Life Insurance Primerica

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

The Commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within what number of days must the hearing be held?

10 days

Viatical settlements may be rescinding within what time period after the viator receives the proceeds?

15 days

An individual covered under a group life insurance policy may convert the policy to any of the following except

15-year level term

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

For variable products, underlying assets must be kept in

A separate account

Which of the following premium payment modes will incur the lowest overall payment?

Annual

The death protection component of Universal Life Insurance is always

Annually Renewable Term

A Universal Life insurance policy is best described as a/an

Annually Renewable Term policy with a cash value account

When an annuity is written, whose life expectancy is taken into account?

Annuitant

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT

Being age 65

Which of the following best describes fixed-period settlement option?

Both the principle and interest will be liquidated over a selected period of time

Which of the following features of the Indexed Whole Life policy is NOT fixed?

Cash value growth

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority

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 (must be initialed by the applicant)

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

Charge a higher premium

Which entity has the authority to grant a temporary life insurance agent's license?

Commissioner of insurance only

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

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Conditional

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration

In Texas, the state's continuing education requirement

Consists of completing 24 hours of CE each biennium

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

Cost comparison methods

What characteristic makes whole life permanent protection?

Coverage until death or age 100

Which of the following is TRUE about credit life insurance?

Creditor is the policyowner

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of

Defamation

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type is it?

Deferred

The death benefit in a variable universal life policy

Depends on the performance of a separate account

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?

He will have to pay a penalty if he is younger than 59 1/2

Fixed annuities provide all of the following EXCEPT

Hedge against inflation

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal

Which of the following policy components contains the company's promise to pay?

Insuring clause

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

Which of the following best describes annually renewable term insurance?

It is term level insurance

Which of the following is true about a policy assignment?

It transfers rights of ownership from the owner to another person

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

Lump sum

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. This dividend option is called

Paid-up additions

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

Paid-up option

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 true regarding insurance policy loans EXCEPT

Policy loans can be made on policies that do not accumulate cash value

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a

Premium receipt

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 a 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

An insured committed suicide one year after his life insurance policy was issued. The insurer will

Refund the premiums paid

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract

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

What is true about a spouse term rider?

The rider is usually level term insurance

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

What is the purpose of a cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance

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

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Via tidal settlement

All of the following benefits are available under Social Security EXCEPT

Welfare benefits

How long is the grace period in group policies?

31 days

An agent completed a CE course in 2019. Until what year must the agent keep the records of completion?

4 years: 2023

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) Plan(TSA)

An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely

Adjust the premium

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

The minimum interest rate on an equity indexed annuity is often based on

An index like Standard & Poor's 500

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income

Under which of the following circumstances would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for medical treatments

In Texas the commissioner of insurance is

Appointed by the governor

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Authorized

A policyowner fails to pay the premium due on his whole life policy after the grace period, but the policy remains in force. This is due to what provision?

Automatic premium loan

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?

Consideration

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant's knowledge

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed period

All of the following are dividend options EXCEPT

Fixed period installments

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is

Fully insured

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases

A Return of Premium term life policy is written as what type of term coverage?

Increasing

What is the term for how frequently a policy owner is required to pay the policy premium?

Mode

Regarding the free-look provision, the insurance company

Must allow the policyowner to return the policy for a full refund

What is the official name for the Social Security program?

Old age survivors disability insurance

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

Only taxable if the cash value exceeds the amount paid for premiums

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

Option A

Which of the following explains the policyowner's rights to change beneficiaries, choose options, and receive proceeds of a policy?

Owner's rights

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached to the policy?

Return of premium

Who may contribute to a Keogh (HR-10) plan?

Self-employed plumber

The ownership provision entitles the policyowner to do all of the following EXCEPT

Set premium rates

Which of the following is called a second-to-die policy?

Survivorship life

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

Target premium

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

The contingent beneficiary

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be in the policy

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities

Social security was created to provide all of the following except

Unemployment income

An applicant properly notifies her insurer of a straightforward claim, but the insurer waits an exceedingly long time to process it. Which of the below terms best describes the behavior of the insurer?

Unfair claims settlement practice

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

The Commissioner has full power and authority to do all of the following EXCEPT

Draft insurance laws

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

Executive is the owner and executive pays premium

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

An agent selling variable annuities must be registered with

FINRA

What does "level" refer to in level term insurance?

Face amount

Which of the following must be included in all life insurance advertisements?

Identity of the actual insurer

All of the following are nonforfeiture options EXCEPT

Interest only

An insured purchased a Life insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy issue at the time. This policy is a/an

Interest-sensitive Whole Life

What is the main purpose of the Seven-pay Test?

It determines if the policy is a MEC

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?

Tax free to terminally ill insured

The initial amount of credit life insurance may NOT exceed

The amount to be repaid under the contract

Which of the following is NOT true regarding the annuitant?

The annuitant cant be the same person as the annuity owner

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which is true?

The annuitant must be a natural person.

The following are all causes for the Insurance Commissioner to suspend or impose conditions upon the continuance of an agent's license EXCEPT

The applicant has been shown to be a poor personal credit risk

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit

The annuity owner 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.

Which of the following is NOT a licensing requirement for a corporation in the state of Texas?

The business must be able to pay up to $50,000 in the event that it is proven to be negligent.

Which of the following is incorrect concerning a non contributory group plan?

The employees receive individual policies

An insured purchased a 10-year level term life 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 but at a higher premium rate

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit From the group policy to the insured

An advertisement must accurately represent which of the following?

The insurer's assets, the insurer's corporate structure, and the insurer's financial standing

Which of the following is NOT required on an illustration used in the sale of a life insurance policy?

The names of the primary and secondary beneficiaries

Which of the following is TRUE for both equity and annuities and fixed annuities?

They have a guaranteed minimum interest rate

What are the two components of a universal policy?

Insurance and cash account

Which best describes annually renewable term insurance?

It is level term insurance

Which statement is NOT true regarding a Straight Life policy?

It's premium steadily decreases over time, in response to its growing cash value

Which of the following settlement options is known as straight life?

Life income

Which option is being utilized When the insurer Accumulates dividends at interest and uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

Which of the following is a risk classification used by underwriters for insurance?

Standard

Which of the following is true regarding variable annuities?

The annuitant assumes the risk on investment

Which of the following is TRUE regarding the premium in term policies?

The premium is level

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of death?

A minor son of the insured

Which of the following components must a life insurance policy have to allow policy loans?

Cash value

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

Equity Indexed Annuity

Which policy component decreases in decreasing term insurance?

Face amount

A man purchased a $90,000 annuity with a single premium and began receiving payments 2 months after that. What type of annuity is it?

Immediate

Life income joint and survivor settlement option guarantees

Income for 2 or more recipients until they die

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause

What type of insurance would be used for a Return of Premium rider?

Increasing term

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

What are the licensing requirements for someone who sells variable universal life insurance?

Life insurance and securities

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

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

Pay a reduced death benefit

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit sharing plan

All of the following are requirements for an individual to be licensed EXCEPT

Provide a financial statement

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount

The policyowner pays for her life insurance annually. Until now, she has collected a non taxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would she use?

Reduction of premium

Which of the following best details the underwriting process for life insurance?

Selection, classification, and rating of risks

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

Substitute insured rider

Which of the following information will be stated in the consideration clause of a life insurance policy?

The amount of premium payment

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of a 20% withholding tax.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for the rest of her 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 insured's age at death

A 40-year-old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to

The insured's estate

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy

The policy owner of a Universal Life Policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance

Which of the following best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third-party ownership

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

An absolute assignment is

Transfer of all ownership rights in a policy

An insurance agent wants for a client to replace her current annuities plan with another one. He presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. The policyowner ends up surrendering her original contract and replacing it with the new one. Which term best describes what the agent did?

Twisting

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

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)

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

Which of the following is a TRUE statement about a temporary license issued in this state?

It can only be issued once in any 6-month period

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

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

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

Equity indexed annuities

Seek higher returns

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?

Size of each installment

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died. What amount would his beneficiary receive as a settlement?

$200,000

An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?

$50,000

Which will be included in a policy summary?

Premium amounts and surrender values

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age of 100 is called

Single premium whole life

The interest earned on policy dividends is

Taxable

Which of the following determine the cash value of a variable life policy?

The performance of the policy portfolio

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

What kind of policy allows withdrawals or partial surrenders?

Universal Life

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal life

Which of the following types of policies will provide permanent protection?

Whole life

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant

With the policy

Which of the following documents delivered to the policy owner includes information about premium amounts, cash values, surrender values, and death benefits for specific policy years?

A policy summary

In an annuity, the accumulated money is converted into a stream of income during which time period?

Annuitization period

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

What percentage of continuing education hours must be in a classroom?

50%

The minimum number of credits required for partially insured status for Social Security disability benefits is

6 credits

For how long is an insurance company allowed to defer policy loan requests?

6 months

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

A business owner was trying to secure a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

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 of the following is TRUE regarding the accumulation period of an annuity?

It is a period of time during which the payments into the annuity grow tax deferred

Which of the following is true about the premium on the children's rider in a life insurance policy?

It remains the same no matter how many children there are

Which of the following is true concerning the accidental death rider?

It will pay double or triple the face amount

Which statement is NOT true regarding a Straight Life Policy?

It's premium steadily decreases over time, in response to its growing cash value

Traditional IRA contributions are tax deductible based on which of the following?

Owners income

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense

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 type of life insurance policy allows the policy owner to pay more or less than the premium?

Universal Life

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?

Withdrawals are not taxable

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?

Within 2 months