Practice Final Exam
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? After the Contestable period When the policy proceeds are paid At the time of application When the insured dies
At the time of application
Who is NOT required to sign a life insurance application? Adult insured Policyowner Agent Beneficiary
Beneficiary
T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? Binding receipt Conditional receipt Warranty receipt Backdated receipt
Binding receipt
Which statement about a whole life policy is correct? Beneficiary may be changed only with the consent of the premium payor Death benefit can usually be adjusted Cash value may be borrowed against Premiums are flexible
Cash value may be borrowed against
A policy loan is made possible by which of these life insurance policy features? Policy loan clause Cash value provision Owner's rights provision Consideration clause
Cash value provision
Which of these would be considered a Limited-Pay Life policy? 10-year Renewable and Convertible Term Life Paid-Up at Age 70 Straight Whole Life Renewable Term to Age 100
Life Paid-Up at Age 70
Which of these factors do NOT play a role in the underwriting of a life insurance policy? Avocations Credit status Marital status Occupation
Marital status
Which type of policy is considered to be overfunded, as stated by IRS guidelines? Modified Whole Life Modified Endowment Contract Variable Universal Life Interest-Sensitive Whole Life
Modified Endowment Contract
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? Variable Life Adjustable Life Graded Premium Whole Life Modified Whole Life
Modified Whole Life
Which of these life products is NOT considered interest-sensitive? Modified Whole Life Variable Universal Life Interest Sensitive Whole Life Variable Life
Modified Whole Life
Which of these is NOT considered to be a right given to a policyowner? Surrendering the policy's cash value Modify a provision in the insurance contract Assignment of ownership Change the beneficiary, if revocable
Modify a provision in the insurance contract
Which type of insurance company allows their policyowners to elect a governing body? Stock Mixed Admitted Mutual
Mutual
S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning September 21 October 16 November 1 December 1
November 1 The insured must wait 60 days after written proof of loss before legal action can be brought against the company.
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? $100,000 $50,000 Refund of premiums paid plus interest No claim will be paid because cause of death was from natural causes
$50,000
P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary? Premiums paid plus interest Nothing. Claim will be denied $50,000 minus any outstanding policy loans $100,000 because the cause of death was accidental
$50,000 minus any outstanding policy loans
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? 5 years 10 years 15 years 20 years
10yrs
A 15-year mortgage is best protected by what kind of life policy? Modified whole life 15-year level term 15-year decreasing term Adjustable life
15-year decreasing term
An insured must notify an insurer of a medical claim within how many days after an accident? 10 20 30 40
20
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? 30 Pay Life Term to Age 70 Universal Life Adjustable Life
30 Pay Life
How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated? 31 45 60 120
45
M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?? 10 days 30 days 45 days 60 days
45 days
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount? Accelerated Benefits provision Entire Contract Accidental Death and Dismemberment provision Consideration clause
Accidental Death and Dismemberment provision
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) Term rider Accidental Death and Dismemberment rider (AD&D) Family rider Annuity
Accidental Death and Dismemberment rider (AD&D)
Which of the following statements describes what an Accident and Health policyowner may NOT do? File a covered claim Assign ownership Cancel the coverage Adjust the premium payments
Adjust the premium payments
The Consideration clause in a life insurance contract contains what pertinent information? Summary of benefits Offer and acceptance Entire Contract Amount of premium payments and when they are due
Amount of premium payments and when they are due
Which of the following statements BEST describes what the Legal Actions provision of an Accident and Health policy requires? An insured must settle a claim within 60 days after Proof of Loss is submitted An insured must wait at least 30 days after Proof of Loss has been submitted before a lawsuit can be filed An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed An insured must settle a claim within 30 days after Proof of Loss is submitted
An insured must wait at least 60 days after Proof of Loss has been submitted before a lawsuit can be filed
An example of false advertising would be Paid testimonials from celebrity endorsements An insurer exaggerating its dividends in a magazine advertisement An agent spending more than $25 on marketing gifts for a client An insurer advertising in an insurance trade journal
An insurer exaggerating its dividends in a magazine advertisement
What does the insuring agreement in a Life insurance contract establish? An insurer's basic promise The insurance policy's grace period An insurer's required reserve amount The obligations of the beneficiary
An insurer's basic promise
When an insurance application is taken by a producer, which of these statements is true? The applicant should have an attorney present during the application process Any changes made on the application require the applicant's initials Any changes made on the application can later be initialed by the producer if the applicant is unavailable The producer has the discretion to ask or not to ask any of the questions listed on the application
Any changes made on the application require the applicant's initials
Any changes made on an insurance application requires the initials of whom? Insured Agent Applicant Beneficiary
Applicant
Before a life insurance policy is issued, which of these components of the contract is required? Applicant's signature on application Beneficiary's signature A conditional receipt Attending Physician Statement (APS)
Applicant's signature on application
What action can a policyowner take if an application for a bank loan requires collateral? Utilize accelerated benefits provision Borrow against policy cash value and use as a down payment Assign policy ownership to the bank Name bank as beneficiary
Assign policy ownership to the bank
When does a Probationary Period provision become effective in a health insurance contract? At the policy's inception 30 days after the policy's inception When a claim is submitted When a covered loss occurs
At the policy's inception
What type of life policy covers 2 lives and pays the face amount after the first one dies? Group Life Joint Life Policy Family Income Policy Last Survivor Policy
Joint Life Policy
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? Claim will be denied Claim will be paid in full Claim will be partially paid Claim will be decided by an arbitrator
Claim will be denied
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period? Claims are denied under the Suicide clause of the policy Company pays twice the face amount under the double indemnity clause Claims are paid in full Premiums are returned under the Consideration clause
Claims are denied under the Suicide clause of the policy
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? Collect initial premium Collect initial premium along with a signed health statement Explain to the applicant the policy is no longer in effect due to change in health condition Collect initial premium and leave a binding receipt
Collect initial premium along with a signed health statement
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? Modified Whole Life 20-Pay Life Decreasing Term Endowment
Decreasing Term
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? Policy Exclusion Incontestable Entire Contract Assignment
Entire Contract
What provision in a life insurance policy states that the application is considered part of the contract? Application provision Policy Exclusions provision Entire Contract provision Incontestability provision
Entire Contract provision
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? Coverage can be added at specific events such as marriage or having a child Evidence of insurability is not required when the option is exercised Evidence of insurability is required when the option is exercised Coverage can be added at specific ages
Evidence of insurability is required when the option is exercised
Which of these statements describe a Modified Endowment Contract (MEC)? Falls below the minimum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract The 7-pay test is used to determine the minimum death benefit of the policy The 7-pay test is used to determine the maximum death benefit of the policy
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
Term insurance has which of the following characteristics? Expires at the end of the policy period Builds cash value Has nonforfeiture options Endows at the end of the policy period
Expires at the end of the policy period
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? Face amount plus the policy's cash value Face amount plus the policy's dividends The greater amount of the policy's death benefit or the cash value Face amount plus total premium paid throughout the life of the policy
Face amount plus the policy's cash value
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Family Maintenance Policy Family Income Policy Survivor Policy Family Survivor Policy
Family Maintenance Policy
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? Family Lump Sum Policy Family Maintenance Policy Family Survivor Policy Family Income Policy
Family Maintenance Policy
After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms? File a lawsuit Contact the insurer again requesting forms Nothing File written proof of loss
File written proof of loss
Which of these actions should a producer take when submitting an insurance application to an insurer? Issue a binding receipt to applicant if no initial premium is submitted Disclose to the applicant the amount of commissions to be earned on this transaction Inform insurer of relevant information not included on the application Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer
Inform insurer of relevant information not included on the application
What would be an accurate definition of "controlled business"? Insurance business that is written on the agent's own life, property, or interests Insurance business obtained by an agent through coercion, intimidation, or boycotting Insurance business that is obtained through false advertising Insurance business that is obtained by replacing an existing policy through misrepresentation
Insurance business that is written on the agent's own life, property, or interests
What is being delivered during a policy delivery? A binding receipt to the proposed insured Insurance contract to the proposed insured Application and initial premium to the insurer Policy summary sheet and disclosure material to the proposed insured
Insurance contract to the proposed insured
Which health policy clause specifies the amount of benefits to be paid? Insuring Consideration Free-look Payment mode
Insuring
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT Fixed Period Interest Only Fixed Amount Life Income
Interest Only
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take? Collect premium from M's estate Deny the claim Pay face amount minus the past due premium Subtract past due premium from cash value
Pay face amount minus the past due premium
The provision that defines to whom the insurer will pay benefits to is called Entire Contract Proof of Loss Claim Forms Payment of Claims
Payment of Claims
Which of these is considered a mandatory provision? Payment of Claims Insurance with Other Insurers Misstatement of Age Change of Occupation
Payment of Claims
Which action could result in a hearing being ordered by the Department of Financial Services? Representing a foreign insurer Sharing commissions with another licensed agent Performing insurance transactions without a license Conducting insurance business in this state while being a resident of another
Performing insurance transactions without a license
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? Premium will be fully refunded minus a surrender charge Policy was not returned within the free-look period, premium will not be refunded Policy was returned within the free-look period, premium will be fully refunded Premium will be fully refunded minus a prorated amount for the period of February 7 - February 13
Policy was returned within the free-look period, premium will be fully refunded
Which is true concerning a Variable Universal Life policy? Policyowner controls where the investment will go and selects the amount of the premium payment Policyowner has no say where the investment will go but can choose the premium mode The investment vehicle for this type of policy is held in the insurer's general portfolio The death benefit can vary but the policyowner has no say in the premium amount paid
Policyowner controls where the investment will go and selects the amount of the premium payment
Which of these characteristics is consistent with a Straight Life policy? Owner can adjust both premium and death benefit Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract Owner has the option of converting to term insurance Premiums are payable for as long as there is insurance coverage in force
Premiums are payable for as long as there is insurance coverage in force
Which statement is correct regarding the premium payment schedule for whole life policies? Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured Premiums are payable for a set period/ coverage expires at that point Premiums are payable until age 65/ coverage lasts a lifetime A single premium is paid at time of application/ coverage lasts until retirement
Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT? Premiums normally decrease at time of renewal Premiums normally increase at time of renewal Policy can renewed at any time by the company Policy can be cancelled at any time by the company
Premiums normally increase at time of renewal
What is the purpose of the Time of Payment of Claims provision? Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit Prevents delayed claim payments made by the insurer Requires a probation period for each claim filed by the insured Protects the insurer from frivolous lawsuits
Prevents delayed claim payments made by the insurer
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? Free-look Reinstatement Grace Period Consideration
Reinstatement
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called Reinstatement Grace period Automatic premium loan Waiver of premium
Reinstatement
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions? Payor clause Automatic Premium Loan provision Reinstatement provision Waiver of Premium
Reinstatement provision
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? Renewable Increasing Level Decreasing
Renewable
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? Risk classification Warranty review Insurable interest Inspection report
Risk classification
P is a producer who notices 5 questions on a life application were not answered. What actions should P take? Mail incomplete application to applicant to be completed and returned to the agent Submit the application as-is to the insurer Call the applicant and complete application over the phone Set up a meeting with the applicant to answer the remaining questions
Set up a meeting with the applicant to answer the remaining questions
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? Interest-Sensitive Whole Life Ten-Year Endowment Variable Universal Life Ten-Year Renewable Term
Ten-Year Endowment
What kind of life insurance product covers children under their parent's policy? Family Maintenance rider Term rider Family Income rider Payor benefit
Term rider
Which of the following factors is NOT considered when the Department of Financial Services determines if an agent's home is an insurance agency? Listing the address on the agent's business cards Business solicitation is done at this location Clients are met at this location The amount of premium collected at this location
The amount of premium collected at this location
All of these statements about Equity Indexed Life Insurance are correct EXCEPT Cash value has a minimum rate of accumulation If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index The premiums can be lowered or raised, based on investment performance Tied to an equity index such as the S&P 500
The premiums can be lowered or raised, based on investment performance
How does a typical Variable Life Policy investment account grow? Tied to price of gold Through mutual funds, stocks, bonds Based on returns from insurer's general account Tied to Treasury Bills
Through mutual funds, stocks, bonds
Why is an applicant's signature required on a life insurance application? To attest that the statements on the application are warranties To attest that the statements on the application are accurate to the best of the applicant's knowledge To give Power of Attorney to the producer if needed To attest that all statements on the application are guaranteed to be true
To attest that the statements on the application are accurate to the best of the applicant's knowledge
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? Modified Whole Life Variable Life Universal Life Adjustable Life
Variable Life
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? Joint Life Adjustable Life Variable Universal Life Universal Life
Variable Universal Life
What does the ownership clause in a life insurance policy state? Who the policyowner is and what rights the policyowner is entitled to Who the beneficiary is and what rights the beneficiary is entitled to Ownership cannot be assigned after the incontestable period Allows the policyowner to adjust the death benefit and premium amount at anytime
Who the policyowner is and what rights the policyowner is entitled to
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? Term Life Whole Life Credit Life Universal Life
Whole Life
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of additional Term Life coverage at any time additional Term Life coverage at specified intervals additional Whole Life coverage at any time additional Whole Life coverage at specified times
additional Whole Life coverage at specified times
L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will pay the death benefit in full adjust the death benefit to an increased amount adjust the death benefit to a reduced amount deny the claim
adjust the death benefit to a reduced amount
How long does the coverage normally remain on a limited-pay life policy? age 65 age 100 when premium payments stop at the discretion of the insurer
age 100
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the agent applicant's spouse National Association of Insurance Commissioners (NAIC) applicant's physician
applicant's physician
What action will an insurer take if an interest payment on a policy loan is not made on time? cancel the policy if not paid within the grace period automatically add the amount of interest due to the loan balance subtract from any dividends owed disallow any further loans
automatically add the amount of interest due to the loan balance
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT type of life insurance S's attained age dividend amount used toward purchase beneficiary's age
beneficiary's age
One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is legal and requires no disclosure closely regulated and requires full disclosure not legal in the state of Florida allowed only if the policy originated outside the state of Florida
closely regulated and requires full disclosure
What is the purpose of the U.S.A. Patriot Act? detect and deter fraud detect and deter alien insurance companies detect and deter terrorism detect and deter misrepresentations
detect and deter terrorism
Health insurance benefits NOT covered due to an act of war are excluded by the insurer in the contract provisions assigned to a reinsurer given a longer probationary period charged a higher premium
excluded by the insurer in the contract provisions
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) elimination exclusion limitation exception
exclusion
The act of an insurance company publishing misleading information about its policy's provisions is called coercion false advertising twisting intimidation
false advertising
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT policy is delivered free-look period has expired insurance company issues policy initial premium is collected
free-look period has expired
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy? increase face amount decrease face amount increase premium-paying period decrease premium payment
increase face amount
A license may be denied, suspended, or revoked if the licensee engages in replacement of an existing policy is found guilty of misrepresentation does not meet a sales quota files for bankruptcy
is found guilty of misrepresentation
What kind of premium does a Whole Life policy have? decreasing adjustable level deferred
level
Convincing a prospective insured to buy an insurance policy based on exaggerations is called rebating intimidation twisting misrepresentation
misrepresentation
In Florida, agents are allowed to engage in rebating if the amount rebated stays below a maximum percentage of annual premium the transaction is reported to the IRS for tax purposes the insured gives his/her written consent offered to all insureds in the same actuarial class
offered to all insureds in the same actuarial class
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the cash value estate of the insured policy proceeds nonforfeiture value
policy proceeds
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is the cost the health of the insured the amount of coverage being converted who will be beneficiary
the cost
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and a Medical Information Report the initial premium forward it immediately to the insurer Attending Physician Statement
the initial premium
When replacing or exchanging an annuity, the agent must disclose to the annuitant the commissions to be paid as a result of the transaction the possible tax ramifications as a result of the transaction the insurer's A.M. Best rating proof of appointment by the agent
the possible tax ramifications as a result of the transaction
When is the face amount paid under a Joint Life and Survivor policy? when policy reaches maturation upon death of the first insured upon death of the last insured when one of the insureds becomes disabled and no longer able to make premium payments
upon death of the last insured
