General Life Insurance Review Exam

A premium receipt that provides for coverage immediately once the premium is paid and the receipt given to an applicant best describes A. A conditional receipt B. A constructive receipt C. A binding receipt D. An insurability receipt

A. A conditional receipt

What dividend option could have a potential tax consequence? A. Accumulate with interest B. Reduce premiums C. Cash D. Paid up insurance

A. Accumulate with interest

A bank requires an insured to carry life insurance as collateral against a loan. Which of the following meets that need? A. Assigning an existing policy to the bank B. Naming the bank as the premium payor C. Changing the beneficiary D. Requiring the primary beneficiary to pay the bank

A. Assigning an existing policy to the bank

Which of the following limits benefits in a policy if the insured is a student pilot? A. Exclusion B. Provision C. Clause D. Option

A. Exclusion

Premiums paid on an individual slide insurance policy are generally A. Not deductible B. Deductible until cash values exceed premium payments C. Deductible once they exceed 7.5% of AGI D. Deductible as long as the policy is less than $100,000

A. Not deductible

What policy has a premium that increases each year for a specified number of years? A. Term B. Graded premium C. Traditional whole life D. Modified premium

A. Term

The proposed insured prepaid on an application, and the policy came back rated. What is the agent's responsibility? A. The agent must collect an additional premium, and an amendment will be made to the policy B. The agent must get a Statement of Good Health signed C. An amendment is made to the application D. The agent must get additional underwriting information

A. The agent must collect an additional premium, and an amendment will be made to the policy

An insured and spouse are in a car accident in which the insured dies. The spouse dies 10 days later. Under the common disaster clause, who will receive the benefit? A. The insured's next of kin B. The spouse's next of kin C. The insured's estate D. The spouse's estate

A. The insured's next of kin

S and W have a business and purchase policies on each other, naming themselves as the beneficiaries. The business is dissolved, and S dies 3 months later. Since there is no longer an insurable interest, who receives the benefit? A. W B. S's spouse C. Probate D. There is no benefit paid

A. W

An insured has a $25,000 whole life policy with an accidental death benefit rider. The insured has a heart attack while driving to work. How much will the policy pay? A. $0 B. $25,000 C. $50,000 D. $75,000

B. $25,000

What type of insurance contract requires 20 years of payments and provides both a death benefit and matures in 20 years? A. 20-year term life B. 20-year endowment C. 20-pay life D. 20-year rider

B. 20-year endowment

For what reason can a company cancel a life insurance policy after 2 years? A. If a misstatement is made in the application B. For a nonpayment of premium C. If a medical condition arises D. If there is no insurable interest at all times

B. For nonpayment of premium.

An insured returned a policy one week after it is issued and receives a full refund of premium paid. What provision did the insured utilize? A. Grace period B. Free look C. Reinstatement D. Nonforfeiture

B. Free look

An insured is not happy with the fixed interest rate on a whole life policy. What policy can the insured purchase to help accommodate this need? A. Term B. Interest sensitive whole life C. Modified whole life D. Endowment

B. Interest sensitive whole life

If a policy is overfunded, the IRS will deem this policy to be which of the following? A. Retirement plan B. MEC C. Whole life D. Annuity

B. MEC

An insured purchases a policy in July. The insured gets depressed and commits suicide in November. What benefits will be paid? A. All benefits are payable B. No benefits are payable under the suicide exclusion C. Partial benefits are payable as the suicide period has expired D. Benefits will be reduced based on a rated premium

B. No benefits are payable under the suicide exclusion

Under the misstatement of age provision, if an insured understates his age, what will the company do? A. Pay the same benefit and charge more premium B. Pay a benefit based on the premium the insured paid at his correct age C. Pay the benefit less any interest D. Pay the face amount since the incontestability clause expired

B. Pay a benefit based on the premium the insured paid at his correct age

What did the insured have to do to renew a renewable term policy? A. Show insurability B. Pay the renewable premium C. Request the agent to renew the policy D. Complete a new application

B. Pay the renewable premium.

Which of the following is CORRECT about an immediate annuity? A. Payments begun at the time the annuity is being set up B. Payments begin after one payment period C. An immediate annuity has an accumulation period D. Premiums can be single pay or periodic

B. Payments begin after one payment period

An insured prepaid an application and waits several months without receiving the policy. The insured contacts the agent, who contacts the insurance company. Once the agent receives the policy and delivers it, what is the agent's responsibility? A. The agent must acquire a Statement of Good Health is required since underwriting took so long B. The agent must explain the coverages, riders, options, and exclusions to the insured C. The agent must extend the free look period D. The agent must take a new application

B. The agent must explain the coverages, riders, options, and exclusions to the insured

Who must initial changes made on an application? A. The insurance agent B. The insured or applicant C. The beneficiary D. An officer of the insurance company

B. The insured or applicant

An insured takes a policy loan and doesn't pay the interest. If the insured dies, what will the insurer do? A. The insurer will do nothing, as policy loans are illegal B. The insurer will deduct the loan and the interest from the death benefit C. The insurer will pay nothing D. The insurer will pay 50% of the death benefit

B. The insurer will deduct the loan and the interest from the death benefit

Under the Fair Credit Reporting Act, which of the following statements is NOT correct? A. The insured has the right to request the nature and the scope of the report B. The investigative firm must have a face-to-face interview C. The insured must be notified if the application is denied D. The insured must give permission before an outside agency can be used

B. The investigative firm must have a face-to-face interview

Regarding Social Security benefits, which of he following is NOT correct? A. If an insured delays payments until after age 65, the payments will be higher B. The payments may increase according to the Federal government C. Payments will be paid in full when the insured reaches age 65, even if they are not retired D. The insured must be "fully insured" to receive full benefits.

B. The payments may increase according to the Federal government

What does a level premium refer to? A. The premium is level for one year B. The premium remains level throughout the term of the policy C. The premium is increased at renewal D. Complete a new application

B. The premium remains level throughout the term of the policy.

Which of the following products pays in units? A. Fixed annuity B. Variable annuity C. Flexible premium annuity D. Immediate annuity

B. Variable annuity

The payor benefit rider determines which of the following? A. When the benefits pay out B. When the premiums will be waived C. How to increase benefits D. When the policy ends

B. When the premiums will be waived

Which of the following is NOT correct regarding a variable universal life policy? A. The face amount can be increased or decreased B. It has flexible premiums C. Benefits are only available on a level basis D. The investment portion can help accommodate inflation

C. Benefits are only available on a level basic

Two partners in a business worth $100,000 purchase a Buy and Sell agreement. Which of the following would most benefit their needs? A. The partnership purchases a $100,000 policy on each of the partners B. Each partner purchases a $100,000 policy on each other C. Each partner purchases a $50,000 policy on each other D. The partnership purchases 6 total policy

C. Each partner purchases a $50,000 policy on each other

Which of the following policies will provide the lowest amount of protection for the same premium? A. Term life B. Whole life C. Endowment policy D. Variable life

C. Endowment policy

The agent/producer tells an insured that the insured's endowment policy will pay $20,000, but the face amount is $10,000 What provision will protect the insurance company against the misstatement? A. Consideration clause B. Insuring clause C. Entire contract clause D. Free look

C. Entire contract clause

The insured has a child and wants to increase coverage. Which provision allows this without insurability? A. Payor benefit B. Waiver of premium C. Guaranteed insurability D. Accidentally death benefit

C. Guaranteed insurability

What policy protects the business in the event of the death of the Chief Executive Officer? A. Buy and Sell B. Deferred compensation plan C. Key employee policy D. Group insurance

C. Key employee policy

Accelerated death benefit are also referred to as A. Cash value B. Endowment C. Living benefit D. Policy loan

C. Living benefit

Which of the following is CORRECT regarding group conversion? A. Evidence of insurability is required B. It must be converted to term C. Premiums are based on attained age D. The death benefit may be increased

C. Premiums are based on attained age

All of the following are true regarding the waiver of premium EXCEPT A. The waiver lasts until the insured is no longer disabled B. The insured must be disabled for a certain amount of time before the premiums are waived C. Premiums must be paid during the disability D. The insured retains all the rights to the policy while the waive is in effect

C. Premiums must be paid during the disability

The insuring clause addresses all of the following parties EXCEPT A. The insurance company B. The insured C. The agent D. The beneficiary

C. The agent

Which of the following statements about reinstatement is NOT correct? A. The policy owner must pay back the premium B. The insured must show insurability C. The policy owner will lose the right to use the automatic premium loan provision D. The policy owner must reinstate within a certain time period

C. The policy owner will lose the right to use the automatic premium loan provision

Which of the following regarding Survivorship Life is CORRECT? A. The premium stops after the first insured dies B. The premiums are mostly based on the older insured C. The premiums are lower than buying separate policies D. The benefit pays after the first insured dies

C. The premiums are lower than buying separate policies

A joint whole life policy may be written as which of the following? A. Term B. Decreasing term C. Traditional whole life D. Universal life

C. Traditional whole life

If the owner is required to get permission from the beneficiary before the beneficiary is changed, what type of beneficiary does this policy have? A. Primary B. Contingent C. Revocable D. Irrevocable

D. Irrevocable

What retirement plan could a sole proprietor pay into as long as its full-time employees are also covered? A. 401k B. TSA C. IRA D. Keogh

D. Keogh

An insured buys a single pay policy at age 40 and dies at age 85. The premium cost for this policy is A. More than a 5 pay life policy B. More than a straight life policy C. Same as a straight life policy D. Less than a straight life policy

D. Less than a straight life policy

What settlement option would have no residual benefit to the beneficiary after the annuitant dies? A. Fixed period B. Fixed amount C. Interest only D. Life income

D. Life income

What provision states that the owner is the premium payor, owns the cash value, and can change the beneficiary? A. Nonforfeiture option B. Settlement option C. Entire contract clause D. Owner's rights

D. Owner's rights

All of the following must sign the application EXCEPT A. The proposed adult insured B. The policy owner C. The insurance agent D. The beneficiary

D. The beneficiary

In a family plan policy, which of the following is TRUE regarding the children's benefit? A. Additional children are not automatically covered B. The children's coverage is based on their future need as an adult C. The breadwinner can adjust the benefits of each child desperately D. The children's coverage is convertible at age 18

D. The children's coverage is convertible at age 18

Which of the following statements regarding convertible term is CORRECT? A. Premiums are only convertible at original age B. The premium is less than non convertible term C. Benefits can be increased D. It is allowable without evidence of insurability

It is allowable without evidence of insurability.

A producer completed the application, received a check for the 1st month payment, provided a conditional receipt, returned to the office, and noticed the check was not signed by the proposed insured. What is the most CORRECT next step for the producer to make? A. Submit the application without money and collect the premium after issue B. Submit the application, with a payment from the producer, and contact the proposed insured for reimbursement C. Promptly meet with the client again and have the client provide the correct payment, update the client's receipt, and then submit the application D. Sign the check on the client's behalf and submit promptly

Promptly meet with the client again and have the client provide the correct payment, update the client's receipt, and then submit the application.

Which of the following is provided by the Fair Credit Reporting Act? A. The availability of credit life insurance on an impartial basis B. Protection to debtors against credit collection agencies C. The requirement that an applicant for insurance be informed that a consumer report may be requested regarding his application D. Information concerning any previous applications for insurance by an applicant

The requirement that an applicant for insurance be informed that a consumer report may be requested regarding his application.