Insurance exam #1
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
Paid-up additions
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up option
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount
A domestic insurer issuing variable contracts must establish one or more
Separate accounts
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments on the interest earned on the death benefit
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options, EXCEPT
Reduction of premium
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Which of the following persons is required to hold a producer license?
A person who negotiates insurance contracts
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
What is NOT typically excluded from life policies?
Death due to plane crash for a fare-paying passenger
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
Defamation
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 be purchase
When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
Fixed amount
In life insurance policies, cash value increases
Grow tax deferred.
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
Joint Life Policy
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 mortality factors?
Life expectancy
What is NOT true regarding policy loans?
Money borrowed from the cash value is taxable.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay Whole Life
If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?
The insurer
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary
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
When would a 20-pay whole life policy endow?
When the insured reaches age 100
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant
With the policy
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
interest-sensitive Whole Life