Insurance - Practice TEST Review

Because a minor does not have the legal capacity to release the insurer from further obligation, benefits normally have to be passed through a guardian or trustee.

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Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.

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Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

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

It has a guaranteed minimum interest rate.

In Texas, the state's continuing education requirement

24 hour CE each biennium

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

Which policy component decreases in decreasing term insurance?

Face Amount

When possible, what should insurers strive to eliminate from illustrations?

Footnotes and caveats

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Insuring Clause

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

The death benefit is fixed.

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

What is the name of the insured who enters into a viatical settlement?

Viator

All of the following are TRUE of the federal tax advantages of a qualified plan

a) Funds accumulate on a tax-deferred basis. b) Employee and employer contributions are not counted as income to the employee for income tax purposes. d) Employer contributions are tax deductible as ordinary business expense. Funds in a qualified plan accumulate on a tax-deferred basis; however, at distribution any amount received by the employee will be treated as ordinary income for tax purposes.

In a NonContributory Group Plan, The employer receives a master policy, and employees receive a _______________

certificate of insurance.

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

conditional

With the________, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.

paid-up option

Attempting to settle a claim in which liability is clear.

is NOT an unfair or deceptive act

What are the two components of a universal policy?

insurance and cash account

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

A Joint Life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death.

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What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies.

All of the following would be eligible to establish a Keogh retirement plan EXCEPT

The president and employee of a family corporation.

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract

Keogh plans are for __________ individuals and their employees.

self-employed

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

What is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?

25%

Misrepresenting the nature of a policy, delaying a settlement solely because there is a another policy that may pay part of the loss, and lacking standards for the investigation of an insured's claim are considered _________

unfair or deceptive acts.

The Seven-pay Test determines whether an insurance policy is "over-funded" or if it's a Modified Endowment Contract. In other words, the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest.

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An agent's license must be renewed every _____years on their birthday in either even or odd numbered years depending on when the license was issued. Agents must complete _______hours of continuing education every renewal period, unless otherwise exempt.

2, 24

Which of the following best describes fixed-period settlement option?

both the principal and interest will be liquidated over a selected period of time.

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?

his minor son

In a NonContributory Group Plan, the employees no not receive __________ ____________

individual policies

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is an MEC.