Life Insurance Practice Exam

Not subject to any taxes

A life insurance death benefit paid in a lump sum to a beneficiary is;

Fixed-amount installments

A life settlement option that pays out the death benefit incrementally, in specified amount until all of the proceeds are exhausted, is called;

Joint Life

A whole life product that covers two lives and provides for payment of the death benefit on the death of the first insured is called;

20-pay life

All other factors being equal, which of the following types of policies will accumulate cash value at the fastest rate?

Free Look

An Agent delivers a policy to an insured, and 9 days later the insured returns the policy and wants a complete refund. What provision covers this circumstance?

Equity Indexed Annuity

An annuity in which investment growth is dependent on the performance of an index such as the Standard and Poor's 500 is called a;

Provides the annuitant with an interest rate that is lesser of the guaranteed or current rate.

An annuity is considered fixed when it does all of the following EXCEPT:

Single Premium Immediate Annuity

An annuity that is purchased with a lump sum payment, and that begins and that begins income payments within one year is a;

Insurer

An insurance agents represents the;

Delivered

An insurer mails an insurance policy to a new policyowner when the insurer relinquishes control of the policy, the policy is considered;

Nonadmitted

Any insurer who is not approved to do business in this state is considered;

The coverage decreases but the premium stays the same.

At age 25, an individual purchased a decreasing term policy. What happens to the coverage and the premiums as the insured gets older?

59 1/2

At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty?

Evidence of insurability is usually required.

Each of the following is a typical characteristic of a group life insurance EXCEPT;

An alien insurer

London Mutual Life is an insurer incorporated in England, and is transacting business in this state. London Mutual would be considered what type of insurer?

Not taxable income

Money borrowed from the policy's cash value is;

Conditional Receipt

The receipt given to a life insurance applicant when the application is completed and the initial premium is received.

insurance

The transfer of a possible financial loss to another party refers to;

Agent's Report

This part of the application provides information about an applicant's financial condition and character, as well as the purpose of sale and how long the Agent has known the applicant.

Insurable interest exists

To prevent people from profiting from a loss, insurers must be certain;

But-Sell Agreement

Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the surviving partner to use the death benefit to purchase the deceased's business interest?

Determining the company's risk regarding the proposed insured.

Underwriting is the process of;

Certificate of Insurance

What do employees covered under a group contract receive?

Premium payments for a juvenile policy

What does the payor benefit rider protect?

To protect the policy-owner against an unintentional lapse of the policy.

What is the purpose of the grace period in life insurance policies?

Substandard

What is the risk classification for those who are insurable, but have a higher than average risk?

Limited Payment

What type of permanent insurance allows the policyowner to pay for a policy in a specified period of time, and the policyowner does not have to make any more premium payments for the life of the policy?

Policy Exclusions

Which of the following allows an insurance company to deny coverage if the insured's death occurs in a war?

Variable Annuities

Which of the following annuity products requires an agent to hold a securities license?

Annuitant

Which of the following indicates the person upon whose life the annuity income amount is determined?

Accumulation at Interest

Which of the following is NOT a nonforfeiture option in whole life policies?

403(b) Tax-Sheltered Annuities (TSAs)

Which of the following retirement plans is a special tax favored plan for nonprofit charitable, educational or religious groups?

Joint and Survivor Annuity

Which of the following types of annuities would be best suited for a retired couple who are seeking income for as long as either lives?

Joint and Survivor

Which settlement option guarantees an income for 2 or more recipients for as long as they live?

The Insurer may guarantee dividends.

Which statement is INCORRECT concerning policy dividends?

Life Income Annuity

Which type of annuity settlement stops when the annuitant dies?

Adjustable Life

Which type of policy allows the insured to change the amount of the death benefit, the amount of the premium, or the type of coverage as their needs change?

Bobs Estate

Betty is the only beneficiary named on her husband Bob's policy which has COMMON DISASTER PROVISION. They are in a car wreck, and Bob dies instantly. Betty lives for 29 days. Who will receive the death benefit?

Continuous Premium (straight) life.

Considered to be the most common type of whole life insurance sold, a policyowner stretches his or her premium installments over the life of the policy (to age 100 or death, whichever comes first). Premium installments are both continuous and level throughout the policyowner's life.

Each party relies on the truthfulness of the other.

For an insurance contract, the principle of utmost faith means;

31 days

How long does an employee have to convert group policy coverage to an individual policy without evidence of insurability?

Adjusts the death benefit based on the premiums that were paid.

If a misstatement of age is discovered during the processing of a life insurance claim, what will the insurer do?

Either the cash value or the premiums paid, whichever is greater.

If an annuitant dies during the accumulation period, what will the beneficiary receive?

The portion that exceeds the premiums paid is taxable.

If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered?

Representations

Statements made by the applicant on the insurance application that are believed to be true to the bed of the applicants knowledge.

Accumulation Period

The "pay in" phase of the annuity is known as what period?

Medical information on applicants for life and health insurance.

The MIB is a nonprofit trade association that maintains;

Assignment

The legal transfer of all or part of a policyowners rights, title or interest is called?

Entire Contract

The policy and a copy of the application, along with any riders and amendments, is called;

Frequency with which the policy premium will be paid.

The premium payment mode can be best described as the;