Primerica
Which of the following is true regarding the spendthrift clause in life insurance policies?
it can protect the policy proceeds from creditors of the beneficiary.
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant.
When must the Buyer's Guide be delivered to the proposed insured?
At the time of application
The Assignment Clause in a life insurance policy allows the policyowner to do which of the following?
c)Transfer policy rights to another person
When replacing a life insurance policy or annuity, a producer has all of the following duties EXCEPT
d)Send a written communication to existing insurers advising them of the proposed replacement.
A Universal Life insurance policy has two types of interest rates that are called
Guaranteed and Current.
All of the following transactions would be allowed EXCEPT
A friend buying life insurance on a friend.
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
Which of the following will be included in a policy summary?
Premium amounts and surrender values
Which of the following characteristics applies to defined benefit plans but not defined contribution plans?
The amount of contributions made by the employer is determined by an actuarial formula.
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies.
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans.
Which nonforfeiture option has the highest amount of insurance protection?
d)Extended Term
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
All of the following statements are true regarding tax-qualified annuities EXCEPT
Employer contributions are not tax deductible.
Avoiding tax consequences when transferring assets from one IRA to another can be accomplished by which of the following?
b)A direct rollover from one plan to the other
Joe, Larry, and Curly own a small business. They have made a legal arrangement which states that if one of them dies or becomes disabled, the other two will be able to buy the partner's shares. Which term best describes this arrangement?
b)Business Continuation
An annuity pays a monthly amount for the remainder of the annuitant's life. If death occurs before the principal is exhausted, the remaining amount will be paid to a designated beneficiary. Which payment option has this annuitant selected?
b)Refund life
An insured covered by a life insurance policy with an accidental death rider was injured in an accident and died 120 days later. The policy had $50,000 coverage with triple indemnity. What will the beneficiary receive?
b)The face amount
An agent who solicits and files applications for the sale of life insurance represents
b)The insurer.
Under what circumstances will the Superintendent issue a replacement life settlement broker's license?
b)The license is active, but has been lost or destroyed.
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
c) Convertible Term Policy.
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
c) The employer is the owner and beneficiary.
All of the following characteristics of a group are considered in group underwriting EXCEPT
c)Medical conditions.
If the Superintendent finds a licensee in violation of an unfair method or unfair practice he or she will issue a
d)Cease and desist order.
Joe, Larry, and Curly own a small business. They have made a legal arrangement which states that if one of them dies or becomes disabled, the other two will be able to buy the partner's shares. Which term best describes this arrangement?
c) Business Continuation
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?
Medical background
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
As a field underwriter, a producer is responsible for all of the following tasks EXCEPT
Issue the policy that is requested.
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?
Need is predicted using the number of years until the insured's retirement.
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of the annuity.
Which of the following determines the cash value of a variable life policy?
d)The performance of the policy portfolio
A producer agent must do all of the following when delivering a new policy to the insured EXCEPT
Disclose commissions earned from the sale of the policy.
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name.
What is the time period called during which the surviving spouse of the insured does not receive Social Security income benefits?
Blackout period
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death?
Life insurance proceeds
under which of the following riders will the insurer both waive policy premiums and pay monthly income to the insured if the insured is disabled?
)Disability Income Benefit Rider
Unused premiums are returned to policyowners tax free in the form of
)Dividends.
The causes of loss insured against in an insurance policy are known as
Perils
Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called
Suitability.
In a group life insurance policy, the employer may select all of the following EXCEPT
The beneficiary.
In a defined contribution plan,
The contribution is known and the benefit is unknown.
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
At times, it is possible for a life insurance agent to affect a savings of premium rates by backdating an application for life insurance. What is the maximum amount of time that an application may be backdated?
6 months
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values
What required provision protects against unintentional lapse of the policy?
Grace period
Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
Needs approach.
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration.
The interest earned on policy dividends is
Taxable.
What limits the amount that a policyowner may borrow from a whole life insurance policy?
a) Cash value
How long is the grace period for an individual life insurance policy?
c)1 month
Which of the following are the features of a variable life insurance policy?
Fixed premium, guaranteed minimum death benefit, separate accounts
A life insurance policy has a legal purpose if both of which of the following elements exist?
Insurable interest and consent
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Joint life
All of the following statements about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of return.
Which of the following statements about group life is correct?
The cost of coverage is based on the ratio of men and women in the group.
f an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
The death benefit will be smaller.
In a life settlement contract, who does the life settlement broker represent?
The owner
if an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about
Whether an insurable interest exists between the individuals.
What insurance principle means something of value that each party gives to the other?
a)Consideration
Another name for a Keogh Plan is
a)HR-10.
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan
Which of the following entities has the authority to revoke a producer's license?
The Department of Financial Services
Unlike the dividend itself, the interest earned on dividends is
b)Taxable.
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?a)Corridor option
Option B
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
a)Replacement rule
What is the waiting period on a Waiver of Premium rider in life insurance policies?
d) 6 months
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
Cost of living rider.
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
When assessing needs for life insurance, an individual may use retention, which means
a)Maintaining assets at death.
Peril is most easily defined as
d) The cause of loss insured against.
If a hearing is scheduled for a producer who has violated regulations regarding unfair trade practices, the Superintendent must send a prior notice within how many days of the hearing?
10 days
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
a) It is a percentage of the cash value and decreases over time.
Which of the following statements is TRUE concerning irrevocable beneficiaries?
a)They can be changed only with the written consent of that beneficiary.
xWhen must the Buyer's Guide be delivered to the proposed insured?
b)At the time of application
A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?a)Joint life
d)Joint and Survivor
A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will
d)Never receive less than 4% interest.
For which of the following reasons can the Department of Financial Services issue a temporary license?
c)Servicing existing business
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
c)The interest is not taxable since it remains inside the insurance policy.
An insured owns a life policy for $100,000. Due to a terminal illness, the insured had to withdraw $20,000 from the policy 2 years before his death. Since the amount was withdrawn, the insurance company lost $200 in interest. Upon the insured's death, what amount will the beneficiary receive?
d)$79,800
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
Which of the following nonforfeiture options of a life insurance policy allows a policyowner to use the cash value to purchase additional insurance of the same type?
Reduced paid-up
In insurance, the uncertainty of an individual sustaining a loss in the future is classified as a/an
b)Risk.
Which of the following practices would be allowed in regards to life settlements?
b)Sharing commissions with more than one licensed life settlement brokers
A key person insurance policy can pay for which of the following?
Costs of training a replacement
An agent accepts the premium payment 35 days after it is due, telling the insured that the policy will continue to remain in force. This is an example of what type of agent authority?
a)Apparent
Which of the following is a characteristic of an equity indexed annuity?
a)Interest rates are often associated with a stock index.
During which of the following annuity periods does an insured make monthly contributions to the annuity for retirement purposes?
b)Accumulation period
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
b)Life expectancy
Which of the following disability riders in life insurance allows the policyowner to keep coverage in force without paying policy premiums after a qualifying event?
b)Waiver of premium
If a term life policy is convertible, that means that at the end of the policy term, the policyowner may convert coverage to
c)A whole life policy.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
a)Automatic premium loan
All of the following are true of key person insurance EXCEPT
b)The plan is funded by permanent insurance only.
Who bears the investment risk in variable life insurance products?
b)The policyowner
Which of the following is NOT true regarding a Certificate of Authority?
d)It is issued to group insurance participants.
Which of the following policy elements remains constant in Level, Increasing and Decreasing policies?
d)Premium
Which of the following is NOT an example of a business use of Life Insurance?
d)Workers Compensation
Which of the following insurance options would be considered a risk-sharing arrangement?
a)Reciprocal
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
d)Waiver of premium.
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Variable
Which of the following is TRUE regarding the annuity period?
It may last for the lifetime of the annuitant.
Which of the following is true regarding a single life settlement option?
It provides income the beneficiary cannot outlive.
he policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of premium
Which is true about a spouse term rider?
The rider is usually level term insurance.
What documentation grants express authority to an agent?
Agent's contract with the principal
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?
Paid-up option
The loan value of a whole life policy is limited to the policy's
a)Cash value.
Which of the following is true regarding commission sharing by insurance agents?
a)Commissions can only be shared with a person authorized and licensed in the same line of authority.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
a)Equal to the original policy for as long as the cash values will purchase.
Which statement is NOT true regarding a Straight Life policy?
a)Its premium steadily decreases over time, in response to its growing cash value.
n which of the following types of temporary insurance protection does the death benefit NOT change throughout the life of the policy?
a)Level term.
Which entity determines the amount of accelerated death benefits that will be paid to an insured?
a)The insurer
Which of the following is NOT true regarding the policy summary?
a)The policy summary may be part of the policy.
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
b) Reduction of premium
All of the following information about a customer must be used in determining annuity suitability EXCEPT
b)Beneficiary's age.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
b)Interest only option
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
b)Pay a reduced death benefit
Which of the following is TRUE regarding a joint life policy?
b)Premium is based on the average age of the insureds.
A life insurance policy has a legal purpose if both of which of the following elements exist?
c)Insurable interest and consent
In which of the following types of temporary insurance protection does the death benefit NOT change throughout the life of the policy?
c)Level term.
When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed?
c)The insurance company's general account
What is a foreign insurer?
d)An insurer with a home office in another state
Which of the following principles describes creating or increasing the chance of loss?
d)Hazard
Annually renewable term policies provide a level death benefit for a premium that
d)Increases annually.
In whole life insurance, which of the following terms describes features such as cash values and loan provisions?
d)Living benefits
What is the purpose of a conditional receipt?
c) It is intended to provide coverage on a date prior to the policy issue.
Which entity determines the amount of accelerated death benefits that will be paid to an insured?
d)The insurer
Variable Whole Life insurance is based on what type of premium?
b)Level fixed
All of the following are true of an annuity owner EXCEPT
c) The owner must be the party to receive benefits.
Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type?
d) Death benefit
An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
a)If the primary beneficiary predeceases the insured
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?
a)Payor Benefit
Which of the following may NOT be included in an insurance company's advertisement?
a)That its policies are covered by a state Guaranty Association
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
a)Other-insured rider.
After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?
d )Surrender charge
A producer agent must do all of the following when delivering a new policy to the insured EXCEPT
a) Disclose commissions earned from the sale of the policy.
A key person insurance policy can pay for which of the following
Costs of training a replacement
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.
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
Which of the following features of the Indexed Whole Life policy is NOT fixed?
Cash value growth
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
b) Discrimination
What type of insurance would be used for a Return of Premium rider?
Increasing Term
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)
Inspection report.
All advertisements are the responsibility of the
Insurer.
All of the following are cause for the Insurance Superintendent to suspend or impose conditions upon the continuance of an agent's license EXCEP
The applicant has been shown to be a poor personal credit risk.
Which concept is associated with "exclusion ratio"?
Annuity payments
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
Joint and survivor
Which of the following is INCORRECT regarding whole life insurance?
b)Policy loans are tax deductible.
