Life Insurance Missed Questions
Cameron is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he feels he can afford at this time, he wants to be sure that additional coverage will be available in the future. He should include in this policy a
Guaranteed renewable option
Amy's insurance premium has decreased slightly, despite the fact that her level of health has remained the same. Which of the following most likely caused the premium decrease?
Her insurer used interest earned on premiums to lower premium amounts
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?
If the father is disabled for more than 6 months
Withdrawals from an IRA taken before the participant reaches age 59 1/2 are subject to
Income taxation and a penalty.
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
Which of the following would help prevent a universal life policy from lapsing?
Target premium
The premiums paid by the employer in a business life insurance policy are
Tax deductible by the employer
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?
Term rider
All of the following are characteristics of a Universal Life policy EXCEPT
The planned premium pays for mortality charges and expenses and any excess is returned to the policyowner.
Julie pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. Julie has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of premium option
An insured committed suicide one year after his life insurance policy was issued. The insurer will
Refund the premiums paid
The Commissioner may suspend, revoke, or refuse to renew the license of any licensee who willfully fails to
Report a reasonable cause to believe that any entity licensed by the Commissioner is financially impaired.
Who may contribute to an HR-10 plan?
Self-employed plumber (SELF EMPLOYED)
Which of the following is NOT a characteristic of universal life insurance?
Set premium
Under which of the following conditions an insurer does not need to provide a buyer's guide and a policy summary to the applicant before collecting the initial premium?
The policy applied for has a death benefit of less than $5,000.
Which of the following is true regarding the premium in term policies?
The premium in any type of term policy is usually level
All of the following are examples of adverse underwriting EXCEPT
The rescission of a policy.
Under an extended term insurance policy, the policy cash value is converted to
The same face amount as in the whole life policy
Social Security is funded by a payroll tax imposed on a percentage of an employee's income. This percentage is called
The taxable wage base
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment.
A life insurance policyowner skips her premium payment, but the policy does not lapse. Instead, the premium amount is deducted from the cash value of the policy. What type of policy is this?
Universal life
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
When would a 20-pay whole life policy endow?
When the insured reaches age 100
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
which type of life insurance policy generates immediate cash value?
Single premium
In North Carolina, anyone who acts without the proper insurance license or who otherwise violates the insurance laws may be deemed guilty of a misdemeanor. Upon conviction, they must pay a fine of at least
$1,000.
An insured has a variable life policy with a $100,000 face amount. At one time, the cash value exceeded $100,000 and was worth $150,000. During this time, the policy face amount was increased to $150,000. In the following year, the cash value took a significant decline and was worth only $70,000. What was the policy's face amount adjusted to?
$100,000
Before the Commissioner will issue a broker's license, the licensee must obtain a bond for at least
$15,000
What is the maximum duration of a temporary license?
180 days
To maintain their insurance license, agents are required to complete how many hours of continuing education every 2 years?
24 hours
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers, for example, is a(n)
403(b) Plan (TSA)
How long must a complaint record be maintained?
5 years
The Commissioner must examine every domestic insurer at least once every
5 years
After receiving notice that an adverse underwriting decision has been made, an individual has how long to request information about that decision in writing?
90 days
The two types of assignments are
Absolute and collateral.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
Adjusted to the insured's age at the time of renewal
Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is
An unfair trade practice.
The death protection component of Universal Life Insurance is always
Annually Renewable Term
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
Which of the following is true regarding taxation of cash value in a life insurance policy?
Cash value in excess of the premiums paid is taxed upon policy surrender
Persons who either assist or provide false or misleading information regarding a claim are guilty of a
Class H felony
An individual borrowed money at the bank to send his daughter to college. Instead of purchasing Credit Life insurance, he used an existing life insurance policy to secure the debt. This would be called a/an
Collateral Assignment.
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
Cost of living rider.
When a policy is surrendered for its cash value,
Coverage ends and the policy cannot be reinstated
Which of the following would be the beneficiary in credit life insurance?
Creditor
Which of the following is NOT allowed in credit life insurance?
Creditor requiring that a debtor buys insurance from a certain insurer
A whole life insurance policy with performance based upon the current interest rate being credited and the current mortality cost being charged is called
Current assumption whole life.
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death benefit
Which of the following is NOT typically excluded from life policies?
Death due to plane crash for a fare-paying passenger
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
Which policy component decreases in decreasing term insurance?
Face amount
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
An organization that, in addition to other activities, organizes a formal insurance plan providing life insurance to its members is classified as a
Fraternal insurer.
All of the following are considered Social Security benefits EXCEPT
Group.
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability.
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
What is the special significance of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of the issuance of the policy
Which of the following best describes annually renewable term insurance
It is level term insurance
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
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
Paul is the policyowner of a life insurance policy which will increase significantly in face amount (death benefit) when the insured reaches an age specified in the policy. This policy is referred to as a
Jumping juvenile policy
Variable Life insurance is based on what kind of premium?
Level fixed
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy
Lower
Which of the following documents must be provided to the policyowner or applicant
Notice regarding replacement
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant.
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?
Pay the death benefit
A prospective insured receives a conditional receipt and dies before the policy is issued. The company will
Pay the policy proceeds only if it would have issued the policy.
Which of the following is NOT true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants.
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit rider
The Commissioner is empowered to promulgate reasonable rules and regulations governing the transactions of all of the following EXCEPT
Policyholders.
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?
The agent or producer
Which of the following is true regarding variable annuities?
The annuitant assumes the risks on investment.
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
Which of the following is INCORRECT concerning a noncontributory group plan?
The employees receive individual policies
All of the following statements are true regarding mortgage protection insurance EXCEPT
The face amount remains the same throughout the life of the policy
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 statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
The Commissioner is empowered to examine the records of any person transacting insurance in the State as an agency, an agent or broker of record. If the Commissioner does examine a person, the expense of that examination will be paid by
The person examined.
Equity indexed annuities
seek higher returns
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources
term
An adjustable life policyowner can change which of the following policy features
the coverage period
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
the policy contains sufficient cash value to cover the cost of insurance
In a survivorship life policy, when does the insurer pay the death benefit?
upon the last death
