 70

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited-Pay Life

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

Policyholders elect the governing bodies of which of the following types of insurance companies?

Mutual

Which of the following actions by an insurance company or an agent is considered rebating?

Offering a prospect something of value that is not specified in a contract to induce the purchase of that contract

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to

P only

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends

Which of these statements concerning an Individual Straight Life annuity is accurate?

Payments are made to an annuitant for life

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor Clause

The underwriting process involves all of these EXCEPT for

Policy Loan

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan provision

Which statement is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

Which of these life insurance riders allows the applicant to have excess coverage?

Term rider

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed"

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

The gross premium is higher on a monthly payment mode as compared to being paid annually

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, bonds

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as

Variable Life

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of Premium

Which of these is considered a statement that is assured to be true in every respect?

Warranty

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole Life

A life insurance policy that provides a policyowner with cash value along with a level face amount is called

Whole life

An insurance company licensed in Georgia and domiciled in Pennsylvania is known as

a foreign company

Before a licensed agent is eligible to transact insurance sales, they must be

appointed by an insurance company

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

increase face amount

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insurable interest in the proposed insured

"Controlled business" is MOST ACCURATELY described as

insurance placed by an agent on the agent's own life, property, or risks

What kind of premium does a Whole Life policy have?

level

An insurance agent who convinces a prospective insured to purchase a policy by exaggerating the benefits of the policy may be found guilty of

misrepresentation

Anyone who makes a fraudulent statement on an insurance application in order to obtain money benefits from an insurance company has committed an act of

misrepresentation

All of the following actions are considered rebating EXCEPT

sharing commissions with other licensed and appointed agents

A stock insurance company is owned by it's

stockholders

The investment gains from a Universal Life Policy usually go toward

the cash value

C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most?

the cost

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

Which statement regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Life Annuity with Period Certain

All of these are considered sources of underwriting information about an applicant EXCEPT

Rating Services

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium

What is Old Age and Survivors Health Insurance (OASDHI) also known as?

Social Security

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

Group life insurance policies are generally written as

annually renewable term

A policyowner is able to choose the frequency of premium payments through what policy feature?

premium mode

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

revocable

Which of these retirement plans can be started by an employee, even if another plan is in existence?

Individual Retirement Account (IRA)