Life Practice Exam: Learning Mode

The following are examples of valid insurable interest:

1. A policy owner insuring their own life 2. Insuring the life of a family member 3. Insuring the life of a business partner, a key employee, or someone who has a financial obligation to the policy owner (a debtor does not have insurable interestst in the life of a creditor)

The following are true regarding policy loans

1. An insurer can charge interest on outstanding policy loans 2. A policy loan may be repaid after the policy is surrendered 3. Money borrowed from the cash value is not taxable 4. Policy loans can be repaid at death

A producer must do all of the following when delivering a new policy to the insured:

1. Collect any premium due 2. Explain the rating procedures if the policy is rated differently than applied for 3. Explain the policy provisions, riders, and exclusions

The following are correct regarding Juvenile Life Insurance

1. It can be a limited Payment Policy 2. Juvenile life is classified as any life insurance written on the life of a minor 3. Usually a parent or guardian is the applicant for insurance on the life of a minor

All of the following are requirements for life insurance illustrations:

1. Must differentiate between guaranteed and projected amounts 2. Must specify that is NOT part of the contract 3. They must be only used as approved 4. They must identify nonguaranteed values

The following are true regarding a Straight Life policy:

1. The premium remains level throughout the insured's life 2. The face value of the policy is paid to the insured at age 100 3. It usually develops cash value by the end of the third policy year 4. It has the lowest annual premium of the three types of Whole Life policies

The following are true regarding installments for a fixed amount:

1. This option pays a specific amount until the funds are exhausted 2. The annuitant may select how big the payments will be 3. The payments will not stop when the annuitant dies 4. Value of the account and future earnings will determine the time period for the benefits

The following are characteristics of a group life insurance plan

1/ The participants receive a Certificate of Insurance as their proof of insurance 2. A minimum number of participants is required in order to underwrite the plan 3. The cost of the plan is determined by the average age of the group

The validity of coverage under a life inurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years, even if there has been a material misstatement of facts or concealment of material fact

Within how many days after receiving proof of death are group life insurers required to pay the policy proceeds to the beneficiary?

30 days

Life insurance policies that have been in force for 3 years must provide for a maximum policy loan interest rate of what annual percentage?

8% - There must be a provision that after 3 years of paid premiums, the insurer will advance at any time a fixed interest rate not exceeding 6% per year or variable rate not more than 8% per year

Within how many days of receipt of proof of death must the insurer pay the death benefit to the beneficiary to avoid paying an interest penalty?

90 days - at day 91, interest will accrue at the stated rate (8% minimum) plus 3%

Survivor Protection

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Other Insured Rider

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the...

To sell variable life insurance policies, an agent must receive all of the following

A securities license, a life insurance license, FINRA registration

For variable products, underlying assets must be kept in

A separate account

Fiar Credit Reporting Act

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

The policy will terminate when the loan amount with interest equals or exceeds the cash value

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

A Universal Life Insurance Policy is best described as

Annually Renewable Term policy with a cash value account

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specific level?

Bail-Out Provision

An insured pays an annual premium to the insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration

No insurance policy form can be issued, delivered, or used unless it has been

Filed with and approved by the Commissioner

Which of the following acts is NOT considered to constitute an act of transacting insurance? A. Execution of Insurance Contract B. Contract Negotiations C. Filing forms with the Department of Insurance D. Solicitation of insurance contract

Filing forms with the Department of Insurance

Where must premium funds received by a producer in a fiduciary capacity be kept?

Funds must be kept in a separate account

In life insurance polices, cash value increases

Grow tax deferred.

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied Authority

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

The type of term insurance that provides increasing death benefits as the insured ages is called

Increasing term

All advertisements are the responsibility of the

Insurer

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government

When calculating the amount a policy owner may borrow from a variable life policy, what must be subtracted from the policy's cash value?

Outstanding loans and interest

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?

Payor Benefit

Reinstatment Provision

Permits the owner to reinstate a lapsed policy within 3 years, by paying back premiums, with interest, and proving insurability

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

Respond to the consumer's complaint, and, if necessary, reinvestigate the report

Under a group plan for an Association, the term "employee" may include

Retired employees from an association may still be eligible as an "employee" for the group plan

Annuities can be used to fund which of the following?

Retirement Plan - Since annuities are a popular means to provide retirement income, they are often used to fund qualified retirement plans

In a survivorship life policy, when does the insurer pay the death benefit?

Survivorship life pays upon the last death

Express authority

The authority granted to. an agent through the agent's contract is referred to as

Change of Insured Provision

The change of insured provision allows a company to maintain a key person policy for a succeeding key person if the original individual leaves the company, without the need to cancel the policy and issue a new one.

WHo must have insurabel interest in the insured?

The policy owner if they are not the same as the insured

Promote the public welfare

The purpose of insurance regulation is to

6 months

The waiting period on a Waiver of Premium rider in life insurance policies

What employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

Those who have been insured under the plan for at least 5 years

15 days

Upon reinstatement or renewal of a policy, after a written request by the insured, how soon must an insurer provide a copy of the application?

$500,00

What is the maximum benefit that the Washington Life and Disability Insurance Guaranty Association will pay for any one individual

10%

What is the penalty for the insurer who fails to refund premiums within 30 days after the free-look period?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days

Which of the following is true regarding a waiver of a surrender charge on an annuity contract?

Adjustable Life - allows for increases or decreases in the face amount or premium as long as the premium is sufficient to pay for the mortality. Any increase in face amount requires proof of insurability

at age 30 an applicant wants to start an insurance program but realizing that his insurance needs will likely change he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?

How often must an authorized insurer be examined?

every 5 years

In an Adjustable Life policyowner can change

the coverage period, amount of coverage (by changing the premium amount and period)