Life Insurance
Which of the following is not a factor in determining the amount the beneficiary will receive each time a payment is made under the fixed amount option? A. the capital amount B. the interest earned on the principal C. the specified amount of each payment D. the principal amount
A. the capital amount
All of the following are examples of buy-sell agreements EXCEPT A. cross-purchase plan B. entity plan C. executive bonus plan D. stock redemption plan
C. Executive bonus plan
Which of the following is a guarantee that at specified ages, dates, or events, the insured may buy additional insurance without a medical exam? A. Accidental death B. Waiver of premium C. Guaranteed insurability D. Return of premium
C. Guaranteed insurability
Which of the following premiums is the mortality element minus the interest element? A. Gross premium B. Loaded premium C. Net premium D. Fixed Premium
C. Net premium
Which of the following is an above average risk of loss and unfavorable to an insurance company? A. Standard B. Preferred C. Substandard D. Declined
C. Substandard
Which of the following is NOT a personal use of life insurance? A. Cash accumulation B. Estate creation C. Third part ownership D. Mortgage payoff
C. Third party ownership
A general report in regard to the applicant's finances, health, character, work, hobbies, and other habits that is usually completed by interviewing friends and associates is known as A. an attending physicians statement B. a medical information bureau report C. an investigative consumer report D. a consumer report
C. an investigative consumer report
The death benefit of a whole life policy is A. decreasing B. variable C. fixed and level D. increasing
C. fixed and level
Which settlement option pays only the earnings on the death benefit to a beneficiary? A. fixed amount B. life income C. interest only D. fixed period
C. interest only
Which of the following is NOT included in the general form of the insurance application? A. Beneficiary B. Occupation and business address C. Type of policy and face amount being applied for D. Height and weight
D. Height and weight
During the underwriting process, medical exams and testing are paid for by the A. underwriter B. applicant C. agent/producer D. insurer
D. Insurer
The amount of money paid by an accidental death and dismemberment rider if the insured is disabled in an accident is referred to as the A. principal sum B. capitol sum C. principle sum D. capital sum
D. capital sum
What are the 3 premium elements of Life Insurance?
Mortality Interest Expenses
The date of the application is the effective date of the _____ _____, as long as the applicant is found to be insurable under the company's standard underwriting rules.
conditional receipt
For an accidental death benefit rider to be payable the insured must die (due to injury from the accident) within how many days of the accident? A. 180 B. 90 C. 60 D. 30
B. 90
Which of the following classes of life insurance has a death benefit only, increasing premiums temporary coverage and expires at end of the term? A. Permanent life insurance B. Variable life insurance C. Term life insurance D. Home service life insurance
C. Term life insurance
Which of the following terms describes something that is used to add benefits to a life insurance policy and customize the coverage to an insured's particular needs? A. A rider B. A life insurance addition C. A contract D. A premium
A. A rider
Which of the following is NOT required to be able to sell variable policies? A. Registration with the NAIC B. Registration with FINRA C. A passing score on the appropriate securities exam D. A state insurance producer license
A. Registration with the NAIC
When Tom dies, Rosemary receives the death benefit. If Rosemary died before Tom, George would have received the benefit. Which of the following statements is TRUE? A. George is the contingent beneficiary, and Rosemary is the tertiary beneficiary B. Tom is the primary beneficiary, and Rosemary is the contingent beneficiary C. Rosemary is the primary beneficiary, and George is the contingent beneficiary D. Rosemary is the contingent beneficiary, and George is the primary beneficiary
C. Rosemary is the primary beneficiary, and George is the contingent beneficiary
A part of the application that requires the agent to provide information regarding the proposed insured, such as habits, character and relationship with the insured is known as a A. confidentiality report B. conditional receipt C. binding receipt D. producer's report
D. producer's report
What are the 5 classes of Life Insurance Policies?
Individual vs. Group Term vs. Permanent Participating vs. Non-Participating Fixed vs. Variable Industrial vs. Home Service
The _____ _____ _____ is a non-profit insurance trade association that maintains underwriting information on applicants.
Medical Information Bureau
The 3 types of information is maintained by the MIB files?
Medical history Hazardous jobs or hobbies Poor driving record
Auto and Home policies are _______ ________. Life and health policies are not.
Personal Contracts
Delbert is self-employed and sets up a retirement plan for himself. Delbert most likely sets up A. a 403(b) plan B. a 401(k) plan C. a SIMPLE plan D. a Keogh plan
D. a Keogh plan
Curtis knows that when he retires, he will receive $100 a month for every year of service with his employer. This is an example of A. a defined-contribution plan B. a profit-sharing plan C. a money purchase plan D. a defined-benefit plan
D. a defined-benefit plan
The Fair Credit Reporting Act requires which of the following to be issued to all applications for life or health insurance? A. a financial disclosure statement B. A free credit check C. all of these must be issued to applicants D. a notice to the applicant
D. a notice to the applicant
All of the following statements regarding tax treatment of group life insurance are true EXCEPT A. if a group plan is contributory, the portion paid by the employee is not tax-deductible B. premiums for any additional coverage above $50,000 are taxable as income to an employee C. premiums for the first $50,000 of coverage is not taxable to the employee D. group life insurance premiums paid by the employer are not tax-deductible as a business expense`
D. group life insurance premiums paid by the employer are not tax-deductible as a business expense`
How many parts are there to a Life Insurance application? What are they?
3 1= General Information 2= Health Information 3= Producer's Report
Which of the following types of insurance has premiums that are due weekly and are collected in person by producers who go door to door? A. Industrial Life insurance B. Permanent life insurance C. Term life insurance D. Home service life insurance
A. Industrial Life insurance
Which of the following factors does NOT have an effect on the insurance premium rates? A Mortality or morbidity B. Producer certification C. Expenses D. Interstate's Rates
B. Producer Certification
All of the following statements about policy dividends are true EXCEPT A. a dividend can be left with the insurer in a savings account to earn interest B. dividends can be guaranteed to be paid every year C. the dividend can be applied against the next premium due, reducing its amount D. the insurer can send a check to the policy owner in the amount of the dividend
B. dividends can be guaranteed to be paid every year
Carmen has selected to receive $10,000 per month until the principal and interest on her husband's life insurance policy have been paid out. Carmen has selected A. fixed-period option B. fixed-amount option C. life-income option D. interest-only option
B. fixed-amount option
Jim has selected to receive only the interest from his mother's life insurance policy. When Jim dies, his children will receive the lump-sum benefit in addition to the benefit from his life insurance policy. Jim has selected the A. fixed-amount option B. interest-only option C. fixed-period option D. life-income option
B. interest-only option
Walter is the beneficiary of his mother's life insurance policy. He wants to make sure the proceeds will last not only as long as he lives but also as long as his wife is alive. Walter should select the A. straight life income option B. joint and survivorship life income option C. life income certain option D. refund annuity option
B. joint and survivorship life income option
Of all the life income options, which settlement option has the largest payment? A. Life with refund certain B. life only C. life with period certain D. joint-and-survivor life
B. life only
All of the following statements regarding the life only settlement options are correct EXCEPT A. payments are guaranteed to continue for as long as the beneficiary lives B. payments continue even if the beneficiary dies shortly after payments begin C. life expectancy is a factor used in calculating the size of the payment D. life income payments are smaller for younger beneficiaries
B. payments continue even if the beneficiary dies shortly after payments begin
Which rider lets insureds buy additional coverage without proof of insurability in order to keep pace with inflation? A. Payor rider B. Guaranteed insurability C. Cost of living D. Accidental death and disability rider
C. Cost of living
Ashley has a policy that she must pay premiums on until she is 100 years old or until she dies. Ashley has A. a modified premium policy B. a limited-pay policy C. a continuous premium whole life policy D. a single premium policy
C. a continuous premium whole life policy
Which of the following types of insurance is designed to provide life insurance protection for only a limited time? A. Universal life insurance B. Whole life insurance C. Variable life insurance D. Term life insurance
D. Term life insurance
Pam owns a 1-year term policy. At the end of the year, she may purchase another identical policy without showing proof of insurability. Pam's policy is A. increasing term B. decreasing term C. convertible term D. renewable term
D. renewable term
A typical enrollment period is how many days after the probationary period? A. 31 B. 60 C. 30 D. 45
A. 31
At what age can people begin making catch-up contributions to their individual retirement plans? A. 50 B. 55 C. 65 D. 60
A. 50
At what age is an individual no longer subject to early withdrawal penalties under an IRA? A. 59 1/2 B. 59 C. 55 1/2 D. 55
A. 59 1/2
SIMPLE plans are reserved to small businesses that employ _____ or fewer employees.
100
If a group insurance policy is contributory was percentage of employees must participate? A. 75% B. 50% C. 90% D. 100%
A. 75%
Most state laws allow life insurance applications to be backdated up to ____ months.
6
Which of the following would NOT qualify as a 1035 exchange? A. An annuity contract to a life insurance policy B. An annuity contract to another annuity contract C. a cash value life insurance policy to another cash value life insurance policy D. a life insurance polity to an annuity contract
A. An annuity contract to a life insurance policy
When the owner of a life insurance policy is not the insured, there are three parties to the contract. Which of the following is not a party to this type of contract? A. Beneficiary B. Insured C. Applicant D. Insurer
A. Beneficiary
Which clause identifies the fact that the policy owner must pay something of value for the insurer's promise to pay benefits? A. Consideration clause B. Payment clause C. Entire contract clause D. insuring clause
A. Consideration clause
Which of the following is used to determine a consumer's eligibility for personal credit, insurance or employment? A. Consumer reports B. HIPAA C. Consumer investigative reports D. Medical information bureau
A. Consumer reports
Steve is the beneficiary on his wife's life insurance policy. When they divorce, his wife cannot remove him as beneficiary on the policy without his written permission because A. Steve is an irrevocable beneficiary B. Steve is an assigned beneficiary C. most states require the beneficiary's written consent D. Steve is a revocable beneficiary
A. Steve is an irrevocable beneficiary
John leaves his $300,000 estate to his 3 children to split equally according to a per stirpes distribution. One of his children dies before John does. Upon John's death, which of the following is TRUE? A. The proceeds are split 3 ways between the remaining children and the beneficiary of the deceased child's estate B. the proceeds are split 2 ways between the remaining children only C. the proceeds are split 4 ways between the remaining children, John's estate, and the deceased child's estate D. the proceeds are split 3 ways between the remaining children and John's estate
A. The proceeds are split 3 ways between the remaining children and the beneficiary of the deceased child's estate
Jimmy's Print Shop and Emily's Boutique join together to form a trust to provide insurance to their employees. This type of group is called A. a multiple employer trust B. a Taft-Hartley Trust C. a labor group D. an employee group
A. a multiple employer trust
All of the following group insurance eligibility requirements are true EXCEPT A. employers can choose which individuals will be covered and which will not be covered B. probationary periods usually range from 1 to 6 months C. employers can determine which classes of employees will be eligible for the plan D. the 2 most common classifications for employees are full time versus part time and years of service
A. employers can choose which individuals will be covered and which will not be covered
If the employer pays the entire group insurance premium for 100% of its employees, the plan is A. noncontributory B. inclusive C. noninclusive D. contributory
A. noncontributory
All of the following statements regarding the conversion privelege are true EXCEPT A. proof of insurability is required B. the converted policy must provide the same coverage amount as the individual had under the group policy C. the converted policy must be permanent insurance, not term D. the conversion must be done within 31 days from the date coverage is lost
A. proof of insurability is required
All of the following statements about profit-sharing plans are correct EXCEPT A. the amount of annual contributions is set by employee B. the maximum amount that an employer may contribute is limited to 25% of the company's payroll for all employees C. employers are not required to make a funding contribution every year D. plan contributions are dependent on the company making a profit
A. the amount of annual contributions is set by employee
An underwriter may ask the proposed insured's regular doctor for an ______ ______ ______ (APS) to find out about the applicants current condition and medical history with the physician.
Attending Physicians Statement (APS)
Martha has a universal life policy she purchased several years earlier. At that time, the death benefit in the policy was $100,000. Her cash value is now $50,000, and she has selected death benefit option A. How much is her current death benefit? A. $80,000 B. $100,000 C. $50,000 D. $150,000
B. $100,000
Which clause identifies the components of the contract? A. Consideration clause B. Entire contract clause C. Insuring Clause D. Payment Clause
B. Entire Contract Clause
Which whole life policy allows for a lifetime of premiums to be paid in a shorter period of time such as 10 or 20 years? A. Continuous premium whole life B. Limited-Pay whole life C. Single premium whole life D. Modified premium whole life
B. Limited-Pay Whole life
Which of the following riders allow for an advance of the death benefit if the insured is confined to a nursing home or cannot perform the activities of daily living? A. Guaranteed insurability rider B. Long-term care rider C. Return or premium rider D. Accidental death or dismemberment rider
B. Long-term care rider
Which of the following organizations would be eligible to offer a 403(b) arrangement? A. Any corporation B. Public School System C. Any small business D. Police Department
B. Public School System
Kim is required to take a $2,000 minimum annual distribution from her IRA. She fails to comply and only takes a $1,000 distribution. Because of this failure, Kim will be subject to A. a $500 fine B. a 50% penalty tax C. a 10% penalty tax D. a 25% penalty tax
B. a 50% penalty tax
The aviation exclusion eliminates coverage for all of the following EXCEPT A. a private flight B. a commercial flight C. test pilots D. military pilots
B. a commercial flight
While delivering the policy the producer must obtain a signed document that the insured's health is the same as when he or she applied for the insurance policy. This document is called A. an inspection report B. a statement of good health C. a delivery receipt D. a policy review
B. a statement of good health
All of the following are designations of beneficiaries EXCEPT A. primary beneficiary B. final beneficiary C. tertiary beneficiary D. secondary beneficiary
B. final beneficiary
Which clause contains the basic promise of the life insurance company to pay a specified sum of money to a beneficiary upon the death of the insured? A. Policy loan clause B. insuring clause C. payment clause D. consideration clause
B. insuring clause
Billy is receiving the proceeds of a life insurance policy as an income stream over a period of several years. What part of the money will be subject to tax? A. all of it; it is being paid out in an income stream B. only the part that represents income earned on the original death benefit C. None of it; it is life insurance proceeds D. only the part that represents the original death benefit and not the income earned on the original death benefit
B. only the part that represents income earned on the original death benefit
If the named beneficiaries cannot be found, under the facility of payment provision the insurer may A. retain the proceeds B. select a beneficiary C. pay proceeds directly to a minor D. pay a mortgage company
B. select a beneficiary
Adam is eligible for coverage on July 1. He enrolls on July 15. He does not need to show evidence of insurability because he enrolled within A. the waiting period B. the enrollment period C. the selection period D. the probationary period
B. the enrollment period
Tammy has a $100,000 life insurance policy with a double indemnity rider. Tammy is killed in an automobile accident. How much will the policy pay? A. $180,000 B. $100,000 C. $200,000 D. $400,000
C. $200,000
An individual chose to receive money from their annuity during the accumulation period. What is the penalty tax that must be paid in addition to regular taxes due on the taxable amount received? A. 3% B. 6% C. 10% D. 5%
C. 10%
For accelerated death benefits to receive the same tax treatment as regular death benefits the insured must be certified to have an illness or physical condition that can reasonably be expected to result in death within A. 36 months B. 12 months C. 24 months D. 9 months
C. 24 months
A rollover from one IRA to another or from a qualified plan to an IRA must be accomplished within how many days if the owner is to avoid an income tax liability on the amount rolled over? A. 90 B. 10 C. 60 D. 30
C. 60
Ginny is a revocable primary beneficiary on her mother's life insurance policy. Which of the following statements is TRUE? A. Ginny's mother may not change the beneficiary without Ginny's permission B. Ginny can probably assign her rights in the policy as collateral on a loan C. Ginny will receive benefits before any other beneficiary upon her mother's death D. Ginny will receive benefits only if another beneficiary has died before her mother dies
C. Ginny will receive benefits before any other beneficiary upon her mother's death
An insured and the primary beneficiary died in a car accident. Which of the following states that the primary beneficiary died first unless there is evidence to the contrary? A. The facility of payment provision B. The spendthrift provision C. The Uniform Simultaneous Death Act D. The common disaster provision
C. The Uniform Simultaneous Death Act
The baker's union and the butcher's union worked together to form a trust to provide insurance to their employees. This type of group is called A. an employee group B. a multiple employer trust C. a Taft-Hartly Trust D. a labor group
C. a Taft-Hartley Trust
For group insurance policies, the covered individual receives proof of coverage in the form of A. an insurance policy B. a certificate of policy C. a certificate of insurance D. an insurance contract
C. a certificate of insurance
In group insurance, the sponsoring group is issued A. a certificate of authority B. a certificate of insurance C. a master policy D. a policyholder policy
C. a master policy
Carmen owns a business with 200 employees that provides a retirement plan whereby the business makes contributions on the employee's behalf. Carmen's plan is most likely A. a 401(k) B. a Keogh plan C. an SEP D. a 403(b) plan
C. an SEP
All of the following are correct regarding group insurance EXCEPT A. the employer is the policyowner B. the employer cannot discriminate when determining eligibility of its members C. an individual policy will be provided to all members of the group D. a group cannot be formed only for the purposes of purchasing insurance
C. an individual policy will be provided to all members of the group
General Electricians offers insurance to its employees. About 80% of its eligible employees are currently covered under the plan. This plan is A. noninclusive B. inclusive C. contributory D. noncontributory
C. contributory
The amount of an annuity payout option for a life insurance settlement option that is taxable gain is determined by using the A. investment in the contract ratio B. cost basis ratio C. exclusion ratio D. expected return ratio
C. exclusion ratio
Which of the following characteristics about group credit life insurance is NOT correct? A. the lender is the beneficiary B. Coverage can be included as part of the loan transaction C. It is more expensive than individual credit life insurance D. if debt is paid, the policy is canceled
C. it is more expensive than individual credit life insurance
The penalties assessed against MECs primarily affect A. the cost basis of the policy B. money put into the policy C. money taken out of the policy D. the death benefits of the policy
C. money taken out of the policy
As a general rule, for federal tax purposes A. both life insurance and annuity premiums are tax deductible B. annuity premiums are tax deductible but life insurance premiums are not C. neither life insurance nor annuity premiums is tax deductible D. life insurance premiums are tax deductible but annuity premiums are not
C. neither life insurance nor annuity premiums is tax deductible
Carl purchased a life insurance policy when he was 44. The insurer accidentally recorded his age as 42. When the accident is discovered in a review of the files 5 years later A. the policy will not change because the incontestable period will have passed B. the policy will be canceled because of misrepresentation C. the coverage will be reduced because the premium is lower than it should have been. D. the coverage will be raised because the premium is higher than it should have been.
C. the coverage will be reduced because the premium is lower than it should have been.
All of the following can be named beneficiaries in a life insurance contract EXCEPT A. the insured's estate B. a trust C. the insured D. a minor
C. the insured
Gianna starts work at a new job on March 1. She is not eligible for insurance coverage until July 1. The period between start date and her eligibility date is A. the selection period B. the eligibility period C. the probationary period D. the waiting period
C. the probationary period
Which of the following is allowed when policy proceeded are being paid through a spendthrift clause? A. The beneficiary may borrow against the strength of the proceeds B. The proceeds may be commuted by the beneficiary to receive the present value of future payments in a lump sum C. The proceeds are paid directly to the beneficiary in monthly installments D. The proceeds may be transferred directly to a creditor by the beneficiary
C. the proceeds are paid directly to the beneficiary in monthly installments
The process of evaluating a risk to determine if the risk is one that the insurance company wishes to insure is also known as the A. decision making process B. application process C. underwriting process D. insurance process
C. underwriting process
All of the following statements regarding a modified endowment contract (MEC) are true EXCEPT A. once policy is an MEC, it will always be an MEC B. policy loans and dividends are taxed the same as withdrawals C. withdrawals are taxed on a first-in-first-out basis D. withdrawals are taxed on a last-in-first-out basis
C. withdrawals are taxed on a first-in-first-out basis
Karen has a universal life policy she purchased several years earlier. At that time, the death benefit in the policy was $100,000. Her cash value is now $20,000, and she has selected death benefit option B. How much is her current death benefit? A. $80,000 B. $100,000 C. $20,000 D. $120,000
D. $120,000
Premature distribution from a qualified plan or an IRA can result in the amount being taxed as income plus a penalty tax of A. 15% B. 5% C. 25% D. 10%
D. 10%
The incontestability provision is usually in effect after A. 4 years B. 1 year C. 5 years D. 2 years
D. 2 years
The insurer is generally required to pay the death benefit claim within A. 30 days B. 45 days C. 90 days D. 60 days
D. 60 days
When does the face amount of a jumping juvenile policy typically increase? A. Age 35 B. Age 15 C. Age 65 D. Age 18
D. Age 18
John leaves his $300,000 estate to his 3 children to split equally according to a per capita distribution. One of his children dies before John does. Upon John's death, which of the following statements is TRUE? A. the proceeds are split 3 ways between the remaining children and the beneficiary of the deceased child's estate B. the proceeds are split 3 ways between the remaining children and John's estate C. the proceeds are split 4 ways between the remaining children, John's estate, and the deceased child's estate D. The proceeds are split 2 ways between the remaining children only
D. The proceeds are split 2 ways between the remaining children only
What is the name of the test that is done on a life insurance policy to see if its premiums exceed those needed to fully pay up a death benefit with seven level annual payments? A. accumulation test B. endowment test C. annuitization test D. seven-pay test
D. seven-pay test
Which classification does this represent? Average Health and normal life expectancy These risks can be insured for standard rates
Standard
The _____ is the underwriters primary source of information
application
Which of the following is NOT a factor in determining the amount the beneficiary will receive each time a payment is made under the fixed period option? A. the age of the beneficiary B. the length of time payments is to be made C. the interest earned on the principal D. the principal amount
A. the age of the beneficiary
The section of the application that includes information regarding the proposed insured's physical condition, medical history and alcohol and drug use is known as A. first part - general information B. the entire application C. second part - health information D. attending physician's statement
C. second part - health information
Zelda agrees to pay premiums on her policy every year for 20 years. After that, she will no longer have to pay premiums, but her insurance protection will continue until she dies. Zelda has A. a modified premium policy B. a whole life policy C. a limited-pay policy D. a single premium policy
C. a limited pay policy
The assets left behind after an individual's death is known as A. liquidity B. dept C. an estate D. financial obligations
C. an estate
Which of the following is a non-profit insurance trade association that maintains underwriting information on applicants from hundreds of insurers? A. Medical Information Bureau B. HIPPA C. Investigative Consumer Reports D. Consumer reports
A. Medical Information Bureau
Which of the following describes as employer that agrees to pay an employee a stated amount of income beginning at retirement rather than paying them money right now? A. Deferred compensation plan B. Buy Sell agreement C. Key person coverage D. Executive bonus plan
A. deferred compensation plan
Which of the following is NOT flexible in a universal life policy? A. guaranteed interest rate B. premium schedule C. death benefits D. premium amounts
A. guaranteed interest rate
The amount of money paid by an accidental death benefit rider if the insured dies in an accident is referred to as the A. principal sum B. capitol sum C. principle sum D. capital sum
A. principal sum
Which of the following imposes a requirement that the insurer must keep all medical information confidential and protect the applicant's privacy? A. HIPAA B. Medical Information Bureau C. Consumer Reports D. Consumer investigative reports
A. HIPAA
All of the following statements about completing the insurance application are correct except A. the producer's report must be signed by both the applicant, proposed insured and producer/agent B. collecting the first premium with the application is the quickest way to get coverage in force C. Any change to an application must be initialed by the applicant D. the application form must be signed by both the applicant, proposed insured and producer/agent
A. the producer's report must be signed by both the applicant, proposed insured and producer/agent
Which of the following riders allow insureds who are terminally ill to obtain benefits from insurance policies prior to their death? A. Disability income rider B. Accelerated benefits rider C. Payor rider D. Waiver of premium rider
B. Accelerated benefits rider
Under which of the following receipts is coverage effective as of the date of the application as long as the applicant is found to be insurable under the company's standard underwriting rules? A. Binding receipt B. Conditional receipt C. Acceptance receipt D. Standard receipt
B. Conditional receipt
Kumar has a life insurance policy with a rider that will pay him $1,000 per month if he is totally and permanently disabled. Which type of rider does he have? A. Accidental death and disability rider B. Disability income rider C. Waiver of premium rider D. Payor Rider
B. Disability income rider
Paul has a life insurance policy on his son for which he pays all the premiums. A rider to this policy states that if Paul becomes permanently and totally disabled, the premiums will be paid until his son reaches age 21, at which point his son will take over the premium payments. Which type of rider does he have? A. Accidental death and disability rider B. Payor rider C. Disability income rider D. Waiver of premium rider
B. Payor rider
The distinguishing feature of a variable policy is that all of the earnings depend on the investment performance of a A. bank account B. separate account C. personal account D. general account
B. Separate Account
Which of the following individuals is NOT required to sign the application form? A. The applicant (if not the insured) B. The beneficiary C. The insured D. The producer/agent
B. The beneficiary
Which of the following statements about paid-up additions is TRUE? A. The operating expenses of putting this coverage in force are higher than original policy expenses. B. The dividends are used to purchase additional insurance protection C. the additional protection is almost always restricted to term insurance D. The single premium for the added coverage will be based on the insured's original age.
B. The dividends are used to purchase additional insurance protection
Which of the following types of insurance requires a level premium and provides lifelong protection? A. Term life insurance B. Whole life insurance C. Variable life insurance D. Universal life insurance
B. Whole life insurance
Whole life is often referred to as A. level insurance B. permanent insurance C. term insurance D. less expensive insurance
B. permanent insurance
A risk that represents a chance of experiencing a loss that is below average and therefore favorable to the company is a A. declined risk B. preferred risk C. standard risk D. substandard risk
B. preferred risk
A risk that bears the same health, habits and occupational characteristic as the persons on whose the mortality table was based upon is known as a A. preferred risk B. standard risk C. declined risk D. substandard risk
B. standard risk
Most states allow backdating to be done on an insurance application for A. up to 2 months B. up to 6 months C. up to 9 months D. up to 4 months
B. up to 6 months
_______ receipts are effective for 30 to 60 days from the date of application even if the applicant is found to be uninsurable.
Binding
Heath has chosen to receive the payout from his wife's life insurance policy in such a way that he will have an income for the remainder of his life, regardless of how long he lives. Heath has selected A. interest-only options B. fixed-period option C. life-income options D. fixed amount option
C. life-income options
Christy has a term policy that will allow her to switch over to a whole life policy at any time during the first half of the term without providing evidence of insurability. What type of policy is this? A. Reentry term insurance B. Renewable term insurance C. Convertible term insurance D. Level term insurance
C. Convertible term insurance
In life insurance contracts, when must insurable interest exist? A. at the time the policy is purchased and at the time the loss occurs B. Only at the time that the loss occurs C. Only at the time the policy is purchased D. It does not need to exist in life insurance contracts
C. Only at the time the policy is purchased
Which of the following riders is increasing term insurance that always equals the total premiums paid during the time the policy is in effect? A. Accidental death B. Waiver of premium C. Return of premium D. Guaranteed insurability
C. Return of premium
Which of the following is a waiver of all future premiums in the event of total and permanent disability? A. Accidental death B. Guaranteed insurability C. Waiver of premium D. Return of premium
C. Waiver of premium
Alberta is concerned that if she became totally and permanently disabled, she would not be able to pay her life insurance premiums and the policy will lapse. Which type of rider should she consider to protect against this possibility? A. Disability income rider B. Accidental death and disability rider C. Waiver of premium rider D. Payor rider
C. Waiver of premium rider
Which of the following statements about flexible policies is NOT correct? A. Policyowners cannot know in advance what their flexible policies' values will be B. A universal life insurance policy is cash-value driven rather than premium-driven C. Policyowners can change their premium or death benefit with an adjustable life insurance policy D. Flexible polices are temporary insurance
D. Flexible polices are temporary insurance
Which of the following specialized policies insures two people and pays its benefit when the first one dies? A. Survivorship policy B. Juvenile policy C. Family policy D. Joint life policy
D. Joint Life policy
Which of the following factors is NOT prohibited from use in order to classify a risk? A. Place of residence B. Race C. Religion D. Marital status
D. Marital status
Emily has chosen to receive the payout from her husband's life insurance policy so that she will receive an income for the next 15 years. At the end of that time, the entire proceeds from the policy will have been paid out. Emily has selected the A. life-income option B. fixed-amount option C. interest-only option D. fixed-period option
D. fixed-period option
Which of the following terms refers to how easily an asset can be turned into cash without loss of value? A. hard assets B. estate conservation c. estate creation d. liquidity
D. liquidity
All of the following statements regarding variable life insurance are true EXCEPT A. Agents who sell variable life much be licensed to sell insurance by the state and also registered as securities representatives B. Variable life's cash values will go up and down based on performance of the separate account C. variable universal life does not have a guaranteed minimum death benefit D. most variable life policies offer a guarantee of a minimum return
D. most variable life policies offer a guarantee of a minimum return
Cash surrender, reduced paid up insurance, and extended term insurance are all examples of A. paid up insurance B. dividend options C. paid up additions D. nonforfeiture options
D. nonforfeiture options
Thomas has chosen to receive the settlement from his wife's $100,000 life insurance policy according to the life income option. Under the option he chooses, he will receive an income for his life and his daughter will receive payments if he dies before receiving $100,000 in income. Thomas has selected a A. straight life income options B. life income certain option C. joint and survivorship life income option D. refund annuity option
D. refund annuity option
All of the following are names of distinct income need periods EXCEPT A. family dependency B. preretirement C. retirement D. social security
D. social security
Which of the following statements about reduced paid-up insurance option is NOT true? A. the new policy will build cash values for the policyowner B. a full share of the expense loading is usually not included in the premium on the reduced coverage because the costs of setting up the coverage are greatly reduced C. No further premiums need to be paid on the reduced policy- it is paid up D. the new protection is for the same amount as the original policy
D. the new protection is for the same amount as the original policy
All of the following statements about the waiver of premium rider are true EXECPT A. with waiver of premium rider, at first, insureds are considered disabled if they are unable to work at their present job B. with the waiver of premium rider, if an insured recovers and returns to work after a disability they must begin paying policy premiums again C. with the waiver of premium rider, if the insured becomes permanently disabled before the insured's working years end, premiums will continue to be waived for life D. with the waiver of premium rider, premiums are reduced by 80% during any period that the insured is disabled
D. with the waiver of premium rider, premiums are reduced by 80% during any period that the insured is disabled
Which classification does this represent? Underwriters guidelines indicate that an applicant is not insurable at any price
Declined
______ _____ ____ _____ Act was enacted to protect the interests of participants in employee benefit plans as well as the interests of the participants' beneficiaries.
Employee Retirement Income Security Act (ERISA)
Which classification does this represent? Excellent health - A risk of loss that is below average These risks may be insured at a preferred or discounted rate
Preferred
What are the 4 classifications an applicant is sorted into based on the level of risk they represent?
Standard Preferred Substandard Declined
Which classification does this represent? Below average life expectancy These risks can only be accepted by charging higher rates
Substandard
The _____ _____ Act is designed to prevent and detect money laundering and financing of terrorism and report suspicious activity.
USA Patriot Act
Most conditional receipts are effective the date of the application, or the date of the required _____ ______, whichever is the later of these two events.
medical examination
Life insurance binders are called _______ ______ _______.
temporary insurance agreements