Life Insurance Test (Georgia)
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a)Consideration b)Legal purpose c)Contract of adhesion d)Acceptance
a) consideration
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)An unfair trade practice. b)A misrepresentation. c)A required disclosure. d)A legal representation of the Association.
a)An unfair trade practice.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a)Automatic premium loan b)Extended term c)Reinstatement d)Reduced paid-up option
a)Automatic premium loan
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a)Entire contract. b)Total contract. c)Aleatory contract. d)Complete contract.
a)Entire contract.
Which policy component decreases in decreasing term insurance? a)Face amount b)Cash value c)Dividend d)Premium
a)Face amount
In insurance transactions, fiduciary responsibility means a)Handling insurer funds in a trust capacity. b)Maintaining a good credit record. c)Being liable with respect to payment of claims. d)Commingling premiums with agent's personal funds.
a)Handling insurer funds in a trust capacity.
What do individuals use to transfer their risk of loss to a larger group? a)Insurance b)Insurable interest c)Exposure d)Indemnity
a)Insurance
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 a)Rebating. b)Coercion. c)Twisting. d)Controlled business.
a)Rebating.
In forming an insurance contract, when does acceptance usually occur? a)When an insurer's underwriter approves coverage b)When an insurer delivers the policy c)When an insurer receives an application d)When an insured submits an application
a)When an insurer's underwriter approves coverage
Insurers must keep files of all advertisements used in Georgia for the minimum of how many years? a)2 b)4 c)5 d)7
b)4
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an a)Self-insurer. b)Authorized insurer. c)Local insurer. d)Certified insurer.
b)Authorized insurer.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a)Adhesion b)Consideration c)Good faith d)Representation
b)Consideration
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as a)Binding contracts. b)Contracts of adhesion. c)Unilateral contracts. d)Aleatory contracts.
b)Contracts of adhesion.
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)An offer to share in commissions generated by the sale. b)Dividends from a mutual insurer. c)An offer of employment. d)Stocks, securities, or bonds.
b)Dividends from a mutual insurer.
Which of the following would NOT be considered a purpose of life insurance solicitation regulations in Georgia? a)Provide buyers with information about policies that would best suit their needs b)Help buyers choose most qualified insurance producers c)Improve buyers' understanding of policy features d)Help buyers evaluate the relative costs of life insurance plans
b)Help buyers choose most qualified insurance producers
As a field underwriter, a producer is responsible for all of the following tasks EXCEPT a)Obtain appropriate signatures on the application for insurance. b)Issue the policy that is requested. c)Help prevent adverse selection. d)Solicit business that will fall within the insurer's underwriting guidelines.
b)Issue the policy that is requested.
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a)The amount distributed is subject to ordinary income tax. b)The amount of the distribution is reduced by the amount of a 20% withholding tax. c)No taxes are due since the plan participant is over age 59 1/2. d)There is a 10% early withdrawal penalty.
b)The amount of the distribution is reduced by the amount of a 20% withholding tax.
Which of the following is INCORRECT concerning a noncontributory group plan? a)The employer pays 100% of the premiums. b)The employees receive individual policies. c)They help to reduce adverse selection against the insurer. d)They require 100% employee participation.
b)The employees receive individual policies.
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT a)The plan is not approved for favorable tax treatment by the IRS. b)The employer can receive a current tax deduction for any contributions made to the plan. c)The plan is a legal method of accumulating money for retirement needs. d)The plan can discriminate as to who may participate.
b)The employer can receive a current tax deduction for any contributions made to the plan.
If an insured continually uses the automatic premium loan option to pay the policy premium, a)The insurer will increase the premium amount. b)The policy will terminate when the cash value is reduced to nothing. c)The face amount of the policy will be reduced by the automatic premium loan amount. d)The cash value will continue to increase.
b)The policy will terminate when the cash value is reduced to nothing.
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? a)Survivor Life b)Second-to-Die c)Common Disaster d)Accidental Death
c) Common disaster
How long is the waiting period for benefits to be paid in a long-term care policy or rider? a)30 days b)60 days c)90 days d)120 days
c)90 days
According to the Entire Contract provision, a policy must contain a)Buyer's guide to life insurance. b)Listing of the insured's former insurer(s) for incontestability provisions. c)A copy of the original application for insurance. d)A declarations page with a summary of insureds.
c)A copy of the original application for insurance.
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be a)Qualified. b)Approved. c)Authorized. d)Certified.
c)Authorized.
The term "conservation effort" deals with a)Charging the lowest possible premium for the highest possible benefit. b)Discouraging agents from terminating their appointments. c)Discouraging policyholders from dropping existing policies. d)Writing the least amount of policy provisions as possible in a given policy.
c)Discouraging policyholders from dropping existing policies.
A life insurance policy has a legal purpose if both of which of the following elements exist? a)Offer and counteroffer b)Policyowners and named beneficiaries c)Insurable interest and consent d)Underwriting and reciprocity
c)Insurable interest and consent
State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT a)Promising returns and profits from the purchase of insurance. b)Offering benefit certificates or securities in return for purchasing insurance. c)Inviting prospective clients to the grand opening of the company's new office. d)Issuing or delivering insurance company stock in return for purchasing insurance.
c)Inviting prospective clients to the grand opening of the company's new office.
Which of the following is TRUE regarding the accumulation period of an annuity? a)It is a period of time during which the beneficiary receives income b)It is limited to 10 years. c)It is a period during which the payments into the annuity grow tax deferred. d)It is also referred to as the annuity period.
c)It is a period during which the payments into the annuity grow tax deferred.
Which of the following statements is TRUE concerning the Accidental Death Rider? a)This rider is only available to insureds over the age of 65. b)It is only available in group insurance. c)It will pay double or triple the face amount. d)It is also known as a triple indemnity rider.
c)It will pay double or triple the face amount.
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? a)Pay nothing; there was a misrepresentation on the application b)Pay the full death benefit and refund excess premium c)Pay a reduced death benefit d)Pay the full death benefit
c)Pay a reduced death benefit
All of the following are examples of transacting insurance in Georgia EXCEPT a)Preliminary insurance negotiations. b)Making an insurance contract go into effect. c)Placing advertisements for an insurer. d)Insurance solicitation.
c)Placing advertisements for an insurer.
n which of the following instances would the premium be tax deductible? a)Premiums paid by a mother on her son's policy b)Premiums paid by an employer on the life of a key person c)Premiums paid by an employer on a $30,000 group term life insurance plan for employees d)Premiums paid by an individual on his/her own life insurance
c)Premiums paid by an employer on a $30,000 group term life insurance plan for employees
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as a)False advertising. b)Coercion. c)Rebating. d)Twisting.
c)Rebating.
Authorized insurance companies are examined by the Commissioner at least once every a)Year. b)2 years. c)3 years. d)5 years.
d) 5 years
The two types of assignments are a)Absolute and partial. b)Complete and partial. c)Complete and proportionate. d)Absolute and collateral.
d)Absolute and collateral.
Which of the following entities has the power to issue certificates of authority? a)Department of Insurance b)NAIC c)Federal Insurance Regulation Board d)Commissioner of Insurance
d)Commissioner of Insurance
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a)Consideration. b)Legal purpose. c)Offer and acceptance. d)Conditions.
d)Conditions.
Which is TRUE about the cash surrender nonforfeiture option? a)After the cash surrender, the insured is covered for a grace period of one month. b)The policy remains active for some time after the policyholder opts for cash surrender. c)The policyholder receives the original cash value of the policy. d)Funds exceeding the premium paid are taxable as ordinary income.
d)Funds exceeding the premium paid are taxable as ordinary income.
Annually renewable term policies provide a level death benefit for a premium that a)Decreases annually. b)Remains level. c)Fluctuates. d)Increases annually.
d)Increases annually.
All of the following are true regarding insurance policy loans EXCEPT a)The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. b)The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. c)Policyowners can borrow up to the full amount of their whole life policy's cash value. d)Policy loans can be made on policies that do not accumulate cash value.
d)Policy loans can be made on policies that do not accumulate cash value.
A nonresident agent is allowed to conduct insurance transactions in Georgia because his home state allows Georgia residents to transact insurance business in it. This is known as a/n a)Nonresident arrangement. b)Overinsurance. c)Appointment. d)Reciprocity agreement.
d)Reciprocity agreement.
Nonforfeiture values guarantee which of the following for the policyowner? a)That the dividends will be paid annually b)That the death benefit will be paid in a lump sum c)That the policy premiums will never increase d)That the cash value will not be lost
d)That the cash value will not be lost
The entire contract is made up of all of the following EXCEPT a)Riders and endorsements. b)The insurance policy. c)The policy application. d)The buyer's guide.
d)The buyer's guide.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a)Universal Life - Option B b)Equity Indexed Universal Life c)Variable Universal Life d)Universal Life - Option A
d)Universal Life - Option A
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize? a)Estate liquidation b)Nonpayment of premium c)Change of beneficiary d)Viatical settlement
d)Viatical settlement
