Life and Health Insurance Midterm

Which of the following life insurance provisions allows for a transfer of all or a portion of the policy owners rights under an insurance contract

Assignment

Which of the following life insurance provisions allows for a transfer of all or a portion of the policyowner's rights under an insurance contract?

Assignment

The type of recipe that makes the company liable for the risk from the day of application is called a

Binding recipes

When Sam, a widower, dies, his sons Jack and Mack share a monthly check of $2,000. Mack dies and Jack continues to receive a check for $1,000 until he dies. This life income settlement option is called

joint and survivor life income option

When Sam, a widower, dies, his sons Jack and Mack share a monthly check of $2,000. Mack dies and Jack continues to receive a check for $1,000 until he dies. This life income settlement option is called:

joint and survivor life income option.

The premium that reflects mortality rates, assumed interest, and the policy's share of the company's operating expenses is called the:

gross premium.

Which statement best describes the provisions of the uniform simultaneous death act?

if the insured and the primary beneficiary should die immediately in the same accident, the proceeds are paid as if the primary beneficiary had died first

For an immediate annuity, payments to the annuitant begin:

in a period of time equal to the time between payments.

Which of the following disabling acts would not normally be excluded from the waiver of premium rider

injury sustained while a paying passenger on a scheduled air flight

The settlement option under which the principal never decreases unless the beneficiary withdraws it is the

interest option

Which of the following is not a characteristic of life insurance as property

it requires reasonable managerial ability

Which of the following statements is true regarding industrial life insurance

it was originally developed for factory workers

Tom and Martha are receiving annuity payments. If Tom dies before Martha, she will continue to receive payments. Tom and Martha have a:

joint life and survivorship annuity.

The factors that determine the amount of each payment under the fixed period settlement option are:

length of the fixed period, face amount of the policy, and interest.

Which policy can be changed from non-accumulating cash value policy to a policy that does accumulate cash value

A convertible term policy

A Keogh plan in which is specified amount is invested each year is known as

A defined contribution plan

A variable whole life policy offers

A guaranteed minimum death benefit

Term Insurance is best used for those individuals with

A need for temporary protection

When converting a group life policy to an individual policy, the parting group members new policy must be

A permanent or whole life policy

The social security program is funded by

A special payroll tax on employers, employees and the self employed

Tom and Martha are receiving annuity payments. If Tom dies before Martha she will continue to receive payments. Tom and Martha have a

Joint life and survivorship annuity

The factors that determine the amount of each payment under the fixed period settlement options are

Length of the fixed period, face amount of the policy, and interest

For a group life insurance what does the employer or association receive as proof of coverage

The master policy

With a continuous pay whole life policy

The premium is required to be paid for the insured's entire life with policy endowment at age 100

A level premium annuity is one that

The premiums remain level throughout the accumulation phase of the annuity

Risk may be defined as

The uncertainty of loss

The primary advantage of convertible term policies is that

These policies do not require the insured to show proof of insurability to convert to a permanent policy

Controlled business may be defined as insurance sold

To the producer, the producers family and friends and the producers business associates

If a policy contains an accident death benefits and the insured also has an outstanding policy loan, in the event of accidental death

Twice the face amount is paid with a deduction equal to the size of the policy loan

Third-party ownership refers to which of the following

When the policy owner is different than the insured

Which policy is not restricted to a stated period of time?

Whole life

When Jonas died it was discovered that he was actually six years older than he had claimed when applying for an insurance policy. As a result of this discovery, the insurance company

Will pay only the amount of the insurance that Jones premiums would've purchased items correct age

All of the following describe consideration in an insurance contract except - Consideration is something of value - The premium paid is the applicants consideration - The promise to pay benefits according to the policy terms is the insurance company's consideration - None of the above

- None of the above

Jack Has a variable annuity in a separate account that has a portfolio valued at $5 million. There are 500,000 outstanding accumulation units for the account. What's the value of one unit

10

In determining whether disability is permanent most companies call for a

3 to 6 month waiting period

The typical waiting period for benefits under the disability income rider is

3 to 6 months

Times are tough and Joe has decided to cash in his 20 year old whole life policy. His cash surrender value is $14,354 and he has paud $19,876 in premiums since he started the policy. How much of the cash surrender value would be subject to tax?

$0

The penalty for committing fraud or making false statements may include

Fines imprisonment or both

Social security disability benefits become available to eligible workers after a waiting period of

Five months

The clause allowing the policyholder to inspect and, if dissatisfied, to return a policy for a full refund, is known as

Free look

The human life value approach considers all of the following except

Future needs of Heirs

Which life insurance policy provision states that the insured has 30 to 31 days or one month from the premium due date to make a premium payment

Grace period

What is the name of the plan that caps the amount of group life insurance coverage at $50,000 to provide life insurance benefits on a tax favored basis

Group carve out plans

Why should a policy owner be especially careful when deciding to increase the amount of an outstanding policy loan

If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance

The party who makes the contract with the insurance company is called the

Owner

Using the policy dividends as a single premium to buy additional life insurance is called the

Paid up additions option

Under the provisions of the fixed period settlement option, the

Principal amount gradually decreases to zero

And annuity can be described as a contract that

Provides a lifetime income through periodic payments to the annuitant

what is the type of annuity that guarantees to pay an income totaling an amount at least equal to the purchase price of the contract

Refund life annuity

Of the following situations, which would be the best choice for term life insurance

Rico has a wife and two children and just purchased their first house. He wants a policy to pay off the mortgage when he dies

TSA retirement plans are for employees of all of the following types of organizations except

Self-employed

The Fair Credit Reporting Act

Sets up procedures for consumer reporting agencies

The type of life insurance that does not require a medical exam is known as

Simplified issue

The type of risk that is below an average risk of loss is referred to as

Substandard

Collateral for a policy loan is

The cash value of the policy itself

The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing all of the following except - transferring the proceeds of the policy - commuting the proceeds of the policy -encumbering the proceeds of the policy - spending any of the money for a designated period of time

spending any of the money for a designated period of time

An insurer formed under the laws of a country other than the United States is called

And alien insurer

Clete named his wife Anna as the primary beneficiary of a $100,000 whole life policy with a common disaster provision. Their son Jimmy is the contingent beneficiary. Cleate and Anna are involved in a serious private airplane accident. Clean is killed immediately but Anna lives for another two months before she to dies. Which of the following is likely to occur

Anna receives the proceeds of the policy, which in turn are paid to her estate upon her death

Amount paid out under the accelerated benefit rider

Are deducted from the policies death benefit

With a modified premium whole life contract, premium payments

Are lower in the early years of the contract

With regard to life insurance policies, loading refers to

Assignment of the appropriate share of the company's operating expenses to each policy

Of the following which is not considered a living benefit of life insurance

Final expenses

Alma, age 35, earns $50,000 a year and expect to retire when she's 65. What is Alma's human life value

$1.5 million

Roberto purchased a universal life policy with the death benefit option B. If his initial face amount was $100,000 and he currently has a cash value of $20,000 his actual death benefit would be

$120,000

R dies without having paid the $500 premium on his $50,000 policy that was due a weekly before her death. With no outstanding policy loans. It's beneficiary can expect to receive

$49,500 which is the face amount minus the premium owed

An accounting measure used to determine a contract owners interest in a separate account of a variable annuity before payments begin is called a

Accumulation unit

Which of the following terms defines a bad risk that attempts to purchase a lot of insurance

Adverse selection

In an outright gift of life insurance to a chairrt

All the incidents of ownership in the policy belong the donee

Amanda's life insurance policy named her sister Joyce as an irrevocable beneficiary of the policy proceeds. This means

Amanda can borrow against the policies cash value but only with Joyce's permission

The death benefit of a deferred annuity can be described as the

Amount paid to a beneficiary when the contract ends due to the death of the annuitant

The cash value accumulation in a life insurance policy

Can be accessed for policy loans or retirement income

Dividend left to accumulate at interest

Can be withdrawn without affecting the cash value of the policy

Death benefits under a variable life policy

Can fluctuate up or down but will never go below the face amount of the policy

And expense loading is added to the net premium in order to do all of the following except

Concentrate cost among certain small groups of insured

Which element of a valid contract shows that each party is giving value or assuming responsibility

Consideration

Using cash values to supplement retirement income or to help fund college tuition is

Considered living benefits of life insurance

The applicant, if other than the proposed insured, must have

An insurable interest in the life of the insured

Term insurance differs from permanent insurance in what way?

term insurance does not build cash value and only pays a death benefit

Collateral for a policy loan is:

the cash value of the policy itself.

If the insured is killed in an airplane accident, the accidental death benefit:

Applied if it is a regularly scheduled airline

Universal life insurance does not allow the policy owner to do any of the following except

Take a partial surrender

A settlement option is an option for

Taking proceeds in other than a lump sum

Which policy may usually be converted into a different type

Term

Which policy may usually be converted into a different type?

Term

Which of the following defines pure risk most accurately? - the certainty of loss - the chance of loss - the chance of gain - the guarantee of loss

- the chance of loss

Amanda's life insurance policy names her sister Joyce as irrevocable beneficiary of the policy proceeds. This means:

Amanda can borrow against the policy's cash value but only with Joyce's permission.

Times are tough and Joe has decided to cash in his 20 year old whole life policy. His cash surrender value is $14,354 and he has paid $19,876 in premiums since he started the policy. How much of the cash surrender value would be subject to tax?

$0

Alma, age 35, earns $50,000 a year and expects to retire when she is 65. What is Alma's human life value?

$1.5 million

Roberto purchased a universal life policy with the death benefit option 'B'. If his initial face amount was $100,000, and he currently has a cash value of $20,000, his actual death benefit would be:

$120,000

If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax?

$3,000

If life insurance is used to protect against premature death, what is used to protect against the risk of living too long

An annuity

R dies without having paid the $500 premium on his $50,000 policy that was due a week before her death. With no outstanding policy loans, R's beneficiary can expect to receive:

$49,500 which is the face amount minus the premium owed.

All of the following describe consideration in an insurance contract except: -Consideration is something of value -The premium paid is the applicant's consideration -The promise to pay benefits according to the policy terms is the insurance company's consideration -None of the above

-None of the above

Jack has a variable annuity in a separate account that has a portfolio valued at $5 million. There are 500,000 outstanding accumulation units for the account. What's the value of one unit?

10

If an insured purchased a 10-year family maintenance policy at age 35, and then died at age 40 how long would benefits be paid to his or her beneficiaries

10 years

If an insured purchased a 10-year family maintenance policy at age 35, and then died at age 40, how long would benefits be paid to his or her beneficiaries

10 years

The waiver of premium rider normally expired at age

60

The waiver of premium rider normally expires at age

60

At what age does Social Security consider as early retirement

62

At what age does social security consider as early retirement

62

Life insurance by-sell agreements can be structured and all of the following ways except

A Split dollar

Which policy can be changed from a non-accumulating cash value policy to a policy that does accumulate cash value?

A convertible term policy

Alicia, age 35, has an annuity that has a guaranteed growth rate of 6% and that will pay her a specified monthly income beginning at age 65. What kind of annuity does Alicia have?

A deferred fixed annuity

Alicia, age 35, has an annuity that has a guaranteed growth rate of 6% that will pay her a specified monthly income beginning at age 65. What kind of annuity does Alicia have?

A deferred fixed annuity

What is a postmortem dividend

A dividend earned, but not yet paid, in the year of the insured's death and paid with the death claim

An insurer formed under the laws of the state in which an insurance policy is written is called

A domestic insurer

Any insurer formed under the laws of the state in which an insurance policy is written is called

A domestic insurer

A participating policy is likely to have which of the following?

A higher premium than a nonparticipating policy.

A payor rider is used to keep what type of policy in force?

A juvenile insurance policy

Select the correct statement: - A producer is never permitted to make a change in policy wording. - A producer may change the wording of a policy, but only if the policyowner requests it. - Because a life insurance policy is a contract, no change in policy wording is ever permitted. - An officer of the company is permitted to make a change in policy wording, with or without the knowledge of the policyowner.

A producer is never permitted to make a change in policy wording.

Which of the following elements of a valid contract consists of the offer and acceptance

Agreement

A revocable life insurance beneficiary is one which

Can be changed without the knowledge or consent of the beneficiary

Which element of contract formation requires that an applicant for insurance have the legal capacity to make a contract

Commented parties

Which element of contract formation requires that an applicant for insurance have the legal capacity to make a contract?

Competent parties

After being informed of an insured's death the producer must first

Contact the insured to initiate the claims process

If an insured currently has a policy with a waiver of premium rider and should change to a more hazardous occupation the insurance company will

Continue the waiver of premium rider

With a variable life policy

Death benefits will vary according to the performance of the separate account; however death benefits will not fall below a guaranteed minimum amount

In which of the following circumstance would the accidental death benefit not apply

Death caused by riot of insurrection

In which of the following circumstances would the accidental death benefit not apply?

Death caused by riot or insurrection.

Decreasing term insurance

Decreases the amount in force to zero at the end of the term.

For the insurance company to pay the accidental death benefit, most companies require that the insured

Die within 90 days of the accident

An insurance marketing method that does not involve producers is

Direct Response Marketing

All of the following statements regarding Keogh plans are true except

Distributions prior to age 59 1/2 are tax deductible

The cash value of the permanent life insurance policy can be used for all of the following except

Dividends

Which of the following is the most accurate description of the accumulation of interest life insurance dividend option

Dividends accumulate with interest paid on them at a rate specified in the contract

Defort by an insurance producer to pay attention to a customers needs is referred to as

Due diligence

The effort by the insurance producer to pay attention to a customer's needs is referred to as

Due diligence

Qualified retirement plans rules are set by

ERISA & IRS

Qualified retirement plans rules are set by:

ERISA and IRS

An application for group coverage is signed by the

Employer who then receives and retains a master policy

Which of the following is a non-forfeiture option

Extended term insurance

Which of the following is a nonforfeiture option?

Extended term insurance

Of the following, which is the type of insurance that provides group life insurance automatically for federal employees, unless they opt-out of the coverage?

FEGLI

Manual allows his whole life policy to lapse. His insurance company then converts the policy to an extended term option. Of the following what will transfer from the original policy to the new policy?

Face amount

Manuel allows his Whole life policy to lapse. His insurance company then converts the policy to the extended term option. Of the following, what will transfer from the original policy to the new policy?

Face amount

Jenny's husband Bill suddenly dies of a heart attack. They have a three-year-old son. Which income. Is there any currently in?

Family dependency period

Sandy purchases an immediate monthly annuity on January 1, 2003. She will receive her first annuity payment on

February 1, 2003

All of the following are required elements of a legal contract except

Fiduciary

Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan?

If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance.

Which life insurance provision states that the company agrees not to use as a defense any error, concealment or miss statement on the part of the insured after the policy has been in effect a specified length of time

Incontestability

Which of the following disabling acts would NOT normally be excluded from the waiver of premium rider?

Injury sustained while a paying passenger on a scheduled airline flight

The part of the insurance policy in which the insurer promises to pay to or onto half of the insured is called the

Insuring agreement or clause

The cash value of variable life policy

Is determined by the investment experience of the separate account

Money provided under the automatic premium loan provision

Is generally charged interest

All of the following apply to a term policy except

It pays at the end of a stated period

T begins work on March 18 at Big Inc. Big offers noncontributory group life insurance to its employees after a probationary period is met. If the probationary period is the typical length, T will eligible for group life insurance on

June 18

The following is a source of life insurance policy dividends except

More policy owners

Producers that offer a variable life insurance and annuities

Must have a valid life insurance license and be registered with the NASD

Policyholders receive policy dividends when there is a profit at what type of insurance company

Mutual

Policyholders receive policy dividends when there is a profit at what type of insurance company?

Mutual

With regard to the waiver of premium rider after the disability a policy owner normally

Need not repay the premiums paid by the company during disability

As a general rule most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the

New premium is higher than the original

Life insurance dividends are considered a return of excess premium and are therefore

Not taxable

Group life insurance is usually written as

One year term insurance

What type of policy pays nothing when the first insured dies but later pays a death benefit when the second insured dies

Survivorship life policy

What type of policy pays nothing when the insured first dies, but later pays a death benefit when the second insured dies?

Survivorship life policy

Which statement best describes the term reserve?

That amount that, when increased by future premiums on outstanding policies, and interest on those premiums, will enable the company to meet future death claims.

With an insurance contract being in a aleatory contract, this means

That equals value is not given by both parties to the contract

Incidental limitations refer to which of the following?

The amount of life insurance that may be included in a qualified retirement plan.

The insured's age is misstated in the life insurance policy, what amount is payable under the policy

The amount the premium would've purchased at the correct age of the injured

With a whole life insurance policy

The cash value is at its maximum at policy and down man; the life insurance protection is maximum at the beginning of the policy

Which of the following defines pure risk most accurately

The chance of loss

If a policy owner has $100,000 policy with an accumulated cash value of $6000 the policy owner can borrow up to

The entire accumulated cash value of $6000 less interest for one year

Which of the following provides the basis for the benefit amount paid to an insured under a disability income rider

The face amount of the policy

An agent is a representative of

The insurance company

Which of the following statements is not true regarding loan values on life insurance policies

The insured is prohibited from charging the policy owner interest for borrowing his or her own money

A producer who is acting in an agent capacity represents

The insurer

The annuity period is

The period of time during which annuity payments are made to the annuitant from the insurer

What is a life insurance policy dividend?

The policy's share of the company's excess funds or divisible surplus.

Voluntary assignment of a life policy is often used for which of the following purposes

To make a gift of the policy

Voluntary assignment of a life policy is often used for which of the following purposes?

To make a gift of the policy

To waive an insured's premium most companies require an individual's disability to be

Total and permanent

The company will normally pay the face amount of the policy to the beneficiary of an insured who commits suicide after the policy has been in effect for

Two years

Which of the following terms means giving up a known right or privilege

Waiver

Which of the following terms means giving up a known right or privilege?

Waiver

Which of the following would NOT be an exclusion found in life insurance policies?

Waiver of premium

Which of the following riders require the insured being totally and permanently disabled before it becomes effective?

Waiver of premium rider

The premium that reflects mortality rates, assumed interest, and the policy's share of the company's operating expenses is called the

gross premium

Which of the following is not a circumstance under which a company will pay a death claim for less than the face amount

When the age of the insured has been overstated at the time the policy was issued

Which of the following is NOT a circumstance under which a company will pay a death claim for less than the face amount?

When the age of the insured has been overstated at the time the policy was issued.

If a proposal insured dies before the policy is issued but while in possession of a conditional recipe, the company

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

A lapsed policy may usually be reinstated

Within three years after the policy lapses

If Jose names his estate as the beneficiary of his life insurance policy and dies without a will:

a court will distribute the proceeds strictly according to state law.

A Keogh plan in which a specified amount is invested each year is known as:

a defined contribution plan.

An insurer formed under the laws of the state in which an insurance policy is written is called:

a domestic insurer.

A Variable Whole Life policy offers:

a guaranteed minimum death benefit

The law of large numbers says that in order to provide insurance an insurance company must have

a large number of similar risks

The law of large numbers says that in order to provide insurance an insurance company must have:

a large number of similar risks.

An indeterminate premium policy offers:

a low initial premium with succeeding premiums based on the company's investment return, mortality and expenses.

Term insurance is best used for those individuals with

a need for temporary protection

When converting a group life policy to an individual policy, the departing group member's new policy must be

a permanent or whole life policy

The Social Security program is funded by:

a special payroll tax on employers, employees and the self-employed.

Life insurance buy-sell agreements can be structured in all of the following ways, except:

a split dollar.

A warranty in insurance is

a statement or condition that the applicant represents to be absolutely true

A warranty in insurance is:

a statement or condition that the applicant represents to be absolutely true.

An accounting measure used to determine a contract owner's interest in the separate account of a variable annuity before payments begin is called a/an:

accumulation unit.

The tendency for poor risks to seek and be covered for insurance more than average risks is referred to as:

adverse selection.

Once a policy has lapsed, the insured usually can reinstate the policy, provided proof of insurability is shown if

all back premiums are due plus interest have been repaid and less than three years have elapsed

When a group insurance policy is noncontributory

all members become covered immediately after completing the probationary period

When a group insurance plan is noncontributory:

all members become covered immediately after completing the probationary period.

Turning over all rights in a life policy to an assignee is referred to as:

an absolute assignment.

An insurer formed under the laws of a country other than the United States is called:

an alien insurer.

If Life Insurance is used to protect against premature death, what is used to protect against the risk of living too long

an annuity

All of the following are factors used to determine annuity premiums EXCEPT:

annuitant's place of residence.

When can a universal life policy be surrendered by the policyowner?

anytime the policyowner chooses

Amounts paid out under the accelerated benefit rider

are deducted from the policy's death benefit

Premium payments made into a variable universal life policy

are invested in one or more investment portfolios at the policyowner's death

Distribution from a qualified retirement plan

are received tax-free only if they result from previously taxed contributions

Distributions from a qualified retirement plan:

are received tax-free only if they result from previously taxed contributions.

Lying about a material fact on an insurance application is considered:

basis for the insurance company to void the contract

If the policyowner has chosen the reduce premium dividend, dividends will

be applied to the premium due

If the policyowner has chosen the reduce premium dividend option, dividends will:

be applied to the premium due.

Joan, whose policy contains a waiver of premium rider, becomes disabled for two years, during which time the company pays over $400 in premiums. Joan recovers and now must:

begin paying the premiums as they become due.

The type of receipt that makes the company liable for the risk from the day of application is called a

binding receipt

The period of time after a surviving spouse no longer receives survivorship benefits and before he or she is eligible for retirement benefits is called the

blackout period

The policy conditions represent the obligations of

both the insured and the insurer

In many states it is necessary for permanent policies to have some cash value:

by the end of the policy's third year.

The cash value accumulation in a life insurance policy:

can be accessed for policy loans or retirement income

A "SIMPLE" retirement plan:

can be either a 401(k) plan or an IRA.

Dividends left to accumulate at interest

can be withdrawn without affecting the cash value of the policy

Death benefits under a variable life policy:

can fluctuate up or down, will never go below the face amount of the policy.

Premiums for a variable universal life policy

can vary in amount and payment schedule

Permanent insurance differs from term insurance with regard to:

cash value accumulation.

Using cash values to supplement retirement income or to help fund college tuition is

considered living benefits of life insurance

After being informed of an insured's death, the producer must first

contact the insurer to initiate the claims process

If an insured currently has a policy with a waiver of premium rider and should change to a more hazardous occupation, the insurance company will:

continue the waiver of premium rider.

If a new mode of premium payments calls for less frequent payments, the total annual dollar outlay by the policyowner will

decrease

If a new mode of premium payments calls for less frequent payments, the total annual dollar outlay by the policyowner will:

decrease.

For the insurance company to pay the accidental death benefit, most companies require that the insured

die within 90 days of the accident

The cash value of a permanent life insurance policy can be used for all of the following except

dividends

Which of the following is the most accurate description of the accumulation at interest life insurance dividend option

dividends accumulate with interest paid on them at a rate specified in the contract

A split-dollar plan

divides the cost of additional insurance for an employee between that employee and the company

Any extra premium charged for the waiver of premium rider

does not apply to the policy's cash value

Joan decides to take a straight life annuity option. Her income payments will be periodically paid

during the Joan's lifetime with no refund upon her death

The nonforfeiture option that provides the most life insurance protecting is the

extended term options

of the following which is not considered a living benefit of life insurance

final expenses

The penalty for committing fraud or making false statements may include:

fines, imprisonment or both.

Social Security disability benefits become available to eligible workers after a waiting period of:

five months.

The word flexible in a flexible premium annuity means

flexible premium payment amounts

Marky chooses a a life annuity period with certain. This will pay him

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

Rebating occurs when a producer

gives a prospect a discount or kickback in order to induce a sale

The premium which states that a policy will stay in force a certain period of time after the premium is due is the

grace period provision

The provision which states that a policy will stay in force a certain period of time after the premium due is the:

grace period provision.

Universal Life insurance does not allow the the policyowner to do any of the following except:

take a partial surrender

A universal life policy with a back end load

makes a service charge when the policy is surrendered

A universal life policy with a back-end load:

makes a service charge when the policy is surrendered.

Part 2 of the life insurance application looks for information on an individual's

medical history

The portion of the premium that is based only on mortality rates and assumed interest is called the

net premium

The portion of the premium that is based only on mortality rates and assumed interest is called the:

net premium.

Which of the following policies offer tax-deductible premiums for individual policyowners? - None - Whole life policy - Term life policy - Variable life policy

none

In underwriting group life insurance, the underwriter:

normally focuses on the group as a whole, rather than on individual members.

In term insurance, cash value is:

not part of a term policy.

As a general rule, most insurance companies will allow the insured to change to another type of insurance policy without a medical examination if the

now premium is higher than the original

Each of the following is a factor in computing the premium for a life insurance policy EXCEPT:

number of anticipated policyowners.

If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance

on his own life at certain specified ages without proof of insurability

Under a group insurance plan, a child may be a dependent beyond the ages of 19 or 21:

only if the child is permanently mentally or physically disabled before that age.

Henry purchases a 10 annuity certain. He dies soon after the payments start, but before the certain period of 10 years. Any funds remaining are:

paid to the beneficiary for the remainder of the certain period.

Using the policy dividends as a single premium to buy additional life insurance is called the:

paid-up additions option.

The extended term nonforfeiture option provides:

paid-up term coverage equal to that of the original policy

Part 2 of the life insurance application looks for information on an individuals:

past medical history.

If an insured commits suicide within the time specified by the suicide clause, the insurance company may do all of the following EXCEPT:

pay the beneficiary only the amount of interest earned by the premium paid to date.

If one of the named beneficiaries has died, and the deceased beneficiary's heir receives a portion of the proceeds of the policy, this is called a

per stirpes beneficiary designation

Each of the following statements about policy loans is correct except

policy loans can be made with both permanent and term policies

Each of the following statements about policy loans is correct EXCEPT:

policy loans can be made with both permanent and term policies.

With a limited-pay Whole life policy

premiums are paid for a specific number of years or until a specified age of the insured is reached

Under the provisions of the fixed period settlement option, the:

principal amount gradually decreases to zero.

If the insured's age has been *overstated* at the time the policy was purchased, and the error is discovered prior to the death of the insured, the company will...

reduce future premium payments

Paul dies before his annuity has paid out an amount at least equal to the purchase price of the annuity, so Paul's beneficiary continues to receive annuity payments until that amount has been reached. This type of annuity is a

refund life annuity

What is the type of annuity that guarantees to pay an income totaling an amount at least equal to the purchase price of the contract

refund life annuity

The Fair Credit Reporting Act:

sets up procedures for consumer reporting agencies.

The payment of the proceeds of a policy in other than a lump-sum cash payment is called a:

settlement option.

If Mary has been named as the irrevocable beneficiary of a life insurance policy:

she cannot be removed as beneficiary without her consent.

The type of life insurance that does not require a medical exam is known as:

simplified issue

Of the following, which describes the suicide clause in a life policy

states that the insurance company will not pay any death benefit if the insured commits suicide during the first two policy years

If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can borrow up to

the entire accumulated cash value of $6,000 less interest for one year

The principal difference between an entity purchase and a cross-purchase buy-sell agreement is

the identity of the policyowner

With an adjustable life policy, which of the following may not be changed?

the individual insured

All of the following factors are considered when using the needs approach to determine the kind and amount of insurance needed for an individual except

the individuals net annual salary

Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider

the insured remains eligible for all provisions

Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider:

the insured remains eligible for all provisions.

For group life insurance, what does the employer or association receive as proof of coverage?

the master policy

If the cash value of a universal life policy reaches zero, the policyowner must make a premium payment or

the policy will go into the grace period

If an insured's policy includes the waiver of premium rider, what happens when the age is reached where the rider no longer applies?

the premium for the policy is reduced

With a continuous-pay whole life policy

the premium is required to be paid for the insureds entire life with the policy endowment at age 100

Under the uniform simultaneous death act, who is considered to have died first if the insured and the primary beneficiary die at the same time

the primary beneficiary

The typical waiting period for benefits under the disability income rider is:

three to six months.

To waive an insured's premium, most companies require an individual's disability to be:

total and permanent.

If a policy contains an accidental death benefit and the insured also has an outstanding policy loan, in the event of accidental death

twice the face amount is paid with a deduction equal to the size of the policy loan

The company will normally pay the face amount of the policy to the beneficiary of an insured who commits suicide after the policy has been in effect for:

two years.

A company that has not received permission from an Insurance Commissioner to do business in his or her state is called a/an:

unauthorized company.

An adjustable life policy allows all of the following changes except: - change the period of protection - variable investment options - increase or decrease the face amount - raise or lower the premium amount

variable investment options

Separate accounts are used with which of the following policies?

variable whole life

Insurers may limit the period of time that an insured can exercise the conversion privileged on a convertible term policy. This conversion period:

varies among the different insurance companies

Which of the following would not be an exclusion found in life insurance policies

waiver of premium

Which of the following riders require the insured being totally and permanently disabled before it becomes effective

waiver of premium rider

"Third-party ownership" refers to which of the following?

when the policyowner is different than the insured.

A policyowner would not lose all his or her cash value when surrendering certain types of life insurance policies. Nonforfeiture options would be a part of which of the following policy types?

whole life

An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance company:

will automatically institute the extended term option.

If a proposed insured dies before the policy is issued but while in possession of a conditional receipt, the company:

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

10 of 100 Questions The head of the state department of insurance has been granted all of the following authority EXCEPT:

writing and approving state insurance laws.