Practice Exam 6

In group insurance the Certificates of Insurance are issued to:

The group members.

After a life insurance policy has been in effect for 2 years, what keeps it from being rescinded by the insurer?

The incontestability clause.

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.

An insured bought a $150,000 non-participating whole life policy many years ago. she is 100 years old today. She has never borrowed from the policy, and has made all premium payments when do. The policy cash value is:

$150,000

Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information?

Fair Credit Reporting Act.

Renewable term insurance can be best described as:

A level death benefit with an increase in premium.

How much continuing education is a new agent who is both life and fire and casualty licensed is required to complete?

25 hours per year for either license.

Renewable term insurance can best be described as:

A level death benefit with a raising premium.

Which of the following is true regarding participation in a group plan?

A non-contributory group health plan must involve all members.

Joe receives a large bonus at work and decides to purchase an annuity with it. His monthly income payments from the annuity will begin the following month. Which of the following has Joe purchased?

A single premium immediate annuity.

In insurance terms a representation can be considered:

An implied warranty.

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

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

All of the following are true statements concerning the treatment of federal income tax on life insurance, except:

Annuity death benefit proceeds are exempt from all taxation.

The policy provision which comes into effect when the insured and primary beneficiary die in a simultaneous accident with no evidence as to who died first is:

Common disaster provision.

In order to deal with the financial consequences of the death of a Senior Sales Manager, a corporation could purchase:

Key person insurance.

Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made. They add the premium paid and:

Current interest; adjusted for mortality and a general expense charge.

The purchase of an insurance policy may not provide one of the following for the insured. Select the most complete answer:

Elimination of the risk.

Under the 10-day right to return, the policy will pay proceeds:

If the policy is not returned but premium is paid.

Which of the following is true about life insurance beneficiary designations?

If there is no surviving beneficiary, the death benefit is paid to the insured's estate.

Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks?

Insolvent.

Usually, in order to join a group insurance plan without proving insurability, an employee must:

Join the plan during the enrollment period.

What would a person be guilty of who refuses to submit books and records to the commissioner?

Misdemeanor.

Identify the penalty for each violation for a person engaging in any unfair method of competition:

No more than $5,000 for each act, or no more than $10,000 for each act if the act is judged to be willful.

Which type of life insurance policy gives the policyowner the right to share in the insurers surplus?

Participating.

In life insurance, the loss of a key family member is considered a:

Personal loss.

Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following?

Promise.

What recource does an insurer have if a violation of a material warranty on the part of the insured is discovered?

Rescission of the policy.

The common disaster provision is designed to protect the interests of which of the following?

The contingent or secondary beneficiary.

Which of the following statements about policy dividends is true?

The insured usually selects the dividend option at the time of policy purchase.

Regarding life insurance coverage for a company, the one responsible for obtaining the coverage, maintaining the policy, and paying the premium is:

The master policy holder.

The department responsible for evaluation, selection and distribution of risks is:

The underwriting department.

The policy owner, age 50, have been paying the premiums on his whole life policy for 15 years. He needs the equivalent of 1/3 of the cash value of his policy over the next two years. He wants to continue to have the policy protection, and can afford to pay the premiums. Which of the following would be his best course of action?

Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force.

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

When no settlement option is chosen, the proceeds are automatically paid to the policy owner's estate.