March 3rd Work Test

Which type of life insurance policy guarantees immediate cash value? A. single premium B. level term C. decreasing term D. continous premium

A. single premium

When would a misrepresentation on the insurance application be considered fraud? A. when application is incomplete B. any misrepresentation is considered fraud C. if it is intentional and material D. never: statements by the applicant are only representation

C. if it is intentional and material

Which of the following settlement options in life insurance is known as straight life? A. life with period certain B. fixed amount C. life income D. single life

C. life income

What characteristic makes whole life permanent protection? A. living benefits B. coverage until death or age 100 C. guaranteed death benefit D. guaranteed level premium

B. coverage until death or age 100

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the A. payor rider B. other-insured rider C. change of insured rider D. juvenile rider

B. other-insured rider

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? A. buyer's guide B. policy summary C. notice regarding replacement D. privacy notice

B. policy summary

Which is NOT true about beneficiary designations? A. trusts can be valid beneficiaries B. the beneficiary must have insurable interest in the insured C. the beneficiary may be a natural person D. the policy does not have to have a beneficiary named in order to be valid

B. the beneficiary must have insurable interest in the insured

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. eduation D. age

C. education

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A. fixed amount B. interest only C. fixed period D. life with period certain

C. fixed period

Which of the following individuals must have insurable interest in the insured? A. Beneficiary B. Underwriter C. producer D. policyowner

D. policyowner

Which of the following when attached to a permanent life insurance policy allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured or allows amounts of temporary insurance to cover other family members? A. accidental death and dismemberment rider B. guaranteed insurability rider C. change of insured rider D. term rider

D. term rider

Which is true about a spouse term rider? A. coverage is allowed for an unlimited time B. the rider is decreasing term insurance C. coverage is allowed up to age 75 D. the rider is usually level term insurance

D. the rider is usually level term insurance

Why is an equity indexed annuity considered to be a fixed annuity? A. has guaranteed minimum interest rate B. modest investment potential C. fixed rate or return D. not tied to an index like the S&P 500

A. guaranteed minimum interest rate

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a seriesof minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A. estoppel B. material misrepresentation C. waiver D. utmost good faith

B. material misrepresentation

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium and receives a conditional receipt. If the applicant dies the following day, which is true? A. the application will be voided B. the beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy C. the premium would be returned to the insured's estate because the policy was not issued D. the death claim will be rejected

B. the beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy

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

D. aleatory

Which of the following includes info regarding a person's credit, character, reputation and habits? A. consumer history B. insurability report C. agent's report D. consumer report

D. consumer report

All of the following are requirements for life insurance illustrations EXCEPT: A. They must be part of the contract B. They may only be used as approved C. They must identify nonguaranteed values D. They must differentiate between guaranteed and projected amounts

A. They must be part of the contract

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT A. explain rating procedures if the policyis rated differently than applied for B. disclose commissions earned from the sale of the policy C. explain the policy provisions, riders and exlcusions D. collect any premium due

B. disclose commissions earned from the sale of the policy

Twin brothers are starting a new business. They know it will take several years to build the businessto the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A. ordinary life B. joint life C. decreasing team D. whole life

B. joint life

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? A. the examiner B. the applicant C. the insurer D. the cost of the examination will be waived

C. the insurer

Which of the following is TRUE regarding the accumlation period of an annuity? A. a period during whichthe payments into the annuity grow tax deferred B. also referred to as the annuity period C. period of time during which the beneficiary receives income D. limited to 10 years

A. a period during whichthe payments into the annuity grow tax deferred

What is the term for how frequently a policyowner is required to pay the policy premium? A. mode B. schedule C. grace period D. consideration

A. mode

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. legal purpose B. offer and acceptance C. conditions D. consideration

C. conditions

If an annuitant dies before annuitization occurs, what will the beneficiary receive? A. amount paid into the plan B. cash value of the plan C. either the amount paid into the plan or the cash value of the plan, whichever is the greater amount D. either the amount paid into the plan or the cash value of the plan,whichever is the lesser amount

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

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A. Equity indexed universal life B. variable universal life C. universal life - option A D. universal life - option B

C. universal life -option A

What is the earliest a policy may gointo effect? A. when the insurer approves the application B. after the underwriter reviews the policy C. when the application is signed and a check is given to the agent D. when the first premium is paid and policy has been delivered

C. when the application is signed and a check is given to the agent

Which of the following products requires a securities license? A. fixed annuity B. equity indexed annuity C. deffered annuity D. variable annuity

D. variable annuity

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. when the insured reaches age 100

In which of the following cases will the insured be able to receive the full face amount from a whole life policy? A. if there are no named beneficiaries when the policy is paid up B. at age 65 C. if the insured lives to age 100 D. as soon as the cash value exceeds the face amount

C. if the insured lives to age 100

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at the age of 65. What would be the right policy for this client? A. life annuity with period certain B. increasing term C. limited pay whole life D. interest-sensitive whole life

C.limited pay whole life

All of the following are requirements for life insurance illustrations EXCEPT: A. must be part of the contract B. they may only be used as approved C. must identify nonguaranteed values D. must differentiate between guaranteed and projected amounts

A. must be part of the contract

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called A. paid-up addition B. one-year term purchase C. accumulation at interest D. reduction of premiums

A. paid-up addition

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? A. unilateral B. undirectional C. aleatory D. conditional

A. unilateral

What is the timeframe for filing relevant Suspicious Activity Reports? A. Within 30 days of initial discovery B. Within 30 days of suspicious transaction C. Within 90 days of initial discovery D. Within 90 days of suspicious transaction

A. within 30 days of initial discovery

What is the purpose of the buyer's guide? A. To provide info about issued policy B. Allow consumer to compare costs of different policies C. Provide name and address of agent/produce issuing the policy D. list all policy riders

B. allow consumer to compare costs of different policies

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? A. as of the policy issue date B. as of the application date C. as of the policy delivery date D. as of the first of the month after the policy issue

B. as of the application date

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

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

Annually renewable term policies provide a level death benefit for a premium that A. remains level B. fluctuates C. increases annually D. decreases annually

C. increases annually

Which of the following best describes what the annuity period is? A. period of time which money is accumulated in an annuity B. period of time from the effective date of the contract to the date of its termination C. period of time during which accumulated money is converted into income payments D. period of time from accumulation period to the annuitization period

C. period of time during which accumulated money is converted into income payments

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 th applicant a A. backdated receipt B. warranty C. premium receipt D. statement of good health

C. premium of receipt

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called A. Modified Endowment Contract (MEC) B. Level term life C. Graded premium whole life D. Single premium whole life

D. Single premium life

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called: A. waiver of cost of insurance B. accelerated benefits C. cost of living D. guaranteed insurability

D. guaranteed insurability

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? A. survivorship life policy B. second-to-die C. family income policy D. joint life policy

D. joint life policy

Which of the following is another term for the accumulation period of an annuity? A. premium period B. liquidation period C. annuity period D. pay-in period

D. pay-in period

What describes the specific info about a policy? A. illustrations B. buyer's guide C. producer's report D. policy summary

D. policy summary

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant A. upon issuance of the policy B. within 30 days after the first premium payment was collected C. priorto filling out an application for insurance D. with the policy

D. with the policy

All of the following are duties and responsibilities of producers at the same time of application EXCEPT: A. Change any incorrect statment on the application by personally initialing next to the corrected statment B. Explain the nature and type of any receipt the producer is giving to the applicant C. Probe beyondthe stated questions if the producer feels the applicant is misrepresenting or concealing information D. check to make sure there are no unanswered questions on the application

A. Change any incorrect statment on the application by personally initialing next to the corrected statment

If the annuitant dies during the accumulation period, who will receive annuity benefits? A. beneficiary B. annuity owner C. insurance owner D. annuitant's estate

A. beneficiary

Which two terms are associated directly with the way an annuity is funded? A. single payment or periodic payments B. increasing or decreasing C. immediate or deferred D. renewable or convertible

A. single payment or periodic payments

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

Which of the following policies would be classified as a traditional level premium contract? A. variable universal life B. straight life C. adjustable life D. universal life

B. straight life

Which of the following is called a "second-to-die" policy? A. joint life B. survivorship life C. family income D. juvenile life

B. survivorship life

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. the wife of the deceased insured B. the former wife of the deceased insured C. a minor son of the insured D. a business partner of the insured

C. a minor son of the insured

Insurance policies are not drawn up through negotiations and an insured has little to say about its provisions. What contract characteristic does this describe? A. conditional B. personal C. adhesion D. unilateral

C. adhesion

Variable whole life insurance is based on what type of premium? A. flexible B. graded C. level fixed D. increasing

C. level fixed

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A. must be advised that a copy of the report is available to anyone who requests it B. may sue the reporting agency inorder to get inaccurate data corrected C. must be informed of the source of the report D. are entitled to obtain a copy of the report from the party who ordered it

C. must be informed of the source of the report

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? A. paid-up additions B. dividend accumulation option C. paid-up option D. accumulation at interest

C. paid-up option