Life Insurance Exam

The term illustration in a life insurance policy refers to A) Pictures accompanying a policy B) Charts and graphs C) A presentation of nonguaranteed elements of a policy D) A depiction of policy benefits and guarantees

A presentation of nonguaranteed elements of a policy

An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? A) Unilateral B) Conditional C) Personal D) Adhesion

Adhesion

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on part of the insurance company A) Adhesion B) Subrogation C) Warranty D) Aleatory

Aleatory

The death protection component of Universal Life Insurance is always A) Whole Life B) Adjustable Life C) Increasing Term D) Annually Renewable Term

Annually Renewable Term

A universal life insurance policy is best described as a/an A) Annually renewable term policy with a cash value account B) Variable life with a cash value account C) Whole life policy with two premiums: target and minimum D) Flexible premium variable life policy

Annually renewable term policy with a cash value account

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A) As of the application date B) As of the policy delivery date C) As of the first of the month after the policy issue D) As of the policy issue date

As of the application date

When must insurable interest exist in a life insurance policy? A) When there is a change of the beneficiary B) At the time of loss C) At the time of application D) At the time of policy delivery

At the time of application

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A) Representation B) Adhesion C) Consideration D) Good faith

Consideration

When an insured makes truthful statements on the application and pays the required premium, it is known as which of the following A) Consideration B) Legal Purpose C) Contract of adhesion D) Acceptance

Consideration

When an insured makes truthful statements on the application and pays the required premium, it is known as which of the following? A) Legal Purpose B) Contract of Adhesion C) Acceptance D) Consideration

Consideration

Representations are written or oral statements made by the applicant that are A)Guaranteed to be true B) Found to be false after further investigation C) Immaterial to the actual acceptability of the insurance contract D) Considered true to the best of the applicant's knowledge

Considered to be true to the best of the applicant's knowledge

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? A) Agent's report B) Any federal report C) Consumer report D) Inspection report

Consumer report

Which of the following is NOT an essential element of an insurance contract? A) Agreement B) Legal Purpose C) Counteroffer D) Consideration

Counteroffer

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? A) Decreasing term B) Variable life C) Universal life D) Whole life

Decreasing term

Which of the following best describes the aleatory nature of an insurance contract? A) Only one of the parties being legally bound by the contract B) Ambiguities are interpreted in favor of the insured C) Policies are submitted to the insurer on a take-it-or-leave-it basis D) Exchange of unequal values

Exchange of unequal values

Both Universal Life and Variable Universal Life have a A) Decreasing premium B) Increasing premium C) Flexible premium D) Level fixed premium

Flexible premium

Fixed annuities provide all of the following except A) Minimum guaranteed rate of interest B) Future income payments C)Hedge against inflation D) Equal monthly payments for life

Hedge against inflation

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? A) Deferred interest annuity B) Immediate annuity C) Variable annuity D) Flexible payment annuity

Immediate annuity

Who makes up the Medical Information Bureau? A) Hospitals B) Former insured C) Physicians and paramedics D) Insurers

Insurers

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 A) It will likely be the average premium issued to standard risks B) The applicant's habits and health do not affect the premiums' C) It will likely be higher because of the applicant is a preferred risk D) It will likely be higher because the applicant is a substandard risk

It will likely be higher because the applicant is a substandard risk

Which statement is not true regarding a straight life policy? A) It has the lowest annual premium of the three types of Whole Life policies B) Its premium steadily decreases over time, in response to its growing cash value C) The face value of the policy is paid to the insured at age 100 D) It usually develops cash value by the end of the third policy year

Its premium steadily decreases over time, in response to its growing cash value

Twin brothers are stating a new business. They know it will take several years to build the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A) Joint Life B) Decreasing Term C) Whole Life D) Ordinary Life

Joint Life

An insured stated on her application for life insurance that she had never had a heart attack when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit is denied? A) Estoppel B) Material Misrepresentation C) Waiver D) Utmost good faith

Material misrepresentation

A prospective insured received a conditional receipt but dies before the policy was issued. The insurer will A) Pay the policy proceeds only if it would have issued the policy B) Pay the policy proceeds up to an established limit C) Not pay the proceeds under any circumstances D) Automatically pay the policy proceeds

Pay the policy proceeds only if it would have issued the policy

Which of the following is another term for the accumulation period of an annuity? A) Pay-in period B) Premium period C) Liquidation period D) Annuity period

Pay-in period

Another name for a substandard risk classification is A) Elevated B) Rated C) Controlled D) Declined

Rated

Which of the following is NOT one of the three basic types of coverage that are available, based on how the face amounts changes during the policy term? A) Increasing B) Renewable C) Decreasing D) Level

Renewable

Equity indexed annuities A) Seek higher returns B) Are more risky than variable annuities C) Are security instruments D) Invest conservatively

Seek higher returns

Which of the following would help prevent a universal life policy from lapsing? A) Face Amount B)Adjustable premium C) Corridor of insurance D) Target premium

Target Premium

All of the following entities regulate variable life policies except A) The insurance department B) The guaranty association C) Federal government D) SEC

The Guaranty Association

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is true? A) Because the annuitization period has not started, the owner's estate will receive the money paid into the annuity B) The insurance company will retain the cash value and pay back the premiums to the owner's estate C) The money will continue to grow tax-deferred until the liquidation period, and then paid to the beneficiary D) The beneficiary will receive the greater of the money paid into the annuity or cash value

The beneficiary will receive the greater of the money paid into the annuity or the cash value

In insurance, and offer is usually made when A) The completed application is submitted B) The insurer approves the application and receives the initial premium C) The agent hands the policy to the policyholder D) An agent explains a policy to a potential applicant

The completed application is submitted

Which of the following determines the cash value of a variable life policy? A) The company's general account B) The policy's guarantees C) The premium mode D) The performance of the policy portfolio

The performance of the policy portfolio

If an insurer issued a policy based on the application that has unanswered questions, which of the following will be true? A) The policy will be interpreted as if the insured did not have an answer to the question B) The policy will be void C) The insurer may deny coverage later, because of the information missing on the application D) The policy will be interpreted as if the insurer waived its right to have an answer on the application

The policy will be interpreted as if the insurer waived its right to have an answer on the application

Why should the producer personally deliver the policy when the premium has already been paid? A) To ensure the producer gets paid commission B) To find out how the family has been doing since the initial presentation C) To make sure the policy is not stolen or lost D) To help the insured understand all aspects of the contract

To help the insured understand all aspects of the contract

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? A) Conditional B) Unilateral C) Unidirectional D) Aleatory

Unilateral

Which of the following is not an example of insurable interest A) Employer in employee B) Child in parent C) Debtor in creditor D) Business partners in each other

debtor in creditor

Upon policy delivery, the producer may be required to obtain any of the following except A) Payment of premium B) Delivery receipt C) Signed waiver of premium D) Statement of good health

signed waiver of premium