Mass Life Insurance producers exam

Children's riders attached to whole life policies are usually issued as what type of insurance? a)Term b)Variable life c)Adjustable life d)Whole life

a)Term

Employer contributions made to a qualified plan a)Are subject to vesting requirements. b)May discriminate in favor of highly paid employees. c)Are after-tax contributions. d)Are taxed annually as salary.

a)Are subject to vesting requirements.

Which of the following is correct regarding credit life insurance? a)It insures the life of a creditor. b)It has a maximum term of 20 years .c)It insures the life of a debtor. d)It is purchased on an installment basis.

.c)It insures the life of a debtor.

Who can make changes to the policy once it is in effect? a)The agent b)An executive officer of the insurer c)The insured d)The policyowner

b)An executive officer of the insurer

Which of the following is true about the premium on the children's rider in a life insurance policy? a)It decreases when the oldest child reaches the age of 21. b)It increases when a newborn baby is added to the policy. c)It decreases when an adopted child is added to the policy. d)It remains the same no matter how many children are added to the policy.

d)It remains the same no matter how many children are added to the policy.

Why should the producer personally deliver the policy when the first premium has already been paid? a)To ensure the producer gets paid commission b)To find out how the family has been doing since the initial presentation c)To make sure the policy is not stolen or lost d)To help the insured understand all aspects of the contract

d)To help the insured understand all aspects of the contract

Which nonforfeiture option provides coverage for the longest period of time? a)Accumulated at interest b)Reduced paid-up c)Extended term d)Paid-up option

b)Reduced paid-up

Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Juvenile life b)Term insurance c)Option B d)Option A

d)Option A

In most instances, a variable contract must be on file with the Commissioner before it may be issued. However, this can be avoided if the insurer is affiliated with an admitted life insurance company that has issued variable contracts for at least a)1 year. b)10 years. c)3 years. d)5 years.

c)3 years.

Which nonforfeiture option has the highest amount of insurance protection? a)Extended Term b)Conversion c)Decreasing Term d)Reduced Paid-up

a)Extended Term

The LEAST expensive first-year premium is found in which of the following policies? a)Level Term b)Annually Renewable Term c)Increasing Term d)Decreasing Term

b)Annually Renewable Term

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a)Implied b)Apparent c)Assumed d)Express

a)Implied

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 a)Incontestability clause. b)Reinstatement clause. c)Insuring clause. d)Misstatement of Age clause.

a)Incontestability clause.

When an annuity is written, whose life expectancy is taken into account? a)Annuitant b)Beneficiary c)Life expectancy is not a factor when writing an annuity. d)Owner

a)Annuitant

Which of the following entities is responsible for paying the producer's appointment renewal fee? a)Appointing insurer b)Commissioner c)The Guarantee Association d)Producer

a)Appointing insurer

A life insurance producer would be qualified to act as a life settlement broker if the producer has had a valid life license for at least a)6 months. b)1 year. c)3 years. d)5 years.

b)1 year.

What happens when a policy is surrendered for its cash value? a)The policy can be converted to term coverage. b)Coverage ends and the policy cannot be reinstated. c)Coverage ends but the policy can be reinstated at any time. d)The policy can be reinstated by paying back all policy loans and premiums.

b)Coverage ends and the policy cannot be reinstated.

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 a)Survivorship insurance. b)Juvenile protection provision. c)Survivor protection. d)Life planning.

c)Survivor protection.

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? a)Income tax on distributions plus 10% penalty. b)Capital gains tax on distributions and no penalty. c)Capital gains tax on distributions plus 10% penalty. d)Income tax on distributions and no penalty.

d)Income tax on distributions and no penalty.

Traditional IRA contributions are tax deductible based on which of the following? a)How long the plan has been in force b)Owner's age c)IRA limit d)Owner's income

d)Owner's income

Which of the following is true about the mandatory free look in a Life Insurance policy? a)It commences when the policy is delivered. b)It commences when the application is signed. c)It applies only to term life insurance policies. d)It is optional on all life insurance policies.

a)It commences when the policy is delivered.

Which of the following is an IRS qualified retirement program for the self-employed? a)Keogh b)Split Dollar c)Buy and Sell Agreement d)401(k)

a)Keogh

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom? a)The producer b)The beneficiary of the applicant c)The insurance company d)The applicant

a)The producer

SIMPLE Plans require all of the following EXCEPT a)No other qualified plan can be used. b)No more than 100 employees. c)Employees must receive a minimum of $5,000 in annual compensation. d)At least 1,000 employees.

d)At least 1,000 employees.

The death protection component of universal life insurance is always? A. Decreasing term B. Annually Renewable term C. Whole Life D. Adjustable life

b. Annually renewable

An applicant was declined for coverage by an insurance company. He made a written request for the medical records used in the underwriting process to be released to his doctor. The insurance company must provide the information within a)14 business days b)45 business days. c)30 business days. d)30 calendar days.

c)30 business days.

If the insurer does not pay the death benefit to the beneficiary within the required time period, what interest rate will be assessed on the proceeds? a)2% b)3% c)6% d)8%

c)6%

Which policy component decreases in decreasing term insurance? a)Dividend b)Premium c)Face amount d)Cash value

c)Face amount

Express Authority

is the authority a principal intends to grant to an agent by means of the agent's contract. It is the authority that is written in the contract.

What type of insurance would be used for a Return of Premium rider? a)Level Term b)Decreasing Term c)Annually Renewable Term d)Increasing Term

d)Increasing Term

Implied Authority

is authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.

Which of the following statements about group life is correct? a)The cost of coverage is based on the ratio of men and women in the group. b)The premiums are higher than in an individual policy because there is no medical exam. c)The group sponsor receives a Certificate of Insurance. d)The policy can be converted to an individual term insurance policy.

a)The cost of coverage is based on the ratio of men and women in the group.

All of the following statements are correct regarding credit life insurance EXCEPT a)Benefits are paid to the borrower's beneficiary. b)The amount of insurance permissible is limited per borrower. c)Premiums are usually paid by the borrower. d)Benefits are paid to the creditor.

a)Benefits are paid to the borrower's beneficiary.

Which of the following statements concerning buy-sell agreements is true? a)Premiums paid are deductible as a business expense. b)Benefits received are considered income taxable. c)Buy-sell agreements pay in the event of a medical emergency. d)Buy-sell agreements are normally funded with a life insurance policy.

d)Buy-sell agreements are normally funded with a life insurance policy.

All of the following statements are true regarding installments for a fixed amount EXCEPT a)This option pays a specific amount until the funds are exhausted. b)The annuitant may select how big the payments will be c)The payments will stop when the annuitant dies. d)Value of the account and future earnings will determine the time period for the benefits.

c)The payments will stop when the annuitant dies.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)The employer pays a bonus to a selected employee to fund the policy. b)It is considered a nonqualified employee benefit. c)The policy is owned by the company. d)Any type of insurance policy may be used.

c)The policy is owned by the company.

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? a)Charitable organization b)Dependents c)Annuitant d)Spouse

d)Spouse

The interest earned on policy dividends is a)Nontaxable. b)Tax deductible. c)40% taxable, similar to a capital gain. d)Taxable.

d)Taxable.

Which is true about a spouse term rider? a)The rider is usually level term insurance. b)Coverage is allowed for an unlimited time. c)The rider is decreasing term insurance. d)Coverage is allowed up to age 75.

a)The rider is usually level term insurance.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a)IRS has no jurisdiction. b)The benefit is received as taxable income. c)The benefit is received tax free. d)The benefit is subject to the exclusionary rule.

c)The benefit is received tax free.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a)The insured would not need to prove insurability for a conversion policy b)The insured may convert coverage to an individual policy within 31 days. c)The premium for individual coverage will be based upon the insured's attained age. d)The insured may choose to convert to term or permanent individual coverage.

d)The insured may choose to convert to term or permanent individual coverage.

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? a)Common Disaster b)Accidental Death c)Survivor Life d)Second-to-Die

a)Common Disaster

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? a)In lesser amounts for the remaining policy term of age 100. b)Equal to the cash value surrendered from the policy c)The same as the original policy minus the cash value d)Equal to the original policy for as long as the cash values will purchase.

d)Equal to the original policy for as long as the cash values will purchase.

Which nonforfeiture option provides coverage for the longest period of time? a)Extended term b)Paid-up option c)Accumulated at interest d)Reduced paid-up

d)Reduced paid-up

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 a)Pay nothing; there was a misrepresentation on the application b)Pay the full death benefit and refund excess premium c)Pay a reduced death benefit d)Pay the full death benefit

c)Pay a reduced death benefit

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? a)Capital gains tax on distributions plus 10% penalty. b)Income tax on distributions and no penalty. c)Income tax on distributions plus 10% penalty. d)Capital gains tax on distributions and no penalty.

b)Income tax on distributions and no penalty.

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 at issue time. The policy is a/an a)Adjustable Life. b)Interest-sensitive Whole Life. c)Credit Life. d)Annual Renewable Term.

b)Interest-sensitive Whole Life.

Whenever the Commissioner has reason to believe that any person has engaged in any unfair method of competition or any unfair or deceptive act or practice, the Commissioner will serve a notice of a hearing, the time and place of which CANNOT be a)Later than 30 days after the date such notice was served. b)Sooner than 30 days after the date such notice was served. c)Sooner than 21 days after the date such notice was served. d)Later than 21 days after the date such notice was served.

c)Sooner than 21 days after the date such notice was served.

A business owner was trying to obtain 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? a)Insurable interest b)Modification clause c)Ownership provision d)Collateral assignment

d)Collateral assignment

Which of the following is true regarding taxation of dividends in participating policies? a)Dividends are not taxable. b)Dividends are taxable only after a certain amount is accumulated annually. c)Dividends are taxable in some life insurance policies and nontaxable in others. d)Dividends are considered income for tax purposes.

d)Dividends are considered income for tax purposes.

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? a)It is a percentage of the cash value and decreases over time. b)It is always 7% of the cash value. c)It is a flat fee determined by the annuity owner when the annuity is purchased. d)It will increase as the accumulation period increases.

a)It is a percentage of the cash value and decreases over time.

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? a)Monthly premium waiver and monthly income b)Percentage of medical costs paid by the insurer c)Payments for life d)Yearly premium waiver and income

a)Monthly premium waiver and monthly income

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT a)The loss may be intentional. b)The loss must not be catastrophic. c)There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable. d)The loss produced by the risk must be definite.

a)The loss may be intentional.

Apparent Authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

What documentation grants express authority to an agent? a)Agent's contract with the principal b)Agent's insurance license c)Fiduciary contract d)State provisions

a)Agent's contract with the principal

If a producer has administrative action taken against his license, he must report such action a)Within 30 days of the final disposition on such action. b)Within 10 days of the pretrial hearing on such action. c)Within 10 days of the final disposition on such action. d)Within 30 days of the pretrial hearing on such action.

a)Within 30 days of the final disposition on such action.

Which of the following types of agent authority is also called "perceived authority"? a)Fiduciary b)Apparent c)Express d)Implied

b)Apparent

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? a)$0 b)$50,000 (50% of the policy value) c)$100,000 d)$300,000 (triple the amount of policy value)

c)$100,000

Which of the following best describes annually renewable term insurance? a)Neither the premium nor the death benefit is affected by the insured's age. b)It provides an annually increasing death benefit. c)It is level term insurance. d)It requires proof of insurability at each renewal.

c)It is level term insurance.

All of the following are duties and responsibilities of producers at the time of application EXCEPT a)Explain the nature and type of any receipt the producer is giving to the applicant. b)Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. c)Check to make sure that there are no unanswered questions on the application. d)Change any incorrect statement on the application by personally initialing next to the corrected statement.

d)Change any incorrect statement on the application by personally initialing next to the corrected statement.

Which of the following riders would NOT cause the Death Benefit to increase? a)Guaranteed Insurability Rider b)Cost of Living Rider c)Accidental Death Rider d)Payor Benefit Rider

d)Payor Benefit Rider

What is the purpose of establishing the target premium for a universal life policy? a)To accumulate cash value faster b)To pay up the policy faster c)To cover all policy expenses d)To keep the policy in force

d)To keep the policy in force

The Waiver of Cost of Insurance rider is found in what type of insurance? a)Whole Life b)Joint and Survivor c)Juvenile Life d)Universal Life

d)Universal Life

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT a)Other insurance coverages. b)Family health history. c)Alcohol and tobacco consumption. d)Recent surgeries.

a)Other insurance coverages.

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? a)Assignment b)Automatic premium loan c)Waiver of premium d)Incontestability period

b)Automatic premium loan

Which of the following statements regarding HIV testing for life insurance purposes is NOT true? a)HIV testing is regulated at the state level. b)Insurers are barred from requesting HIV testing. c)Positive test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant. d)The testing practices must meet the criteria of the U.S. Department of Health and Human Services.

b)Insurers are barred from requesting HIV testing.

Which of the following is NOT true regarding the annuitant? a)The annuitant must be a natural person. b)The annuitant cannot be the same person as the annuity owner. c)The annuitant's life expectancy is taken into consideration for the annuity. d)The annuitant receives the annuity benefits.

b)The annuitant cannot be the same person as the annuity owner.

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? a)The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. b)The beneficiary will receive the greater of the money paid into the annuity or the cash value. c)The owner's estate will receive the money paid into the annuity. d)The insurance company will retain the cash value and pay back the premiums to the owner's estate.

b)The beneficiary will receive the greater of the money paid into the annuity or the cash value.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a)The date of application b)The date of medical exam c)The date of policy delivery d)The date of issue

b)The date of medical exam

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? a)When the agent submits the application to the company and the company issues a conditional receipt b)When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health c)On the designated effective date d)On the application date

b)When the agent delivers the policy, collects the initial premium, and the applicant

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? a)Defamation b)Twisting c)Rebating d)False financial statement

d)False financial statement

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? a)Credit life b)Ordinary life c)Franchise life d)Industrial life

d)Industrial life

All of the following are general requirements of a qualified plan EXCEPT a)The plan must be communicated to all employees. b)The plan must be for the exclusive benefits of the employees and their beneficiaries. c)The plan must be permanent, written and legally binding. d)The plan must provide an offset for social security benefits.

d)The plan must provide an offset for social security benefits.