Life Insurance Exam Questions

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid Up Option With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.

Policies written on a third-party ownership basis are usually written to cover:

Policyowner's minor children or business associates.

When group life insurance is offered to members of an employee's family, the coverage is typically what when compared with the coverage offered to the employee?

Lesser than Group life insurance may be extended to members of the employee's family, usually at a lesser coverage.

Regarding credit life insurance, how long after the maturity date will termination occur?

Mo more than 15 days beyond maturity date.

What does the application of contract of adhesion mean?

Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred. Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis.

When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the

Insurer

The commissioner receives complaints from several policyholders of a particular insured. She needs to examine information included in their insurance contracts. Where will she find this information?

Licensee's principle place of business.

cash value guarantees in a whole life policy are called

Nonforfeiture values

To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called?

Insurable Interest

What is the maximum death benefit that the Delaware Life and Health Insurance Guaranty Association will pay for health insurance benefits for any one individual?

$100,000

How long does the typical grace period last?

1 month (30 days)

When an insured dies, how long does the insurer have to make a settlement on the payable benefits?

2 months

An individual will receive 10 automatic credits every 2 years to use toward fulfilling continuing education requirements, if he or she has been continuously licensed for at least how many years?

25 years an individual who has been continuously licensed for 25 years or longer, or an individual who holds a professional designation, receives an automatic 10 credits every 2 years.

What is the maximum death benefit that delaware life and health insurance guaranty association will pay for an insolvent insurerer?

300,000

Domestic insurers must be examined at least once every how many years?

5 Years

All of the following are consideration in an insurance policy EXCEPT a. The premium paid at the time of application b.Promise to pay covered losses c. Cash value in the policy d. Statements on application

C the cash value in the policy

In a variable life insurance policy, all of the following assets are held in the insurance company's general account except a)Mortality reserves b)Face amount reserves c)Incidental benefit amounts d)Cash surrender values

Cash Surrender values

Which authority will determine whether a prospective producer will receive his or her producers license?

Commissioner

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the

Company.

An insurer belonging to the Delaware Life and Health Insurance Guaranty Association becomes insolvent. What factor will determine the amount that each of the member insurers will pay?

Each insurer's portion of the total premiums collected.

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended Term

The term "insurance consultant" may be used interchangeably with which of the following terms?

insurance producer According to the Delaware Insurance Code, the terms "insurance agent," "insurance broker," and "insurance consultant" may be used interchangeable with the term "insurance producer."

If it is determined that a violation was committed, the Director may suspend a producer's license for

up to 12 months

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

After a loan is requested off of a life insurance policy, how long does an insurer have to disperse funds?

6 months

Which of the following applies to the 10-day free-look privilege?

A policyowner may return a policy for any reason during the free-look period and receive a full refund.

Which of the following would NOT trigger the payment of Accelerated Death Benefits? a) Being permanently disabled b) Terminal Illness c)Requiring an organ transplant for the insured to survice d)Being permanently institutionalized

A) Being permanently disabled Accelerated death benefits or living riders allow the early payment of some portion of the death benefit if the insured has conditions such as terminal illness, permanent institutionalizaiotn , or a life threatening condition that requires dramatic medical intervention. Accelerated death benefit however, does not cover disability.

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?

As of the application date If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application.

An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?

Fair Credit Reporting Act The federal Fair Credit Reporting Act regulates consumer investigative reports that are ordered in connection with applications for credit, insurance or employment. If an insurer takes adverse action against an applicant based upon incorrect information received in a credit report, the Act contains procedures for the applicant to follow I order to get it corrected, without the need to file a lawsuit.

Annually renewable term policies provide a level death benefit for a premium that

Increases Annually

Which of the following provides specific information about the products that are being considered and must be left with a prospective insured at the time of application?

Policy Summary

Which universal option has a gradually increasing cash value and a level death benefit?

Universal option A

Which statement is guaranteed to be true and if untrue may breach an insurance contract?

Warranty

All of the following are true of a non qualified deferred compensation plan EXCEPT a. it can be discretionary b.Contributions are tax deductible c.It is a contractual agreement whereby the employee agrees to defer receipt of a portion of his compensation until retirement, disability, or death.

B

Where are premiums from fixed annuities invested?

GENERAL ACCOUNT A fixed annuity is characterized by a general account into which the purchase payments (premiums) are invested.

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed Insurabiltiy The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider. The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.

Which of the following is NOT one of the three basic types of coverage's that are available, based on how the face amount changes during the policy term?

Renewable There are three basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: Level, Increasing, and Decreasing. Regardless of the type of term insurance purchased, the premium is level throughout the term of the policy.

Which of the following would help prevent a universal life policy from lapsing?

Target Premium The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

A person may request a hearing by the commissioner. What are the requirements for requesting a hearing?

The application must be in writing and within 90 days after the violation occurred

An insurance producer may qualify to obtain a license in all of the following EXCEPT

a) Property insurance. b) Marine insurance. c) Surplus lines. d) None of the above. All would qualify. D An insurance producer may qualify to obtain a license in life insurance, variable annuities, health insurance, Medicare and long-term care insurance as a supplement, title insurance, fire and allied lines (property), casualty (liability, home owners), fidelity and surety, marine and transportation, and general lines, such as a surplus lines broker.