LIFE INSURANCE EXAM QUESTIONS
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to rollover her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?
$10,000, no tax consequence
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9,800
The hearing for a cease and desist order must occur within how many days of the order date?
15
An insured gets a notice about converting group coverage to individual coverage 5 days before the end of the conversion period. In this situation, how long will the insured have to convert the policy?
15 days
For how long is the certificate of relicensing course completion valid?
180 calendar days
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years
How many hours of continuing education must be completed in ethics?
3 (every 2 years)
An insolvent insurer is one who is unable to pay its obligations when they are due or has fewer assets than liabilities for a period of
3 years
How often must the Superintendent examine financial affairs of domestic insurers?
3 years
To avoid violating the state insurance code regarding unfair claims settlement practices, insurers must pay a claim within how many days of he final agreement to the settlement?
5 days
How many days after being licensed to place business transactions in Ohio must an insurer have an antifraud program in place?
90 days
When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by
A paramedic or examining physician at the insurers expense
Which of the following is not an allowable 1035 exchange?
A whole life insurance policy is exchanged for a term life policy
Which of the following produces evaluations of insurers' financial status often used by the departments of insurance?
AM Best
What documentation grants express authority to an agent?
Agent's contract with the principal
All of the following are required to qualify for a resident license EXCEPT
An applicant that is at least 21 years old
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer sponsored plan who has earned income
The LEAST expensive first year premium is found in which of the following policies?
Annually renewable term
Partners enter into a buy sell agreement. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
All of the following statements are correct regarding credit life insurance EXCEPT
Benefits are paid to the borrower's beneficiary
All of the following are duties and responsibilities of producers at the time of application EXCEPT
Change any incorrect statement on the application by personally initialing next to the corrected statement
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common disaster clause
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
Cost of living rider
Which of the following is true about credit life insurance?
Creditor is the policyowner
Which of the following is not typically excluded from life policies?
Death due to plane crash for a fare paying passenger
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
Who assumes control over an insurance company's funds and management if they become insolvent?
Department of insurance
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Distribution
Which of the following is true regarding taxation dividends in participating policies?
Dividends are not taxable
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income
The automatic premium loan provision is activated at the end of the:
Grace period
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?
Income tax on distributions and no penalty
An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have?
Industrial life
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option
Which of the following is true regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following is true regarding the annuity period?
It may last for the lifetime of the annuitant
Which of the following statements about the reinstatement provision is true?
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated
Which of the following would be the best option that would help the surviving spouse of the insured to put her children through daycare after the insured's death?
Life insurance proceeds
A person filed a report about an insurance fraud practice. The person could be sued for civil damages by which of the following?
No one
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor benefit
All of the following are examples of risk retention EXCEPT
Premiums
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex, and occupation of each individual certificate holder
A couple owns a life insurance policy with a children's term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required
Another name for a substandard risk classification is
Rated
An insured owns a term life policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describes this scenario?
Re-entry
Which of the following insurance options would be considered a risk sharing arrangement?
Reciprocal
Which type of insurance is based on mutual agreements among subscribers?
Reciprocal insurance
Statements made by an applicant for a life insurance policy which are true to the best of one's knowledge are referred to as:
Representations
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary
Equity Indexed Annuities
Seek higher returns
All of the following are beneficiary designations EXCEPT
Specified
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
Survivor protection
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
A viatical settlement is arranged between a viatical company and a
Terminally ill insured
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum or the current rate
The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free
Which of the following statements about group life is correct?
The cost of coverage is based on the ratio of men to women
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
The insured will need a written consent of the insurer
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies
All of the following statements are true regarding installments for a fixed amount EXCEPT:
The payments will stop when the annuitant dies
If an insured continually uses the automatic premium loan option to pay the policy premium,
The policy will terminate when the cash value is reduced to nothing
An applicant for insurance has been asked to take an HIV test, this is legal if
The test is only in conjunction with tests for other conditions
Which of the following is an example of a producer's judiciary duty?
The trust that a client places in the producer in regard to handling premiums
Which of the following is true about warranties
They are guaranteed to be true.
All of the following are true regarding the guaranteed insurability rider except
This rider is available to all insureds with no additional premiums
What is the purpose of a disclosure statement in life insurance policies?
To explain features and benefits of a proposed policy to the consumer
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
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?
Unilateral
Which of the following life insurance policies would be considered interest sensitive?
Universal life
In a survivorship policy, when does the insurer pay the death benefit?
Upon the LAST death
Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits?
Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued that original policy
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
an unfair trade practice
All of the following information about a customer must be used in determining annuity suitability EXCEPT
beneficiary's age
All of the following are personal uses of life insurance EXCEPT
buy sell agreement
For the purpose of insurance, risk is defined as
the uncertainty or chance of loss
