Life License Practice Questions

One-Year Term Option

The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the:

They determine how the proceeds will be paid

What is the purpose of settlement options in life insurance?

To provide additional information about the application to the underwriters

What is the purpose of the agents report in the application process?

Nondeductible premiums, nontaxable death benefits

What is the usual federal income tax treatment of individual life insurance?

Universal Life

What kind of policy allows withdrawls or partial surrenders?

Surrendering the annuity for cash

What type of annuity activity will cause immediate taxation of the interest earned?

As a fiduciary

When agents, brokers, or solicitors handle premiums for an answer, they are acting in which capacity:

Representation

When an applicant make a material statement on the insurance application, this time it is considered to be a

It is a life contingency option

All of the following statements are true regarding installments for A Fixed. Annuity settlement option except:

Discriminating against a group of individuals because of poor risk

All of the following statements describe unfair trade practices except

General account

An Insurer invests the cash value of a fixed annuity in which of the following:

FINRA

An agent selling variable annuities must be registered with:

Join during the enrollment period

An employee wants to join a group insurance plan. In order to avoid proving insurability, what was the applicant do?

Convert to a whole life policy for the same face amount without proof of insurability

An individual has a $50,000 convertible term life insurance policy. If he chooses, he can:

paid-up additions option

An individual owns a participating a whole life policy and uses our policy dividends to buy more of the same type of coverage for herself. She has chosen the:

Industrial Life

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?

Accelerated (Living) Benefit

An insured has a terminal illness and needs access to half of his death benefit to pay for medical expenses. Which Rider will meet the insured's current needs?

Only the premiums paid will be included in the estate

An insured has paid only part of her total number of IRA premiums before she died. What effect will this have on the insured's estate?

Automatic Premium Loan

An insured missed her premium payment on her cash value policy and the grace period has lapsed. The policy is still in force because the insurer has deducted the cost of the premium from the policy's cash value. What provision allows this?

ordinary life

An insured purchased an individual life insurance policy with a face amount of $15,000. He pays a premium each month. What type of policy is that?

100

An insured, age 45, has a paid up at age 65, whole life insurance policy with a death benefit of $150,000. The policies cash value will be $150,000 at the insured's age:

Stop the action in violation

An insurer is issued a cease and desist order of misrepresentation. What is the insurer required to do to comply with the order?

Non-resident

An out-of-state producer wants to start selling insurance in the state. What type of license sure the producer obtain?

Attending physician statement

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?

Variable Universal Life

And insurance flexible premium is invested into a separate account. What type of insurance product does the insured half?

Increases annually

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

Yes, but not unfairly

Are insurance company underwriters allowed to discriminate?

Predicted needs of the family after the insured's death

Based on human life value approach, which of the following is not used to calculate an individual's life value?

Cover a mortgage

Decreasing term insurance is often used to:

Are subject to vesting requirements

Employer contributions made to a qualified plan:

Accumulation Period

For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin, is known as the

Single Premium

What type of life insurance policy generates immediate cash value?

The owner of the policy is disabled or has died

When a life insurance policy continues because of a Payor benefit clause, it means

When application is signed and check given to agent

When is the earliest a life policy may go into effect?

Waiver of Premium

When the insured becomes disable under the requirements of a life insurance policy, which of the following provisions keeps the policy in force even though the owner stop making the premium payments?

Underwriting

Which division of an insurance company is responsible for the selection, evaluation, and distribution of risks?

Extend term insurance

Which nonforfeiture option allows a policy owner to use the existing cash value to purchase a policy of the same face amount as the original policy for as long as possible buy?

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

Which of the following best describes what the annuity is?

The performance of a separate account

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

Before the participants age 59 1/2

Which of the following distributions from a qualified retirement plan will incur a 10% tax penalty?

Those who have been insured under the plan for at least five years

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

Increasing premium

Which of the following is not a feature of a whole life policy?

A whole life insurance policy is exchanged for a term insurance policy

Which of the following is not an allowable 1035 exchange?

Lump sum

Which of the following is the default settlement option for life insurance policy proceeds?

It may last for the lifetime of the annuitant.

Which of the following is true regarding the annuity.?

Payor Benefit Rider

Which of the following riders would NOT cause the death benefit to increase?

Buy-Sell Agreement

Which of the following would describe a legal document which would dictate who can buy a deceased partners share of a business in for what amount?

Family Term Rider

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

A reinstated policy is incontestable

Which statement about reinstatement is false regarding a policy reinstatement provision?

One party except the exact terms of the other party's offer

Which statement best describes agreement as it relates to insurance contracts?

The Director

Who decide if a licensed property or casualty insurance producer can be licensed as a resident surplus lines broker?

Limited Pay Whole Life

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?

Life Income (straight life)

A beneficiary decides to take a settlement option that will pay the largest amount per payment, knowing that after the beneficiaries death no monies will be paid out to any descendants. The settlement option is:

Receive commissions

A person is required to be licensed to do which of the following?

The new policy will expire in 10 years

After 12 years a policy owner decides she no longer needs a large death benefit on her whole life policy. She calls her agent, who informs her that she can use the reduced paid up nonforfeiture option. Which of the following is not true about the new policy?

Interest only

All of the following are Dividend options in life insurance policies except:

Premiums

All of the following are examples of risk retention except:

National origin

All of the following are factors that an underwriter could use to select and classify risk except:

The plan must be temporary

All of the following are general requirements of a qualified plan except:

By sell agreement

All of the following are personal uses of life insurance except

The Guaranty Association

All of the following entities regulate variable life policies except

Health insurance policies in force

All of the following information needs to be included on an application for life insurance except:

Decreasing Term

An individual has just borrow $10,000 from his bank on a five-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to the situation question?

Guaranteed Insurable option

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 the time, he wants to be sure that additional coverage will be available in the future. Which of the following option should be included in the policy?

Each party relies upon the truthfulness of the other

For an insurance contract, the principle of utmost good faith means:

$3000

If $100,000 of life insurance proceeds were used in a settlement option to pay $13,000 per year for 10 years, which of the following would be taxable annually?

Annuitant's estate

If a beneficiary is not named for annuity benefits, to which of the following with a benefit be paid?

Securities

If a live agent wants to sell variable life policies, what license must the agent obtain?

Unilateral

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Inform the insurance company

If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must be agent do?

Fixed Period

If the beneficiary wants a guarantee the policy proceeds will be paid for a period of 10 years before being exhausted, what settlement options should the beneficiary select?

Group life

In Arizona resident has a life insurance policy that has a grace period of 31 days. what kind of insurance policy is it?

Producer's Report

The insurance company underwriter could find information concerning the personal activities in character of an applicant from which of the following reports?

Annually Renewable Term

The least expensive first year premium is found in which of the following policies?

Incontestability Clause

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

Is defined as the frequency and the amount of premium payment

The mold of premium payment:

Interest Only Option

The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?

Lower

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

The annuitant must be a natural person

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

Department of Insurance

To which of the following must insurance producers report changes of business or a residence address?

Nothing, the payments will cease

Under a straight life annuity, if the annuitant dies before the principal amount is paid out the beneficiary will receive:

An increase with the inflation rate

Under the cost of living adjustment writer, what will happen to the face amount in the policy?

If the premium has been paid and the policy has not been returned

Under the terms of the 10 day free look. A claim will be paid:

Homogeneous

Units with the same or similar exposure to loss or refer to as:

Agent contract with the principal

What documentation grants espress authority to an agent?

Cash values can be borrowed it anytime

What does liquidity refer to in a life insurance policy?

The owner will receive the surrender value of the annuity. Premium plus interest minus surrender charge

What happens if a deferred annuity is surrendered before the annuitization period?

One-sided, only one party makes an enforceable promise

What is a definition of a unilateral contract?

The original age is used for premium determination

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

It has the highest amount of insurance protection

What is the benefit of choosing extend the term as a nonforfeiture option?

Increasing Term

What type of insurance would be you for a Return of Premium Rider?

Preferred

Which of the following risk classification would pay the lowest premium?

It requires the policy owner to pay all overdue premiums with interest before the policy is reinstated

Which of the following statements about the reinstatement provision is true?

Surrendering the annuity for cash

Which of the following transaction in an annuity will cause the media taxation of the interest earned

Apparent

Which of the following types of age in authority is also called perceived authority?

Term Insurance

Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance need?

Fire

Which of the following would be considered a peril?

Public school teachers

Which of the following would be the most likely to start a tax sheltered annuity?

Extended Term

What is the default nonforfeiture option when the policy owner neglects to select an option?

Insurers

Which of the following are members of the MIB?