Life Insurance Exam 2
When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information? Interviews State records Medical redords Application
Application
The term "fixed" in a fixed annuity refers to all of the following EXCEPT Equal annuity payments Amount and length of payments Death benefit Guaranteed rate of interest
Death benefit
When must insurable interest exist in a life insurance policy? At the time of the policy delivery When there is a change of the beneficiary At the time of loss At the time of application
At the time of application
What does "liquidity" refer to in a life insurance policy? The death benefit replaces the assets that would have accumulated if the insured had not died The policy owner receives dividend checks each year The insured receives payments each month in retirement Cash values can be borrowed at any time
Cash values can be borrowed at any time
Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose HR-10 (Keogh plan) Section 457 Deferred Compensation plan 403(b) plan 401(k) plan
HR-10 (Keogh plan)
The entire contract is made up of all the following EXCEPT The buyer's guide Riders and endorsements The insurance policy The polocy application
The buyer's guide
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? The death benefit will be larger The death benefit will be smaller The death benefit will be forfeited The death benefit will be the same as the original face amount
The death benefit will be smaller
Long-term care coverage may be available as any of the following options EXCEPT Individual long-term care Endorsement to a life policy Endorsement to a health policy Group long-term care
Endorsement to a health policy
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 Survivorship Life Policy Second-to-Die Family Income Policy
Joint Life Policy
What is the other term for the cash payment settlement option? Principal amount Face amount proceeds Lump sum
Lump sum
Which of the following is called a "second-to-die" policy? Survivorship life Family income Juvenile life Joint life
Survivorship life
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? Universal Life- Option A Universal Life-Option B Equity Indexed Universal Life Variable Universal Life
Universal Life- Option A
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision making process? illustrations Buyer's guide Insurance index Policy summary
Buyer's guide
Which of the following is NOT an example of insurable interest? Child in parent Debtor in creditor Business partners in each other Employer in employee
Debtor in creditor
Which of the following best describes annually renewable term insurance? It is level term insurance It requires proof of insurability at each renewal Neither the premium nor the death benefit is affected by the insured's age It provides as annually increasing death benefit
It is level term insurance
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? Limited pay whole life Interest sensitive whole life Life Annuity with period certain Increasing term
Limited pay whole life
Which Universal Life option has a gradually increasing cash value and a level death benefit? Option A Juvenile life Term Insurance Option B
Option A
An insured purchased a 10-year level term policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? The insured may renew the policy for another 10 years at the same premium rate The insured may renew the policy for another 10 years, but at a higher premium rate The insured must provide evidence of insurability to renew policy The insured may only convert the policy to another term policy
The insured may renew the policy for another 10 years, but at a higher premium rate
The insured had his wife named as the beneficiary of his life insurance policy. to ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT The beneficiary's life expectancy Projected interest rates Face amount of the policy The insured's age of death
The insured's age of death
Which of the following is the best reason to purchase life insurance rather than annuities? To liquidate a sum of money over a period of years To crate regular income payments To liquidate a sum of money over a lifetime To create an estate
To create an estate
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT Most term policies contain a convertibility option Upon conversion, the premium for the permanent policy will be based upon attained age Upon conversion, the death benefit of the permanent policy will be reduced by 50% Evidence of insurability is not required
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
All of the following are true regarding a decreasing term policy EXCEPT The payable premium amount steadily declines throughout the duration of the contract The death benefit is $0 at the end of the policy term The contract pays only in the event of death during the term and there is no cash value The face amount steadily declines throughout the duration of the contract
The payable premium amount steadily declines throughout the duration of the contract
An individual purchased a $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 the policy? Nothing $50,000 $100,000 $200,000
$100,000
If a company has a Simplified Employee Pension plan, what type of plan is it? The same as an IRA, with the same contribution limits An undefined contribution plan for large businesses A qualified plan for a small business The same as a 401(k) plan
A qualified plan for a small business
What license of licenses are required to sell variable annuities? Only a life insurance license Only a securities license No license is required Both a life insurance license and a securities license
Both a life insurance license and a securities license
Life income joint and a survivor settlement option guarantees Income for 2 or more recipients until they die Payment of interest on death proceeds Payout of the entire death benefit Equal payments to all recipients
Income for 2 or more recipients until they die
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be Determined by the health of the insured Based on the issue age of the insured Discounted Adjusted to the insured's age at the time of renewal
Adjusted to the insured's age at the time of renewal
Who bears all of the investment risk in a fixed annuity? The beneficiary The annuitant The insurance company The owner
The insurance company
Which required provision allows an insured to pay overdue premiums within 30 days for a life insurance policy to remain in effect? Payment of premiums Grace period Incontestability Reinstatement
Grace period
Which term describes the benefits of a life insurance policy that the policy owner does not automatically relinquish even if the policy lapses? Nonforfeiture values Permanent values Cash values Guaranteed values
Nonforfeiture values
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? Option A Option B Corridor option Variable option
Option B
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy Decreased death benefit at each renewal Required a premium increase each renewal Built cash values Required proof of insurability every year
Required a premium increase each renewal
Which of the following applicants would NOT qualify for a Keogh Plan? Someone who has been employed for more than12 months Someone who is over 25 years of age Someone who works for a self employed individual Someone who works 400 hours per year
Someone who works 400 hours per year
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as Survivorship Insurance Juvenile protection provision Survivor protection Life planning
Survivor protection