life insurance

In terms of parties to a contract, which of the following does not describe a competent party?

The person must have at least completed secondary education.

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.

what percentage of company's empoyees must take part in a noncontributory group life plan?

100%

what is the number of credits required for fully insured status for social security disability benefits?

40

Which of the following is the required number of participants in a contributory group plan?

75%

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A policy summary

All of the following would be considered an insurance transaction except?

Abtaining an insurance license.

Which of the following is another term for an authorized insurer?

Admitted

when transacting business in this state an insurer formed under the laws of another country is know a a/an?

Alien insurer

Which of the following products will protect an individual from outliving their money?

Annuity

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain

The accelerate benefits provision will provide for an early payment of the death benefit when the insured?

Becomes terminally ill.

Which of the following statements concerning buy-sell agreement is true?

Buy-sell agreements are normally funded with a life insurance policy.

All if the following are duties and responsibilities of producer at the time of application except?

Change any incorrect statement on the application by personally initialing next to the connected statement.

Which of the following includes information regarding a person's credit, character reputation, and habits?

Cunsumer report

Which of the following is not an example of a valid insurable interest?

Debtor in the life of the creditor.

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable.

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 asnlong as the cash values will purchase.

All of the following are true regarding a decreasing term policy except?

The payable premium amount steadily declines throughout the duration of the contract.

All of the following actions can be described as twisting except?

Explaining to client the advantages of permeant insurance over term and suggesting changing policies.

All of the following are business uses of life insurance except?

Funding against company's general financial loss.

Which is true about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual. obligations due to financial impairment?

Insurance Guaranty Association

Which of the following is true about the 10-day free-look period in life insurance policy?

It begins when the policy is delivered.

Which of the following is not true regarding the life with Guaranteed minimum annuity settlement option?

It does not guarantee that the entire principal amount will be paid out.

Which of the following is true of a qualified plan?

It has tax benefit for both employer and employee.

what is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection.

Which of the following is not true regarding a certificate of Authority?

It is issues to group insurance participants.

Which of the following is not true regarding a non qualified retirement plan?

It needs IRS approval.

Which of the following determines the cash value of a variable life policy?

The performance of the policy's portfolio.

Which of the following is true regarding a single life settlement option?

It provides income the beneficiary cannot live without.

Which of the following settlement options in life insurance is known as straight life?

Life income

Which of the following is an example of an example of a limited-pay life policy?

Life paid-up at age 65.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will...?

Pay the policy proceeds only if it would have issued the policy.

Which of the following allows the insurer to relieve a minor insured form premium payments if the minor's parents have died or become disabled?

Payor benefit

All of the following are characteristics of group life insurance except?

Premiums are determined by the age, sex, and occupation of each individual certificate holder.

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payment.

Another name for a substandard risk classification is....?

Rated

Another name for a substandard risk classification is?

Rated

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. which rider is attached to the policy?

Return of premium.

The insurer discovered that one of the applicants for life insurance missed a couple of questions in the application. What must the insurer do with the application?

Return to the applicant for completion.

Which of the following describes attachments made to policies that either add or modify coverage?

Riders

Which of the following best details the underwriting process for life insurance?

Selection, classification, and rating of risks.

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is resnesentative of the majority of people.

Which of the following is called a "second-to-die" policy?

Survivorship life

The premiums paid by the employer in a business life insurance policy are?

Tax deductible by the employer.

Which of the following statements is correct regarding a whole life policy?

The Policyowner is entitled to policy loans.

All of the following statements about equity index annuities are correct except?

The annuitant receives a fixed amount of return.

Which of the following would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction.

Which is not true about beneficiary designations?

The beneficiary must have insurable interest.

Which of the following statements is true concerning irrevocable beneficiaries?

The can be change only with written consent of the beneficiary.

Which of the following is an example of liquidity in a life insurance contract?

The cash value available to the policyowner.

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

The employees receive individual policies.

All of the following statements concerning an employer sponsored non qualified retirement plan are true except?

The employer can receive a current tax deduction for any contributions made to the plan.

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 benefit from the group policy to the beneficiary.

All of the following are true statements regarding the accumulation at interest option except?

The interest is not taxable since it remains inside the insurance policy.

Which is generally true regarding insureds' who have been classified as preferred risks?

Their premiums are better.

All of the following are characteristics of a group life insurance plan except?

There is a requirement to prove insurability on the part of the participants.

All of the following are requirements for life insurance illustrations except?

They must be part of the contract.

All of the following are true regarding the guaranteed insurability rider except?

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

Which of the following is the best reason to purchase life insurance rather than an annuity?

To create an estate.

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.

The paid-up addition option uses the dividend?

To purchase a smaller amount of the same type of insurance as the original policy.

Which of the following policies would have an IRS required corridor or gab between the cash value and the death benefit?

Universal life-option A

Which of the following products requires a securities license?

Variable annuity

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 types of policies allows for a flexible premium and a variable investment component?

Variable universal life insurance

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage.

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following types of policies will provide permanent protection?

Whole life

Which of the following statements regarding the taxation of modified endowment contracts is false?

Withdrawals are not taxable.

what is a foreign insurer?

an insurer with a home office in another state.

All of the following information about a customer must be used in determining annuity suitability except?

beneficiary's age

what license or licenses are required to sell variable annuities?

both a life insurance license and a securities license.

what limits the amount that a policyowner may borrow from a whole life insurance policy?

cash value

Which of the following must an insurer obtain in order to transact insurance within a given state?

certificate of authority

when policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called?

class designation

what characteristic makes whole life permanent protection?

coverage until death or age 100.

what is another name for interest-sensitive whole life insurance?

current assumption life

All of the following are dividend options except?

fixed-period installments

when would a misrepresentation of the insurance application be considered fraud?

if it is intentional and material

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

During partial withdrawal from a universal life policy, which portion will be taxed?

interest

All of the following are nonforfeiture options except?

interest only

what is the main purpose of the seven-pay test?

it determines if the insurance policy is a MEC.

what would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?

it determines who receives policy benefits if the primary beneficiary is deceased.

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 universal life option has a gradually increasing cash value and a level death benefit?

option A

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

what form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

pure life

when an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. which rider is attached to the policy?

return of premium

which type of life insurance policy generates immediate cash value?

single premium

which of the following would help prevent a universal life policy from lapsing?

target premium

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.

what is the purpose of establishing the largest premium for a universal life policy?

to keep the policy in force.

if only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

unilateral

what kind of policy allows withdrawals or partial surrenders?

universal life

All of the following benefits are available under social security except?

welfare benefits

when is the earliest a policy may go into effect?

when the application is signed and a check is given to the agent.

which of the following statements regarding the taxation of modified endowment contracts is false?

withdrawals are not taxable