life insurance test

the insurer may suspect that a moral hazard exists if the policyholder

is not honest about his health on an applicant fpr insurance

which of the following applies to the 10-day-free-look privilege

it permits the insured to return the policy for a full refund of premiums paid

which of the following statements about the reinstatement provisions is true?

it requires the policy-owner to pay all overdue premiums with interest before the policy is reinstated

which of the following is NOT true regarding the accumulation period of an annuity?

it would not occur in a deferred annuity

a set of legal or regulatory conditions that affect an insurer's ability ti collect premiums commensurate with the level of risk incurred would be considered an

legal hazard

which operating division of an insurers is responsible for advertising, promoting, and distributing the insurer's products to the public?

marketing and sales

which of the following statements best describes the effect the accelerated benefit provision would have on the benefits paid to the beneficiary?

it will decrease the benefits paid to the beneficiary

what is the other term for the cash payment settlement option?

lump sum

any insurer who engages in the insurance business and violates the code with respect to insurance replacement shall on the first violation

be fined a sum of $10,000

any insurance agent who engages in the insurance business and violates the code with respect to insurance replacement shall on the first violation

be fined a sum of 5,000

all of the following are requirements of eligibility for social security disability income benefits EXCEPT

being age 65

which of the following statements regarding business overhead expense policies is NOT true

benefits are usually limited to 6 months

a policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called

business overhead expense

which of the following is the closest term to an authorized insurer?

admitted

factual statements about the insured or the risk in an insurance policy are considered

express warranty

which of the following life insurance policies allows a policy-owner to take out a loan from the policys cash value?

variable universal life

in forming an insurance contract, when does the acceptance usually occur?

when an insurers underwriter approves coverage

what limits the amount that a policyowner may borrow from a whole life insurance policy?

cash value

which of the following must an insurer obtain in order to transact insurance within a given state?

certificate of authority

which of the following is NOT a type of information that needs to be gathered in order to determine that value of someones life when using the needs approach

estimated longevity

the key factor of representation that allows the injured party to rescind the contract is

if the representation is false in a material point

based on human life value approach which of the following is NOT used to calculate an individuals life value?

predicated needs of the family after the insureds deatb

to achieve the profitable distribution of exposures

preferred risks and poor risks are balanced, with average risk in the middle

which of the following is the most common way to transfer risk

purchase insurance

the price of insurance for each exposure unit is known as

rate

which of the following insurance options would be considered a risk sharing arrangement

reciprocal

which type of beneficiary is changeable at any point

revocable

the premiums paid by the employer in a business life insurance policy are

tax deductible by the employer

written binders provide insurance before the policy is actually issued. the time period between the issuance of the binder and the policy's effective date is called

temporary term

if the annuitant dies during the accumulation period, who will receive the annuity benefits?

the beneficiary

when a life insurance policy was issued, the policy-owner designated a primary and contingent beneficiary. several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. which of the following would receive the death benefit?

the insureds contingent beneficiary

all of the following are true of an annuity owner EXCEPT

the owner pays the premiums on the annuity

what happens if a deferred annuity is surrendered before the annuitization period?

the owner will receive the surrender value of the annuity

under an extended term nonforfeiture option, the policy cash value is converted to

the same face amount as in the whole life policy

which of the following statements regarding policy dividends is true?

they are a refund of unearned premiums

when the breadwinner that is the insured by a family policy dies, what rights are provided to other family members that are covered under the policy ?

they can convert their coverage to permanent life insurance with evidence of insurability

which of the following insurance arrangements will be appropriate for a parent buying life insurance on a child where the parent is the policy-owner?

third-party ownership

which of the following statements regarding the taxation of modified endowment contracts is FALSE

withdrawals are not taxable

what is the waiting period on a waiver of premium rider in life insurance policies?

6 months

an investor buys a life policy on an elderly person in order to sell it for a life settlement. this is an example of

a stoli policy

an applicant buys a non qualified annuity, but dies before the starting date. for which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable

spouse

what is the minimum free-look period for newly issued life insurance policies in this state?

10 days

the code defines the term "transact" as all of the following except

analyzing contract insurance

an insurer wants to begin underwriting procedures for an applicant. what source will it consult for the majority of its underwriting information?

application

the full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. when does the policy coverage become effective?

as of the application date

the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

credit life

which of the following is not fundable by annuities

death benefits

if an insured changes his payment plan from monthly to annually what happens to the total premium?

decreases

what is the term for sales campaign conduct through the mail?

direct-response

which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?

guaranteed lifetime withdrawal

a return of premium term life policy is written as what type of coverage?

increasing

insurance is the transfer of

risk

the title page of the policy provides a summary of the benefits and coverages provided by the policy. All of the following information is included in the title page EXCPET

the insureds beneficiaries

what would be an advantage to naming a contingent or (secondary) beneficiary in a life insurance policy?

it determines who receives policy benefits if the primary beneficiary is deceased

which of the following terms is used to name the non-taxed return of unused premiums?

dividend

during the grace period, the policy owner can

pay a late premium without penalty

another name for a substandard risk classification is

rated

in the event of a loss, business overhead insurance will pay for

rent

an intentional or unintentional concealment entitles the affected party to which of the following?

rescission of a contract

the annuity owner dies while the annuity is still in the accumulation stage. which of the following is TRUE?

the beneficiary will receive the greater of the money paid into the annuity or the cash value

which of the following protects consumers against the circulation of inaccurate or obsolete personal l or financial information?

the fair credit reporting act

an insured and his spouse own a home. when the insured dies the insurer pays the remaining balance on his home loan. which type of life insurance provision/rider does this describe?

mortgage redemption

in case of a loss, the indemnity provision in insurance policies

restores an insured person to the same financial state as before the loss

if an agent wishes to sell variable life policies what license must the agent obtain?

securities

events in which a person has both the chance of winning or losing are classified as

speculative risk

stranger originated life insurance(stoli) policies are in direct opposition to the principle of

insurable interest

a contract which one party undertakes to indemnify another against loss is called

insurance

in general terms, IRA contributions are

Tax deductible

the agents authority to transact insurance business for an insurer is effective ?

as of the date that the notice of appointment is signed

the proposed insured makes the premium payment on a new insurance policy. if the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. this is an example of what kind of contract?

conditional?

an insured has the right to return the new insurance policy for a full refund during the

free-look period

if a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes

guaranteed insurability rider

the dividend option in which the policy uses dividend to purchase a term policy for one year is referred to as the

one-year term option

upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean?

the beneficiary will only receive payments of the interest earned on the death benefit

which of the following is an example of liquidity in a life insurance contract?

the cash value available to the policy owner

which of the following would NOT fall into the category of costs associated with death?

the expense of a vacation for surviving family members

which of the following is true if the policy owner exercises his/her right to surrender his/her life insurance policy for its current cash value? assume that policy owner and insured are the same person.

the insured is no longer covered under the surrendered policy

the waiver of cost of insurance rider is found in what type of insurance?

universal life

an applicant for insurance is requesting more information from her agent about a claim that is currently being settled. within what time period must the agent respond?

15 days

which of the following must be disclosed in all advertisements and policies of term life insurance for individuals 55 years of age or older?

insurance monetary value index

which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery?

insureds who are 60 years of age or older

when a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?

the insurance company's general account

which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds death?

a minor son of the insured

which of the following is NOT allowed in credit life insurance?

creditor requiring that a debtor buys insurance from a certain insurer

in which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contact with the insurer

direct response system

what type of premium do both universal life and variable universal life policies have?

flexible

an insurer may discriminate against a person through underwriting if that person has

a physical handicap that could result in an actuarially predictable loss

which of the following documents delivered to the policy-owner includes information about the premium amounts, cash values, surrender values and death benefits for specific policy years?

a policy summary

which of the following best describes the policy non renewal

discontinuance of an insurance policy by the insured on the policy anniversary date

if an annuitant dies before annuitization occurs, what will the beneficiary receive?

either the amount paid into the plan or the cash value of the pan, whichever is the greater amount

when the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

equal to the original policy for as long as the cash values will purchase

all of the following actions by a person could be described as risk avoidance EXCEPT

investing in the stock market

which of the following is NOT considered personally identifiable information?

government records

if an agent unwittingly gives a client incorrect information what professional insurance would pay for the losses or defend the agent against any resulting lawsuit?

errors and omissions

any insurance agent who commits a repeated violation of the insurance code with respect to insurance replacement will be liable for

an administrative penalty of no less than 5,000 and no more than 50,000

all of the following are examples of third-party ownership of a life insurance policy EXCEPT

an insured borrows money from the bank and makes collateral assignment of a part of the death benefit to secure to the loan

an insured owns a $50,000 whole life policy. at age 47, the insured decides to cancel his policy and exercise the extended term option for the polciys cash value, which is currently $20,000. what would be the face amount of the new term policy?

$50,000

for variable products, underlying assets must be kept in

a separate account

which of the following would NOT be considered a form of direct response marketing

a sign in an insurers office

the policy-owner 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 for their children when they reach a certain age. which settlement option should the policy-owner choose?

interest only option

which of the following is TRUE regarding the insurance amount in a credit life policy?

the creditor can only insure the debtor for the amount owed

all of the following are true about variable products EXCEPT

The premiums are invested in the insurers general account

if an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

it is only taxable if the cash value exceeds the amount paid for the premiums

peril is most easily defined as

the cause of loss insured against