Section II - Life Insurance Practice Exam

Life insurance policies and annuities sold to persons age 60 or older must contain an examination period of ____ days after receipt of the policy for purposes of review, at which time the applicant may return the contract for a full refund of premium.

30

Under social security, being fully insured entitles a worker and family to full benefits. To achieve fully insured status, an individual must attain at least ____ quarters of coverage.

40

If a corporation and a shareholder enter into an agreement that requires the corporation to buy the shareholder's shares upon his or her death, they have entered into:

A buy/sell agreement

Group life insurance policies may exclude all of the following EXCEPT:

Accidents

The person upon whose life a life insurance policy is based is known as the:

Insured

A person who receives a bonus at work and elects to use the money to buy an annuity that will start paying monthly payments right away has purchased a:

Single premium immediate annuity

The owner of a life insurance policy may do all of the following EXCEPT:

The owner of a life insurance policy may do all of the following EXCEPT:

When making a life settlement, a policyowner will permanently transfer all rights of ownership in the policy to another party by making a(n):

Absolute assignment

The incontestability clause in a life insurance policy protects the insured by preventing an insurer from denying a claim:

After the policy has been in effect for a specified period of time

The person upon whose life an annuity is based is known as the:

Annuitant

Which of the following completes the application for life insurance?

Applicant

All of following are required nonforfeiture options or provisions on a cash value life insurance policy EXCEPT:

Automatic premium loan

Agents must send all of the following to the replacing insurer when replacing life insurance EXCEPT:

Copies of all printed communications used for presentation to the applicant

An individual who obtains a 30 year mortgage and would like insurance coverage which would pay off the mortgage in the event of his or her death and no more and no less, would purchase:

Decreasing term

The source of dividends paid to the owners of participating life insurance policies issued by mutual insurers is:

Earned surplus

The greater the number of similar exposure units insured, the easier it will be to predict future claims based upon the law of:

Large numbers

Which risk classification will have the highest premium?

Non-standard

If an insured's medical conditions indicate that more information is needed, the underwriter will:

Order an attending physician's statement

Social security provides protection for all of the following EXCEPT:

Poor investments

Which of the following annuity benefit payment options would generate the highest monthly payments to the contract owner upon annuitization?

Pure or straight life

Which type of term life insurance has a level face amount but a premium that increases each year as the insured gets older?

Renewable

The premium that an employer pays for group life insurance coverage for an employee that exceeds $50,000 in coverage is:

Taxable as income to the employee

All of the following are true regarding annuities EXCEPT:

The contract owner and the annuitant must be the same person

All of the following are true regarding group life conversion EXCEPT:

The employer will pay the entire cost of the new policy

All of the following are true regarding participating life insurers EXCEPT:

They are owned by their stock holders

All of the following are true regarding mutual insurance companies EXCEPT:

They issue non-participating policies

All of the following are true regarding dividends paid by a mutual life insurance company EXCEPT:

They must be paid in cash

If a client has to multiply the value of an accumulation unit by the number of units he or she owns in the separate account in order to determine the value of his or her annuity, he or she must have a(an):

Variable annuity

A client who wants life insurance protection and cash values that fluctuate in value based upon the performance of a separate account should purchase:

Variable life

If the beneficiary of a life insurance policy wants $1,000 per month for as long as the money lasts, they should choose the ________ settlement option.

Fixed amount

If the beneficiary of a life insurance policy wants to take the proceeds over a 5 year period, they should select the ______ settlement option

Fixed period

Which of the following would not be considered to be ordinary life insurance?

Group

List in order from the lowest annual premium to the highest:

Modified, ordinary, limited pay, single premium

Which mode of premium payment would have the highest overall annual cost?

Monthly

All of the following are dividend options on a participating life insurance policy EXCEPT:

Monthly income

When a policyowner uses the cash value in their policy to buy a lesser amount of permanent life insurance, they have exercised which nonforfeiture option:

Reduced paid-up

In the case of a variable annuity sold to a senior citizen in this state for which the owner has directed that the premium be invested in the mutual funds underlying the contract during the 30-day cancellation period, cancellation during that period entitles the owner to a refund of:

The account value

The transfer of risk to an insurance company is an effective risk management technique when:

The amount and frequency of future losses are unknown

Which of the following best describes the entire contract clause as it relates to life insurance?

The policy and the application, if attached at issue

A life settlement broker represents which of the following in a life settlement transaction:

The policyowner

All of the following are true regarding the reinstatement of a lapsed life insurance policy EXCEPT:

The policyowner has up to three (3) years to apply to reinstate a policy that was surrendered for cash

All of the following are true regarding key person life insurance EXCEPT:

The premium is tax deductible for the employer as a business expense

If an employer offers employees the option of voluntarily increasing their group life coverage to an amount that is more than the group life policy normally covers, who is responsible for paying the premium for the elective coverage?

Those employees who elect to increase coverage

The department of an insurer that is responsible for classifying risks is:

Underwriting

On group life insurance, dependent children may be covered up to age

26

Where replacement is involved, every life insurer that uses an agent in a life insurance or annuity sale shall send to the existing life insurer a written communication advising of the replacement within ____ working days of the date the application was received.

3

When using the needs approach to determine how much life insurance a client should buy, producers should consider all of the following EXCEPT:

Future earnings potential

All of the following are true regarding social security disability income benefits EXCEPT:

Individuals must meet the own job definition of total disability

Which of the following life insurance settlement options enables the beneficiary to conserve the proceeds of a life insurance policy?

Interest only