Prelicense - NC
Which of the following statements best describes the purposes that annuities serve? A. Annuities accumulate and/or distribute sums of money. B. Annuities collect premiums to pay them back to the annuitant in a lump sum some time in the future. C. Annuities are a form of life insurance that ensures lifetime income. D. When "annuitized," funds accumulated in an annuity are paid out and the contract expires with no value.
A. Annuities accumulate and/or distribute sums of money.
Which statement about the tax treatment of endowment contracts is correct? A. Endowment contracts no longer get the good tax treatment given to life insurance policies. B. Endowment contracts are treated like other life insurance policies for tax purposes. C. Congress has given endowment contracts the best tax status of all types of insurance policies. D. Endowment contracts are still popular today because of their good tax treatment.
A. Endowment contracts no longer get the good tax treatment given to life insurance policies.
Carl decides to surrender his life insurance policy. Which of the following most correctly describes the option(s) available to him? A. He may choose from all settlement options that are available with the policy's death benefit. B. He may take the cash value as a lump sum payment only. C. He must leave the cash value with the insurer to accumulate interest for a specified period of time. D. He may choose only the settlement option spelled out in the contract, which can vary between insurers.
A. He may choose from all settlement options that are available with the policy's death benefit.
Jake and five of his friends are self-employed in different fields. They want to form a group so that they can buy group life insurance. What can they do? A. Jake and his friends would probably not be considered an eligible group for insurance purposes. B. Jake and his friends could form an association group to get group life coverage. C. Jake and his friends could form a Multiple Employer Welfare Arrangement to get group life coverage. D. Jake and his friends would need to find at least two more people to join their group to be eligible for group life insurance.
A. Jake and his friends would probably not be considered an eligible group for insurance purposes.
Susan is a life and health insurance agent for Key Insurers. She just sold a life insurance policy to Ted, who named his wife Edith as beneficiary. Which party does Susan represent in this insurance transaction? A. Key Insurers B. Ted C. Ted and Edith D. Ted and Key Insurers
A. Key Insurers
Sue's annual premium is $1,500 and the declared dividend was $200. If Sue chooses the premium reduction dividend option, she will receive a premium notice for which of the following? A. $200 B. $1,300 C. $1,500 D. $1,700
B. $1,300
Tom is a 45-year-old senior accountant employed by ABC, Inc. Under ABC's employer-pay-all group life plan, Tom's coverage is $120,000. The premiums for what amount of that coverage are taxable to Tom? A. $120,000 B. $70,000 C. $50,000 D. $0
B. $70,000
Terry is licensed in North Carolina as a life and health insurance agent. To maintain his license, how many hours of continuing education must he complete every two years? A. 12 B. 24 C. 30 D. 40
B. 24
Mark and Melanie are a young married couple who own permanent life insurance policies. Expecting their family to grow, they want to increase their insurance protection without having to prove their insurability. Which of the following riders should their agent recommend? A. Cost-of-living adjustment (COLA) rider B. Guaranteed insurability rider C. Term rider D. Accidental death & dismemberment (AD&D) rider
B. Guaranteed insurability rider
Steve decides to retire this year at age 69. What will happen when he applies for Social Security retirement benefits? A. His benefits will be slightly lower than if he had retired at normal retirement age. B. His benefits will be slightly higher than if he had retired at normal retirement age. C. His benefits will be significantly higher than if he had retired at normal retirement age. D. His benefits will not be affected.
B. His benefits will be slightly higher than if he had retired at normal retirement age.
When a deferred annuity is annuitized, which one of the following most correctly describes the tax treatment of the contract's "gain" (i.e., accrued interest) portion of each payment? A. It is tax exempt. B. It is taxable. C. Gain is exempt from taxation until basis has been distributed; then it becomes taxable. D. A 29 percent tax is applied
B. It is taxable.
Which of these personal relationships does NOT automatically constitute insurable interest? A. People have insurable interest in themselves. B. Neighbors have insurable interest in each other. C. Spouses have insurable interest in each other D. Dependent children have insurable interest in their parents or grandparents.
B. Neighbors have insurable interest in each other.
Which of the following best describes how the insured's money is handled in a variable life insurance policy? A. The state guarantees a minimum death benefit, usually the face amount of the policy at issue. B. Premiums are placed in investment subaccounts owned by the policy owner. C. The insurer guarantees a rate of return on the cash value invested. D. The insurer assumes all risks for the performance of the policy's investments over time.
B. Premiums are placed in investment subaccounts owned by the policy owner.
An applicant for an insurance policy submits an application without the first premium. Which of the following is correct? A. The applicant has made an offer to the insurer. B. The applicant has invited the insurer to make an offer. C. The insurer has made an offer to the applicant. D. The insurer may not make a counteroffer to the applicant
B. The applicant has invited the insurer to make an offer.
Carl is a policyowner who does not want to pay premiums annually. How does Carl's insurance company adjust his premium when it allows him to pay more frequently? A. The insurer does not change the premium. B. The insurer increases the annual premium. C. The insurer increases only the first monthly premium. D. The insurer increases only the first annual premium.
B. The insurer increases the annual premium.
Annuities are often referred to as "insurance against living too long" for all of the following reasons, EXCEPT: A. The insurer can provide a guaranteed stream of income for a single life or for a joint life, based on life expectancies and its mortality experience. B. The insurer provides a guaranteed death benefit. C. The insurer can guarantee any refund or term certain factor. D. They pay a certain amount for the length of what is an unknown time.
B. The insurer provides a guaranteed death benefit.
Which statement regarding the reduced paid-up life insurance nonforfeiture option is NOT correct? A. A paid-up policy under the reduced paid-up insurance option requires no further premiums nor can any be paid. B. The paid-up policy will not build any more cash value C. If the lapsed policy was a participating policy, the paid-up policy is eligible for dividends. D. A policy owner of a lapsed policy can take the reduced paid-up option regardless of whether the lapsed policy was issued on a standard or substandard (rated) basis
B. The paid-up policy will not build any more cash value
Which of the following is NOT a requirement a retirement plan must meet in order to be qualified? A. The plan must be in writing. B. The plan must cover key employees and independent contractors. C. The plan must meet certain funding levels. D. The employer, employees, or both must make contributions to the plan.
B. The plan must cover key employees and independent contractors.
If insurers do not allow minors to be beneficiaries of life insurance, what do they do if no adults are available to receive death benefits? A. Insurers hold the proceeds in trust until the child reaches maturity. B. The state receives the funds and holds them in escrow until the child is age 21. C. Insurers require the court to appoint a legal guardian before paying benefits to a minor child. D. Each state treats these situations differently.
C. Insurers require the court to appoint a legal guardian before paying benefits to a minor child.
What will result if an insured decides to stop paying premiums for his or her insurance policy? A. The insurance company can require the insured to continue paying the premiums. B. The insured has breached the terms of the contract. C. The insurance company must return all premiums that have been paid if no claims have been made under the policy. D. The insurance company is released from its promise to pay benefits and the contract expires.
D. The insurance company is released from its promise to pay benefits and the contract expires.
Which statement about apparent authority is NOT correct? A. The agent's contract does not create it. B. The insurer does not intend it. C. A third party reasonably believes that the agent has it based on the reasonable statements and actions by the insurer and agent. D. The insurer is not liable for an agent's acts when he or she is acting under apparent authority.
D. The insurer is not liable for an agent's acts when he or she is acting under apparent authority.
Funds in a Section 529 college savings plan can be used to pay for tuition at all of the following, EXCEPT A. public universities. B. private colleges. C. community colleges. D. private high schools
D. private high schools
Which of the following is not a power granted to the North Carolina Commissioner of Insurance? A. examining insurers' financial statements B. enforcing insurance laws C. issuing regulations to administer insurance laws D. prosecuting individuals for violating insurance laws
D. prosecuting individuals for violating insurance laws
Which of the following types of whole life insurance is paid with one premium at the time the policy is bought? A. modified premium whole life B. limited pay life C. graded premium whole life D. single-premium life
D. single-premium life
Bob's only goal is to provide a death benefit to protect his family in case he dies while his children are young. What type of life insurance is best suited to this need? A. business insurance B. whole life insurance C. group insurance D. term insurance
D. term insurance
Which of the following does NOT describe the term "field underwriting"? A. the agent or producer seeking applications for insurance B. the agent requesting information about prospective insureds C. the agent helping people fill out applications D. the applicant collecting the right data to help the insurer decide whether to accept the application
D. the applicant collecting the right data to help the insurer decide whether to accept the application
The Notice Regarding Replacement provides all of the following information to the life insurance applicant EXCEPT: A. a list of any life insurance policies that will be replaced B. whether an existing policy will fund the new policy C. the insurer's identity D. the role of the Department of Insurance in regulating replacement transactions
D. the role of the Department of Insurance in regulating replacement transactions
Which of the following is a unique feature of insurance contracts? A. consideration B. legal purpose C. competent parties D. unilateral
D. unilateral
Which of the following conditions must exist for a risk to be considered insurable? A. Loss must be catastrophic. B. Loss must be due to a force of nature. C. Loss must occur at least six months after the policy effective date. D. Loss must be ascertainable.
D. Loss must be ascertainable.
Which of the following does NOT provide independent ratings of insurance companies' financial strength and claims-paying abilities? A. A.M. Best B. Duff and Phelps C. Moody's D. Securities and Exchange Commission
D. Securities and Exchange Commission
Which statement about increasing term insurance policies is NOT correct? A. The premium normally stays level throughout the term. B. The death benefit and premium increase over the term of the policy. C. The death benefit increases over the term of the policy. D. The increasing term coverage is typically provided by a rider on a base policy.
. The death benefit and premium increase over the term of the policy. With increasing term insurance, the death benefit increases over the term to a preset amount or at a preset rate. The premium normally stays level.
If an annuity requires only that each premium deposit be above a certain minimum, this is most likely which type of annuity? A. immediate annuity B. fixed premium deferred annuity C. flexible premium deferred annuity D. immediate variable annuity
C. flexible premium deferred annuity
A person must be at least what age to purchase life insurance or annuities in North Carolina? A. 15 B. 16 C. 17 D. 18
A. 15
Barb, age 40, buys a ten-pay life policy while Jill, age 40, buys a life paid up at age 65 policy. All other factors being equal, which of the following statements is most correct?
A. Barb will pay a higher premium than Jill. The shorter the premium-paying period, the higher the premium that is charged for a limited payment life insurance policy. Because Barb's policy will be paid up after ten years, her premium will be higher than Jill's.
Which of the following is NOT a party to an annuity? A. the agent B. the owner C. the annuitant D. the beneficiary
A. the agent
Bob owns an ordinary whole life insurance policy. He likes to pay smaller premiums more frequently. An insurer would offer him the chance to pay premiums on all of the following schedules, EXCEPT A. weekly. B. monthly. C. quarterly. D. semi-annually.
A. weekly.
Zelda, a producer selling health insurance, assures a prospective applicant that the insurance company she represents is backed by the protections of the North Carolina Life and Health Insurance Guaranty Association. Which of the following statements is correct regarding this kind of assurance? A. It is recommended when selling health insurance. B. It is prohibited at all times. C. It is required when selling to Medicare-eligible individuals. D. It is highly regulated by the Insurance Department.
B. It is prohibited at all times.
The payor benefit rider for a juvenile insured sets the terms for when and how long the premium waiver stays in effect. If the payor becomes totally disabled or dies before the specified age, which of the following happens? A. The waiver usually stays in effect until the payor recovers or the child enrolls in college. B. The waiver usually stays in effect until the payor recovers or the child reaches a certain age. C. The premiums are waived for the duration of the policy. D. The premiums are reduced by an amount set in the policy.
B. The waiver usually stays in effect until the payor recovers or the child reaches a certain age.
To protect his family in case he died prematurely, John applied for a $1 million life insurance policy. When he died two years later, the insurer paid $1 million in benefits, even though John was unemployed when he died. What is this type of insurance contract? A. contract of indemnity B. valued contract C. reimbursement contract. D. indemnification policy
B. valued contract
The Acme Company sets up a plan that provides annuities to its employees when they retire. The individuals those annuities cover hold "certificates of participation." Which type of plan is that? A. fixed annuity B. multiple-lives annuity C. group annuity D. 403(b) plan
C. group annuity
Which annuity settlement option guarantees that income is paid for the length of the annuitant's life, but no less than a specified number of years? A. straight, or pure, life income B. life income with guaranteed minimum (refund guarantee or life annuity certain) C. life income with period certain D. joint and survivor life income
C. life income with period certain
To boost her sales at the end of the year, Agent Trudy started offering potential clients a $250 cash gift card in exchange for purchasing a life insurance policy. Which ethical sales practice has Agent Trudy violated? A. twisting B. false information C. rebating D. churning
C. rebating
Beatrice is a member of the Supreme Lodge fraternal benefit society. What must Beatrice do before she can sell insurance on its behalf? A. obtain a restricted agent's license B. obtain a surplus lines license C. become a licensed agent with a specialty in fraternal lines insurance D. comply with the same general licensing requirements that apply to resident agents
D. comply with the same general licensing requirements that apply to resident agents
Policyowners can access their policies' living benefits through all of the following , EXCEPT: A. policy loans B. withdrawals C. partial surrenders D. policy liens
D. policy liens
Which statement about level premium payment plans is NOT correct? A. Premiums may be adjusted by the insurer only as long as premiums are increased for all policies of that type issued by the insurer. B. The policy owner pays the same premium amount each time it is due for as long as the policy is in force. C. The payment amount does not change even though the risk to the insurer increases over time. D. Depending on the policy, a life insurance policy owner may have the choice of paying the premium on a level basis or a flexible basis.
A. Premiums may be adjusted by the insurer only as long as premiums are increased for all policies of that type issued by the insurer.
Which of the following statements is correct if a group offers non-contributory group life insurance? A. The employer must pay most of the premiums. B. The employees must pay part of the premiums. C. The plan must cover at least 75 percent of eligible group members. D. The plan must cover 100 percent of eligible group members.
A. The employer must pay most of the premiums.
In personal insurance, what is the disadvantage to third-party ownership? A. The insured has no right to name the beneficiary. B. The insured has access to the policy's cash values C. The beneficiary holds rights to the policy's cash values D. The policy owner has no right to name the beneficiary
A. The insured has no right to name the beneficiary
Sylvia's insurer guarantees a fixed death benefit for the policy she owns. Based on this, which one of the following benefits is also most likely guaranteed with this policy? A. a minimum rate of return on the policy's cash value B. to reinstate Sylvia's policy if it ever lapses C. to send an agent to Sylvia's home to collect the premiums D. to pay premiums for Sylvia in the event of emergencies
A. a minimum rate of return on the policy's cash value Sylvia's policy does guarantee a minimum rate of return on the policy's cash value.
Which organization is NOT eligible to sponsor a 403(b) plan for its employees? A. a real estate partnership B. a state university C. a religious center D. a not-for-profit cancer society
A. a real estate partnership
Under a traditional split-dollar arrangement, what does the employer typically receive when the insured employee dies? A. an amount equal to the policy's cash value B. one-half of the policy's death benefit C. all of the death benefits D. none of the death benefits
A. an amount equal to the policy's cash value
What is the term for the money that builds within a whole life insurance policy over the policy's life? A. cash value B. death benefit C. accrued value D. policy reserve
A. cash value
When meeting with a prospect to discuss life insurance, Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Agent Tyler committed? A. defamation B. rebating C. unfair discrimination D. coercion
A. defamation
What is the name of one of the first systems developed for determining how much life insurance is necessary, based on the economic value of a human life? A. human life value approach B. financial loss analysis C. needs approach D. cost-benefit analysis
A. human life value approach
In-person delivery of a whole life insurance policy gives the agent the opportunity to do all of the following, EXCEPT A. increase the policy's face amount, if the applicant agrees to do so (and pay the additional premium) within ten days of policy delivery. B. explain policy benefits, terms, and riders. C. get any required delivery forms, discuss any exclusions, and explain any substandard ratings. D. begin the free-look period.
A. increase the policy's face amount, if the applicant agrees to do so (and pay the additional premium) within ten days of policy delivery. Once a whole life policy is issued, no changes can be made to it.
The policy Kevin owns lasts for his entire lifetime or until age 120. As long as he pays the premiums, the insurance stays in force and is guaranteed to pay its death benefit. This may describe any of the following types of policy, EXCEPT A. term life insurance. B. variable life insurance. C. whole life insurance. D. ordinary life insurance.
A. term life insurance
All of the following are examples of an agent's responsibilities toward an applicant EXCEPT A. waiving payment of the policy's first premium B. recommending suitable insurance C. disclosing all important information about a policy D. clearly representing the terms of a proposed policy
A. waiving payment of the policy's first premium
What is the reason an annuity cannot be exchanged tax free for a life insurance policy? A. This exchange is not possible because life insurance death benefits are taxed when they are paid out. The tax laws do not provide favorable tax treatment when a contract with taxable benefits is exchanged for a contract with non-taxable benefits. B. This exchange is not possible because annuity values are taxed when withdrawn or paid out. Life insurance death benefits are not. C. This exchange is not possible because annuity values are not taxed when withdrawn or paid out. Life insurance death benefits are. The tax laws do not provide favorable tax treatment when a contract with taxable benefits is exchanged for a contract with non-taxable benefits. D. This exchange is not possible because annuity values are taxed when withdrawn or paid out as are life insurance death benefits at retirement. The tax laws provide favorable tax treatment when a contract without taxable benefits is exchanged for a contract with non-taxable benefits.
B. This exchange is not possible because annuity values are taxed when withdrawn or paid out. Life insurance death benefits are not.
A variable annuity's purchase rate is the amount of on going income that can be provided by $1,000 of the contract's accumulated value. The purchase rate is based on which one of the following? A. 2000 CSO Mortality Table B. assumed interest rate (AIR) C. prevalent interest rate (PIR) D. current interest rate (CIR)
B. assumed interest rate (AIR)
What is the result of Alice paying her life insurance premiums more frequently than once a year? A. lower annual premiums B. higher annual premiums to account for lost interest and additional insurer costs C. no effect D. higher annual premiums to account for the increased risk to the insurer
B. higher annual premiums to account for lost interest and additional insurer costs
If the parties disagree over the terms of an insurance contract, courts will typically interpret anything unclear in the contract in favor of which party? A. insurance company B. insured C. beneficiary D. agent
B. insured
A worker who is considered fully insured is entitled to all of the following benefits under Social Security EXCEPT: A. retirement benefits B. medical care benefits C. survivor benefits D. disability benefits
B. medical care benefits
Which of the following describes a group whose members pay a pro-rata share of the losses suffered by other members in the group? A. risk retention group B. reciprocal insurer C. reinsurer D. self-insurer
B. reciprocal insurer
Which of the following describes a group whose members pay a pro-rata share of the losses suffered by other members in the group? A. risk retention group B. reciprocal insurer C. reinsurer D. self-insurer
B. reciprocal insurer
Jack bought a life insurance policy to make sure his surviving family members would have an income for ten years if he died prematurely. Five years after purchasing the policy, Jack died. Beginning with the date of his death, the policy began paying a level monthly benefit to his family for ten years. What type of policy did Jack buy? A. ten-year family income policy B. ten-year family maintenance policy C. ten-year family protection policy D. endowment
B. ten-year family maintenance policy
Wilson buys life insurance but commits suicide three years later. Wilson's beneficiary will get which of the following from the insurer? A. nothing B. the full death benefit C. a return of premiums paid, plus interest D. a return of the premiums paid
B. the full death benefit
Which one of the following is the primary goal of the insurer's premium rate calculation process? A. to set a gross premium that can be charged equally to all applicants for that particular product B. to make sure the company collects enough money from each group of insureds to pay all of the benefits promised under the contract C. to give the insurer a good profit margin D. to give agents a minimum level of compensation
B. to make sure the company collects enough money from each group of insureds to pay all of the benefits promised under the contract The goal of insurance premium rate-making is to make sure the company collects enough money from each group of insureds to pay all of the benefits promised under the contract.
The Acme Supply Company might buy life insurance to do all of the following, EXCEPT: A. to insure the lives of key employees or owners B. to provide insurance coverage for large-volume customers C. to insure liquidity in case one of the owners or key employees dies D. to insure partners' lives to provide liquidity to fund buy-out agreements
B. to provide insurance coverage for large-volume customers Businesses do not buy life insurance to insure the lives of large-volume customers
What is the term for voluntarily giving up a known right? A. estoppel B. waiver C. voidable D. conditional
B. waiver
What does a viatical settlement allow? A. It allows a chronically or terminally ill insured to leave an inheritance to heirs. B. It allows an insured to sell a life insurance policy when he or she no longer needs insurance coverage. C. It allows a chronically or terminally ill insured to gain a sum of money that is needed to pay medical expenses or to enhance the quality of life. D. It allows an insured to assign a life insurance policy to a third party, who will use the proceeds to pay the insured's estate taxes.
C. It allows a chronically or terminally ill insured to gain a sum of money that is needed to pay medical expenses or to enhance the quality of life.
What happens to Peter's signed application after it has been submitted to the insurer? A. It is destroyed. B. It becomes the insurer's property. C. It becomes part of the contract between the insurer and the policy owner. D. It becomes property of the state.
C. It becomes part of the contract between the insurer and the policy owner.
Becky works as an agent for Delta Insurance Company, which is located in North Carolina. What must Becky do in order to sell life insurance on behalf of Delta to U.S. military personnel who are stationed in Germany? A. She must obtain a nonresident license. B. She must obtain a surplus lines agent's license. C. She must obtain a restricted license. D. Nothing, because she is already licensed as an agent.
C. She must obtain a restricted license.
To avoid being recognized as a modified endowment contract (MEC), a life insurance policy must meet the 7-pay test. Which one of the following most correctly describes the 7-pay test? A. If the amount of the first seven premiums exceeds the amount of premium needed to buy seven years' worth of term life insurance, the policy is a modified endowment contract (MEC). B. The 7-pay test applies specifically to the premiums paid into a contract. If, after seven level annual payments are made, the policy's cash surrender value is double that of an ordinary life contract, then the policy is a MEC. C. The 7-pay test applies specifically to the premiums paid into a contract during its first seven years. If this amount exceeds the net level premiums that would have been required to produce a paid-up policy after seven level annual payments, then the policy is a MEC. D. The 7-pay test applies specifically to the premiums paid into a contract during its first seven months. If this amount exceeds the net level premiums that would have been required to produce a seven-year term policy, then the policy is a MEC.
C. The 7-pay test applies specifically to the premiums paid into a contract during its first seven years. If this amount exceeds the net level premiums that would have been required to produce a paid-up policy after seven level annual payments, then the policy is a MEC.
All the following statements about ordinary whole life insurance are correct EXCEPT A. The insured pays level premiums until he or she dies or reaches age 120, whichever comes first. B. Premiums never increase. C. The death benefit increases during the early policy years and then levels off. D. The premium level is set higher than the actual mortality costs during the early years of the policy.
C. The death benefit increases during the early policy years and then levels off. Under an ordinary life policy, death benefits are level. An ordinary life policy gives permanent protection for the insured's lifetime.
Which statement about the net single premium for a traditional life insurance policy is NOT correct? A. Net single premium reflects two of the premium factors: mortality and interest. B. The net single premium is the sum of the present values of all the expected benefits under the policy. C. The net single premium for a traditional life insurance policy is the amount charged to the policyowner. D. The net single premium is the premium that an individual would need to pay, in a lump sum, to provide all the benefits promised in the policy, if no insurer expenses were considered.
C. The net single premium for a traditional life insurance policy is the amount charged to the policyowner. The net single premium is determined on the basis of mortality and interest. An expense load is added to create the gross premium charged to the policyowner.
Insurance agents must comply with all of the following rules when selling life insurance policies in North Carolina EXCEPT: A. They must inform prospects that they are acting as life insurance agents before beginning a sales presentation. B. They must give prospects a Buyer's Guide and a policy summary. C. They can never use life insurance policy illustrations during a sales presentation. D. They can use terms such as financial planner or investment advisor only if they hold such designations.
C. They can never use life insurance policy illustrations during a sales presentation.
Agent Smith represents Gretchen and is negotiating the viatical settlement agreement in which she will sell her life insurance policy to BBC Corporation. In this transaction, what is Agent Smith considered? A. a viator B. a viatical settlement provider C. a viatical settlement broker D. a viatical settlement purchaser
C. a viatical settlement broker
During the application process, ABC Insurers receives personal and confidential information about Tom, who is applying for a life insurance policy. In which of the following circumstances must ABC Insurers obtain Tom's written authorization before disclosing this information? A. before disclosing information to law enforcement agencies who are investigating insurance fraud B. before disclosing information in response to an administrative order C. before disclosing information to third parties for telemarketing and sales purposes D. before disclosing information to a consumer reporting agency
C. before disclosing information to third parties for telemarketing and sales purposes
If the Alpha-Omega Corporation wants to provide life insurance for all its full-time employees, it will most likely buy which of the following? A. business life insurance B. whole life insurance C. group insurance D. term insurance
C. group insurance Employers typically offer group insurance for the benefit of their employees. Under group coverage, one policy covers a number of people. The organization that represents the group and sponsors the coverage owns the policy. The people who are insured are not owners of or parties to the contract.
Actuaries calculate net single premiums based on which of the following? A. mortality and dividend assumptions B. morbidity and interest assumptions C. mortality and interest assumptions D. mortality and assumed bond rates
C. mortality and interest assumptions The net single premium for a traditional life insurance policy reflects two of the premium factors: mortality and interest.
Which statement about spouse/other insured term riders on a life insurance policy is NOT correct? A. A person can buy a term life insurance rider to cover the life of a spouse (or other adult). B. Usually the coverage ends sometime before the other insured's age 100. C. The intent of this coverage is temporary. D. A policyowner often buys a term life insurance rider on a spouse to provide additional coverage once the children have grown and moved out on their own.
D. A policyowner often buys a term life insurance rider on a spouse to provide additional coverage once the children have grown and moved out on their own.
Which one of the following statements regarding life insurance accelerated benefits is most correct? A. The insured can use these funds only for medical care. B. An accelerated benefit is only available as a rider. C. An accelerated benefit is only available as a provision of the policy itself, not as a rider. D. An accelerated benefit rider pays out part or all of the policy's face value while the insured is still living.
D. An accelerated benefit rider pays out part or all of the policy's face value while the insured is still living.
Bob bought a $100,000 ten-year level term insurance policy on March 1, 2002. What will happen if he dies on March 10, 2012? A. The beneficiary of Bob's policy will get $100,000. B. The beneficiary of Bob's policy will get part of the $100,000 death benefit. C. The beneficiary of Bob's policy will receive the $100,000 death benefit, minus an amount equal to the one-year term premium that would be required to extend the policy beyond the current policy termination date. D. Bob's beneficiary will not get any benefits.
D. Bob's beneficiary will not get any benefits
Variable universal life combines features of variable life and universal life. Variable universal life and universal life are alike in all of the following ways EXCEPT A. The premium payments for both are flexible. B. Both types of policies let the policyowner choose a death benefit from two (or sometimes three) options. C. For both policies, the insurer deducts insurance and expenses monthly from the cash value. D. Both are considered securities products as well as life insurance.
D. Both are considered securities products as well as life insurance. Variable universal life policies are considered securities products as well as life insurance. Universal life insurance is not a security.
Variable life and variable universal life insurance are similar in all of the following ways EXCEPT A. Both are considered securities. B. Both offer a death benefit that varies based on the performance of the subaccount investments. C. Both let the policyowner put funds in investment subaccounts. D. Both require fixed, set premiums.
D. Both require fixed, set premiums.
Which statement regarding the practice of backdating a life insurance application is NOT correct? A. Most states do allow a policy to be backdated up to six months. B. Backdating is a good marketing move for the insurer. C. The premium amount agreed to in a policy is based on the insured's age at the time the insurance is written. D. It effectively extends the incontestability period by adding the backdated period to the two-year incontestability period provided in the contract.
D. It effectively extends the incontestability period by adding the backdated period to the two-year incontestability period provided in the contract
Jason, age 27, is single, works for a small computer company, and earns $125,000 a year. Because the company does not have any retirement plan for its employees, Jason set up and contributed to a traditional IRA this year. Which of the following statements is correct? A. Jason cannot take a deduction for his IRA contribution because his adjusted gross income is too high. B. Jason can deduct part of his IRA contribution this year. C. Jason cannot take a deduction for his IRA contribution because he is not covered by a qualified employer plan. D. Jason can deduct the full amount that he contributes to his traditional IRA.
D. Jason can deduct the full amount that he contributes to his traditional IRA.
