Stimulate your exam 5

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

$3,000

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

According to the Entire Contract provision, a policy must contain

A copy of the original application for insurance

Which of the following reports will be provide the underwriting with the information about an insurance applicant's credit?

Consumer report

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of Adhesion

According to the fair credit act all of the following would be considered negative information about a consumer EXCEPT

Disputes regarding consumer report information.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

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

The medical information bureau ( mib) was created to protect

Insurance companies from adverse selection by high risk persons.

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

Interest only

Which of the following is true about the mandatory free look in a life insurance policy?

It commences when the policy is delivered

All of the following statements are true regarding installments for a fixed period annuity settlement option except

It is a life contingency option.

Which of the following is true regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred.

When an insurer terminates an agent appointment, the insurer must do all of the following except

Provide a 30 day advance notice to the commissioner

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

The full death benefit

Which is true about a spouse term rider?

The rider is usually level term insurance

Which of the following is not true life settlements?

The seller must be terminally ill

Which of the following true about nonforfeiture values?

They are required by state law to be included in the policy

Which of the following components must a life insurance policy have to allow policy loans?

cash value

What term is used for replacing insurance policies for the sole purpose of making commissions

churning

The automatic premium loan provision is activated at the end of the

grace period

Another name for a substandard risk classification is

rated

For variable products, underlying assets must be kept in

separate account

A domestic insurer issuing variable contracts must establish one or more

separate accounts

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

Adjusted to the insured's age at the time of renewal

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory

The full premium was submitted the the application insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As the application date

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will purchase.

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

Which statements is not true regarding policy summary?

It must be combined with a sales illustration

Which of the following statements about the reinstatement provision is true?

It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

In the underwriting process, it was determined that the applicant for life insurance is in poor health & has some dangerous habits Which of the following is true concerning the policy premium?

It will likely be higher because the applicant is a substandard risk.

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 morality factors?

Life expectancy

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividend, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

Which of the following best describes a pure life annuity settlement option?

Pure life provides payments for as long as the annuitant is alive.

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement options

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

Which of the following is not true regarding equity indexed annuities?

They earn lower interest rates than fixed annuities.

In a survivorship life policy, when does the insurer pay death benefit?

Upon the last death

Which of the following statements regarding the taxation of modified endowment contracts is false?

Withdrawals are not taxable

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

a fixed amount

When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information?

application

Which is the primary source of information used for insurance underwriting

application

What provision in a life insurance policy extends coverage beyond the premium due date?

grace period