Study Practice Test 1

A producer agent must do all fo the following when delivering a new policy to the insured except

Disclose commissions earned from the sale of the policy.

A tornado that destroys property would be an example of which of the following?

A peril

Which of the following produces evaluations of insurer's financial status often used by state departments of insurance?

AM Best

A Policyowner of a universal life insurance policy must receive a policy status report from the insurer at least

Annually

What provision in a life insurance policy would allows the insurer, after the death of the insured, to pay benefits to a person not named in the policy as beneficiary?

Facility of payment clause `

Which of the following best describes a misrepresentation

Issuing sales material with exaggerated statements about policy benefits

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

Which of the following is true regarding the annuity period?

It may last for the lifetime of the annuitant

Which of the following is usually true of a participating life insurance policy?

It may pay dividends to policy owners

All of the following are characteristic of group life insurance except

Premiums are determined by the age, sex and occupation of each individual certificate holder.

All of the following are characteristics of group life insurance Except

Premiums are determined by the age, sex, and occupation of each individual certificate holder

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance

Replacement rule

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes

Misrepresentation

If a statement of policy information is not furnished to the applicant at the time of application, how soon must the form be delivered to the applicant?

15 days

which of the following documents delivered to the policy owner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A policy summary

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay 10000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

The death benefit under the universal life option B

Gradually increases each year by the amount of the cash value increases `

All of the following entities regulate variable life polices except:

Guaranty association

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

Randy owns a universal life policy. he has just received a policy status report. How long will it be until he receives the next report?

12 month

Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the commissioner?

12 months

Michigan insurance polls can specify a time limit during which legal action against the insurer can be taken. This time limit, however, has to be at least

6 years

When must insurable interest exist in a life insurance policy

At the time of application

the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

Credit life

Which of the following types of insurance policies is most commonly used in credit life insurance?

Decreasing term

Which of the following best describes the aleatory nature of an insurance contract? `

Exchange of unequal values

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider

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

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all insurance policies that will be replaced

Which part of an insurance application would contain information regarding the applicant's medical history

Part 2 (medical section)

Which of the following statements is an accurate comparison between private and government insurers?

Private insurers may be authorised to transact insurance by state insurance departments

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?

Reduction

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is incorrect?

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

All of the following are true statements regarding the accumulation at interest option Except:

The interest is not taxable since it remains inside the insurance policy

All of the following are beneficiary designations except

Specified

A flexible premium universal life insurance policy must provide a grace period of

30 days

Which of the following determines the length of time that benefits will be received under the Fixed Amount settlement option?

Size of each instalment