Primerica Focused Exam
In Modified Life policies, what happens to the premium? a) It is higher during the first policy years. b) It varies at the beginning, but levels out by the end of the third year. c) It is level at the beginning and increases after the first few years. d) It always remains level.
c) It is level at the beginning and increases after the first few years. Modified Life policies charge lower premiums (similar to term rates) during the first few policy years, usually the first 3 to 5 years, and then higher level premiums for the remainder of the insured's life. The higher subsequent premiums are typically higher than straight life premiums would be for the same age and amount of coverage.
Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy? a) Indeterminate premium whole life b) Enhanced whole life c) Minimum deposit whole life d) Graded premium whole life
d) Graded premium whole life Premiums charged for a graded premium whole life policy are lower during the preliminary period and then increase each year until leveling off after the preliminary period. The premium rates are actually equivalent to a standard whole life policy.
Using a class designation for beneficiaries means a) Naming beneficiaries as a group. b) Not naming beneficiaries. c) Naming an estate as the beneficiary. d) Naming each beneficiary by his or her name.
a) Naming beneficiaries as a group. Class designations are used when an insured chooses to distribute benefits among the living beneficiaries and/or their heirs without naming each individual person, such as "all my children."
In insurance, an offer is usually made when a) The completed application is submitted. b) The insurer approves the application and receives the initial premium. c) The agent hands the policy to the policyholder. d) An agent explains a policy to a potential applicant.
a) The completed application is submitted. In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a) Juvenile rider. b) Payor rider. c) Other-insured rider. d) Change of insured rider
c) Other-insured rider. The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance
The license of Forgetful Frank has lapsed. How long, from the due date of the renewal fee, may Frank be reinstated without having to re-take a course or exam? a) 1 month b) 6 months c) 3 months d) 12 months
d) 12 months Any license that has lapsed may be reinstated within 12 months from the due date of the renewal fee without retaking a prelicensing course or an exam. Any renewal fee received after the due date will be doubled as a penalty.
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? a) Whole Life b) Ordinary Life c) Joint Life d) Decreasing Term
c) Joint Life A Joint Life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death.
What is a definition of a unilateral contract? a) Two or more parties go into a contract understanding there may be an unequal exchange of value. b) One author: the company wrote the contract; the insured must accept it as written. c) If one party makes a condition, the other party can counteroffer. d) One-sided: only one party makes an enforceable promise.
d) One-sided: only one party makes an enforceable promise. An insurance contract is unilateral in that only one of the parties to the contract is legally bound to do anything.
For a producer to meet the state continuing education requirements, how many CE hours must be completed on the topic of ethics? a) 3 b) 8 c) 12 d) 1 1/2
a) 3 Out of the 24 CE hours required every 2 years, 3 hours must be on the topics of ethics or business practices
All other factors being equal, the least expensive first-year premium payment is found in a) Annually Renewable Term. b) Increasing Term. c) Decreasing Term. d) Level Term.
a) Annually Renewable Term. Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.
What type of license is needed to transact non-major lines of insurance like baggage and accident only insurance? a) Expired b) Provisional c) Temporary d) Limited
d) Limited Some limited lines of insurance, as determined by the Commissioner, may be transacted under a limited license.
What would be considered a disadvantage of owning a fixed annuity? a) Decrease in purchasing power of the benefit in times of inflation b) Investment risks being carried by the annuity owners c) Interest rate dependence on stock performance d) Guaranteed minimum interest rate
a) Decrease in purchasing power of the benefit in times of inflation A fixed annuity is characterized by a level benefit payment. This means that in times of inflation, benefits have less purchasing power. Since costs increase as a result of inflation, more money is required to purchase something that had previously cost less.
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a) Guaranteed insurability rider. b) Paid-up additions option. c) Cost of living provision. d) Nonforfeiture option.
a) Guaranteed insurability rider. The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a) Option A b) Option B c) Corridor option d) Variable option
b) Option B Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.
c) $50,000 The face of the term policy would be the same as the face amount provided under the whole life policy.
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT a) Employer contributions are tax deductible as ordinary business expense. b) Funds accumulate on a tax-deferred basis. c) Employee and employer contributions are not counted as income to the employee for income tax purposes. d) At distribution, all amounts received by the employee are tax free.
d) At distribution, all amounts received by the employee are tax free. Funds in a qualified plan accumulate on a tax-deferred basis; however, at distribution any amount received by the employee will be treated as ordinary income for tax purposes.
What is the other term for the cash payment settlement option? a) Principal amount b) Face amount c) Proceeds d) Lump sum
d) Lump sum Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.
