Life Insurance - Guaranteed Exam Missed Questions

All of the following are advantages of a qualified retirement plan EXCEPT a.) The funds grow tax deferred. b.) The income at retirement is tax free. c.) The contribution is deductible to the employer. d.) The contribution is not taxable to the employee when made.

b.) The income at retirement is tax free.

A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following ? a.) A predetermined multiple of the premium b.) The face amount of the policy c.) A percentage of the face amount of the policy d.) More than the face value

c.) A percentage of the face amount of the policy

Which of the following is NOT required to be included in a disclosure document for an annuity? a.) A document describing the different type of annuities. b.) A generic description of the contract. c.) An explanation of how specific dollar amounts apply d.) The insurer's address

a.) A document describing the different type of annuities.

All of the following are consideration in an insurance policy EXCEPT a.) The promise to pay covered losses. b.) The cash value in the policy. c.) The statements on the application. d.) The premium paid at the time of application.

b.) The cash value in the policy.

In whole life insurance, when the policy cash value scheduled to equal the face amount? a.) When the insured paid up all policy loans b.) It depends on the type of whole life purchased. c.) At the insured's age 100 d.) By the policy's 10th year

c.) At the insured's age 100.

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.) Being permanently disabled

Which of the following does a producer not have the authority to do? a.) Sell insurance b.) Sell insurance contracts c.) Negotiate contracts of insurance d.) Write insurance code

d.) Write insurance code

Who is the annuity owner? a.) The person on whose life the annuity is written b.) The insurer c.) The person who purchases the annuity d.) The person who receives the benefits

c.) The person who purchases the annuity

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.) Premium payment period

The entire contract includes all of the following EXCEPT a.) A buyer's guide b.) The life insurance policy c.) A copy of the application d.) Any riders or amendments

a.) A buyer's guide

When assessing needs for a life insurance, an individual may use retention, which means a.) Keeping a life insurance policy until death. b.) Raising capital. c.) Purchasing life insurance. d.) Maintaining assets at death.

d.) Maintaining assets at death.

What happens to the face amount of a whole life policy if the insured reaches the age 100? a.) It is paid to the insured's estate and the policy is terminated. b.) It is paid to the beneficiary in full. c.) The cash value and the face amount are paid to the insured. d.) The face amount is paid to the insured.

d.) The face amount is paid to the insured.

Which of the following provides funding for the Alabama Life and Disability Insurance Guaranty Association? a.) Tax payers b.) Insolvent insurers c.) Member insurers d.) The Department of Insurance

c.) Member insurers

A social security disability must be expected to last for at least how many months in order for the person to qualify for disability benefits? a.) 12 b.) 3 c.) 6 d.) 9

a.) 12

A married couple purchases a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend? a.) Automatic premium loan b.) Waiver of Premium c.) Payor benefit d.) Guaranteed insurability

c.) Payor Benefit

Policies written on a third-party ownership basis are usually written to cover: a.) Insured's estate b.) Policyowner's estate c.) Policyowner's minor children or business associates d.) Policyowners who are not insureds

c.) Policyowner's minor children or business associates

Because of the imposed blackout period, the surviving spouse will NOT receive social security benefits until a.) Becoming fully insured. b.) The age of 59 1/2. c.) Qualifying for retirement benefits. d.) The age of 65.

c.) Qualifying for retirement benefits.

The renewable provision allows the policy-owner to renew the coverage at the expiration date a.) With evidence of insurability if the insurer requires it. b.) With evidence of insurability if the insured risk has increased. c.) Without evidence of insurability. d.) Only with evidence of insurability.

c.) Without evidence of insurability.

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? a.) Paid up additions b.) Cash surrender value c.) Reduced paid up d.) Extended term

d.) Extended term

What type of an interest rate is guaranteed in universal life policies? a.) Contract interest rate b.) Nominal interest rate c.) Adjustable interest rate d.) Current interest rate

a.) Contract interest rate

Which of the following is NOT a component of an insurance policy premium? a.)Investment return b.) Number of beneficiaries c.) Mortality cost d.) Insurer expenses

b.) Number of beneficiaries

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an for life. Which settlement option should this policyowner select? a.) Joint and Survivor b.) Fixed-amount installments c.) Fixed-period installments d.) Life income

a.) Joint and Survivor

Which of the following would be considered a violation of Life Insurance Advertising regulations? a.) Making oral sales presentations b.) Informing the applicant the sole subject of the sale is insurance c.) Calling an insurance policy an investment plan d.) Not guaranteeing dividends

c.) Calling an insurance policy an investment plan

A policyowner no longer needs a life insurance policy and agrees to sell it to a third party for more than its cash value. This type of transaction is called a/n a.) Investor-originated life insurance b.) Viatical Settlement c.) Life settlement d.) 1035 Exchange

c.) Life settlement

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgages was paid. The most inexpensive type of policy that would accomplish this need would be a.) Increasing term. b.) Flexible term. c.) Level term. d.) Decreasing term.

d.) Decreasing term.

An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer? a.) Alien b.) Unauthorized c.) Surplus lines d.) Foreign

a.) Alien

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose? a.) Joint and Survivor b.) Fixed Amount c.) Fixed Period d.) Interest Only

b.) Fixed Amount

An adjustable life policy can assume the form of a.) Either term insurance or permanent insurance. b.) Neither term nor permanent insurance. c.) Only term insurance. d.) Only permanent insurance.

a.) Either term insurance or permanent insurance.

Which of the following would benefit the most from a straight life immediate annuity? a.) A retiree who is looking for a higher rate of return on his investment b.) A 60-year old man who beeds as much retirement income as possible c.) A 40-year old man who has a larger amount of cash to purchase an annuity and who needs immediate income d.) An individual who wants to grow the annuity tax deferred

b.) A 60-year old man who needs as much retirement income as possible

Which of the following terms refers to the nontaxable portion of each annuity benefit payment? a.) Principal b.) Cost base c.) Tax base d.) Interest

b.) Cost base

Which of the following would be considered a peril? a.) Playing golf in a thunderstorm b.) Fire c.) Smoking d.) Driving too fast for conditions

b.) Fire

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will a.) Decrease over time b.) Reduce to the pre-surrender value c.) Continue to increase d.) Remain the same

c.) Continue to increase

An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this? a.) Incontestability b.) Grace period c.) Waiver of premium d.) Automatic premium loan

b.) Grace period

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 must be renewed no matter what happens to one's health.

a.) Proof of insurability must be provided at each renewal.

An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems. Their answer is considered to be a: a.) concealment b.) warranty c.) fraudulent answer d.) Representation

d.) Representation

All of the following are true regarding the waiver of cost of insurance rider EXCEPT a.) The rider waives insurance costs in the event the insured becomes disabled. b.) The rider is only applicable to universal 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.) The rider expires when the insured reaches age 60.

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 time the coverage will last

a.) The insured

When comparing a Joint Life Policy to two individual 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 higher premium that the total of two individual policies. c.) Joint Life has a lower premium than the total of two individual policies. d.) Joint Life has a premium that is identical to the sum of the two individual policies.

c.) Joint life has a lower premium that the total of two individual policies.

According to the life insurance replacement regulations, which of the following would be an example of policy replacement? a.) A lapsed policy is reinstated within a specific timeframe. b.) A policy is reissued with a reduction in cash value. c.) A term policy expires, and the insured buys another term life policy. d.) Term insurance is changed to a Whole Life policy.

b.) A policy is reissued with a reduction in cash value.

Which of the following statements is true regarding thrift plans? a.) The employer contributes up to 10% of each employee's salary. b.) The employer contributes a certain amount for each dollar contributed by the employee. c.) The employee is the sole contributor to the plan. d.) The employer is the sole contributor to the plan.

b.) The employer contributes a certain amount for each dollar contributed by the employee.

When replacement is involved, how long must existing insurers maintain records of replacement notifications? a.) 1 year b.) Indefinitely c.) 3 years d.) 5 years

d.) 5 years

An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered a.) Issued. b.) Relinquished. c.) Delivered. d.) Mailed.

c.) Delivered

How often must insurers send policyowners status reports on policies that use illustrations? a.) After any occurrence that changes the illustration's information b.) Every 6 months for the first 3 years, then annually c.) Every year d.) When requested by policyowners

c.) Every year

Cash Value generates in a whole life policy are called a.) Living Benefits b.) Cash Loans c.) Dividends d.) Nonforfeiture values

d.) Nonforfeiture values

Who makes up the Medical Information Bureau? a.) Hospitals b.) Insurance companies c.) Physicians and paramedics d.) Former insureds

b.) Insurance companies

Premiums collected on behalf of the insurance company by an agent will be held in what capacity? a.) Security b.) Rebate c.) Fiduciary d.) Debit

c.) Fiduciary

Which of the following insurance products are covered under solicitation regulations of the Insurance Code? a.) Deferred Annuity b.) Variable Life c.) Group Life d.) Whole Life

d.) Whole Life

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.) The premium is based on the age of each insured.

Life insurance creates an immediate estate. Which of the following best explains this statement? a.) The death benefit will always be paid to the estate of the insured. b.) The face value of the policy is payable to the beneficiary upon the death of the insured. c.) The policy has cash values and nonforfeiture values. d.) The policy generates immediate cash value.

b.) The face value of the policy is payable to the beneficiary upon the death of the insured.

The Guaranteed Insurability Rider allows 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.) Purchase of a new home.