Life Insurance Test

d)Guaranteed and Current.

A Universal Life insurance policy has two types of interest rates that are called a)Option A and Option B. b)Fixed and Variable. c)Minimum and Target. d)Guaranteed and Current.

c)Master contract

In a single employer group plan, what is the name of the policy issued to the employer? a)Employer-insurer contract b)Certificate of authority c)Master contract d)Certificate of insurance

b)Premium receipt.

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a a)Warranty. b)Premium receipt. c)Statement of good health. d)Backdated receipt.

b)Taxable.

Unlike the dividend itself, the interest earned on dividends isa)40% taxable, similar to a capital gain.b)Taxable.c)Nontaxable.d)Tax deductible.

c)Decreasing term

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

1. Level term.

In which of the following types of temporary insurance protection does the death benefit NOT change throughout the life of the policy? (Choose from the following options)1. Level term.2. Universal life3. Whole life4. Decreasing term.

a)Level term.

In which of the following types of temporary insurance protection does the death benefit NOT change throughout the life of the policy?a)Level term.b)Universal lifec)Whole lifed)Decreasing term.

a)Other-insured rider.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called thea)Other-insured rider.b)Change of insured rider.c)Juvenile rider.d)Payor rider.

c)Medical conditions.

All of the following characteristics of a group are considered in group underwriting EXCEPTa)Turnover rate.b)Purpose of the group.c)Medical conditions.d)Financial strength.

1. Apparent

An agent accepts the premium payment 35 days after it is due, telling the insured that the policy will continue to remain in force. This is an example of what type of agent authority? (Choose from the following options)1. Apparent2. Express3. Fiduciary4. Implied

d)Refund life

An annuity pays a monthly amount for the remainder of the annuitant's life. If death occurs before the principal is exhausted, the remaining amount will be paid to a designated beneficiary. Which payment option has this annuitant selected?a)Life onlyb)Straight lifec)Fixed-period installmentsd)Refund life

4. Living benefits

In whole life insurance, which of the following terms describes features such as cash values and loan provisions? (Choose from the following options)1. Nonforfeiture options2. Dividend options3. Accelerated death benefits4. Living benefits

c)The annuity value minus the surrender charge.

When an annuity is surrendered early, the annuitant will receivea)Only the premiums paid into the annuity.b)The full annuity benefit.c)The annuity value minus the surrender charge.d)Only the interest earned.

d)Payor Benefit

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? a)Jumping Juvenile b)Juvenile Premium Provision c)Waiver of Premium d)Payor Benefit

d)Waiver of premium

Which of the following disability riders in life insurance allows the policyowner to keep coverage in force without paying policy premiums after a qualifying event?a)Disability income benefitb)Accelerated benefitc)Waiver of cost of insuranced)Waiver of premium

3. The policy summary may be part of the policy.

Which of the following is NOT true regarding the policy summary? (Choose from the following options)1. The policy summary must be a separate document.2. The insurer must provide a policy summary.3. The policy summary may be part of the policy.4. The policy summary must be provided upon policy delivery.

1. Interest rates are often associated with a stock index.

Which of the following is a characteristic of an equity indexed annuity? (Choose from the following options)1. Interest rates are often associated with a stock index.2. It is a variable annuity.3. Interest rates are not guaranteed.4. Annuitants cannot share in excess interest.

2. Extended term

Which of the following nonforfeiture options would be automatically implemented by the insurer if none of the other options has been selected by the policyowner? 1. Interest only2. Extended term3. Reduced paid-up insurance4. Cash surrender value

b)Guaranteed insurability

An insured just got married and would like to purchase additional coverage on his existing life insurance policy. Which of the following policy riders will allow the insured to purchase additional coverage without evidence of insurability?a)Spouse term riderb)Guaranteed insurabilityc)Guaranteed renewabilityd)Nonforfeiture option

b)Seek higher returns.

Equity indexed annuities a)Invest conservatively. b)Seek higher returns. c)Are more risky than variable annuities. d)Are security instruments

a)A legal practice.

Of $10,000 in premiums a producer wrote over the past year, $3,000 came from sales to a business which employs the producer's spouse. This is considereda)A legal practice.b)Coercion.c)Rebating.d)A violation of the controlled business regulations.

a)Annual Renewable Term

The insurance component of a Universal Life policy is what type of insurance?a)Annual Renewable Termb)Flexible Premium Adjustable Lifec)Convertible Termd)Modified Whole Life

d)Annual Renewable Term

The insurance component of a Universal Life policy is what type of insurance?a)Flexible Premium Adjustable Lifeb)Convertible Termc)Modified Whole Lifed)Annual Renewable Term

c)Employer may match the employee's contributions to the plan.

Which of the following is correct regarding a 401(k) plan?a)Employee contributions are mandatory.b)There is no limit on annual contributions.c)Employer may match the employee's contributions to the plan.d)Loans are not permitted.

c)The agent becomes a nonresident licensee in another state.

A certificate of appointment is valid until any of the following EXCEPT a)The agent's license expires and is not renewed. b)The appointment is terminated by the insurer under the terms of the agent's contract. c)The agent becomes a nonresident licensee in another state. d)The agent's license is suspended or revoked.

c)Monthly premium waiver and monthly income

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? a)Payments for life b)Yearly premium waiver and income c)Monthly premium waiver and monthly income d)Percentage of medical costs paid by the insurer

d)Aleatory

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a)Good health b)Adhesion c)Conditional d)Aleatory

b)Level fixed

Variable Whole Life insurance is based on what type of premium? a)Graded b)Level fixed c)Increasing d)Flexible

b)Pure life

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?a)Joint and survivor b)Pure life c)Life with guaranteed minimum d)Installment refund

b)Reduced paid-up

Which nonforfeiture option provides coverage for the longest period of time? a)Accumulated at interest b)Reduced paid-up c)Extended term d)Paid-up option

d)Contest the claim

After a policy had been in effect for 18 months, a claim was submitted. The insurer determined that the insured had made a material misstatement on the application for coverage. The insurer would probably do which of the following?a)Adjust any future premiumsb)Pay the claimc)Cancel the policyd)Contest the claim

d)Creditor

Who is the policyowner in credit life insurance?a)Insuredb)Insurerc)Borrowerd)Creditor

a)Apparent

An agent accepts the premium payment 35 days after it is due, telling the insured that the policy will continue to remain in force. This is an example of what type of agent authority?a)Apparentb)Expressc)Fiduciaryd)Implied

c)Limited pay whole life

An individual planning for retirement wishes to purchase a life insurance policy with living benefits. He does not wish to pay premiums beyond his income earning years. Which of the following life insurance products will best meet those requirements?a)Universal lifeb)Term lifec)Limited pay whole lifed)Modified whole life

3. 60 days

In an IRA rollover, the rollover must be completed within how many days of the time the funds are taken out of the first plan? (Choose from the following options)1. 10 business days2. 30 days3. 60 days4. 6 months

d)Living benefits

In whole life insurance, which of the following terms describes features such as cash values and loan provisions?a)Nonforfeiture optionsb)Dividend optionsc)Accelerated death benefitsd)Living benefits

2. Part 2

Information regarding the insured's medical history can be found in which part of the application for life insurance? (Choose from the following options)1. Part 12. Part 23. Agent's report4. Inspection report

a)14 1/2

What is the minimum age for a minor to purchase a life insurance policy in this state?a)14 1/2b)16 1/2c)18d)21

b)Send a written communication to existing insurers advising them of the proposed replacement.

When replacing a life insurance policy or annuity, a producer has all of the following duties EXCEPTa)Obtain a list of existing life insurance policies and annuities.b)Send a written communication to existing insurers advising them of the proposed replacement.c)Provide a signed Notice Regarding Replacement to the applicant.d)Give the applicant copies of all replacement related communication.

a)In another country

Where must an insurer's home office be located for it to be considered an alien insurer?a)In another countryb)In this statec)In another stated)In more than one state

a)Policy loans are tax deductible.

Which of the following is INCORRECT regarding whole life insurance?a)Policy loans are tax deductible.b)Cash value exceeding the premiums paid is taxable.c)Premiums are not tax deductible.d)Dividend interest is taxable.

d)Insureds cannot be randomly selected.

Which statement regarding insurable risks is NOT correct? a)Insurance cannot be mandatory. b)The insurable risk needs to be statistically predictable. c)An insurable risk must involve a loss that is definite as to cause, time, place and amount. d)Insureds cannot be randomly selected.

b)The full death benefit

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy? a)Nothing, since the insured was killed as a result of a war b)The full death benefit c)The policy's cash value d)A refund of premiums

c)Education.

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT a)Gender. b)Occupation. c)Education. d)Age

b)Transfer of all ownership rights in a policy

An absolute assignment is a a)Change of insurer. b)Transfer of all ownership rights in a policy. c)Transfer of some ownership rights in a policy. d)Change of beneficiary.

c)Deferred

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? a)Flexible premium b)Immediate c)Deferred d)Fixed

d)Conditional

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?a)Contingent b)Aleatory c)Unilateral d)Conditional

c)Variable

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? a)Securities b)Stock c)Variable d)Term

b)Inspection Report

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?a)Underwriter's Report b)Inspection Report c)Medical Information Bureau's report d)Agent's Report

b)The uncertainty or chance of loss.

For the purpose of insurance, risk is defined as a)An event that increases the amount of loss. b)The uncertainty or chance of loss. c)The certainty of loss. d)The cause of loss.

b)Business Continuation

Joe, Larry, and Curly own a small business. They have made a legal arrangement which states that if one of them dies or becomes disabled, the other two will be able to buy the partner's shares. Which term best describes this arrangement? a)Buy-up Distribution b)Business Continuation c)Shares Distribution d)Business Partner Disability Provision

d)The beneficiary will receive the greater of the money paid into the annuity or the cash value.

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? a)The owner's estate will receive the money paid into the annuity. b)The insurance company will retain the cash value and pay back the premiums to the owner's estate. c)The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. d)The beneficiary will receive the greater of the money paid into the annuity or the cash value.

d)SEC registration.

To sell variable life insurance policies, an agent must receive all of the following EXCEPT a)FINRA registration. b)A securities license. c)A life insurance license. d)SEC registration.

c)3

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages? a)7 b)10 c)3 d)5

c)It has the highest amount of insurance protection.

What is the benefit of choosing extended term as a nonforfeiture option? a)It allows for coverage to continue beyond maturity date. b)It can be converted to a fixed annuity. c)It has the highest amount of insurance protection. d)It matures at age 100.

b)Ownership

What is the major difference between a stock company and a mutual company? a)Types of whole life policies b)Ownership c)Amount of death benefit d)Number of producers

d)Spendthrift provision

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?a)Settlement option b)Accelerated benefit provision c)Loan provision d)Spendthrift provision

d)When the insured reaches age 100

When would a 20-pay whole life policy endow? a)At the insured's age 65 b)After 20 payments c)In 20 years d)When the insured reaches age 100

d)It has a vesting requirement

Which is INCORRECT concerning a Section 457 Deferred Compensation plan? a)The deferred amount is paid upon death, disability, or retirement. b)It is a nonqualified plan. c)It is a means of deferring current income until later when the employee is in a lower tax bracket. d)It has a vesting requirement.

d)Only the annuity owner

Which of the following can surrender a deferred annuity contract? a)Only the insurance company for nonpayment of premiums b)The beneficiary after the owner's death c)A deferred annuity cannot be surrendered. d)Only the annuity owner

a)The performance of the policy portfolio

Which of the following determines the cash value of a variable life policy? a)The performance of the policy portfolio b)The company's general account c)The policy's guarantees. d)The premium mode

c)The annuitant cannot be the same person as the annuity owner

Which of the following is NOT true regarding the annuitant? a)The annuitant receives the annuity benefits. b)The annuitant must be a natural person. c)The annuitant cannot be the same person as the annuity owner. d)The annuitant's life expectancy is taken into consideration for the annuity.

d)To help the insured understand all aspects of the contract

Why should the producer personally deliver the policy when the first premium has already been paid? a)To ensure the producer gets paid commission b)To find out how the family has been doing since the initial presentation c)To make sure the policy is not stolen or lost d)To help the insured understand all aspects of the contract

c)Return the application to the applicant for a signature.

If an agent fails to obtain an applicant's signature on the application, the agent must a)Sign the application, stating it was by the agent. b)Send the application to the insurer with a note explaining the absence of signature. c)Return the application to the applicant for a signature. d)Sign the application for the applicant

a)Convertible Term Policy.

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a a)Convertible Term Policy. b)Renewable Term Policy. c)Decreasing Term Policy. d)Whole Life Policy.

b)Class designation.

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called a)Stirpes designation. b)Class designation. c)Revocable designation. d)Irrevocable designation

b)Concealment.

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of a)Warranty. b)Concealment. c)Misrepresentation. d)Fraud.

c)Other insurance coverages.

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT a)Alcohol and tobacco consumption. b)Recent surgeries. c)Other insurance coverages. d)Family health history.

b)Lower.

The premium of a survivorship life policy compared with that of a joint life policy would be a)Half the amount. b)Lower. c)Higher. d)As high

c)Inform the Department within 30 days

An agent has recently changed his email address. What must the agent do to comply with the regulation for change of address? a)Nothing, email addresses are not subject to regulations b)Report the address change to the NAIC c)Inform the Department within 30 days d)Inform all his customers within 30 days

c)Each insured person.

In group life policies, a certificate of insurance is given to a)The insurance producer. b)The policyholder to keep on file. c)Each insured person. d)The group sponsor.

b)Underwriting

What process do insurance companies use to determine whether or not a particular applicant is insurable? a)Solicitation b)Underwriting c)Adverse Selection d)Marketing

c)Grace period

What required provision protects against unintentional lapse of the policy? a)Payment of premiums b)Reinstatement c)Grace period d)Assignment

c)It is level term insurance.

Which of the following best describes annually renewable term insurance? a)Neither the premium nor the death benefit is affected by the insured's age. b)It provides an annually increasing death benefit. c)It is level term insurance. d)It requires proof of insurability at each renewal.

c)The employer is the owner and beneficiary.

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? a)The key employee is the owner and beneficiary. b)The key employee is the owner and the employer is the beneficiary. c)The employer is the owner and beneficiary. d)The employer is the owner and the key employee is the beneficiary

b)From trustee to trustee

In a direct rollover, how is the money transferred from one plan to the new one? a)From the original plan to the original custodian b)From trustee to trustee c)From trustee to the participant d)From the participant to the new plan

c)The rider is usually level term insurance.

Which is true about a spouse term rider? a)The rider is decreasing term insurance. b)Coverage is allowed up to age 75. c)The rider is usually level term insurance. d)Coverage is allowed for an unlimited time.

d)Need is predicted using the number of years until the insured's retirement.

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? a)Coverage is based on the predicted needs of that family. b)The death of an insured must be premature. c)It must be assumed that the death of the insured will occur immediately. d)Need is predicted using the number of years until the insured's retirement.

a)It has a tax benefit for both employer and employee.

Which of the following is TRUE of a qualified plan? a)It has a tax benefit for both employer and employee. b)It does not need to have a vesting schedule. c)It may discriminate in favor of highly paid employees. d)It may allow unlimited contributions

c)The cost of coverage is based on the ratio of men and women in the group.

Which of the following statements about group life is correct? a)The group sponsor receives a Certificate of Insurance. b)The policy can be converted to an individual term insurance policy. c)The cost of coverage is based on the ratio of men and women in the group. d)The premiums are higher than in an individual policy because there is no medical exam.

d)They can be changed only with the written consent of that beneficiary.

Which of the following statements is TRUE concerning irrevocable beneficiaries? a)They may be changed at any time. b)They can never be changed. c)They may be changed only on the anniversary date of the policy. d)They can be changed only with the written consent of that beneficiary.

a)Prior to or at the time of application.

A buyer's guide must be provided to the insurance applicanta)Prior to or at the time of application.b)When the premium is paid.c)After the free-look period.d)Before the renewal date.

d)On the date of the application

An insured submits the full premium along with a completed application. Once the policy is issued, when does the coverage begin?a)On the date the policy was issuedb)When the policy is receivedc)After the free-look periodd)On the date of the application

c)Considered unfair discrimination.

Denying insurance coverage on the basis of a person's marital status isa)Allowed with the Insurance Commissioner's approval.b)Allowed under state law.c)Considered unfair discrimination.d)Considered a category D felony.

c)1 month

How long is the grace period for an individual life insurance policy?a)7 to 10 business daysb)2 weeksc)1 monthd)3 months

d)Apply within 90 days of becoming a resident.

In order for a nonresident licensee to become a resident producer in New York, the licensee must a)Wait 6 months and close out all existing business. b)Fulfill New York's prelicensing requirements. c)Pass a written exam. d)Apply within 90 days of becoming a resident.

c)Nondeductible.

Regular premium payments made to purchase an individual nonqualified annuity area)Tax deferred.b)Tax exempt.c)Nondeductible.d)Deductible.

2. Dividends

Unused premiums are returned to policyowners tax free in the form of (Choose from the following options)1. Policy loans.2. Dividends.3. Stocks.4. Premiums.

b)Sharing commissions with more than one licensed life settlement brokers

Which of the following practices would be allowed in regards to life settlements?a)Acting as a life settlement broker for a policy in which the broker has personal interest.b)Sharing commissions with more than one licensed life settlement brokersc)Paying settlement proceeds in monthly installmentsd)Compensating an unlicensed person for referrals

d)Indemnity

Which of the following principles describes restoring the insured to his or her original financial status after a loss?a)Warrantyb)Utmost good faithc)Reasonable expectationsd)Indemnity

a)The annuitant must be a natural person.

Which of the following statements is TRUE regarding an annuitant?a)The annuitant must be a natural person.b)The annuitant must also be the owner of the annuity.c)The annuitant may be a corporation.d)The annuitant is also the beneficiary under the annuity.

3. Interest only

Which settlement option allows the insurer to retain the face amount but pay some income based on gain on the proceeds to the beneficiary at regular intervals? (Choose from the following options)1. Fixed amount2. Fixed period3. Interest only4. Life income

b)A copy of the original application for insurance.

According to the Entire Contract provision, a policy must contain a)Listing of the insured's former insurer(s) for incontestability provisions. b)A copy of the original application for insurance. c)A declarations page with a summary of insureds. d)Buyer's guide to life insurance.

a)Permanent

An applicant wants to buy a policy that has a cash value element. Which type should she buy? a)Permanent b)Stock c)Investment d)Term

a)Speculative risk.

Events in which a person has both the chance of winning or losing are classified as a)Speculative risk. b)Insurable. c)Pure risk. d)Retained risk

a)The producer

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? a)The producer b)The beneficiary of the applicant c)The insurance company d)The applicant

c)It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance

Which of the following best describes the MIB? a)It is a member organization that protects insured against insolvent insurers. b)It is a rating organization for health insurance. c)It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. d)It is a government agency that collects medical information on the insured from the insurance companies.

a)Certificate of appointment

Before an agent can transact business in New York, every insurer, fraternal benefit society or HMO must file with the Superintendent which of the following?a)Certificate of appointment b)Temporary license c)Nonresident license d)Completion of appointment

c)An unfair trade practice.

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a)A required disclosure. b)A legal representation of the Association. c)An unfair trade practice. d)A misrepresentation.

c)It is only taxable if the cash value exceeds the amount paid for premiums

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? a)It is taxable only if it exceeds the amounts paid for premiums by 50%. b)It is automatically taxable. c)It is only taxable if the cash value exceeds the amount paid for premiums. d)It is not considered to be taxable.

c)The annuitant will receive the higher of either the guaranteed minimum rate or current rate

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? a)The annuitant will receive the lower of either the guaranteed minimum rate or current rate. b)The annuitant will only receive the guaranteed minimum specified in the contract. c)The annuitant will receive the higher of either the guaranteed minimum rate or current rate. d)The annuitant will always receive the current interest rate.

d)Utmost good faith.

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as a)Reasonable expectations. b)A warranty. c)Implied warranty. d)Utmost good faith.

b)To purchase a smaller amount of the same type of insurance as the original policy.

The paid-up addition option uses the dividend a)To accumulate additional savings for retirement. b)To purchase a smaller amount of the same type of insurance as the original policy. c)To purchase a one-year term insurance in the amount of the cash value. d)To reduce the next year's premium.

c)Universal life

Which of the following Life Insurance policies would be considered interest sensitive? a)Whole life b)Increasing term c)Universal life d)Adjustable life

c)An insurer's officer

Which of the following would NOT be considered an insurance producer? a)A reinsurance intermediary b)An insurance agent c)An insurer's officer d)An insurance broker

d)Fiduciary responsibility.

The requirement that agents not commingle insurance monies with their own funds is known as a)Premium accountability. b)Express authority. c)Accepted accounting principal. d)Fiduciary responsibility.

d)Straight life

Which of the following types of annuities will generally provide the highest monthly income?a)Joint and survivor b)Installment refund c)Life with a 10-year period certain d)Straight life

d)Universal life

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? a)Flexible life b)Variable life c)Adjustable life d)Universal life

c)Premium amounts and surrender values

Which of the following will be included in a policy summary? a)Comparisons with similar policies b)Primary and secondary beneficiary designations c)Premium amounts and surrender values d)Copies of illustrations and application

b)Its premium steadily decreases over time, in response to its growing cash value.

Which statement is NOT true regarding a Straight Life policy? a)It has the lowest annual premium of the three types of Whole Life policies. b)Its premium steadily decreases over time, in response to its growing cash value. c)The face value of the policy is paid to the insured at age 100. d)It usually develops cash value by the end of the third policy year

d)Universal life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Variable life b)Decreasing term c)Straight whole life d)Universal life

d)An applicant who is a smoker

Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination? a)An applicant who was born in another country b)An applicant who is legally blind c)An applicant who has been a victim of domestic abuse d)An applicant who is a smoker

d)A person who is selling the contract

Which of the following best defines the owner of a life settlement contract? a)A person insured under the contract b)A fiduciary for the contract c)An insurance provider d)A person who is selling the contract

a)Interest only option

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a)Interest only option b)Life income with period certain c)Joint and survivor d)Fixed amount option

c)The insurer

Which entity determines the amount of accelerated death benefits that will be paid to an insured?a)Federal law b)State law c)The insurer d)Employers offering plans that include accelerated death benefits

d)Insurance Guaranty Association

Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?a)Insurance Consumer Protectorate b)Insurance Solvency Association c)Consumer Protection Agency d)Insurance Guaranty Association

b)Workers Compensation

Which of the following is NOT an example of a business use of Life Insurance? a)Key Person b)Workers Compensation c)Buy-sell Funding d)Executive Bonuses

b)Human life value approach

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? a)Lump-sum approach b)Human life value approach c)Needs approach d)Blackout approach

d)It may last for the lifetime of the annuitant.

Which of the following is TRUE regarding the annuity period? a)During this period of time the annuity payments grow interest tax deferred. b)It is also referred to as the accumulation period. c)It is the period of time during which the annuitant makes premium payments into the annuity. d)It may last for the lifetime of the annuitant.

a)1035 exchange.

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called a)1035 exchange. b)Qualified distribution. c)Premature distribution. d)Rollover.

b)Interest

During partial withdrawal from a universal life policy, which portion will be taxed? a)Loan b)Interest c)Cash value d)Principal

a)Not taxable since the IRS treats them as a return of a portion of the premium paid

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are a)Not taxable since the IRS treats them as a return of a portion of the premium paid. b)Paid at a fixed rate every year. c)Taxable as ordinary income. d)Guaranteed.

b)Annually Renewable Term

The death protection component of Universal Life Insurance is always a)Increasing Term b)Annually Renewable Term c)Whole Life d)Adjustable Life

c)Immediately after receiving written proof of loss

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit? a)After the estate of the insured has been settled b)Within 2 years of the date of loss c)Immediately after receiving written proof of loss d)On the next anniversary of the policy

c)Insurers

Who makes up the Medical Information Bureau?a)Former insured b)Physicians and paramedics c)Insurers d)Hospitals

b)At the time of application

When must the Buyer's Guide be delivered to the proposed insured? a)At the time the appointment is set for the first presentation b)At the time of application c)At policy delivery d)At the time the first premium is paid

d)The trust that a client places in the producer in regard to handling premiums.

Which of the following is an example of a producer's fiduciary duty? a)An obligation to state every known fact about the policy the producer is selling. b)A duty to base all transactions upon the principle of Utmost Good Faith. c)The obligation to tell the truth to the best of one's knowledge d)The trust that a client places in the producer in regard to handling premiums.

b)Premiums are determined by the age, sex and occupation of each individual certificate holder.

All of the following are characteristics of group life insurance EXCEPT a)Certificate holders may convert coverage to an individual policy without evidence of insurability. b)Premiums are determined by the age, sex and occupation of each individual certificate holder. c)Amount of coverage is determined according to nondiscriminatory rules. d)Individuals covered under the policy receive a certificate of insurance.

c)Medical background

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?a)Occupation b)Marital status c)Medical background d)Gender

c)Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.

Which of the following is NOT true of Section 1035 Policy Exchanges? a)It is an IRS Code which permits like kind exchanges of property. b)It is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy. c)Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days. d)It requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy.

a)It provides income the beneficiary cannot outlive.

Which of the following is true regarding a single life settlement option? a)It provides income the beneficiary cannot outlive. b)Payments continue until the entire principal is exhausted. c)Proceeds are paid out in a lump sum. d)It provides income for a specified period of time.

d)Greatest

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection? a)Least b)Most comprehensive c)Longest d)Greatest

b)The interest is not taxable since it remains inside the insurance policy.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a)The policyholder has the right to withdraw the accumulations at any time. b)The interest is not taxable since it remains inside the insurance policy. c)The annual dividend is retained by the company. d)The interest is credited at a rate specified by the policy.

d)Fair Credit Reporting Act

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

d)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?a)Adjustable life b)Term life c)Limited pay d)Universal life

c)Upon the last death

In a survivorship life policy, when does the insurer pay the death benefit? a)Half at the first death, and half at the second death b)If the insured survives to age 100 c)Upon the last death d)Upon the first death

d)Buy-sell agreements are normally funded with a life insurance policy.

Which of the following statements concerning buy-sell agreements is true? a)Premiums paid are deductible as a business expense. b)Benefits received are considered income taxable. c)Buy-sell agreements pay in the event of a medical emergency. d)Buy-sell agreements are normally funded with a life insurance policy.

d)The plan is funded by permanent insurance only

All of the following are true of key person insurance EXCEPT a)There is no limitation on the number of key employee plans in force at any one time. b)The employer is the owner, payor and beneficiary of the policy. c)The key employee is the insured. d)The plan is funded by permanent insurance only

c)Term

Children's riders attached to whole life policies are usually issued as what type of insurance?a)Adjustable life b)Whole life c)Term d)Variable life