Insurance exam 10

#76. 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? a) $3,000 b) $13,000 c) $10,000 d) $7,000

$3,000

#81. A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default? a) 15 b) 30 c) 60 d) 90

60

#42. The term "conservation effort" deals with a) Charging the lowest possible premium for the highest possible benefit. b) Discouraging agents from terminating their appointments. c) Discouraging policyholders from dropping existing policies. d) Writing the least amount of policy provisions as possible in a given policy.

Discouraging policyholders from dropping existing policies.

#64. Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? a) Long-term care b) Accidental death c) Guaranteed insurability d) Payor benefit

Long-term care

#12. Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a) Guaranteed insurability rider b) Change of insured rider c) Term rider d) Accidental death and dismemberment rider

Term rider

#59. Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. b) The beneficiary will only receive payments of the interest earned on the death benefit. c) The beneficiary must pay interest to the insurer. d) The beneficiary will receive the lump sum, plus interest.

The beneficiary will only receive payments of the interest earned on the death benefit.

#53. Under an extended term nonforfeiture option, the policy cash value is converted to a) The same face amount as in the whole life policy. b) The face amount equal to the cash value. c) A lower face amount than the whole life policy. d) A higher face amount than the whole life policy.

The same face amount as in the whole life policy.

#73. All of the following are true regarding the guaranteed insurability rider EXCEPT a) The insured may purchase additional insurance up to the amount specified in the base policy. b) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. c) This rider is available to all insureds with no additional premium. d) The insured may purchase additional coverage at the attained age.

This rider is available to all insureds with no additional premium.

#48. What is the main purpose of the Seven-pay Test? a) It guarantees the minimum interest. b) It determines if the insurance policy is a MEC. c) It requires level premium payments for 7 years. d) It ensures that the policy benefits are paid out in 7 years.

it determines if the insurance policy is a MEC.