Review Missed Questions

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance.

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

An IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed?

10%

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

Increases annually

All advertisements are the responsibility of the

Insurer

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy.

All of the following are characteristics of a group life insurance plan EXCEPT

There is a requirement to prove insurability on the part of the participants.

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary.

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant.

What is the definition of a unilateral contract?

One-sided; only one party makes an enforceable promise

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholders?

3%

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

What is a specific requirement regarding the number of employees in a SIMPLE plan?

No more than 100 employees

Which of the following is a NOT a component of an insurance policy premium?

Number of beneficiaries

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed wavier of premium.

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

The Wavier of Cost of Insurance rider is found in what type of insurance?

Universal Life

What is the difference between a straight life policy and a 20-pay whole life policy?

Premium payment period

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information?

Application

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free.

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

Other-insured rider

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

Upon the last death

All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?

A 60-year-old man

What documentation grants express authority to an agent?

Agent's contract with the principal

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?

Aleatory

A Universal Life Insurance policy is best described as

An Annually Renewable Term policy with a cash value account.

Which of the following individuals must be licensed as an insurance agent?

An employee of an insurer who receives commissions only on a few policies a year

Which of the following is a true comparison between annuities and life insurance?

Both annuities and life insurance use mortality tables.

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

An IRA contribution can be made from which of the following?

Cash

Which of the following types of insurance policies is most commonly used in credit life insurance?

Decreasing term

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

All of the following are personal uses of life insurance EXCEPT

Estate liquidation

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 he couple buy?

Joint life

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy this client?

Limited pay whole life

Cash Value guarantees in a whole life policy are called

Nonforfeiture

All of the following are true of annually renewable term insurance EXCEPT

Proof of insurability must be provided at each renewal.

Another name for a substandard risk classification is

Rated

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

Which of the following statements is true regarding the cash value in a Universal life policy?

The insurer credits the cash value in the policy with a current interest rate.

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract.

Which of the following best describes what the annuity period is?

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

All of the following are general requirements of a qualified plan EXCEPT

The plan must be temporary.

All of the following are true of the Survivorship Life policy EXCEPT

The premium is based on the age of each insured.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability.

An insured owns a $50,000 whole life policy. At age 47, the insured decided to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

Which of the following features of the Indexed Whole Life policy is NOT fixed?

Cash value growth

Which component increases in the increasing term insurance?

Death benefit

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

Decreases

Which type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distributions to start at age 70 1/2?

Roth IRA

What type of annuity promises to pay to a beneficiary, in a lump sum, the difference between the amount paid into the contract and the benefits received prior to the annuitant's death?

Cash refund annuity

An insurance contact requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristics does this describe?

Conditional

In reference to fixed annuities, what comprises most of a life insurance company's general account?

Conservative investments like bonds

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

Contracts that are prepared by one party and submitted to the other party on a "take it or leave it" basis are classified as

Contracts of adhesion

A policy-owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policy-owner should have her husband named as the

Revocable beneficiary.

In insurance, an offer is usually made when

The application is submitted.

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.

All of the following are true about key-person insurance EXCEPT

The death benefit is taxable to the business.

With the cash refund option, when the annuitant dies, what would the beneficiary receive?

The refund of the original amount minus payments already made

M is the owner of a $100,000 life policy with a triple indemnity rider for accidental death. When M is killed in a car accident, it is determined that the accident was his fault. The triple indemnity rider in M's policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

$100,000

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

Credit life

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

Express Authority

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

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.

The automatic premium loan provision is activated at the end of the

Grace period.

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases.

What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuity will refund the remaining payments to a beneficiary?

Installment refund annuity

Which of the following is TRUE of a qualified plan?

It has tax benefit for both employer and employee.

Which of the following is TRUE of level term insurance?

It is temporary protection.

An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information?

Present the insured with a Disclosure Authorization Notice

The Gramm-Leach-Billey Act was passed to

Protect private customer information filled with a financial institution.

In what way can an agent demonstrate a high standard of ethics?

Putting the client's best interest before their own

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

The term "illustration" in a life insurance policy refers to

A presentation of non-guaranteed elements of a policy.

Which is the primary source of information used for insurance underwriting?

Application

Events in which a person has both the chance of winning or losing are classified as

Speculative risk

In contrasting stock insurers with mutual insurers, which statement is true?

Stock insurers are owned by the shareholders, and issue nonparticipating policies.

The term "illustration" in life insurance policy refers to

A presentation of non-guaranteed elements of a policy.

Which of the following is TRUE regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred.

Which of the following would not be a violation of Louisiana insurance regulations?

Producer C uses her license to write uncontrolled business only.

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 statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount.

All of the following are true regarding a cash refund annuity settlement option EXCEPT

It provides a cash payment to the annuitant at annuitization.

In order to qualify for conversation from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5

Which of the following is NOT a type of a hazard?

Exposure

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

An insured falls down a flight of stairs and sustains a neck injury that renders him severely disabled. The insured owns a Whole Life policy. Is it possible for the policy to include a Wavier of Cost of Insurance rider, and if so, what insurance costs would be waived?

No; it is not possible for this wavier to be included in a whole life policy

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

Which of the following statements concerning the Medical Information Bureau is correct?

The Medical Information Bureau assists underwriters in evaluating and classifying risks.

Which of the following is an example of apparent authority of an agent appointed by an insurer?

The agent accepts a premium payment after the end of the grace period.

Which of the following types of insurance is investment based, has a level fixed premium, and a non-guaranteed cash value?

Variable whole life