Life insurance exam practice
A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years?
7 years
What are the continuing education requirements for agents who market long-term care insurance policies?
8 hours of long-term care specific education included in the regular CE requirements
Where are premiums from fixed annuities invested?
A general account A fixed annuity is characterized by a general account into which the purchase payments (premiums) are invested
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value
Automatic Premium Loan Option
Which of the following is NOT a characteristic of variable insurance and annuities
Benefits are determined solely based on the policy premium
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option
Extended term
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT
It does not have a guaranteed death benefit
What does an annuity protect the annuitant against?
Living longer than expected
In contrasting stock insurers with mutual insurers, which statement is true
Stock insurers are owned by the shareholders and issue nonparticipating policies
All of the following are true of credit life EXCEPT
The insured names the beneficiary
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
The primary beneficiary died before the insured
Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is
larger
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement
level
Which of the following is TRUE of level term insurance?
It is temporary protection
When an insurer tries to discourage a policyholder from replacing an existing policy, this is called
conservation effort
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select
Joint and survivor
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?
The difference between the premiums paid and the cash value
What is the purpose of key-person insurance?
To minimize the risk of financial loss caused by the death of a key employee
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce
Without receiving written consent from an insurance regulatory authority.
In life insurance, which of the following is NOT required to have an insurable interest in the insured?
beneficiary
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will
continue to increase
An annuity owner receives the same guaranteed payment every month. What type of annuity is it?
fixed
A representation in an insurance contract qualifies as a(n)
implied warranty
A person has a history of DUIs. To his insurer, this presents what type of hazard?
morale
An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using
reduction
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles
standard
An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed
twisting
An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive
$70,000
A policyholder returns the policy to the insurer a week after it is delivered. How much of the premium will be returned to the applicant
100%
For an insurance contract, the principle of utmost good faith means
3. Each party relies upon the truthfulness of the other.