Simulate Life part 4

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a) Cash surrender b) Reduced paid-up c) Paid-up options d) Extended term

A) Cash surrender

According to the entire contract provision, what document must be made part of the insurance policy? a) Copy of the original application b) Buyer's Guide c) Agent's report d) Outline of coverage

A) Copy of the original application

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? a) Cost of Living Rider b) Value Adjustment Rider c) Return of Premium Rider d) Inflation Rider

A) Cost of living Rider

Any regularly salaried employee of a licensed insurer, without license or other qualification, may act on behalf of that insurer in the negotiation of insurance for that insurer, provided a) That employee has been previously licensed in that line of insurance. b) A licensed producer participates in the sale of insurance. c) That employee has completed a prelicensing education course. d) That employee receives no commissions.

B) A licensed producer participates in the sale of insurance

The LEAST expensive first-year premium is found in which of the following policies? a) Level Term b) Annually Renewable Term c) Increasing Term d) Decreasing Term

B) Annually Renewable Term

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an a) Self-insurer. b) Authorized insurer. c) Local insurer. d) Certified insurer.

B) Authorized insurer

This state provided for a temporary license for all of the following EXCEPT a) A producer's disability. b) A producer's time in the military service. c) A producer's retirement. d) The death of a producer.

C) A producers retirement

When an employee terminates coverage under a group insurance policy, coverage continues in force a) Until the employee can obtain coverage under a new group plan. b) Until the employee notifies the group insurance provider that coverage conversion policy is issued. c) For 31 days. d) For 60 days.

C) For 31 days

Which policy provision stipulates for what period of time the policy will remain in effect after the premium payment due date? a) Free-look period b) Consideration c) Grace period d) Ownership

C) Grace period

What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? a) It ensures the policy proceeds will be split between the primary and contingent beneficiaries. b) It requires that someone who is not the primary beneficiary handles the estate. c) It determines who receives policy benefits if the primary beneficiary is deceased. d) It allows creditors to receive payment out of the proceeds.

C) It determines who receives policy benefits if the primary beneficiary is deceased

Which of the following is a risk classification used by underwriters for life insurance? a) Normal b) Excellent c) Standard d) Poor

C) Standard

The premiums paid by the employer in a business life insurance policy are a) Always taxable to the employee. b) Never taxable to the employee. c) Tax deductible by the employer. d) Tax deductible by the employee.

C) Tax deductible by the employer

The Commissioner may examine the affairs and condition of all of the following insurance companies doing business in the State, EXCEPT a) Reciprocal or fraternal insurers. b) Reinsurance companies. c) There are no exceptions. d) Foreign and domestic insurers.

C) There are no exceptions

Once an individual has successfully passed a licensing exam, for how many year(s) are the results valid? a) 1 b) 2 c) 5 d) 3

D) 3

When an annuity is written, whose life expectancy is taken into account? a) Beneficiary b) Life expectancy is not a factor when writing an annuity. c) Owner d) Annuitant

D) Annuitant

Which of the following types of life insurance coverage is designed for groups of people who are exposed to a common hazard? a) Common hazard b) High-risk pool c) Association d) Blanket

D) Blanket

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) Both the principle and interest will be liquidated over a selected period of time.

Which of the following best describes the aleatory nature of an insurance contract? a) Only one of the parties being legally bound by the contract b) Ambiguities are interpreted in favor of the insured c) Policies are submitted to the insurer on a take-it-or-leave-it basis d) Exchange of unequal values

D) Exchange of unequal values

To which of the following life products do the Replacement Regulations apply? a) Group life insurance b) Credit life insurance c) Coverage under a binding receipt issued by the same company d) Individual annuity

D) Individual annuity

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? a) Mortality rate b) Risk exposure c) Morbidity d) Life expectancy

D) Life expectancy

Which of the following best describes the unfair trade practice of defamation? a) Assuming the name and identity of another person b) Issuing false advertising material c) Refusing to deal with other insurers d) Making derogatory oral statements about another insurer's financial condition

D) Making derogatory oral statements about another insurers financial condition

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a a) Statement of good health. b) Backdated receipt. c) Warranty. d) Premium receipt.

D) Premium receipt

A domestic insurer issuing variable contracts must establish one or more a) Liability accounts. b) Annuity accounts. c) General accounts. d) Separate accounts.

D) Separate accounts

The initial amount of credit life insurance may NOT exceed a) An amount set by statute and adjusted regularly for inflation. b) The borrower's monthly income. c) The borrower's annual income. d) The amount to be repaid under the contract.

D) The amount to be repaid under the contract

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a) The policy will be interpreted as if the insured did not have an answer to the question. b) The policy will be void. c) The insurer may deny coverage later, because of the information missing on the application. d) The policy will be interpreted as if the insurer waived its right to have an answer on the application.

D) The policy will be interpreted as if the insurer waived its right to have an answer on the application

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? a) If the primary beneficiary predeceased the insured b) When the insured dies, the primary and contingent beneficiaries share death benefits equally. c) With the primary beneficiary's written consent d) If the insured died from accidental means

A) If the primary beneficiary predeceased the insured

In property and casualty insurance, assignments of policies are valid a) Only if the insurer has given prior written consent. b) Without insurer review if the policy has been in effect for at least 2 years. c) Under no circumstance. d) Without insurer review, on the date of the insured's request.

A) Only if the insurer has given prior written consent

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) Refund the premiums paid

In terms of parties to a contract, which of the following does NOT describe a competent party? a) The person must have at least completed secondary education. b) The person must not be under the influence of drugs or alcohol. c) The person must be of legal age. d) The person must be mentally competent to understand the contract.

A) The person must have at least completed secondary education

What is the purpose of a fixed-period settlement option? a) To provide a guaranteed income for a certain amount of time b) To settle the insurance company's liability c) To provide a guaranteed income for life d) To provide a guaranteed amount of money each month

A) To provide a guaranteed income for a certain amount of time

The portion of a loss that is considered the responsibility of the insured is called a) Premium. b) Deductible. c) Exclusion. d) Liability.

B) Deductible

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a) Slandering b) Defamation c) Undercutting d) Twisting

B) Defamation

Which of the following would NOT constitute an eligible group for life insurance? a) Creditor-debtor group b) Family group c) Employer-employee group d) Labor union

B) Family group

Which statement is NOT true regarding a Straight Life policy? a) It has the lowest annual premium of the three types of Whole Life policies. b) Its premium steadily decreases over time, in response to its growing cash value. c) The face value of the policy is paid to the insured at age 100. d) It usually develops cash value by the end of the third policy year.

B) It's premium steadily decreases over time, in response to its growing cash value

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) Ordinary Life b) Joint Life c) Decreasing Term d) Whole Life

B) Joint life

Which of the following statements is TRUE concerning whole life insurance? a) Policy loans are tax deductible. b) Lump-sum death benefits are not taxable. c) Dividend interest is not taxable. d) Premiums are tax deductible.

B) Lump-sum death benefits are not taxable

Which of the following is another term for the accumulation period of an annuity? a) Annuity period b) Pay-in period c) Premium period d) Liquidation period

B) Pay-in period

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? a) Standard risk is also known as high exposure risk. b) Standard risk is representative of the majority of people. c) Standard risk pays a higher premium than a substandard risk. d) Standard risk requires extra rating.

B) Standard risk is representative of the majority of people

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a) The premium for individual coverage will be based upon the insured's attained age. b) The insured may choose to convert to term or permanent individual coverage. c) The insured would not need to prove insurability for a conversion policy. d) The insured may convert coverage to an individual policy within 31 days.

B) The insured may choose to convert to term or permanent individual coverage

All of the following are requirements for life insurance illustrations EXCEPT a) They must identify nonguaranteed values. b) They must differentiate between guaranteed and projected amounts. c) They must be part of the contract. d) They may only be used as approved.

C) They must be part of the contract

In a survivorship life policy, when does the insurer pay the death benefit? a) Half at the first death, and half at the second death b) If the insured survives to age 100 c) Upon the last death d) Upon the first death

C) Upon the last death