Life and Annuties
Which provision is NOT a requirement in a group life policy? A. Conversion B. Grace period C. Incontestable period D. Accidental
D. Accidental
Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated: A. 1970 -Fair Credit Reporting Act B. 1959 - Intervention by (SEC) The Securities and Exchange Commission C. 1999 - Financial Services Modernization Act D.1945 - The McCarran-Ferguson Act
A. 1970 -Fair Credit Reporting Act
The USA Patriot Act was enacted in: A. 2001 B. 2002 C. 2003 D. 2004
A. 2001
Qis severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to file for Social Security disability benefits? A. 3 B. 4 C. 5 D. 6
C. 5
When must insurable interest exist for a life insurance contract to be valid? A. Inception of the contract B. Throughout the entire length of the contract C. When the insured dies D. During the contestable period
A. Inception of the contract
All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT A. Income derived from the TSA is received income tax-free B. TSA's are available to public school employees C. Contributions to the TSA are tax-deductible D. Interest earned by TSA is tax deferred
A. Income derived from the TSA is received income tax-free
What is the consideration given by an insurer in the Consideration clause of a life policy? A. Promise to never cancel coverage B. Promise to pay a death benefit to a named beneficiary C. Promise to not raise premiums D. Promise to accept an insured's assignment of benefits
B. Promise to pay a death benefit to a named beneficiary
The Consideration clause of an insurance contract includes: A. the buyer's guide B. a summary of the coverage provided C. the named beneficiaries D. the schedule and amount of premium payments
D. the schedule and amount of premium payments
What is Old Age and Survivors Health Insurance (OASDHI) also known as? A. Medicare B. Social Security C. Medicaid D. FICA
B. Social Security
Quarterly premium payments increase the annual cost of insurance because A. insurer risk exposure is greater B. interest to the insurer is increased while administrative costs are decreased C. mortality costs are greater D. interest to the insurer is decreased while the administrative costs are increased
D. interest to the insurer is decreased while the administrative costs are increased
When a policy pays dividends to its policyholders, it is said to be A. profitable B.mutual C. nonparticipating D. participating
D. participating
Who elects the governing body of a mutual insurance company? A.chairman of the board B. Bondholders C. stockholders D. policyholders
D. policyholders
What is the underlying concept regarding level premiums? A. Level premiums build cash value quicker in the early years B. The early years are charged more than what is needed C. The early years are charged less than what is needed D. Level premiums can only be paid annually
B. The early years are charged more than what is needed
Which of these is considered a statement that is assured to be true in every respect? A. Estoppel B. Warranty C. Guarantee D. Representation
B. Warranty
Which of the following best describes a contingent beneficiary? A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured B. Person designated by the primary beneficiary's executor to receive policy proceeds C. Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies D. Person designated by the insurance company to receive policy proceeds in the event that the primary beneficiary dies
A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be; A. converted to an individual permanent policy at an individual rate B. converted to an individual permanent policy at a group rate C. continued at an individual rate D. continued at a group rate
A. converted to an individual permanent policy at an individual rate
A life insurance policy would be considered a wagering contract WITHOUT: A. insurable interest B. premium payment C. agent solicitation D. constructive delivery
A. insurable interest
Which of the following is an important underwriting principle of group life insurance? A. Physical examinations are required B. Everyone must be covered in the group C. Employer must pay for the entire premium D. The group must be formed for the purpose of getting affordable insurance
B. Everyone must be covered in the group
S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits? A. No benefits are payable under the Master contract B. Full benefits are payable under the Master contract C. Full benefits are payable under the converted policy D. Benefits less required premium are payable under the converted policy
B. Full benefits are payable under the Master contract
Which of these is an element of a Single Premium annuity? A. Deferred payment B. Lump-sum payment C. Fixed income D. Tax-deductible
B. Lump-sum payment
Which statement is true regarding a minor beneficiary? A. Normally, the death proceeds are required to be held in trust until the beneficiary reaches the age of 21 B. Normally, a guardian is required to be appointed in the Beneficiary clause of the contract C. The minor must pay the debts of the insured's estate before receiving any of the proceeds D. The minor is entitled to receive the death proceeds immediately
B. Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
Which type of contract liquidates an estate through recurrent payments? A.Universal life insurance B. Whole life insurance C. Annuity D. 401(k)
C. Annuity
Which of these is NOT a source of funding for Social Security benefits? A. Self employed individuals B. Employees C. Federal Government D. Employers
C. Federal Government
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n): A. Cash Refund B. Installment Refund C. Straight Life annuity D. Life Annuity with Period Certain
C. Straight Life annuity
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? A. Consideration B. Competent Parties C. Offer/Acceptance D. Legal Purpose (Insurable Interest)
D. Legal Purpose (Insurable Interest)
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? A. Interest Only B. Fixed Period C. Fixed Amount D. Life Income
D. Life Income
A policyowner is allowed to pay premiums more than once a year under which provision? A. Insuring B. Consideration C.Payor D. Mode of Premium
D. Mode of Premium
Which of these is NOT an element of Life insurance premiums? A. Mortality rate B. Insurer's expenses C. Interest credit D. Morbidity rate
D. Morbidity rate
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: A. R's estate B. Q's estate C. P and Q's estate D. P only
D. P only
Which of the following statements about noncontributory employee group life insurance is FALSE? A. A minimum number of employees is required to participate B. All eligible employees must be covered C. No evidence of insurability required D. Must have conversion rights
A. A minimum number of employees is required to participate
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features? A. Aleatory B. Adhesion C. Unilateral D. Consideration
A. Aleatory
When can a policyowner change a revocable beneficiary? A. Anytime B. After the consent of the current beneficiary C. Never D. Only if primary beneficiary dies
A. Anytime
An incomplete life insurance application submitted to an insurer will result in which of these actions? A. Application will be returned to the writing agent B. Application will be approved with restrictions C. Application will be pending until a MIB report is sent to the insurer D. Application will be automatically declined
A. Application will be returned to the writing agent
What is considered to be a characteristic of an immediate annuity? A. Benefit payment start within one payment period of purchase B. Benefit payments start within 5 years of initial purchase C. Normally tied to a specific equity or stock index D. Periodical contributions begin immediately
A. Benefit payments start within one payment period of purchase
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: A. Bilateral B. Unilateral C. Aleatory D. Adhesion
A. Bilateral
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? A. Daughter B. Husband's estate C. K's estate D. Trust fund
A. Daughter
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? A. F B. The dissolved partnership C. E's family D. E's estate
A. F
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n) A. Installment Refund annuity B. Joint Refund annuity C. Straight Refund annuity D. Equal Value annuity
A. Installment Refund annuity
Which of these describe a participating insurance policy? A. Policyowners are entitled to receive dividends B. Policyowners pay assessments for company losses C. Stock companies allow their policyowners to share in any company earnings D. Policyowners are not entitled to vote for members of the board of directors
A. Policyowners are entitled to receive dividends
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? A. Portion of the premiums paid for by the employer may be a tax deduction B. Portion of the premiums paid for by the employee may be a tax deduction C. Portion of the death proceeds are taxable to the beneficiary D. Portion of the death proceeds are taxable to the estate
A. Portion of the premiums paid for by the employer may be a tax deduction
What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? A. Primary Insurance Amount (PIA) B. Total taxes paid into FICA C. Number of dependents D. State of residence
A. Primary Insurance Amount (PIA)
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? A. Risk classification B. Warranty review C. Insurable interest D. Inspection report
A. Risk classification
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? A. The cost B. The nonforfeiture options C. The contestable period D. The assignment of ownership
A. The cost
J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? A. The gross premium is higher on a monthly payment mode as compared to being paid annually B. The gross premium is lower on a monthly payment mode as compared to being paid annually C. The cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual basis D. The face amount of a life policy paid on a monthly basis is higher than one paid on an annual basis
A. The gross premium is higher on a monthly payment mode as compared to being paid annually
The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true? A. This clause provides the payment of proceeds to the insured's estate B. This clause provides the payment of proceeds to the beneficiary's estate C. The estate taxes in the insured's estate may be reduced D. The estate taxes in the beneficiary's estate may be reduced
A. This clause provides the payment of proceeds to the insured's estate
A Variable Annuity has which of the following characteristics? A. Underlying equity investments B. Only available with Single Premium C. Offers a fixed interest D. Does not require an insurance license
A. Underlying equity investments
A $20,000 life insurance policy application is completed, however the producer does not collect the initial premium. At what point does the coverage go into effect? A. When the applicant receives the policy and pays the initial premium B. When the MIB report is received C. Upon a completed medical examination D. Upon policy approval
A. When the applicant receives the policy and pays the initial premium
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: A. a fraternal benefit society B. a stock insurer C. a mutual insurer D. the Life and Health Insurance Guaranty Association
A. a fraternal benefit society
To be eligible for Social Security disability benefits, an employee must be unable to perform: A. any occupation B. his/her current occupation C. any occupation that reflects the employee's education level D. any occupation that the employee is qualified and willing to do
A. any occupation
T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company A. does NOT have to make any further payments B. MUST make full payments to the beneficiary C. MUST make half-payments to the beneficiary D. has the option to continue making payments based on what has already been paid out
A. does NOT have to make any further payments
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: A. representations B. consideration C. warranties D. guarantees
A. representations
A noncontributory group term life plan is characterized by: A. the entire cost of the plan is paid for by the employer B. the entire cost of the plan is paid for by the employee C. the cost of the plan is shared by both employer and employee D. both employer and employee must provide evidence of insurability
A. the entire cost of the plan is paid for by the employer
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has: A. waived one of its legal rights B. issued a voidable policy C. committed an act of fraud D. assigned the risk to a reinsurer
A. waived one of its legal rights
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of: A.$10,000 B. $7,500 C. $5.000 D. $2,500
A.$10,000
Which requirement must be met for an association to be eligible for a group life plan? A.Group was formed for a purpose other than acquiring insurance B. Group must establish a President C. Group must have at least 10 members D. Group was formed for the purpose of acquiring insurance
A.Group was formed for a purpose other than acquiring insurance
What year was the McCarran-Ferguson Act enacted? A. 1944 B. 1945 C. 1946 D. 1947
B. 1945
One becomes eligible for Social Security disability benefits after having been disabled for: A. 3 months B. 5 months C. 6 months D. 12 months
B. 5 months
All are true statements regarding the underwriting process, EXCEPT: A. Signed consent from the applicant must be provided in order to test for B. AIDS and HIV virus exams can be conducted in a discriminatory fashion C. The cost of any examination is paid for by the insurer D. The original application is the primary source of information used in the underwriting process
B. AIDS and HIV virus exams can be conducted in a discriminatory fashion
The amount of monthly disability benefits payable under Social Security is affected by which of the following factors? A. Insured's tax bracket B. Amount of the benefits available from other C. Nature of the disability D. Insured's education level
B. Amount of the benefits available from other
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 he 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? A. Collect initial premium B. Collect initial premium along with a signed health statement C. Explain to the applicant the policy is no longer in effect due to change in health condition D. Collect initial premium and leave a binding receipt
B. Collect initial premium along with a signed health statement
Which of the following does Social Security NOT provide benefits for? A. Survivorship B. Dismemberment C. Disability D. Retirement
B. Dismemberment
Under a trustee group life policy, who would be eligible for a certificate of coverage? A. Corporation B. Employee C. Employer D. Labor union
B. Employee
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? A. Fixed Period B. Fixed Deferred C. Fixed Immediate D. Fixed Variable
B. Fixed Deferred fixed deferred pays out a fixed amount for life starting at a future date
In regards to representations or warranties, which of these statements is TRUE? A. Warranties are statements considered to be true to the best of the applicant's belief B. If material to the risk, false representations will void a policy C. Representations are statements guaranteed to be true in every respect D. If material to the risk, false representations will NOT void a policy
B. If material to the risk, false representations will void a policy
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? A. If the primary beneficiary is a minor at the time of the insured's death B. If the primary beneficiary dies before the insured C. If the insured died of accidental causes D. If the insured died of natural causes
B. If the primary beneficiary dies before the insured
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? A. Income for a fixed period stated in the contract B. Income that cannot be outlived by the owner C. Inflation protection D. Tax-free income
B. Income that cannot be outlived by the owner A Straight Life Annuity will provide an income that the insured cannot outlive.
How does an indexed annuity differ from a fixed annuity? A. Fixed annuity owners receive credited interest tied to the fluctuations of the linked index B. Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index C. Fixed annuity owners have a separate investment account D. Indexed annuity owners recerve annual dividends
B. Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index
Who makes the legally enforceable promises in a unilateral insurance policy? A. Beneficiary B. Insurance company C. Insured D. Applicant.
B. Insurance company
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value? A.Cash surrender B. Life settlement contract C. Buy-sell arrangement B. 1031 Exchange
B. Life settlement contract
The underwriting process involves all of these, EXCEPT for: A. Credit report B. Policy loan C. Risk classification D. Application
B. Policy loan
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? A. Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account B. Return to the customer, collect a new check made out to the insurance company and send the new check out to the insurance company C. Cross off his name on the "pay to" portion of the check, write the name of the insurance company and send the check back to the insurance company D. Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company
B. Return to the customer, collect a new check made out to the insurance company and send the new check out to the insurance company
Which statement regarding the Change of Beneficiary provision is true? A. The beneficiary can only be changed with the consent of the insurer B. The policyowner can change the beneficiary C. The insured can change the beneficiary D. A beneficiary change is subject to underwriting procedures
B. The policyowner can change the beneficiary
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? A. Before the appointment is scheduled B. Upon completion of the application C. At the policy's delivery D. When the insurer receives the MIB report
B. Upon completion of the application
A(n)______ annuity pays benefits based on units rather than stated dollar amounts. A. Deferred B. Variable C. Immediate D. Unit
B. Variable
Group life insurance policies are generally written as: A. a term rider B. annually renewable term C. increasing term D. group whole life
B. annually renewable term
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: A. all statements be warranties B. insurable interest in the proposed insured C. the agent complete a third-party application D. all those involved be family-related
B. insurable interest in the proposed insured
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called: A. credits B. reserves C. surplus D. retention
B. reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a: A. treaty insurer B. risk retention group C. risk assumption group D. captive insurer
B. risk retention group
A contract owner terminates an annuity before the income payment period begins. The owner will then receive A. half of the current surrender value B. the current contract surrender value C. the premiums paid to date D. nothing
B. the current contract surrender value
All of these are considered to be a benefit under Social Security, EXCEPT for: A. survivorship B. unemployment C. disability D. retirement
B. unemployment
P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy? A. A straight life deferred annuity B. A straight life annuity C. An immediate annuity D. A deferred annuity
C. An immediate annuity
When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n): A. Federal Fair Credit Act Violation B. Title 18 Fraud violation C. Anti-Money Laundering violation D. Unfair Trade Practice
C. Anti-Money Laundering violation
Which of the following consists of an offer, acceptance, and consideration? A. Warranty B. Estoppel C. Contract D. Representation
C. Contract
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? A. Immediate B. Retroactive C. Deferred D. Universal
C. Deferred
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? A. Premiums are normally not tax deductible B. Cash dividends are normally not taxed C. Entire cash surrender value is taxable D. Proceeds are received tax-free if there is a named beneficiary
C. Entire cash surrender value is taxable If cash value is surrendered, the portion the exceeds the premiums paid is taxable. For policies that are not surrendered, the cash value grows tax-free.
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the: A. State Guaranty Association B. Fair Labor Standards Board C. Fair Credit Reporting Act D. National Association of Insurance Commissioners
C. Fair Credit Reporting Act
What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained? A. State Guaranty Association B. Fair Labor Standards Board C. Fair Credit Reporting Act D. National Association of Insurance Commissioners
C. Fair Credit Reporting Act
The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own? A.Immediate Fixed B. Quarterly Flexible C. Flexible Installment Deferred D. Adjustable Deferred
C. Flexible Installment Deferred
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): A. Flexible Premium Deferred annuity B. Variable annuity C. Immediate annuity D. Straight Life annuity
C. Immediate annuity Immediate annuities start providing income payments usually starting within 30 days from the purchase date.
Which of these actions should a producer take when submitting an insurance application to an insurer? A. Issue a binding receipt to applicant if no initial premium is submitted B. Disclose to the applicant the amountof commissions to be earned this transaction C. Inform insurer of relevant information not included on the application D. Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer
C. Inform insurer of relevant information not included on the application
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? A. Agent's report B. MIB report C. Inspection report D. Attending physician's report
C. Inspection report
Variable annuities may invest premiums in each of the following, EXCEPT: A. Common Stock B. Money Market securities C. Insurer's corporate business account D. Junk bonds
C. Insurer's corporate business account
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? A. Fixed Certain B. Joint and Full Survivor C. Life Annuity with Period Certain D. Installment Refund
C. Life Annuity with Period Certain
When an employee is terminated, which statement about a group term life conversion is true? A. Employee must convert group term life coverage into an individual term life policy B. Employee must provide evidence of insurability for conversion C. Policy proceeds will be paid if the employee dies during the conversion period D. Policy proceeds will NOT be paid if the employee dies during the conversion period
C. Policy proceeds will be paid if the employee dies during the conversion period
A policyowner is able to choose the frequency of premium payments through what policy feature? A. Consideration B. Payor benefit C. Premium Mode D. Assignment provision
C. Premium Mode
Which of these is NOT a type of agent authority? A. Express B. Implied C. Principal D. Apparent
C. 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? A. Proceeds will be paid to P's estate B. Proceeds will be divided equally between and P's estate C. Proceeds will be payable to K's estate if P dies within a specified time D. The courts will decide who will receive death benefits
C. Proceeds will be payable to K's estate if P dies within a specified time
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? A. 403(b) Plan B. Deferred Premium C. Single Premium D. Period Certain
C. Single Premium Immediate Annuities are purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date.
Life and health insurance policies are: A. Multi-lateral contracts B. Bilateral contracts C. Unilateral contracts D. Non-lateral contracts
C. Unilateral contracts
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? A.Deferred B. Flexible C. Variable D. Fixed
C. Variable
At what point does an informal contract become binding? A. When one party makes an invitation and the other makes an offer B. When an offer is made by one party and the other party rejects the offer and makes a counteroffer C. When one party makes an offer and the other party accepts that offer D. When one party makes the required payment
C. When one party makes an offer and the other party accepts that offer
When must insurable interest be present in order for a life insurance policy to be valid? A.When the insured dies B. Within the incontestability period C. When the application is made D. Before the insured dies
C. When the application is made
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? A. When the policy is issued B. The date of policy delivery C. When the conditions of the receipt are met D. The date the sales appointment was set
C. When the conditions of the receipt are met
Dividends payable to a policyowner are A. guaranteed B. declared by the State C. declared by the insurance company D. strictly regulated
C. declared by the insurance company
What is the purpose of the U.S.A. Patriot Act? A. detect and deter fraud B. detect and deter alien insurance companies C. detect and deter terrorism D. detect and deter misrepresentations
C. detect and deter terrorism
Which of these is NOT considered to be an element of an insurance contract? A. the offer B. acceptance C. negotiating D. consideration
C. negotiating
Insurance policies are considered aleatory contracts because A. they are "take it or leave it" contracts B. both parties consent to the contract C. performance is conditioned upon a future occurrence D. the contract is voidable upon proof of fraud
C. performance is conditioned upon a future occurrence
An immediate annuity consists of a: A. variable premium B. flexible premium C. single premium D. deferred premium
C. single premium
An individual who purchases a Life annuity is given protection against: A. inflation B. the risk of dying prematurely C. the risk of living longer expected D. the risk of not having enough retirement income
C. the risk of living longer expected
The part of a life insurance policy guaranteed to be true is called a(n): A. representation B. exclusion C. warranty D. waiver
C. warranty
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? A. $1,000,000 B. $500,000 C. $250,000 D. $0
D. $0
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a: A. $125,000 individual whole life policy B. $25,000 modified whole life policy C.$25,000 individual term life policy D. $25 000 individual whole life policy
D. $25 000 individual whole life policy
A non-contributory plan requires______ participation of all eligible employees. A. 25% B. 50% C. 75% D. 100%
D. 100%
Which of the following is NOT included in an annuity contract? A.Nonforfeiture benefit B. Free-Look period C. Beneficiary D. AD&D rider
D. AD&D rider
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? A. The proceeds which exceed the amount paid in premiums are taxable B. The proceeds are taxable only if the beneficiary's tax bracket has changed from the payout C. All proceeds are considered taxable income in the year they are received D. All proceeds are income tax free in the year they are received
D. All proceeds are income tax free in the year they are received
Which premium schedule results in the lowest cost to the policyowner? A. Semi-annual B. Monthly C. Quarterly D. Annual
D. Annual
Company XYZ offers a group Term Life insurance plan to its employees. What does each employee covered under this plan receive? A. Master policy B. Receipt of coverage C. Individual policy D. Certificate of insurance
D. Certificate of insurance
Insurance policies are offered on a "take it or leave it" basis, which make them: A. Conditional Contracts B. Aleatory Contracts C. Unilateral Contracts D. Contracts of Adhesion
D. Contracts of Adhesion
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? A. Entire contract B. Owner's rights C. Nonforfeiture options D. Conversion
D. Conversion
Taking receipt of premiums and holding them for the insurance company is an example of: A. Commingling B. Misappropriation C.Theft D. Fiduciary responsibility
D. Fiduciary responsibility
The type of annuity that can be purchased with one monetary deposit is called a(n): A. Single Deposit annuity B. Single Premium annuity C. Fixed annuity D. Immediate annuity
D. Immediate annuity
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? A. Insurer B. Beneficiary C.Reinsurer D. Insured
D. Insured
If the insured and primary beneficiary are both killed in the same accident who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death and it cannot be determined Act? A. Primary beneficiary's estate B. Primary beneficiary's next of kin C. Insured's estate D. Insured's contingent beneficiary
D. Insured's contingent beneficiary
A life insurance arrangement which circumvents insurable interest statutes is called: A. a contract of adhesion B. an indemnity contract C. key person insurance D. Investor-Originated Life Insurance
D. Investor-Originated Life Insurance
Which of these arrangements allows one to bypass insurable interest laws? A. Concealment B. Indemnity contract C. Contract of adhesion D. Investor-Originated Life Insurance
D. Investor-Originated Life Insurance
which of these statements concerning an Individual Straight Life annuity is accurate? A. Life expectancy of the annuitant is not a factor B. The payments are received tax-free C. Only available to employees of nonprofit charitable, educational, and religious organizations D. Payments are made to an annuitant for life
D. Payments are made to an annuitant for life
Which of these do NOT constitute policy delivery? A. Policy mailed to applicant B. Policy mailed to agent C. Policy delivered to the applicant by the agent D. Policy issued with a rating
D. Policy issued with a rating
Who has the right to change a revocable beneficiary? A. Beneficiary B. Agent C. Insurance agency D. Policyowner
D. Policyowner
Which of the following are Equity Indexed annuities typically invested in? A. Corporate Bonds B. Money Market accounts C. Municipal Bonds D. S&P 500
D. S&P 500
Which of the following BEST describes a warranty? A. Guarantees that an insurance company will pay a benefit B. Statement believed to be true to the best of one's knowledge C. Cannot be used to void the contract D. Statement guaranteed to be true
D. Statement guaranteed to be true
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective? A. The date the sales appointment was made B. The date the application was submitted to the insurance company C. The date of application D. The date the agent delivered the policy collected the initial premium and obtained a good health statement from the insured
D. The date the agent delivered the policy collected the initial premium and obtained a good health statement from the insured
A policy of adhesion can only be modified by whom? A. The agent B. The applicant C. The primary beneficiary D. The insurance company
D. The insurance company
A policy of adhesion can only be modified by whom? A. The agent B. The applicant C.The primary beneficiary D. The insurance company
D. The insurance company
What type of reinsurance contract involves two companies automatically sharing their risk exposure? A. Arbitrage B. Facultative C. Excess D. Treaty
D. Treaty
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? A. Subrogation B. Unenforceable C.Adhesion D. Unilateral
D. Unilateral
A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of A.adherence B. assimilation C. aleatory D. adhesion
D. adhesion
an applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the: A. agent B. applicant's spouse C. National Association of Insurance Commissioners (NAIC) D. applicant's physician
D. applicant's physician
A life insurance application must be signed by all of these, EXCEPT: A. the policyowner B. the agent C. the insured (if an adult) D. beneficiary
D. beneficiary
Insurance contracts are known as_____because certain future conditions or acts must occur before any claims can be paid. A. consideration B. unilateral C. aleatory D. conditional
D. conditional
A level premium indicates: A. the premium is fixed for a period stated in the contract, then becomes variable B. the premium can only be changed with the consent of the insurer C. the premium stays level until the policy's renewal date D. the premium is fixed for the entire duration of the contract
D. the premium is fixed for the entire duration of the contract
