LAH Test Questions
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 index. She would likely purchase an
Equity Indexed Annuity
Sam applied for insurance and paid the premium on august 14, he died on august 22 before the policy was issued the insurance company will
Issue the policy anyway and pay the face value to the beneficiary
Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term? (increasing, decreasing, level, renewable)
Renewable
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the consumer's complaint
The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application.
Return the applicant for completion
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
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?
Variable universal life
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additonal amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members
term rider
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
the death benefit will be smaller
Which of the following is the best reason to purchase life insurance rather than annuities?
to create an estate
what is the purpose of a fixed-period settlement option
to provide a guaranteed income for a certain amount of time
CHAPTER 3 What required provision protects against unintentional lapse of the policy?
Grace period
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection
Greatest
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
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attained fully insured status
What is the purpose of a conditional receipt
It is intended to provide coverage on a date prior to the policy issue
Insurance is the transfer of
Risk
Which of the following statements about a suicide clause in a life insurance policy is true?
Suicide is excluded for a specific period of years and covered thereafter
Which of the following is called a "second-to-die" policy
Survivorship
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
$3,000
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary
A full death benefit
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
A full death benefit
The term "illustration" in a life insurance policy refers to
A presentation of non guaranteed elements of a policy
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's.
Ancestry
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 an
Interest-sensitive whole life
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
Buy-sell agreement
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
CHAPTER 1 Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the application in the decision process and to allow the consumer to compare the costs of different policies (To allow the consumer to compare the costs of different policies)
Buyer's Guide
To legally transact insurance in this state, an insurer must obtain which of the following
Certificate of authority
If an applicant for life insurance policy is found to be a substandard risk, the insurance company is most likely to
Charge a higher premium
An insured and his wife are both involved in a head-on collision. The husband died instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance had what provision?
Common Disaster
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common Disaster Clause
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 of the following is NOT an essential element of an insurance contract
Counteroffer
Which of the following is NOT an example of a valid insurable interest
Debtor in the life of the creditor
CHAPTER 2 An individual has been making periodic payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
Deferred
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan (premiums) or the cash value of the plan, whichever is the greatest amount
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Under a 20 pay whole life policy, in order for the policy to pay the death benefit to the beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first
All of the following information about the applicant is identified in the general information section of a life insurance application except
Gender
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 make sure that additional coverage will be available in the future, what type of policy is this included in
Guaranteed insurability option
Fixed annuities provide all of the following EXCEPT
Hedge against inflation
In which of the following cases will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to age 100
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
Immediate
Stranger- originated life insurance policies are in direct opposition to the principle of
Insurable interest
Which is not true regarding certificate of authority
It is issued to group insurance participants
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium
It will likely be higher because the applicant is substandard risk
What is true concerning the Accidental Death Rider
It will pay double or triple the face amount
Two 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
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 is NOT a type of whole life insurance?
Level term
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
An applicant who receives a preferred risk classification qualifies for
Lower premiums than a person who receives a standard risk
If a settlement option is not chosen by the policy owner or the beneficiary, which option will be used
Lump Sum
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable (it is NOT taxable)
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Mutual
Which of the following best describes the MIB
Nonprofit organization that maintains underwriting information on applicants for life and health insurance
On participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable
What is the official name for the social security program
Old age survivors disability insurance
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT
Other insurance coverages
What is the major difference between a stock company and a mutual company
Ownership
An insured purchased a Life Insurance policy in 2010 and died in 2020. The insurance company discovers at that time the insured had misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
In which of the following instances would the premium be tax deductible?
Premiums paid by an employer on a $30,000 group term life insurance plan for employees
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe
Reduction of Premium
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
Upon policy delivery, the producer may be required to obtain any of the following except
Signed waiver of premium
Which type of life insurance policy generates immediate cash value?
Single Premium
Which of the following would be considered a non-qualified retirement plan?
Split-dollar plan
Which of the following is a risk classification used by underwriters for life insurance?
Standard
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles
Standard risk is representative of the majority of people
Which of the following insurers are owned by stockholders
Stocks
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
The premiums paid by an employer for his employee's group life insurance are usually considered to be
Tax deductible by the employer
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
A 60-year-old participant in a 401K plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% withholding tax
What is not true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
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 of the interest earned on the death benefit
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date
The date of the medical exam
An insured purchased a 10 year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10 year term?
The insured may renew the policy for another 10 years, but at a higher premium rate
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
Which of the following statements is correct regarding a whole life policy?
The policy owner is entitled to policy loans.
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be true
The policy will be interpreted as if the insurer waived its right to have an answer on the application
Which of the following is TRUE regarding the premium in term policies?
The premium is level
Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly?
The producer
Which is true for both equity indexed annuities and fixed annuities?
They have guaranteed minimum interest rate
What is the purpose of the buyer's guide
To allow the consumer to compare the costs of different policies
When is the earliest a policy may go into effect
When the application is signed and a check is given to the agent
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than
With the policy
For variable products, underlying assets must be kept in
a separate account
When an employee terminates coverage under a group insurance policy, coverage continues in force
for 31 days
If taken as a lump sum, life insurance proceeds to beneficiaries are passed
free of federal income taxation
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
guaranteed insurability rider
What type of insurance would be used for a Return of Premium rider?
increasing term when added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary
A policy will pay the death benefit if the insured dies during the 20-year premium-playing period, and nothing if death occurs after the 20-year period. What type of policy is this?
level term