Simulation 3

The _____ privilege allows an individual to leave the group term plan and continue his/her insurance without providing evidence of insurability.

Conversion

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

Conversion

Credit life insurance is typically issued with which of the following types of coverage?

Decreasing Term

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

Deferred

____ cannot report additional taxable income to employees covered under a group life policy paid for by the employer.

Employers

An _____ policy is characterized by cash values that grow at a rapid pace so that the policy matures or endows at a specified date (before age 100).

Endowment

____ life insurance policies provide an insured the greatest amount of permanent protection per dollar of annual premium.

Straight life

A policy of adhesion can only be modified by whom?

The insurance company

The amount of coverage on a group credit life policy is limited to:

The insured's total loan value

Under a Graded Premium Whole Life policy,

The premium increases each year during the early years of the contract and remains the same after that time

A Life insurance policy owner would like to take out a policy loan against the cash value in his Whole Life policy. The interest rate applied to this loan may vary over times. This is referred to as a(n) ___ rate loan.

Variable

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?

Endowment at Age 70

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?

Non-occupational coverage

A group health policy's approved premium rate is guaranteed by the insurer for an initial period of at LEAST ___ months.

12 months

A terminated employee must have been covered for at LEAST __ month(s) under a Group Health Insurance policy immediately prior to termination in order to be eligible for continuation of coverage.

3 months

An insurance applicant was recently denied insurance coverage. The applicant is requesting access from the insurer to recorded personal information regarding this decision. Under the Information and Privacy Protection Act, the insurer MUST make the information available within ___ business days.

30

Before an insurer can increase the rates for individual accident and health policy owners, the insurer must provide written notice at least ___ days before the effective rate increase.

30 days

When does a Guaranteed Insurability Rider allow the Insured to buy additional coverage?

At future dates specified in the contract with no evidence of insurability required

At what time must a policy owner have insurable interest on the insured in order for the life policy to be valid?

At the times of application

Accidental Death coverage is provided to commercial airline passengers in which of the following types of policies?

Blanket Accident policy

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

Fund a buy-sell agreement

Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT?

If the employee paid for qualified medical expenses, the reimbursements may be tax-free

If an insurance applicant is being investigated into his/her personal character and mode of living, the applicant MUST be notified of this investigation. Which of the following makes this a requirement?

Insurance Information and Privacy Protection Act

Credit life insurance is

Issued on a debtor to cover outstanding balances on installment loans

K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT

K will forfeit the right to use the automatic loan provision upon reinstatement

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at Age 70

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life income

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider

_____ ____ is the feature that allows the policy owner to select the timing of premium payment, such as monthly, quarterly, annually, etc

Premium Mode

A Limited-Pay Life policy has:

Premium payments limited to a specified number of years

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?

Straight Life

A (n) ______ ____ Life policy combines investment choices with a form of Term coverage

Variable Universal

A policy that provides permanent life insurance with premiums payable for life is called ___ ____

Whole Life

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life