Playbook Life Insurance Exams 1

If a dependent child covered by a group life plan is not attending full-time schooling, coverage under the plan may continue up to what age?

20.

What age is considered an elder in California?

65

A person purchased a $1,000,000 whole life policy at age 24. She added a rider to the policy that allows her to purchase additional amounts of life insurance without evidence of insurability at age 30, 33, 36, 39, and 42. Which rider did your client buy?

A Guaranteed insurability rider.

Renewable term insurance can best be described as:

A level death benefit with an increase in premium.

All of the following are used for substandard risk EXCEPT:

A preferred rating based on a persons age, health, habits, and occupation.

A person involved in a Viatical settlements: would use what life provision to allow for transfer for this transaction?

Absolute Assignment.

Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness?

Accelerated death benefit.

In group "life" plans, a dependent child attending an educational institution full time may be covered until what age?

Age 24.

When does an agent have the authority to change policy provisions?

An agent never has the right to change any part of the policy.

How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary?

An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent.

All of the following are true about life insurance policies and federal income taxation EXCEPT:

Annuity death benefits are totally exempt from taxation.

Which of the following supports the Medical Information Bureau?

Both Life & Health Insurance Companies.

When converting a term policy to a whole life policy at the insured's attained age, the cash value of the policy at age 65 would best described in which of the following answers:

Cash values will be lower than if ordinary life had been purchased at original age.

Policy provision, which comes into effect when insured and primary beneficiary die in simultaneous accident with no evidence who died first, is known as what?

Common disaster clause.

A person may be covered under social security benefits, if they have earned six credits out of the last 13 quarters. This person would be considered.

Currently insured.

An applicant has purchased a $500,000 home. His monthly mortgage payment is $1,500 per month for 30-year mortgage. In order to protect his family from paying the mortgage upon his death, which of the policy listed below would have the lowest premium?

Decreasing term.

Which policy options are "Paid-up additions"?

Dividend options.

Accidental death riders is also known as what?

Double indemnity.

From the descriptions below, which one best identifies a term policy?

Each year the premium increases as the insured grows older. After several years the coverage and premiums end simultaneously. There is no cash value.

Which of the following provisions are used to allow a life insurance policy to use as a defense against a death claim submitted within the first two years of the policy purchase.

Entire contract provision.

Common life insurance policy riders include all of the following except:

Extended Term.

Cost of living rider on a policy will provide what?

Face amount of the contract will increase according to the changes to the CPI, for an additional premium.

A Life annuity with a 10 year period will pay:

Guaranteed 120 months and Income for Life.

All of the following statements about the election of a life insurance policy's settlement options are true EXCEPT:

If not settlement option is chosen, the proceeds are automatically paid to the policy owner's estate.

The person whose life is the object of a life insurance policy is:

Insured.

The payor rider on a juvenille life policy provides that if the payor dies or becomes disabled before the insured juvenille reaches the age specified on the policy, what occurs?

Insurer will make the payments until the insured juvenille reaches a specified age.

All of the following statements apply to a "Family Income Policy" EXCEPT:

It affords a minimal amount of coverage on each family member.

A "Family Maintenance Policy" is a combination of which of the following policies?

Level term rider on whole life insurance policy.

Term insurance is typically characterized by what?

Low premiums and no cash value.

What three major categories do life underwriters use to base life insurance premiums?

Mortality, Interest, and Expenses.

An applicant has purchased a $500,000 home. He is currently paying $1,500 per month for his 30-year mortgage. In order to protect his beneficiary from paying the mortgage upon his death, which of the following would pay an amount equal to the outstanding balance of the mortgage?

Mortgage redemption.

When the death benefit is paid as a lump sum, the benefits are:

Non-taxable.

The insured's death was as a result of suicide during the suicide restricition period, how much will the insurer pay?

Pay an amount equal to the total premium up to point of suicide.

In the life insurance planning process, the "blackout period" is considered what?

Period of time when a surviving spouse does not receive any Social Security benefits.

The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsor to provide participants with what?

Plan descriptions & benefit statements.

Under ERISA, there is fiduciary responsbility between:

Plan sponsor and employees.

Making the insured "whole" again after a loss, is best defined by the following:

Principle of Indemnity.

What is the purpose of settlement options?

Provides methods for distributing policy proceeds.

The guaranteed insurability option provides the ability to:

Purchase additional insurance regardless of insurability.

If an insurer indicates that an illustration will be used, which of the following, must they do?

Send a summary status report to the policy owner annually.

The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following EXCEPT:

Subtract the policy surrender charges.

An individual with a low income and high insurance needs should buy what?

Term insurance.

A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue premium payments. If they select the reduced paid-up non-forfeiture option this option would provide:

The cash value is used to up purchase a $20,000 paid-up policy.

All of the following statements about contingent beneficiaries are true except:

The contingent beneficiary shares death proceeds equally with the primary beneficiary.

Identify the statement that is true about contributory group life insurance:

The employee will contribute to the premium payments.

Which of the following is a correct statement about life insurance policy types?

The initial premium for term insurance is lower than the initial premium for whole life insurance.

When the policy owner wants to change the beneficiary, who has to sign on an irrevocable beneficiary?

The insured and irrevocable beneficiary agreeing together.

When life income, joint life, life income period certain or life refund, is selected as a settlement option, which of the following answers describes the amount the insurer will pay:

The insurer can not determine how much, will be paid to a beneficiary or annuitant.

All of the following statements about survivorship life insurance are true, EXCEPT:

The policy face amount is paid out only upon the death of the first insured to die.

From the choices below, which party has the right to borrow from the policies cash value?

The policy owner.

Which of the following is a true statement regarding the social security (OASDHI) program?

The program provides only a minimum floor of income. Individuals are expected to supplement this with their own personal programs.

What is the purpose of "key person" life insurance?

To cover decreased business earnings due to death of a key employee.

All of the following are reason for an individual to purchase ordinary life insurance EXCEPT:

To have funds that can supplement Social Security at retirement.

Which flexible policy can offer a guarantee of mortality and expenses, but not interest?

Universal life.

An annuity that may be used to help fund retirement in a few years maintains a "separate account". The owner purchases "accumulation units". This is called a type of annuity.

Variable annuity.

The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains what?

Waiver of premium.

If the proposed insured dies before the policy is issued, yet they received a condition receipt, the company will or will not do what?

Will pay policy proceeds, if the insured would have been accepted and policy would have been issued whether the insured had lived or not.

An insured bought a $150,000, non-participating whole life policy many years ago. He is now 100 years old. He has never borrowed from the policy's cash value and made all payments when due. Policy's cash value is what?

$150,000

A man has been diligent in investing money for his retirement. His total payments into a tax deferred annuity are $100,000. He is now ready to take it out, and the insurance company that issued the annuity guarantees an annual payment for $8,000 fo the remainder of his life. His expected payout over his lifetime is $200,000. How much of each year's annuity payment is taxable?

$4,000.