Life insurance and annuity

The agent must provide the buyers guide to the applicant:

Upon application or at the time of policy delivery if a 10-day free look is provided.\

Adverse selection is characterized by:

A sick person purchasing health insurance

Which of the following does not constitute policy replacement?

Life insurance coverage in which a loan is not repaid to the insurer.

Gina and Jerry are purchasing life insurance. They decided on policies that would be paid up in 20 years. What type of policies did they purchase?

Limited payment policies

Another term for insurers expense is:

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All of the following acts are considered unfair trade practices.

Rebating, misrepresentation, coercion (replacement is not)

In a universal life insurance policy, the two most common adjustments made during a month are:

Cost of death protection deducted and current interest rate credited

What term of a mortgage reduction policy decreases over time?

Face amount

Benefits under a medical expense policy are provided through which of the following methods?

Indemnity

Net single premium is:

Mortality-interest

Mary and Philip are married. Philip named Mary as the primary beneficiary of his life insurance policy. His children from a prior marriage are contingent beneficiaries. Under the uniform simultaneous death act, who will receive the death emerging is Mary and Phillip are in a car accident and there is no evidence of who died first?

Philips children's from his prior marriage

The insured and the primary beneficiary are killed in a car accident. Which of the following is true according to the uniform simultaneous death act?

Policy proceeds are paid as if the primary beneficiary died first.

Which beneficiary designation is most appropriate for a person who wants to name his spouse as a beneficiary of his life insurance policy, and simultaneously retain full policy ownership rights

Revocable beneficiary

Which of the following laws defined a security product?

Securities act of 1933

Which of the following prevents creditors from seizing life insurance policy proceeds as long as there is at least one living named beneficiary, excluding the insured's estate?

Spendthrift clause

Employer-paid premiums used to fund group life insurance for the benefit of employees are:

Tax-deductible as a business expense

All of the following options are available if the only logical beneficiary is a minor:

The company can hold the insurance until the minor is of age, a guardian can be appointed, a trust can be established

When Dakota's life insurance policy was written it stated on the policy that Dakota was male. However, Dakota is female. On average, women tend to live several years longer than men. When Dakota died this misstatement was discovered. How did this impact the policy?

The death benefit was increased.

If an irrevocable beneficiary is named on the life insurance policy, all of the following are true:

The policy owner pays the premium, irrevocable beneficiaries must consent to cancelling the policy, policy owners need consent to assign the policy.

Of the following individuals, who has the right right change the beneficiary designations in a life insurance policy?

The policyholder

Why are whole life policies more expensive than some other insurance options?

They must cover cash values, net insurance and mortality costs, as well as expenses.

Which type of life insurance provides living benefits?

Whole

How long is the loan period on STOLI arrangements?

2 years

In most states, the period of con-testability for material misrepresentations made on a life insurance application is:

2 years

A limited payment life insurance policy is best suited for:

A single waitress who wants the most insurance protection for the least amount of money.

ABC insurer is incorporated in Texas. Which of the following is true?

ABC insurer is alien in Great Britain.

Sandra wants to have a flexibility with her life insurance policy to accommodate changes in her situation? She should consider...

Adjustable life

A foreign insurer is:

An insurance company conducting business in a state in which is wasn't incorporated.

A domestic insurer is:

An insurance company conducting business in the state in which it is incorporated.

There are three types of private insurers. Which of the following is a true statement about the different insurers?

An insurer that conducts business in countries that is was not incorporated in is a foreign insurer.

Jennifer is trying to add her insurance premium payments to her budget. All of the following are accepted payment mode options:

Annually, monthly, quarterly

Which of the following business continuation agreements is most appropriate for Teri and Annette's business partnership?

Cross-purchase plan

Family income policies consist of whole life and:

Decreasing term

What is the primary purpose of the securities act of 1933?

Defines a securities product

Which of the following terms means the ways insurance products are marketed and sold to the public?

Distribution system

A furniture company is owned by five partners. What business continuation plan would you suggest to the company?

Entity plan

Which policy has a face amount that increases by five times the original policy face when the insured child reaches the age of 21?

Estate builder

The ____________ section of the contract states what the insurer will not do. This includes the risks that the insurer will not cover.

Exclusions

This policy insures the primary breadwinner with whole life and term?

Family maintenance policy

All of the following are features of variable universal life insurance?

Flexible premiums, death benefit option A & B and cash value

The stipulated period of time, allotted by the insurance company, to allow a policy holder to make an overdue payment while the policy remains in force and coverage is provided is called the...

Grace period

Which provision is mandatory in life insurance policies?

Grace period

Joanna's cash value in her life policy went to zero. Which of the following statements is true about the effect on her cash value ;I've insurance policy?

Her policy lapsed and her premium didn't get paid.

Withdrawals or partial surrenders can be made on the cash value of a universal life policy. Which of the following is specified in the policy?

How much can be withdrawn

The non-guaranteed elements of an insurance policy are:

Illustrations

Agents are appointed to work on behalf of:

Insurance companies

The provision identifies the named insured, type and amount of coverage provided by the policy:

Insuring cause

What is true regarding the cash value in an ordinary whole life policy?

It may be used as a policy loan without affecting the death benefit.

All of the following policies could be offered as variable polices?

Joint life, ordinary whole life, universal

Which of the following policies has a level face amount with level premiums?

Level premiums term

All of the following, if performed frequently enough to indicate a general business practice, are unfair claims settlement practices.

Making claim payments not accompanied by a statement setting forth the coverage under which payments are made, refusing to pay claims without conducting a reasonable investigation based on all available information, attempting to settle claims on the basis of an application that was altered without the insured consent.

Which of the following policies combined convertible term and whole life, and has lower premiums in the early years which increase to a higher level after a certain number of years?

Modified whole

Which policy is a combination of whole life and convertible term, and has lower premiums in early policy years and higher premiums in later years?

Modified whole

Which of the following best describes the tool underwriters use to determine the rate at which a group of people die?

Mortality table

What best describes MIB?

Non-profit trade organization that supplies insurability information to member companies.

All of the following are guaranteed features in a variable life insurance policy's?

Period of death protection, premium rate, death benefit

A life insurance policy summary includes all of the following:

Policy premium amounts, policy loan interest rates, the insurance agents name.

A person with this risk classification will have discounted premium from the rates provided in C.S.O. Tables.

Preferred

For what reason would the insurance company raise the death benefit of a universal life policy?

Prevent the cash value from growing too quickly

What are the benefits of a convertible and renewable term life insurance policy?

Proof of insurability is not required to convert or renew coverage.

What is the primary purpose of the entire contract provisions in s life insurance policy?

Provide assurance that the policyholder has all necessary policy documents in their possession.

All of the following are ownership rights?

Right of assignment, right to name a beneficiary, and right to take out a policy loan

Julie applies for a health insurance policy. Her consideration consists:

Statements made on the application and initial premium.

Which of the following is not a way that an endowment policy can mature? A. When the cash value equals amount, at the end of the policy period B. Surrender of cash value C. When the policy period ends, even if the insured is alive D. Upon the death of the insured

Surrender of cash value

Which policy pays a death benefit only upon the death of the last person insured.

Survivorship life policy

What are two major types of life insurance?

Term and whole

All life insurance is either term insurance or cash value insurance. Term insurance insures your life only for a specified time. Which of the following is not true about term insurance?

Term insurance builds cash value

Because variable contracts are equity products, they are subject to various regulations. Which of the following applies to variable contracts?

The 12% rule

All of the following are involved in the collection of an applicants medical history.

The agent report, the attending physician statement, the application of the insurance policy.

An individual signed a application for a $100,000 life insurance policy and paid the first premium on January 1st. The agent issued an issued a insurability receipt. A week later, the required medical examination proves the person insurance. If the person dies before the insurer approves the application:

The coverage will be retroactively effective. As a result the beneficiary will receive $100,000 death benefit.

What best describes option and option 1 under a universal life policy?

The death benefit is the policy face amount or a policy cash value, but not both.

Angela took out $2000 policy loan from her whole life policy. The policy face amount is $200,000. If Angela does not repay the loan, how will the death benefit be affected?

The death benefit will be decreased by $2,000 plus interest.

John purchases a life insurance policy for his wife Jean. Which of the following best describes who is legally bound to the policy's promise of benefits?

The insurer

Who is responsible for the dissemination and content of insurance advertisements?

The insurer

What happens when the cash value of a life insurance policy equals the face value?

The policy endows

What happens when a universal life policyholder pays these target premium?

The policy will resemble whole life insurance

After looking at his option, Randy decided on a single premium whole life policy. What is the main advantage of this type of policy?

The total premium is lower.

An excess and surplus lines insurer is categorized as a:

Unauthorized insurance company

An excess and surplus lines insurer is categorized as an _____________

Unauthorized insurance company

What policy can be described as annual renewable term with a cash value account?

Universal life

Gerald wants a life insurance policy in which he can choose the investment vehicle. Which policy would you recommend to him?

Variable life

Which of following policies allows the policy owner to buy term and direct the investments made in the cash value account?

Variable universal life

This life insurance policy provides death protection for the insurers entire life, but premiums are not paid for the insured's entire life.

20-pay life

There are three types of private insurers. Which of the following is a true statement about the different insurers?

A business that conducts business in countries that is not incorporated in it is a foreign insurer.

All the following policies and contracts are typically covered by state insurance guaranty associations.

A term life insurance policy issued by a stock insurer, an individually-owned annuity, a whole life insurance policy issued by a mutual insurer.

What policy provides flexible premiums, cash values, face amounts, premium-paying period and length of coverage?

Adjustable life

Which of the following is not a primary component of an insurance contract?

Aleatory contract

LMO insurer is incorporated in New Hampshire, conducts business in all of the eastern seaboard states and in Germany. How is LMO insurer classified in Germany?

Alien

All of the following statements regarding unauthorized insurers are true, EXCEPT

All excess and surplus lines insurers are unauthorized. Unauthorized insurers are also referred to as nonadmitted insurers, and do not hold a certificate of authority Unauthorized insurers are insurers that are unlicensed because they have not yet applied for a certificate of authority, and have applied and been denied licensure, or are excess and surplus lines insurers. Excess and surplus lines insurers must apply for a certificate of authority to become admitted.

Why are life and health insurance contracts said to be contracts of adhesion?

Because the insurer writes the contract, to which the insured must adhere.

All of the following are buy-sell agreements:

Cross-purchase, stock redemption plan, entity plan

A policy known as interest-sensitive whole life is:

Current assumption whole life

What life insurance policies is not a example of third party ownership? Key employee life insurance, spilt-dollar plan, group life, econometric?

Econometric

Which policy works the same way as universal life, but has an interest rate that is tied to the stock market index?

Equity indexed universal life

Level premium life insurance policies usually have ___________ premiums in order to account for the greater risk of death with advancing age.

Higher

In life insurance the risk of death increases with age, so premiums must be _________ in ___________ years to account for this risk.

Higher, later

An insured, submits a claim and proof of loss for medical expenses covered by his major medical policy. According to the time of payment claims provision, how soon must the company pay the claim?

Immediately

Marcella purchases a modified life insurance policy at the age of 31. Thinking she could get a slightly better rate on her policy, she lists her age as 21. If the insurance company discovers the error upon Marcella's death, what action will the insurance company take?

Pay the death benefit based on Marcella's actual age

Martin pays his policy premiums on a monthly basis. Which is the best term to to describe the frequency that Martin pays his premiums?

Premium payment mode

Gerry forgets to pay his life insurance premium, and the policy lapses. If he is within the reinstatement period and decides to reinstate his policy, he will be required to take all the following actions:

Provide proof of evidence of insurability, pay any back-due interest on an outstanding policy loan, and pay all past-due premiums

If a policy loan is unpaid, the automatic premium loan provision has effect of deducting the amount of the loan with interest from the death benefit. What should the policyholder do to avoid this reduction in the death benefit?

Repay the loan with interest

Which business continuation plan permits decreased shareholders heirs to maintain some ownership while the corporation redeems a portion of the deceased shareholders shares?

Section 303 plan

What business continuation agreement would you recommend to a corporation with 3 shareholders so that when a shareholder dies, all other shareholders agree to purchase a portion of the decreased shareholders stock at an agreed price?

Stock purchase plan

Which of following best describes the automatic premium loan provision of a life insurance policy?

The insurer will automatically use the policy cash value to pay an overdue premium.

The insuring clause of a policy includes all of the following:

The names of covered individuals, the period of coverage of the policy, the effective date of the policy

Which policy has fixed premiums, a guaranteed minimum death benefit and non guaranteed cash values?

Variable whole life