Life and Health exam Ch. 1-5
Which of the following are generally NOT considered when underwriting group insurance? A) the insureds medical history B) the nature of the group C) the groups past claim experience D) the size of the group
A) the insureds medical history
Who bears all of the investment risk in a fixed annuity?
insurance company
What are the 3 basic types of term life insurance?
level, increasing, decreasing
An individual purchase date $100,000 joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from his policy?
$100,000
Which of the following premium modes would result in the highest annual cost for an insurance policy
monthly
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
$50,000
Attempting to determine how much insurance a family would require based upon their financial objectives is known as
needs approach
at times, it is possible for a life insurance agent to affect a savings of premium rates by back dating an application for life insurance. what is maximum amount of time that an application may be back dated?
6 months
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A) business partners have an insurable interest in each other B) a married person has an insurable interest in their spouse C) an individual has an insurable interest in their own life D) a debtor has an insurable interest in the life of a lender
A debtor has an insurable interest in the life of a lender
All of the following could own group life insurance EXCEPT A) a debtor group B) a group needing low-cost life insurance C) a group sponsored by an employer D) an alumni group
A group needing low cost life insurance.
A tornado that destroys property would be an example of which of the following?
A peril
Which of the following is true regarding the spendthrift clause in life insurance policies? A) it can protect the policy proceeds from the creditors of the beneficiary B) it allows the beneficiary to select a different settlement option C) it is only used when the beneficiary is a minor D) it is the same as irrevocable settlement clause
A) it can protect the policy proceeds from the creditors of the beneficiary
In a group life insurance policy, the employer may select all of the following EXCEPT A) the beneficiary B) the type of insurance C) the amount of insurance D) the premium payor
A) the beneficiary
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 been insured under the plan for at least 5 years B) those who have worked in the company for at least 3 years C) those who have dependents D) those who have no history of claims
A) those who have been insured under the plan for at least 5 years
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance?
AM Best
What are the 2 distinct periods of an annuity?
Accumulation Period and Annuitization Period
Which of the following best describes rescission?
An insurer cancels a policy after it has been issued and refunds all paid premiums.
If a beneficiary is NOT named for annuity benefits, to which entity will the benefit be paid?
Annuitant's estate
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called
Avoidance
All of the following are personal uses of life insurance EXCEPT A) cash accumulation B) buy-sell agreement C) survivor protection D) estate creation
B) buy-sell agreement
Which of the following is a feature of a variable annuity? A) benefit payment amounts are not guaranteed B) payments into the annuity are kept in the companies general account C) interest rate is guaranteed D) securities license is not required
Benefit payment amounts are not guaranteed
What is the time period called during which the surviving spouse of the insured does not receive Social Security income benefits?
Blackout period
A producer who fails to segregate premium monies from his own personal funds is guilty of..
Commingling
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as ...
Contracts of adhesion
A key person insurance policy can pay for which of the following?
Costs of training a replacement
Which of the following with NOT be an appropriate use of a deferred annuity? A) creating an estate B) accumulating retirement funds C) accumulating funds in an IRA D) funding a child's college education
Creating an estate
Which of the following is NOT allowed in credit life insurance? A) creditor becoming a policy beneficiary B) creditor requiring that a debtor buys insurance from a certain insurer C) creditor having a collateral assignment on the policy D) creditor requiring that a debtor has life insurance
Creditor requiring that a debtor buys insurance from a certain insurer
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A) statement of good health B) payment of premium C) delivery receipt D) signed waiver of premium
D) signed waiver of premium
Which of the following is NOT an example of a valid insurable interest? A) employer in key employees life B) child in parents lives C) debtor in the life of the creditor D) business partners in each others lives
Debtor in the life of the creditor
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Decreases
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? A) liquidation period B) depreciation period C) annuitization period D) pay-out period
Depreciation period
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity indexed annuity
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT A) erase the incorrect answer and record the correct answer B) draw a line through the first answer, record the correct answer, and have the applicant initial the change C) note on the application the reason for the change D) destroy the application and complete a new one
Erase the incorrect answer and record the correct answer
An agent selling variable anybody's must be registered with
FINRA
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
When an employee terminates coverage under a group insurance policy, coverage continues in force
For 31 days
Which rider allows an insured to purchase additional coverage without evidence of insurability?
Guaranteed insurability rider
What insurance concept is associated with the names Weiss and Fitch?
Guides describing company financial integrity
What are the 2 types of annuities based on when the annuity payments begin?
Immediate and deferred
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
What type of insurance would be used for a Return of Premium rider?
Increasing Term
The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?
Interest only option
Which of the following is NOT true regarding the life with guaranteed minimum annuity settlement option? A) It does not guarantee that the entire principal amount will be paid out B) it is a life contingency option C) the beneficiary receives the remainder of the principal amount upon the annuitants death D) payments can be made installments and as a single cash refund
It does not guarantee that the entire principal amount will be paid out
Which of the following is TRUE regarding the accumulation period of an annuity? A) it is also referred to as the annuity period B) it is a period of time during which the beneficiary receives income C) it is limited to 10 years D) It is a period during which the payments into the annuity grow tax deferred
It is a period during which the payments into the annuity grow tax deferred.
An insured who had a life insurance policy for $1 million died. I am filing the claim, his wife and children discovered that there was no beneficiary named on the policy. What will happen to the death benefit in this case?
It will go to the insured's estate.
And 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 renew the policy in five years, what will happen to the premium?
It will increase because the insured will be five years older than when the policy was originally purchased.
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?
It will likely be higher because the applicant is a substandard risk
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
Joint life policy
And insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited-pay life
Another name for the Accelerated Death Benefit Rider if it is part of the policy is
Living Benefit
The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as...
Loss
When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would..
Lower the insured's premium.
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
Which of the following individuals must have insurable interest in the insured? A) producer B) policy owner C) beneficiary D) underwriter
Policyowner
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not tax deductible as a business expense
Which of the following statements is an accurate comparison between private and government insurers?
Private insurers may be authorized to transact insurance by state insurance departments.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A) proof of insurability is not required B) medical exam C) her parents federal income tax receipts D) medical exam and parents medical history
Proof of insurability is not required.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allow this?
Reinstatement provision
I'm case of a loss, the indemnity provision in insurance policies ...
Restores an insured person to the same financial state as before the loss.
A policy owner who is also the insured wants to name her husband as the beneficiary of her policy. She also wishes to retain all of the rights of ownership. The policy owner should have have her husband named as the
Revocable beneficiary
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A) a Securities license B) a life insurance license C) SEC registration D) FINRA registration
SEC registration
An employee has group life insurance through her employer. After 5 years, she decided to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the
Spendthrift Clause
Which of the following types of annuities would generally provide the highest monthly income?
Straight life
Which of the following is called a "second-to-die" policy?
Survivorship life
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
Which of the following is NOT true regarding the annuitant? A) the annuitant receives the annuity benefits B) the annuitant must be natural person C) The annuitant cannot be the same person as the annuity owner D) the annuitants life expectancy is not taken into consideration for the annuity
The annuitant cannot be the same person as the annuity owner.
All of the following statements about equity index annuities are correct EXCEPT A) they invest any more aggressive basis, aiming for higher returns B) the annuitant receives a fixed amount of return C) they have a guaranteed minimum interest D) the interest rate is tied to an index, such as the standard & Poors 500
The annuitant receives a fixed amount of return
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums. Which of the following is TRUE? A) the cash value will be paid to the annuitants estate B) the premium value will be paid to the annuitants estate C) all benefits will be forfeited D) the cash value will be paid to the state government
The cash value will be paid to the annuitants estate
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?
The employer is the owner and beneficiary
When a life insurance policy was issued, the policy owner designated a primary and contingent beneficiary. Several years later, both the insured in the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?
The insureds contingent beneficiary
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT A) the policyholder has the right to withdraw the accumulations anytime B) The interest is not taxable since it remains inside the insurance policy C) the annual dividend is retained by the company D) the interest is credited at a rate specified by the policy
The interest is not taxable since it remains inside the insurance policy
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT A)The loss produced by the risk must be definite B)The loss may be intentional C)The loss must not be catastrophic D)There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable.
The loss may be intentional
Which of the following is NOT a characteristic of an insurable risk? A) the loss must be catastrophic B) the loss must be due to chance C) the loss must be measurable D) the loss exposure must be large
The loss must be catastrophic
All of the following statements are true regarding installments for a fixed amount EXCEPT A)The payments will stop when the annuitant dies. B) value of the account and future earnings will determine the time period of the benefits C) this option pays a specific amount until the funds are exhausted D) the annuitant may select how big the payments will be
The payments will stop when the annuitant dies.
Who is an annuitant?
The person on whose life expectancy the annuity is written and who receives benefits from the annuity
What constitutes the entire contract?
The policy and a copy of the application, along with any riders or amendments, form the entire contract.
The policy-owner of a Universal life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance.
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
implied
Which of the following is NOT true regarding Equity Indexed Annuities? A) they are less risky than variable annuities B) they are in lower interest rates than fixed annuities C) the insurance company keeps a percentage of the returns D) they have guaranteed minimum interest rates
They earn lower interest rates than fixed annuities.
Which of the following is the best reason to purchase life insurance rather than an annuity?
To create an estate
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
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?
Universal Life
Which type of life insurance policy allows the policy owner to pay more or less than the planned premium?
Universal Life
Which of the following policies would have an IRS required corridor or gap between the cash value, and the death benefit? I text.
Universal Life - Option A
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
When would a whole life insurance policy mature?
When the insured dies or turns age 100, whichever is sooner
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly
When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
a fixed amount
What types of licenses do you need to sell variable products?
a life insurance producer license, and a securities license
The LEAST expensive first-year premium is found in which of the following policies?
annually renewable term
What are the 3 nonforfeiture options?
cash surrender value, extended term, reduced paid-up insurance
Which of the following would be the beneficiary in credit life insurance?
creditor
The authority granted to an agent through the agent's contract is referred to as
express authority
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
fixed period
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest and the policy cash value to pay the policy up early?
paid up option
Annuities can be used to fund which of the following? A) variable life insurance B) group life insurance C) estate creation D) retirement plans
retirement plans
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments
spendthrift provision
The interest earned on a policy dividends is
taxable
