Life insurance guarantee exam part 1

which of the following would be considered a peril? A. fire B. smoking C. driving too fast for conditions D. playing golf in a thunderstorm

A

all of the following are true credit life EXCEPT A. the death benefit cannot exceed the amount of the loan B. the premium payment is included in the loan payment C. the creditor is the policyowner D. the insured names the beneficiary

D

all of the following are true of the Survivorship Life policy EXCEPT A. it can insure more than 2 lives B. the premium is based on the age of each insured C. the death benefit is not paid until the last death D. the premium would be lower than in a joint life policy

B

all of the following are true regarding the federal Fair Credit Reporting Act EXCEPT A. the customer must be notified if adverse action is taken as a result of a report B. reports may be sent to anyone who requests one C. insurers are not required to give customers a copy of the report D. it applies to credit reports ordered in connection with insurance, banking an employment

B

the Human Life Value approach to determining Life insurance needs is based upon which of the following ideas? A. retirement needs B. loss of the breadwinner's income C. replacement of assets D. specific needs for college education

B

what is the purpose of the surrender charge in a deferred annuity? A. to prevent the over funding of the annuity B. to provide additional revenue for the insurance company C. to compensate the company for loss of investment value D. to punish the annuitant for breach of contract

C

which of the following best describes pure life annuity? A. it is also known as refund life annuity B. it guarantees to pay out all the proceeds C. it provides the highest monthly benefits D. it continues payments to the beneficiary when the annuitant dies

C

which of the following statements concerning in the Medical Information Bureau is correct? A. the Medical Information Bureau report must be attached to each life insurance policy issued A. all applicants for life insurance receive a copy of the findings of the life insurance medical examination C. information contained in the Medical Information Bureau report is available to all physicians D. the Medical Information Bureau assists underwriters in evaluating and classifying risks

D

which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity? A. premium building period B. annuity period C. loading period D. accumulation period

D

underwriters use all of these methods to protect the insurer against adverse selection EXCEPT A. accepting certain risks only at a higher rate B. restricting coverage C. refusing to accept a risk D. only accepting a small percentage of applicants

D

when an insured terminates membership in the insured group, the insured can convert to A. whole life with proof of insurability B. term without proof of insurability C. term with proof insurability D. whole life without proof of insurability

D

the reduction of premium option uses the dividend to reduce A. the premium on any other policy owned by the policyowner B. next year's premium C. this year's premium D. the previous year's premium

B

which of the following is NOT true regarding a deferred annuity? A. it is used to accumulate funds for retirement B. it can be purchased with a single lump sum C. the annuity grows tax deferred D. income payments begin within 1 year from the date of purchase

D

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? A. one-year term b. reduction of premium C. accumulation at interest D. paid-up option

D

according to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed? A. the primary beneficiary died before the insured B. the deaths occurred at the same time C. the estate of primary beneficiary and the contingent beneficiary split benefits equally D. the insured died before the primary beneficiary

A

an annuity owner receives the same guaranteed payment every month. What type of annuity is it? A. guaranteed B. single C. fixed D. immediate

C

all of the following are true of a non qualified deferred compensation plan EXCEPT A. it is a contractual agreement whereby the employee agrees to defer receipt of a portion of his compensation until retirement, disability, or death B. it does not require IRS approval C. it can be discretionary D. contributions are tax deductible

D

Which is generally true regarding insureds who have been classified as preferred risks? A. they can decide when to pay their monthly premiums B. they keep a higher percentage of any interest earned on their policies C. their premiums are lower D. they can borrow higher amounts off of their policies

C

key person insurance can provide protection for all of the following economic losses to a business EXCEPT A. provide deferred compensation retirement benefit if the insured key person survives to retirement B. fund the expense of finding a suitable replacement following the death of an employee C. fund the cost of training a current employee to perform the duties of a decease employee D. pay the death benefit to the estate of the insured

D

the owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months.what is the insurance company's course of action? A. deny only payment of the face amount but pay the rider since suicide is an accident B. pay the face amount only because suicide is not an accident C. pay twice the face amount D. deny any payment of death benefit

D

when a whole life policy is surrendered for its nonforfeiture value, what is automatic option? A. paid up additions B. cash surrender value C. reduced paid up D. extended term

D

a whole life policy that will generate immediate cash value is a A. single premium policy B. continuous premium policy C. variable life policy D. limited-pay policy

A

which of the following is NOT one of the independent rating services that publishes guides to insurance companies financial integrity? A. NAIC B. Fitch C. AM Best D. Moody's

A

when comparing a Joint Life policy to two individuals life policies of the same amount on the same insureds, which condition is true? A. the Joint Life premium can only be paid monthly B. Joint Life has a premium than the total of the two individual policies C. Joint Life has a lower premium than the total of the two individual policies D. Joint Life has a premium that is identical to the sum of the two individual policies

C

all of the following are true of annually renewable term insurance EXCEPT A. proof of insurability must be provided at each renewal B. the premium increases each year C. the death benefit remains level D. the policy renews regardless of the insured's health

A

which of the following would be required to become licensed as an insurance producer? A. a person whose activities are limited to insurance advertising B. an officer of an insurer who does not receive commissions C. a customer service representative who solicits no more than one policy a year D. agency supervisor whose actions do not include selling insurance

C

an IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed? A. no penalty B. 6% C. 10% D. 20%

C

what type of an interest is guaranteed in universal life policies A. contract interest rate B. nominal interest rate C. adjustable interest rate D. current interest rate

A

which of the following is true regarding pure life annuity settlement option? A. it guarantees income for a specified period of time B. it provides the highest monthly benefit C. it guarantees that all the proceeds will be paid out D. the beneficiary will receive a refund of the pincipal

B

during policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of A. twisting B. false advertising C. misrepresentation D. defamation

D

which risk classification is representative of the majority of people in a certain age group and with similar lifestyles? A. declined B. preferred C. standard D. substandard

C

an insured committed suicide one year after his life insurance policy was issued. The insurer will A. pay the policy's cash value B. pay the full death benefit to the beneficiary C. pay nothing D. refund the premiums paid

D

life insurance creates an immediate estate. Which of the following best explains this statement? A. the policy has cash values and nonforfeiture values B. the policy generates immediate cash value C. the death benefit will always be paid to the estate of the insured D. the face value of the policy is payable to the beneficiary upon the death of the insured

D

under which of the following conditions would life insurance proceeds be taxable by the federal government? A. if collaterally assigned to a lender B. if taken as a lump sum C. if paid to the policy owner D. if there is a transfer for value

D

all of the following are general requirements of a qualified plan EXCEPT A. the plan must have a vesting requirement B. the plan's benefit cannot discriminate in favor of the "prohibited group" C. the plan must be temporary D. the plan must be approved by the IRS

C

An insurance producer who by contract is bound to write insurance for only one company is classified as a/an A. captive agent B. solicitor C. broker D. independent producer

A

which of the following would NOT trigger the payment of Accelerated Death Benefits? A. requiring an organ transplant for the insured to survive B. being permanently institutionalized C. being permanently disabled D. terminal illness

C

a 60 year old participant in a 401(k) plan takes a distribution and rolls it overto an IRA within 60 days. Which of the following is true? A. the amount of the distribution is reduced by the amount of a 20% witholding tax B. no taxes are due since the plan participant is over age 59 1/2

A

if someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy A. a modified endowment contact B. term C. permanent D. an annuity

C

when life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as A. estate conservation B. estate creation C. liquidity D. life settlement

A

During replacement of life insurance, a replacing insurer must do which of the following? A. designate a new producer for a replaced policy B. send a copy of the Notice Regarding Replacement to the Department of Insurance C. obtain a list of all life insurance policies that will be replaced D. guarantee a replacement for each existing policy

C

an annuity would normally be purchased by an individual who wants to A. earn a higher rate of interest B. create an estate C. provide income for retirement D. provide a death benefit to the surviving family

C

decreasing term insurance is often used to A. build up cash value for retirement B. pay estate taxes C. cover mortgage D. liquidate an estate

C

if a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 10 days B. 3 days C. 5 days D. 7 days

C

the regulation of the insurance industry primarily rests with A. private insurers B. the federal government C. the state D. the NAIC

C

a life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? A. 3 years B. 5 years C. 7 years D. the life of the policy

C

in order for a business partner to be eligible for a Keogh plan, he/she must work full-time and own at least how much of the business? A. 50% B. 10% C. 25% D. 33%

B

an adjustable life policy can assume the form of A. either term insurance or permanent insurance B. neither term insurance nor permanent insurance C. only term insurance D. only permanent insurance

A

An IRA contribution can be made from which of the following? A. stocks and bonds B. cash C. life insurance D. collectibles

B

an Equity Indexed Annuity will grow based upon A. a rate of interest determined by the banking system B. performance of a recognized index C. performance in a separate amount D. current interest rates

B

when an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called? A. insurability clause B. statement of Good Health C. statement of insurability D. insuring Agreement

B

which of the following is TRUE of level term insurance? A. the policy offers nonforfeiture values B. it is temporary protection C. the premium will increase or decrease based on current interest rates D. the policy endows at age 100

B

which of the following is true regarding a joint life annuity? A. the payments go to the surviving annuitant after the first death B. the payments stop at the first death C. the payments stop at the last death D. the payments go to a beneficiary upon the last death

B

which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business for what amount? A. split dollar agreement B. buy-sell agreement C. profit and loss agreement D. key person agreement

B

who is the annuity owner? A. the insurer B. the person who purchased the annuity C. the person who receives the benefits D. the person on whose life the annuity is written

B

which of the following is required in order for a plan to be qualified? a. the plan must be formally written and communicated to the employees B. the plan must not be permanent C. the plan must be for the exclusive benefit of the employer D. the plan's contribution formula is allowed to discriminate in favor of officers of the company

A

an insured purchases a nonparticipating whole life policy. This policy includes all of the following EXCEPT A. dividends B. a premium calculated closely to the cost of the insurance C. permanent protection D. cash values

A

the entire contract includes all of the following EXCEPT A. a buyer's guide B. the life insurance policy C. the copy of the application D. any riders or amendments

A

with Adjustable Life, the owner can change all of the following EXCEPT A. the insured B. the death benefit C. the premium D. the length of the time the coverage will last

A

whaat are the two components of a universal policy? A. insurance and investments B. mortality cost and interest C. separate account and policy loans D. insurance and cash account

D

the Guranteed Insurability Rider allows to the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT a. purchase of a new home B. approximately every 3 years between the ages of 25 and 40 C. birth of a child D. marriage

A

which of the following statements is true regarding thrift plans? A. the employer contributes a certain amount for each dollar contributed by the employee B. the employee is the sole contributor to the plan C. the employer is the sole contributor to the plan D. the employer contributes up to 10% of each employee;s salary

A

what is the difference between a straight life policy and a 20 pay whole life policy? A. the face amount and cash value B. policy maturity date C. premium payment period D. the benefit settlement option

C

where are premiums from fixed annuities invested? A. a hedge fund B. a separate account C. a general account D. a variable annuity

C

which of the following types of insurance policies is most commonly used in credit life insurance? A. whole life B. equity indexed life C. decreasing term D. increasing term

C

all of the following are true regarding the waiver of cost of insurance rider EXCEPT A. rider waives insurance costs in the event insured becomes disabled B. the rider is only applicable to universal life policies C. the rider cannot waive the cost of premiums that accumulate cash value D. the rider expires when the insured reaches age 60

D

which of the following would provide an underwriter with information concerning an applicant's health history? A. the Medical Information Bureau B. a medical examination C. the agent's report D. the inspection report

A

if an annuity has a guaranteed minimum interest rate, this means A. there is no interest rate B. the interest rate will never drop below the guaranteed minimum C. the interest rate will never rise above the guaranteed minimum D. the interest rate will not fluctutate

B

which of the following TRUE regarding premium in a 10 year level premium policy? A. the premium will be level for the first few years of the policy, but will increase by the 10th year B. the premium will remain level for 10 years C. the premium will remain the same at renewal D. the premium will decrease at the end of the term

B

all of the following are advantages of a qualified retirement plan EXCEPT A. the income at retirement is tax free B. the contribution is deductible to the employer C. the contribution is not taxable to the employee when made D. the funds grow tax deferred

A

a distribution from an employer-sponsored retirement plan or from an IRA is eligible for a tax-free rollover if it is reinvested in an IRA within A. 100 days B. 30 days C. 60 days D. 90 days

C

an annuitant pays the annuity premium on the 14th of each month. which of the following best describes this arrangement? A. flexible B. lump sum C. single D. level

D

if a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a A. deferred annuity B. pure annuity C. joint life annuity D. joint and survivor annuity

C

all of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A. an offer to share in commissions generated by the sale B. dividends from a mutual insurer C. an offer of employment D. stocks, securities, or bonds

B

which of the following documents used in the underwriting process contains specific medical details about an applicant? A. applicant B. attending physician's statement (APS) C. statement of Good Health D. agent's report

B

which of the following employees under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A. those who have no history of claims B. those who have been insured under the plan for at least 5 years C. those who have worked in the company for at least 3 years D. those who have dependents

B