Insurance

An insured bought a $150k non-participating whole life policy many years ago. She is 100 years old today. She has never borrowed from the policy, and has made all premium payments when due. The policy cash value is

$150k

Of of the following listed answers, select the answer that shows which term policy would have the highest premium to the lowest premium

10 year level term, 10 year increasing term, 10 year decreasing term and annual term

The minimum number of employees for group life insurance in California is

2

If a dependent child covered by a group life plan is not attending full-time schooling, coverage under the plan may continue up to what age?

20

In a group life plan, unmarried children may be covered as dependents until what age?

20

Joe is 30 years old and purchases a life insurance policy. Which would be his highest annual paid premium?

20 pay whole life

In a group life plan, a dependent child attending an educational institution full time may be covered until what age?

24

What age is considered to be an elder in California?

65

Which of the following is a hazard?

A condition that might increase the likelihood of a loss occurring

Renewable term insurance can be best described as

A level death benefit with an increase in premium

Which of the following best describes a life insurance agent?

A person appointed by the life insurance company to act on their behalf

An insurance company that is entitled to transact insurance in this state having complied with all required laws and regulations is referred to as what?

Admitted Company

Which of the following annuity pay-out methods pays for the duration of the annuitant's life?

All of the above

Which of the following would not be covered under a disability insurance but may be covered under long term care?

Alzheimer's

A type of group insurance is which of the following?

An employer-employee policy

Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made. In doing so, they add the premium paid. What else do they add?

Current interest adjusted for mortality, and a general expense charge

The doctrine of "utmost good faith" applies to the business of transacting insurance. Which of the following is an example of its application?

Each party is entitled to rely upon the representations of the other party

From the descriptions below, which one best identifies a term policy?

Each year the premium increases as the insured grows older. After several years the coverage and premiums end simultaneously. There is no cash value

In an insurance policy, the term that prevents a person to re-assert their rights, after they knowingly waived those rights is known as what?

Estoppel

Any insurer who provides claim forms must include which of the following statements?

For your protection California law requires the following to appear on this form: Any person who knowingly presents false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison

Every insurer offering individual life insurance policies or annuities to senior citizens that use non-guaranteed elements in illustrations must provide a statement to that effect. Which of the following is correct regarding this statement?

Guaranteed elements must be in bold print and non-guaranteed elements must be in plain type

When using a non-medical application for life insurance, which of the following is a common practice?

If the answers given in the health statement do not meet the company's underwriting standards, a medical examination is required

Which of the following is true about life insurance beneficiary designations?

If there is no surviving beneficiary, the death benefit is paid to the insured's state

Facing a personal risk of loss and holding a lawful and substantial economic interest in the subject of insurance is the definition of what?

Insurable interest

The effect of the incontestable clause on a life insurance policy serves which purpose?

It prevents the insurer from voiding the contract on grounds of misrepresentation, concealment or fraud of the insured if he or she dies after the period stated in the policy

Typically, in order to join a group insurance plan without proving insurability, an employee must do what?

Join the plan during the enrollment period

Settlement option that pays policy proceeds to two or more persons and ceases upon the death of the first is known as what?

Joint life

The annuity that pays the benefit to two or more people and ends upon the death of the first is known as what?

Joint life

Which of the following is a retirement plan designed for self-employed individuals?

Keogh

Matthew purchases a life insurance policy on his young son, Nathan. He names Mary Ann, his wife, as a beneficiary. Upon whose death will the insurer pay?

Nathan

A variable annuity is purchased by a senior and cancels during the free look period. Premiums are invested in money market. Which of the following is true?

Paid premium minus account fee

An insurance contract is an aleatory contract. What does this indicate?

Performance depends on an uncertain future event

In a group life policy with a death benefit of more than $50k, which of the following is true?

Premium cost for insurance about $50k is taxable as part of the employee's taxable gross annual income

In a group life policy with a death benefit of more than $50k, which of the following is true?

Premium cost for insurance above $50k is taxable income to the insured

Which of the following has a non-deductible contribution?

Roth IRA

The clause that protects the proceeds of a life insurance policy from attachment by creditors after the death of the insured is called what?

Spendthrift trust clause

An ESOP invests money in what?

Stock of the company where employees work

In the rating of substandard, the method where the risk is classified to the Severity of Impariment is known as

Tabular rating

A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option?

The cash value is used to purchase a $20,000 paid-up policy

After a life insurance policy has been in effect for two years, what keeps it from being rescinded by the insurer?

The incontestability clause

Which of the following is a correct statement about life insurance policy types?

The initial premium for term insurance is lower than the initial premium for whole life insurance

In the life insurance planning process, the "blackout period" is considered what?

The period of time when a surviving spouse does not receive any Social Security benefits

Listed below are the descriptions of four types of policies. Which is the term policy?

The policy has a face amount of $100k. Every five years, the premium paid increases. After ten years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value.

What is the purpose of "key person" insurance?

To indemnify the business of loss earnings due to the death of a key employee

If either a fixed period or fixed amount option is chosen, which scenario occurs?

Total amount paid over the years will be more than the face amount of the policy

Which policy requires that the agent be securities licensed?

Variable life

The Medical Information Bureau gathers information that assists in the underwriting process. This information includes matters such as what?

When an applicant previously applied for insurance

If the proposed insured dies before the policy is issued but while in possession of a condition receipt, the company is or not required to do what?

Will pay the policy proceeds only if it would have issued the policy to the proposed insured had he or she been living

If the proposed insured dies before the policy is issued, yet they received a condition receipt, the company will or will not do what?

Will pay the policy proceeds only if it would have issued the policy to the proposed insured had he or she been living

An annuity that pays income to two or more annuitants until their deaths is called what?

a joint and survivor annuity

Renewable term insurance can best be described as

a level death benefit with a raising premium

All of the following are classed as a settlement option for paying life insurance proceeds EXCEPT

a lump sum payment made to the beneficiary

The entity which usually issues participation policies which allow the policy owner a right to receive part of the divisible surplus of the company is known as what?

a mutual insurance company

If your client buys a 30-Pay life policy for $35k at age 20 and the policy lapses later, the Non-Forfeiture Option that would provide protection for the greatest length of time would be which of the following

a reduced paid-up option

Joe receives a large bonus at work and decides to purchase an annuity with it. His monthly income payments from the annuity will begin the following month. Which of the following has Joe purchased?

a single premium immediate annuity

All of the following are must be included in life insurance illustrations EXCEPT

a statement that the benefits in the illustration are guaranteed

All of the following are required to be included in life insurance illustrations EXCEPT

a statement that the benefits in the illustration are guaranteed

A company that issues policies which do not grant the owner of the policy the right to receive policy dividends is known as what?

a stock insurance company

A variable annuity is purchased by a senior and cancels during the free look period. Premiums are invested in mutual fund

account value minus account fee

Which of the following policy dividend options will allow the policy owner to withdraw money without affecting the cash values of the life insurance policy?

accumulate at interest option

Which of the following is part of the application

agent report

Under the OASDHI, Social Security, what type of benefits is/are available to covered workers?

all of the above

When the owner of a life policy assigns the entire face amount to another, this is known as

an absolute assignment

When does an agent have the authority to change policy provisions?

an agent never has the right to change any part of the policy

Which of these defines the principle of indemnity?

an insured cannot receive more than an actual economic loss in the event of a claim

What is the order from lowest to highest on premium mode?

annual, semi-annual, quarterly, monthly

All of the following are true statements concerning the treatment of federal income tax on life insurance EXCEPT

annuity death benefit proceeds are exempt from all taxation

If a dependent child covered by a group life plain is incapable of self-support, coverage under the plan may continue up to which age?

any age

Life policies require insurable interest to exist

at the issuance of the policy

All of the following are true about accidental death and dismemberment coverage EXCEPT

benefits are paid for losses resulting from accident or illness

How may a life insurance policy be reinstated within time limits after it has lapsed from non-payment of premiums?

by paying overdue premiums plus interest, with an application and evidence of insurability

An insurer owned by a parent company that provides insurance to cover the parent company's loss exposures is what?

captive insurer

An unpaid life insurance policy loan may void the contract if the amount of the outstanding loan plus interest exceeds what?

cash surrender value

When converting a term policy to a whole life policy at the insured's attained age, the cash value of the policy at age 65 would best described in which of the following answers

cash values will be lower than if ordinary life had been purchased at original age

Policy provision, which comes into effect when insured and primary beneficiary die in simultaneous accident with no evidence of who died first, is known as what?

common disaster clause

The policy provision which comes into effect when the insured and primary beneficiary die in a simultaneous accident with no evidence as to who died first is

common disaster provision

Neglecting to communicate that for which a party knows and ought to communicate so that the other party may make a sound decision is known as

concealment

When an existing agent is working with an insured to prevent possible replacement of a life insurance policy, what is this known as?

conservation

Which of the following is considered ordinary life insurance?

continuous premium whole life

Which of the following applies to the social insurance program known as social security?

contributions are compulsory for most workers

A person may be covered under social security benefits, if they have earned six credits out of the last 13 quarters. This person would be considered

currently insured

An applicant has purchased a $500k home. He's monthly mortgage payment is $1,500 per month for a 30-year mortgage. In order to protect his family from paying the mortgage upon his death, which of the policy listed below would have the lowest premium?

decreasing term

Which of the following could be used to pay off the mortgage on a home, providing death benefit that equals the amount of outstanding debt on the home, mo more or no less?

decreasing term insurance

Which of the following is true regarding a regular IRA?

deductible contributions, taxable benefits

All of the following are qualified plans EXCEPT

deferred compensation

In which of the following qualified pension plans are benefits linked to the employee's years of service and/or amount of compensation?

defined benefit plan

Someone works for a company and after 30 years he retires. His company will pay $35/month times the length of his employment. What is this known as?

defined benefit plan

Paid-up additions are

dividend options

Which policy options are "Paid-up additions?"

dividend options

Accidental death rider is also known as what?

double indemnity

"Accidental death benefits" provides for an additional payment when an insured dies within a stated time after, and as a result of, an accident. Generally, the insurer will pay what amount?

double the face amount

Group life insurance employer pays premium up to certain amount. Employees have an option for additional coverage on a voluntary basis under which condition?

employee pays premium

The main master policy owner of a group health insurance contract is the

employer

Which of the following are common insurance policy provisions?

entire contract, grace period, reinstatement

Common life insurance policy riders include all of the following except

extended term

On August 12, 1975, your client purchased an endowment-at-age-65 policy. On April 1, 1986, she converted the policy to a reduced paid-up status. The amount of life insurance she has under the policy is equal to which of the

face amount of the paid up coverage less than the original policy's face value

What type of policy has the principal insured covered with a whole life policy and term on the spouse and child?

family policy

A beneficiary wants to receive $2k per month until the principle and interest are exhausted. Which settlement option should be chosen?

fixed amount option

The settlement option that pays a pre-determined monthly benefit until principal and interest are exhausted is known as what type of option?

fixed-amount installment option

A life annuity with installments certain pays the annuitant when/what?

for a specified minimum number of years, or the rest of his or her life, whichever is longer

In order to quality for Social Security retirement benefits the worker must be

fully insured

Which of the following is not one of the common personal uses of life insurance?

funding a buy/sell agreement

When using a non-medical application for life insurance, a common practice is what?

if the answers given in the health statement do not meet the company's underwriting standards, a medical examination is required

Which of the following statements describes, the effect of a suicide clause found in life insurance policies?

if the insured dies by suicide within two years from the date of issue, the insurer is liable only for a return of premiums paid

In regards to representation or warranty, material translates into which of the following?

important enough to influence the decision to enter into a contract

In a life insurance policy with a settlement option for which the insured chooses an installment of a fixed amount, how would installments be paid?

in installments of a fixed or set amount until the proceeds including accumulated interest are

Facing a personal risk of loss and holding a lawful and substantial economic interest in the subject of insurance is the definition of?

insurable interest

Which of the following best describes a "universal life insurance policy"?

insurance protection with a cash value account, earning a guaranteed minimum interest rate and a current rate of interest with flexible premium

When the principal never decreases until the beneficiary withdraws it, this settlement option is called

interest option

Life insurance may be the most practical means of meeting obligations arising from an individuals premature death because of what factor?

it creates an immediate estate

Insurance provides all of the following benefits EXCEPT

it eliminates the risk

All of the following statements are true about insurance EXCEPT

it involves speculative loss

Which statement best describes a life insurance policy dividend?

it is a distribution of excess funds accumulated by the insurer on participating policies

Which of the following is a true statement regarding a life insurance policy?

it is a two-party contract between the insurer and the insured?

What does the term "adverse selection" mean

it is the tendency of those who have a greater risk of loss to apply for, and obtain, insurance

What is a characteristic of term life insurance?

it is written for a specified period of time

Which answer is true regarding the whole life policy?

it requires the insured to pay the premium for life and endows at age 100

An insured who wishes to receive a retirement benefit which cannot be outlived by either the insured or the primary beneficiary should choose a life insurance policy with which option?

joint and survivor option

What type of policy would you sell to the employer when he wants to cover an employee who is an integral part of the business?

key person insurance

The usual amount of death benefit in an industrial life insurance policy is

less than $2,000

When an insured surrenders a whole life policy and selects extended term insurance as the non-forfeiture option, the cash value will be used to buy what type of coverage?

level term insurance in the same amount as the surrendered policy

If the insured dies by suicide within the time limits of the policy issue date, the company is

liable for a return of premiums paid

Which of the following is NOT true about a family maintenance life insurance policy?

life insurance coverage is provided for all family members

Of the following listed answers, select the answer that shows which whole life policy would have the lowest initial premium to the highest premium

modified life, ordinary life, 20 pay life and 7 pay life

What three major categories do life underwriters use to base life insurance premiums?

mortality, interest, and expenses

The insurer that allows for policy holders to receive dividends when there is a profit is what type of company?

mutual company

Life insurance premiums paid for personal needs are

non-deductible

Life insurance illustrations showing premiums, values, credits or charges that are not determined at issue demonstrate what?

non-guaranteed elements

When the death benefit is paid as a lump sum, the benefits are

non-taxable

When the death benefit is paid as a lump sum, to the named beneficiary the benefits are

non-taxable

premiums on life insurance are

nondeductible

Which of the following is true regarding a ROTH IRA?

nondeductible contributions, nontaxable benefits

A life insurance policy is a unilateral contract because

only the insurance company must live up to its side of the agreement

All of the following are considered physicians EXCEPT

optometrist

A life agent must keep the following records EXCEPT

outline of coverage

When policy dividends are used as a single premium to buy additional life insurance, what is this option called?

paid-up addition option

The "grace period" in regards to a life insurance policy is the time allowed after the due date in which to do what?

pay the premium, no penalty or evidence of insurability is required

In life insurance, the only measure of liability is the amount of what?

payable as provided in the policy

The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsor to provide participants with what?

plan descriptions and benefit statements

Which of the following allows employees to share in the financial success of the company?

profit-sharing plan

Which of the following is true about non-forfeiture provisions?

protect the cash value accumulated in a policy

If an insurer indicates that an illustration will be used, they must do which of the following?

provide a summary status report to the policy owner on an annual basis

What is the purpose of settlement options?

provides methods for distributing policy proceeds

Loss retention when choosing not to buy insurance is described in all the answers EXCEPT if the probability of loss is unknown. That is why everyone should buy insurance.

purchase additional insurance regardless of insurability

The guaranteed insurability option provides the ability to

purchase additional insurance regardless of insurability

What is a standard risk classification

rate person on age, health, habit and occupation

One of the following is not a dividend option of a participating life policy, which is it?

receiving the cash surrender value

The process where an insurer has an agreement with other insurers to share amounts of insurance over its own retention limit is what?

reinsurance

Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium?

renewable term

All of the following are reasons to buy life insurance except one of the following. Which is it?

retirement income

Which of the following substandard risk listed below would be classified as an A or AA rating?

secretary

Which of these entities usually do not issue policies that grant the policy owner the right to share in the profits of the company

stock insurance company

In an annuity, which annuity option does the company guarantee the least?

straight life annuity

William has chosen a policy option under which the company will pay his widow an income each month for as long as she lives. Payment stops after death. The option William has selected is

straight life income

The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following EXCEPT

subtract the policy surrender charges

If an insurer knowingly allows one of its agents to mislead a member of the public in order to induce the person to change their existing insurance, the Commissioner may

suspend the insurer's certificate of authority for the class business involved

Choose from the following selections that best describe premium

the amount an insured pays for each unit coverage. $7 for every $1,000 of coverage is an example

All of the following is required on a life insurance application EXCEPT

the amount of disability income insurance in force

In life insurance, the only measure of liability is what?

the amount payable as provided in the policy or policies

Which party has rights in a life insurance policy only after the death of the insured?

the beneficiary

All of the following are true about a life insurance policy which has a waiver of premium with disability income rider attached EXCEPT

the cash value is used to pay premium during a period of disability

The Common Disaster provision is designed to protect the interests of whom?

the contingent or secondary beneficiary

Which of these is NOT a source used to calculate life insurance premiums?

the expected number of policy holders

According to the CA Insurance Code, an insured's policy must specify all of the following EXCEPT

the financial rating of the insurer

A life insurance policy provides annually increasing premiums for a certain period and level premiums thereafter is known as what?

the graded-premium life policy

All of the following are true regarding variable insurance products EXCEPT

the growth in the cash account is guaranteed

The Social Security age of retirement is dependent upon

the individual's date of birth

Underwriting information can be obtained from each of the following sources EXCEPT

the insurer's policy reserves

Which statement relates to the law of large numbers?

the larger the number of separate risks of a like nature combined into one group, the more certainty there is to the amount of loss in a given period

A fundamental rule of an annuity is which of the following?

the longer the life expectancy of an annuitant, the lower the payment

Regarding life insurance coverage for a company, the one responsible for obtaining the coverage, maintaining the policy, and paying the premium is whom?

the master policy holder

When compared to life insurance mortality tables, annuity mortality projects the annuitant by which table?

the mortality table reflecting a longer life for the annuitant

All of the following statements regarding survivorship life insurance are true EXCEPT

the policy face amount is made out based only on the death of the first to die

All of the following statements about survivorship life insurance are true EXCEPT

the policy face amount is paid out only upon the death of the first insured to die

From the choices below, which party has the right to borrow from the policies cash value?

the policy owner

When the policy owner has named Betty Smith as an irrevocable beneficiary, what does or does not need to take place?

the policy owner can borrow the loan value of the policy only with Betty Smith's permission

What makes up the entire contract in a life insurance policy?

the policy, and when attached, the application

Loss retention is an effective risk management technique when all of the following conditions exist EXCEPT

the probability of loss is unknown

What does the phrase "life insurance creates an immediate estate" mean?

the total death benefit will be paid to a beneficiary on the death of the insured

All of the following are true about KEOGH plans EXCEPT

there is no limit on annual plan contributions

Regarding annuities, one of the following statements is false. Which one is it?

they are sold to create an estate

Which answer is true about policy dividends that have been left to draw interest?

they can be used without affecting the cash value of the policy

Which of the following is true about policy dividends?

they cannot be guaranteed

Which of the following is true about life insurance policy loans?

they may be borrowed against cash values at a specified interest rate

All of the following are true about split-dollar life insurance plans EXCEPT

they may be used to fund buy-sell agreements

What is the main purpose of the "common disaster clause" and the "shot-term survivorship clause"?

they preserve the amount the secondary beneficiary would collect from the policy

Which of the following statements describes what happens when money is taken out of a modified endowment contract?

this could be considered an early withdrawal and be a subject to 10% penalty

Once a policy has lapsed, the policy owner can typically reinstate that policy if proof of insurability is shown, all back premiums due plus interest have been paid, and less than what amount of time has elapsed?

three years

Why should a contingent beneficiary be named in a life insurance policy?

to determine who receives the policy benefits if the primary beneficiary is deceased

If either the fixed period or fixed amount option is chosen, then what occurs?

total amount paid over the years will be more than the face amount of the policy

When an individual purchases insurance, what is she doing?

transferring the risk

A type of short-term insurance is what?

travel insurance

The insurance company, _____ department is responsible for selection, classification and the rating of risk is known as

underwriting

Which flexible policy can offer a guarantee of mortality and expenses, but not interest?

universal life

The preferred way to name an insured's children as beneficiaries, and to assure that all such children are provided for equality is to do what?

use a class beneficiary designation

When an insurer presents an illustration for life insurance, all of the following are prohibited EXCEPT

using the insurer's "disciplined current scale" in the illustration

What flexible policy can offer a guarantee of mortality and expenses but not interest?

variable life

Which of the following terms describe the participants 100% ownership in the monies of a retirement

vested

The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains what?

waiver of premium

A deferred annuity pays a death benefit to a beneficiary under what circumstances?

when the annuitant dies before receiving any annuity payments

Representation may be altered or withdrawn at what point in time?

before insurance is in effect

Which of the following is true statement regarding a regular IRA?

both contribution and interest earned are tax deferred; at time of distribution the contribution and gain will be taxed each year

Which of the following is not an option for the use of the policy dividends?

fund the distribution of monthly income payment

All of the following statements apply to a "Family Income Policy" EXCEPT

it affords a minimal amount of coverage on each family member

An insured bought a $150,000, non-participating whole life policy many years ago. He is now 100 years old. He has never borrowed from the policy's cash value and has faithfully made all payments when due. The policy's cash value is what?

$150,000

The vesting schedule for a retirement plan is seven years. After seven years, the employer contribution is vested how much?

100% vested

Identify the statement that is true about contributory group life insurance

the employee will contribute to the premium payments

When the policy owner wants to change the beneficiary, who has to sign on an irrevocable beneficiary?

the insured and irrevocable beneficiary agreeing together

An insured and beneficiary die in a car accident and it is impossible to determine who died first. Who will receive the life insurance proceeds?

the insured's estate

All of the following are true of a variable annuity EXCEPT

the number of units received during a payout period fluctuates

A variable annuity applicant requests that the premium be immediately invested in a stock portfolio. The policy is returned to the insurer within the cancelation period. What is the applicant entitled to receive?

the policy account value on the date the policy was received by the insurer

All of the following are reasons for an individual to purchase ordinary life insurance EXCEPT

to cover a buy/sell agreement

An annuity that may be used to help fund retirement in a few years maintains a "separate account." The owner purchases "accumulation units." This is a _____ annuity

variable

If the insured's death is a result of suicide during the suicide restriction period, the insurer will do what?

Pay an amount equal to the total premium paid

The class beneficiary designation means that the surviving beneficiaries will receive equal shares of the death benefit divided amongst them. What is this designation called?

Per capita

What is the purpose of "key person" insurance?

To cover decreased business earnings due to a death of a key employee

In an insurance policy, the term that allows doubt in the document to be construed against the party that worded the contract is known as what rule?

Adhesion

How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary?

An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent

The client purchased a $1 mil whole life policy at age 24. She added a rider to the policy that allows her to purchase additional amounts of life insurance without evidence of insurability at age 30, 33, 36, 39, and 42. Which rider did your client buy?

a guaranteed insurability rider

Which provision will pay a portion of the death benefit prior to the insured's death due to serious illness?

accelerated death benefit

Under ERISA, there is fiduciary responsibility between

plan sponsor and employees

Who has the right to change life insurance policy beneficiaries?

the policy owner

An insured bought an annuity 10 years ago. He will retire in five years. To determine the value of the annuity, the number of accumulation units is multiplied by the value of the separate account. What type of annuity was this?

variable annuity

All of the following are true about life insurance policies and federal income taxation EXCEPT

annuity death benefits are totally exempt from taxation

A person is involved in a Viatical settlement. What provision in the life insurance contract allows for this transaction?

Absolute Assignment

Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness?

Accelerated death benefit

What kind of coverage protects an insurance agent for losses due to professional services he or she rendered or failed to render?

Errors & Omissions

When a family policy covers children, all of the following are true EXCEPT

Evidence of insurability is required if coverage for children is permanent insurance

Cost of living rider on a policy will provide what?

Face amount of the contract will increase according to the changes to the CPI, for an additional premium

The policy owner, age 50, has been paying the premiums on his whole life policy for 15 years. He needs the equivalent of 1/3 of the cash value of his policy over the next two years. He wants to continue to have the policy protection, and can afford to pay the premiums. Which of the following would appear to be his best course of action?

Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force.

All of the following statements about the election of a life insurance policy's settlement options are true EXCEPT

When no settlement option is chosen, the proceeds are automatically paid to the policy owner's estate

Which of the following is not ordinary life insurance?

a group life insurance policy

A man has been diligent in investing money for his retirement. His total payments into a tax deferred annuity are $100k. He is now ready to take it out, and the insurance company that issued the annuity guarantees an annual payment for $8k for the remainder of his life. His expected payout over his lifetime is $200k. How much of each year's annuity payment is taxable?

$4,000

The guarantee insurability rider provides that the policyholder can purchase more insurance at what point, and under what conditions?

At certain specified ages on his own life insurance without proof of insurability

Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information about him?

Fair Credit Reporting Act

A "Family Maintenance Policy" is a combination of which of the following policies?

Level term rider on a whole life insurance policy

A licensee would like to surrender his license. What must he do?

Submit document to the Insurance Commissioner for termination request

An individual with a low income and high insurance needs should buy what?

Term insurance

A person spends $10k in a single premium annuity, and another person spends $10k in a Certificate of Deposit (CD). Both pay 10% annual interest. One of these insureds is in a 31% income tax bracket. For 40 years, this person does not touch his annuity and reinvests all income from the CD at 10%. Which of the following statements is true?

The annuity would be worth several hundred thousand more because of the tax deferral of the earnings

All of the following statements about contingent beneficiaries are true EXCEPT

The contingent beneficiary shares death proceeds equally with the primary beneficiary

Which of the following is a correct statement about life insurance policy types

The initial premium for term insurance is lower than the initial premium for whole life insurance

The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy, what occurs?

The insurer will make payments until the insured juvenile reaches the specified age

Which of the following is a true statement regarding the social security (OASDHI) program?

The program provides only a minimum floor of income. Individuals are expected to supplement this with their own personal programs

Insurance companies have several departments handling various responsibilities in the issuance of policies. Which department handles adverse selection?

The underwriting unit

With the cost-of-living rider, what occurs with the life insurance policy holder?

They receive the automatic increase in the face value if there is an increase in the cost-of-living index. There is an additional premium for the additional coverage

Unless the applicant indicates otherwise during the right-to-return period for an individual annuity, the premium for a variable annuity would be invested only in which of the following?

fixed income investments and money market funds

The settlement option that puts the insurer in the position of the least guarantee and also has the potential to generate the greatest return to the policy owner is known as what?

life income option

Which of the following supports the Medical Information Bureau?

life insurance company

Term insurance is typically characterized by what?

low premiums and no cash value

An applicant has purchased a $500k home. He is currently paying $1,500 per month for his 30-year mortgage. In order to protect his beneficiary from paying the mortgage upon his death, which of the following policy would pay an amount equal to the outstanding balance of the mortgage?

mortgage redemption