Life Final EXAM

21. Which of the following statement options would provide an annuitant with the largest monthly income from a life insurance death benefit?

Straight Life Annuity.

60. Which of the following is true of a Whole Life policy surrender for ets cash value by the policyowner at age 58?

Taxes on the gain.

46. In question number 45 above, if Popeye surrenders his policy, how much will he receive?

$ 4,000.

52. On February 2, 1996 Mrs. Abramowitz pay an annual premium of $200 on her $10,000 face value Whole Life policy. Mrs. Abramowitz failed to pay her next premium that was due on February 2, 1997. If Mrs. Abramowitz died on February 19, 1997, her beneficiary/estate would receive, disregarding interest, how much?

$9,800

45. Popeye owns. $100,000 Straight Life policy with a cash value of $9,000 and a $5,000 outstanding loan (including interest). If Popeye dies, his beneficiary, Olive Oyl, will receive

$95,000.

95. Death benefits must be paid within

2 months of receipt of proof of death.

79. As a license Producer, you must notify the Commissioner of a change in business or residential address within how many days of the change?

30.

94. Interest must be paid by a life insurance company on a death benefit if it is not paid within how many days of the submission of valid proof of death?

30.

30. Which of the following qualified retirement plans would you recommend for a 501c corporation?

403B

86. The Commissioner must post a faithful performance bond in the sum of at least

50,000.

18. Molly was insured under ABC corporation's noncontributory Group Life Insurance plan for $30,000. Molly left ABC Company on July 1 and stated to her ex-employer that she had no intention of converting her group coverage. Molly died on July 4. Molly's beneficiaries will receive

A $30,000 life insurance policy.

80. All the following individuals would be exempt from taking an Indiana licensing examination in whole or in part EXCEPT:

A funeral director applying for a limited lines license to sell burial insurance.

90. All of the following must be found in the Policy Summary EXCEPT:

A listing of the current investment portfolio of the company.

11. A Single Premium Joint and Survivorship Deferred Variable Life Annuity would have all of the following characteristics EXCEPT:

A tax free benefit.

98. Should a life insurance benefit not be paid in a timely manner, interest

Accrues at a rate equal to the policy loan rate.

64. Which of the following can be sold by a Producer who does not also have an NASD/SEC license?

Adjustable Life

54. Accelerated Death Benefits

Allow the insurance company to pay a percentage of the death benefit to a terminally ill insured.

29. ABC life insurance company is a member of the MIB. As a member, ABC would be required to report all the following types of applicant information to the MIB EXCEPT:

Amount of insurance applied for.

81. The Commissioner May grant a temporary license to all the following individuals EXCEPT:

An applicant who is unable to sit for the license examination due to a permanent and total disability.

87. To license a business entity as an insurance producer:

An employee who holds a producer's license must be appointed as a compliance officer.

77. Under Indiana law, which of the following is considered to be an alien insurer?

An insurance company domiciled in Toronto, Canada.

76. Which of the following persons would NOT be required to be license as a Producer?

An insurance company president whose responsibilities consist solely of management and administration of the company.

2. In life insurance, the Applicant must have an insurable interest

At the time of application.

25. Which of the following life insurance riders would NOT require additional premium?

Automatic Premium Loan.

6. Carol Barrick, who is age 30, owns a $200,000 Level Term insurance policy which is renewable at age 65 issued by Mackinac Mutual. Which of the following statements about her policy is true?

Carol may renew her policy through age 65 without showing proof of insurability.

83. All of the following are defined as unfair methods of competition EXCEPT:

Charging varying premium rates to individuals in different insuring classes.

78. As a license Producer, all of the following transactions constitutes controlled business EXCEPT:

Coverage you place on friends.

36. A judge orders a divorce father to purchase life insurance on his life for the benefit of his dependent children. In order to protect the interests of the children, the judge would most likely order the beneficiaries to be named on which of the following basis.

Irrevocable on a reversionary basis.

39. All the following statements are true concerning the taxation of Whole Life policies EXCEPT:

Dividends paid by stock companies to their stockholders are not taxable.

19. The clause in a Life insurance policy which states that neither party to the contract can unilaterally introduce modifications to the contract is called the

Entire Contract

85. The process by which the Commissioner is given the authority to inspect the financial affairs of any insurer doing business or proposing to do business in Indiana is called

Examination.

31. All of the following are normally part of the Whole Life insurance policy EXCEPT the

Expiration date.

4. As a producer, you take a prepaid application today for an Universal life policy on Joe insured. You issue Joe a Conditional Receipt and no medical exam is required. Which of the following actions would you NOT take on this original interview?

Explain to Joe that the policy will go into effect when et is delivered to him by the producer.

89. Which of the following would NOT be a violation of the Unfair Claims Settlement Practices regulations?

Failure to pay a death claim within 10 days of receipt of proof of death.

9. Which of the following can be constructed by adding Convertible Term Riders to an existing Whole Life Policy?

Family (Protection) policy.

41. Joe Insured owns a Whole Life policy on his own life with a Guaranteed Insurability rider. Joe has the right to purchase specified additional amounts of insurance.

For himself in the future without proof of insurability but at rates for his attained age.

72. All the following May currently obtain a Limited Insurance License without taking an examination EXCEPT:

Funeral directors who sell pre-need funeral policies.

59. A Free Look Provision

Gives the insured the right to return a policy for a full refund.

43. A life insurance policy that accumulates cash value at a known rate, provides a constant level of death protection, has a lower premium in the early years of the policy life and a higher premium in the later years of the policy life, is called

Graded Premium Whole Life.

48. Which of the following is an example of third party ownerships?

Group Life

20. Harold owns a$400,000 life insurance policy on his own life and has named his wife Gertrude as his primary beneficiary. The second beneficiary is Harold's now deceased older sister. Unfortunately, Gertrude and Harold decided to take their second Honeymoon on the good ship Titanic, which sank. Both went down with the ship and no one knows who died first. The $400,000 will be paid to which of the following?

Harold's estate.

75. All of the following are true statements regarding the Indiana insurance Commissioner EXCEPT:

He is a gubernatorial appointee serving a four year term.

16. Jolene has a typical double indemnity rider on her $150,000 Whole Life policy. If she dies of a stroke, which of the following is true concerning her coverage?

Her policy will pay a $150,000 death benefit.

82. As a license Producer, you May do all of the following EXCEPT:

Hold a Consultant's license.

51. Ten years ago, Tim purchased a 20 Pay Life policy with Automatic Premium Loan. Tim failed to pay his Premium Loan. Tim failed to pay his premium which was due yesterday. Which of the following statements is true?

If Tim dies tomorrow, his beneficiary will be paid the full death benefit, minus the overdue premium and interest.

93. All of the following is true concerning Group life insurance EXCEPT that

If a departing employee is not properly informed of the conversion period, then the employee has an additional 90 days to covert to an individual policy.

22. Which of the following is true of a Whole Life policy that is continuing under the Waiver of Premium with Disability income rider as the result of the disability of the policyowner/insured?

If declared, dividends will be declared as usual.

47. Assume that you own a $100,000 Whole Life policy with a cash value of $11,000. Also assume that you have made a collateral assignment of the policy to Acme Loan Company for an installment loan of $7,000. Which of the following is true?

If you repay the loan, the collateral assignment will be cancelled, and all policy rights will revert to you.

49. Which of the following is true of Group Life insurance?

In Group Credit Life, the designated beneficiary is the policyowner.

8. Which of the following provisions would be found in a Life insurance contract?

Incontestable.

55. Which of the following is NOT true of Joint Life insurance?

It pays the death benefit upon the death of the second or last Insured to die.

65. According to IRS rules, which of the following is true of a cash value policy that you pay up in full in seven or less years?

It will be classified as a MEC and they may be subjected to certain negative tax consequences.

15. Jim S. Broke applied for a Life Insurance policy two weeks ago and has just been denied coverage because of information the insurance company obtained from a consumer credit report. According to the Fair Credit Reporting Act, all the following statements are true EXCEPT:

Jim has the right to obtain a copy of his credit report from the insurance company.

34. As a Producer, you are taking an application from Joe for a $200,000 Variable Universal Life contract on his wife Jolene. Joe plans to be the policyowner and the primary beneficiary. Joe also wishes to name his son, Joe College, age 19, as the secondary beneficiary. All the following individuals should sign the application EXCEPT:

Joe College.

70. Linda is purchasing a new Universal Life policy. Replacement would be involved in all the following situations EXCEPT:

Linda will allow a one year Tear policy to expire.

73. As resident insurance Producer you must do all the following EXCEPT

Live in Indiana.

24. Twenty years ago Lois Lane and Clark Kent each purchased a Premium Annuity. The Annuities were identical. Today, each is the same age when they elect to annuitize their contracts. Both contracts have $300,000 cash value and both annuitants have chosen the Life Income with 10 Year Period Certain option. All of the following are true EXCEPT:

Lois and Clark both will receive the same monthly income amount.

71. A Temporary insurance Producer's license

May be issued for periods not exceeding 180 days.

57. The IRS defines any cash value life insurance policy in which the cash value grows faster than a 7 Pay Whole Life policy as a/an

Modified Endowment

50. In addition to your life license, to sell Variable Contracts, you must be license with the

NASD or SEC

38. The premiums for which of the following types of life insurance are tax deductible as an ordinary business expense to your business?

Non-contributory Group.

28. Which of the following is a typical exclusion found in life insurance policies written today?

None of the above.

58. If Joe were to die ten years after purchasing a 20-Pay Whole Life policy, for which of the following reasons could the insurance company deny payment of the death benefit?

None of the above.

88. A legally licensed Producer may

Offer advice for a fee and write coverage for the same client in the same transaction with adequate disclosure.

7. A customer submits a prepaid application to an insurance company for a standard rate life policy. Because of the customer's prior health problems, the insurance company will only issue a rated policy. The customer agrees to the higher price and pays the premium. From a contract law point of view, how were the negotiations conducted?

Offer, counter offer, acceptance.

1. Betty Boop applies for a life insurance policy but does not submit any premium with her application. When will her coverage begin if the company issues the policy?

On the date the policy is delivered and she pays the premium and signs a statement of continued good health.

97. Under Indiana Law, Rules are not,

Passed by the legislature.

33. Which of the following is a policyowner NOT required to do the reinstate a Whole Life policy?

Pay rates based on the insured's attained age at reinstatement.

32. Producer Ima Harry takes a prepaid application for an Universal Life policy from Client Weird Willy. The policy is issued and delivered as requested. Six weeks later, Weird dies. The company discovers some unanswered questions on Weird's application. The company will do which of the following?

Pay the claim.

53. Which of the following events can result in the policyowner receiving cash from an insurance company?

Payment of policy dividends.

44. Professor Higgins is a self-employed linguist who earns $80,000 per year. Every year he puts aside $8,000 in a Keogh plan. Eliza Dolittle, his secretary, is age 35 and has been employed full-time by the professor for four years. Eliza's salary is $25,000 per year. Which of the following is true regarding Eliza's retirement account?

Professor Higgins must place 2,500 a year from his income into a Keogh for Eliza.

61. A renewable Term insurance policy on which of the renewal premium rate will be slightly reduced if the insured can pass a physical exam and will submit a renewal application is called

Re-entry.

62. Which of the following events will NOT generate taxable income?

Receipt of a policy dividend.

63. Which of the following is NOT a Nonforfeiture option?

Reduction of Premium.

17. Paul Sorrow purchased a typical $250,000 Ordinary Life policy six months ago that contains a two year suicide clause. If Paul were to commit suicide today, his policy would pay which of the following to his beneficiary?

Return of premium paid less any outstanding loans.

84. The Commissioner of insurance has:

Some of the powers vested in all three branches of government.

27. Which of the following is NOT a qualified retirement plan?

Split Dollar

5. Which of the following statements is NOT true about traditional Whole life policies?

The Whole Life policies are always written with flexible premiums.

42. Which of the following is reason your premium would increase if you converted your 5 year old Term insurance policy to Whole Life's?

The Whole Life premium will be calculated on your attained age, not on the age you were when the Term policy was issued.

66. The Life Insurance Solicitation Regulation, Rule 24, requires that

The applicant be given adequate information regarding the relative cost of various insurance products.

40. Which of the following statements is NOT a characteristic of Universal Life insurance?

The cash values can be withdrawn from the policy after age 70 1/2 tax free.

100. Under the Life Insurance Solicitation Regulation, Rule 24, cast is defined as

The difference between what you put in and what you get out.

23. Which of the following variables is NOT considered in determining how much an annuitant would receive under annuity payout?

The insurability of the annuitant.

26. Which of the following is NOT a characteristic of a qualified retirement plan?

The plan must be funded by guaranteed investment.

3. Which of the following statements is true about Universal Life?

The policy owner may withdraw part of the cash value and never pay et back, which is referred to as a partial surrender.

92. Which of the following is NOT considered to be replacement of life insurance?

The policyowner is keeping his existing coverage; however, he plans to borrow 20% of the cash value to pay the initial premium on the new policy that he is purchasing from you.

68. Which of the following is true regarding the Replacement Regulation, Rule 24?

The underlying purpose of Rule 24 is simply to make sure that an individual has enough information to make a valid decision about replacement.

91. Which of the following is NOT true of Viatical companies in Indiana?

They must pay the full face value of any life insurance contracts they purchase.

69. Which of the following is true about Living Benefit Agreements.

They permit a policyowner/insured who is suffering from a terminal illness to sell their life insurance to a third party at a price somewhat less than the expected death benefit.

74. You offer to give your prospect 25% of your commission if she purchases insurance from you.

This is a violation of the Unfair Competition Law.

67. As a Producer, which of the following best describes your duties under the Replacement Regulation, Rule 16. 1?

To conduct a reasonable investigation as to whether replacement will take place as the result of the purpose of a new policy.

12. In which of the following forms of Life insurance is the protection is always expressed in the form of Term insurance?

Universal Life

56. Survivorship Life insurance is

Useful in estate planning situations where there are substantial taxes to be paid.

10. The life insurance policy type that provides the policy owner with the greatest control over all elements of the policy, such as the amount of the death benefit, the size of the cash value, and where the cash value is invested is

Variable Universal Life

13. You wish to give an insurance company $300,000 today an in return you want the company to pay you and your spouse a fixed number of dollars of income per month for the rest of your lives starting ten years from now. Which of the following would not be appropriate to describe this annuity contract?

Variable.

99. Which of the following individuals represent terminally ill parties wishing to enter into a Viatical settlement?

Viatical Brokers.

96. When a third party purchases the rights to the proceeds of a life insurance policy covering a terminally ill person, this is referred to as a

Viatical settlement.

14. Assume that you own an Adjustable Life Insurance Policy. Which of the following factors can you NOT adjust?

Where the cash value is invested.

37. Interest sensitive Whole Life generally has all of the following characteristics EXCEPT:

You must hold an NASD license to market interest sensitive Whole Life policies.

35. Congratulations! You are approaching retirement and are fully insured. Which of the following will be the primary factor in determining how much you will receive as a social security retirement benefit?

Your average monthly wage during your earning years.