Primerica Practice test part 1

All of the following are personal uses of life insurance EXCEPT a) Buy-sell agreement. b) Survivor protection. c) Estate creation. d) Cash accumulation.

a

An insured committed suicide one year after his life insurance policy was issued. The insurer will a) Refund the premiums paid. b) Pay the policy's cash value. c) Pay the full death benefit to the beneficiary. d) Pay nothing.

a

To attain currently insured status under Social Security, an worker must have earned at least how many credits during the last 13 quarters? a) 4 credits b) 6 credits c) 10 credits d) 40 credits

b

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Representation b) Warranty c) Concealment d) Indemnity

b

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a) Premiums are taxable to the employee. b) Premiums are not tax deductible as a business expense. c) Premiums are tax deductible by the key employee. d) Premiums are tax deductible as a business expense.

b

Which two terms are associated directly with the way an annuity is funded? a) Renewable or convertible b) Single payment or periodic payments c) Increasing or decreasing d) Immediate or deferred

b

A Straight Life policy has what type of premium? a) A decreasing annual premium for the life of the insured b) A variable annual premium for the life of the insured c) A level annual premium for the life of the insured d) An increasing annual premium for the life of the insured

c

All of the following benefits are available under Social Security EXCEPT a) Old-age and retirement benefits. b) Disability benefits. c) Death benefits. d) Welfare benefits.

d

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a) Insurance Index b) Policy Summary c) Illustrations d) Buyer's Guide

d

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? a) Conditional b) A legal (but unethical) contract c) Unilateral d) Adhesion

c

Nonforfeiture values guarantee which of the following for the policyowner? a) That the dividends will be paid annually b) That the death benefit will be paid in a lump sum c) That the policy premiums will never increase d) That the cash value will not be lost

d

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a) Joint and survivor b) Single life c) Fixed-amount d) Life income with period certain

d

Which of the following best describes fixed-period settlement option? a) Only the principal amount will be paid out within a specified period of time. b) The death benefit must be paid out in a lump sum within a certain time period. c) Income is guaranteed for the life of the beneficiary. d) Both the principal and interest will be liquidated over a selected period of time.

d

Insurance is the transfer of a) Hazard. b) Peril. c) Risk. d) Loss.

c

Which of the following is NOT true regarding the accumulation period of an annuity? a) It would not occur in a deferred annuity. b) It is the period during which the annuity payments earn interest. c) It is the period over which the annuitant makes payments into an annuity. d) It is also known as the pay-in period.

a

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 a) Cost of living provision. b) Nonforfeiture option. c) Guaranteed insurability rider. d) Paid-up additions option.

c

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT a) Applicant's present physical condition. b) Applicant's present occupation. c) Applicant's past income. d) Applicant's past medical history.

c

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be a) Based on the issue age of the insured. b) Discounted. c) Adjusted to the insured's age at the time of renewal. d) Determined by the health of the insured.

c

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

Which of the following is called a "second-to-die" policy? a) Juvenile life b) Joint life c) Survivorship life d) Family income

c

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? a) She will still be covered under the group plan, but will have to pay an individual policy premium. b) She can only convert her coverage without proof of insurability if she has the master policy. c) She must apply for a new policy, which requires her to provide proof of insurability. d) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

d

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) Beneficiary clause b) Consideration clause c) Insuring clause d) Entire contract clause

c

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize? a) Estate liquidation b) Nonpayment of premium c) Change of beneficiary d) Viatical settlement

d

Which of the following is INCORRECT concerning a noncontributory group plan? a) They help to reduce adverse selection against the insurer. b) They require 100% employee participation. c) The employer pays 100% of the premiums. d) The employees receive individual policies.

d