Life Prac Test
Any licensed person who violates a cease and desist order must forfeit and pay a maximum sum of
$10,000 for each violation.
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
$3,000
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?
$3,000
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?
Insurer's guaranteed minimum rate of interest
Who makes up the Medical Information Bureau?
Insurers
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 about the premium on the children's rider in a life insurance policy?
It remains the same no matter how many children are added to the policy.
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount.
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
Juvenile Life is classified as any life insurance purchased by a minor.
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
The continuing education requirement for licensees, during the initial licensing period, is a
Minimum of 60 hours of instruction.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration.
A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called
1035 exchange.
In a life settlement transaction, how many days does the owner have to terminate the contract after the date it is executed?
15 days
To avoid interest on insurance proceeds, the insurer must pay the death benefit within how many days of receipt of proof of loss?
30 days
The fine for impersonation of a licensed producer is
At least $10, but no more than $100.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed.
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
Which of the following features of the Indexed Whole Life policy is NOT fixed?
Cash value growth
A key person insurance policy can pay for which of the following?
Costs of training a replacement
Which of the following is TRUE about credit life insurance?
Creditor is the policyowner.
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death.
The authority granted to an agent through the agent's contract is referred to as
Express authority.
In life insurance policies, cash value increases
Grow tax deferred.
Events or conditions that increase the chances of an insured loss occurring are referred to as?
Hazards
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?
Human life value approach
Which of the following is true regarding the spendthrift clause in life insurance policies?
It can protect the policy proceeds from creditors of the beneficiary.
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person.
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
It will increase because the insured will be 5 years older than when the policy was originally purchased.
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
Joint and survivor
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. The dividend option that the insured has chosen is called
Paid-up additions.
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
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.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal.
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 of the premiums paid. Which rider is attached to the policy?
Return of premium
Which of the following types of risk will result in the highest premium?
Substandard risk
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on accumulation
If an insurer becomes insolvent, which of the following would pay benefits to policyholders?
The Guaranty Association
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
Any individual insurance producer who allows his license to lapse may, within 12 months from the due date of the renewal fee, reinstate the same license
Without the necessity of passing a written examination, but a penalty fee of double the unpaid renewal fee must be paid.
A tax-sheltered annuity is a special tax-favored retirement plan available to
Certain groups of employees only.
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
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable?
Spouse
Which of the following are generally NOT considered when underwriting group insurance?
The insureds' medical history
In a life settlement contract, whom does the life settlement broker represent?
The owner
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies.
The policyowner 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.
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time.
