Wrong Life Test Questions

All of the following are duties and responsibilities of producers at the time of application EXCEPT a)Change any incorrect statement on the application by personally initialing next to the corrected statement. b)Explain the nature and type of any receipt the producer is giving to the applicant. c)Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. d)Check to make sure that there are no unanswered questions on the application.

a)Change any incorrect statement on the application by personally initialing next to the corrected statement.

Which of the following is true regarding taxation of dividends in participating policies? a)Dividends are not taxable. b)Dividends are taxable only after a certain amount is accumulated annually. c)Dividends are taxable in some life insurance policies and nontaxable in others. d)Dividends are considered income for tax purposes.

a)Dividends are not taxable.

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a)False advertising b)Defamation c)Coercion d)Misrepresentation

a)False advertising

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a)Guaranteed insurability rider. b)Paid-up additions option. c)Cost of living provision. d)Nonforfeiture option.

a)Guaranteed insurability rider.

After a hearing, if the Commissioner finds that a licensee is in violation of the state insurance laws, the Commissioner can do any of the following EXCEPT a)Imprison the licensee. b)Impose a civil penalty. c)Issue a cease and desist order .d)Suspend or revoke the license

a)Imprison the licensee.

What is the purpose of a conditional receipt? a)It is intended to provide coverage on a date prior to the policy issue. b)It guarantees that a policy will be issued in the amount applied for. c)It serves as proof that the applicant has been determined insurable. d)It is given only to applicants who fully prepay the premium.

a)It is intended to provide coverage on a date prior to the policy issue.

When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy? a)It is reduced to the amount of what the cash value would buy as a single premium. b)It is increased when extra premiums are paid. c)It decreases over the term of the policy. d)It remains the same as the original policy, regardless of any differences in value.

a)It is reduced to the amount of what the cash value would buy as a single premium.

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a)Predicted needs of the family after the insured's death. b)Insured's current and future income. c)Insured's annual expenses. d)Effect of inflation on income over time.

a)Predicted needs of the family after the insured's death.

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? a)Reduction of premium b)Paid-up addition c)Accumulation at interest d)Cash option

a)Reduction of premium

All of the following would be different between qualified and nonqualified retirement plans EXCEPT a)Taxation on accumulation b)Taxation of withdrawals c)Taxation of contributions d)IRS approval requirements

a)Taxation on accumulation

All of the following entities regulate variable life policies EXCEPT a)The Guaranty Association. b)Federal government. c)The SEC. d)The Insurance Department.

a)The Guaranty Association.

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? a)The insured's premiums will be waived until she is 21. b)The premiums will become tax deductible until the insured's 18th birthday. c)Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. d)The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

a)The insured's premiums will be waived until she is 21.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a)Upon conversion, the death benefit of the permanent policy will be reduced by 50%. b)Evidence of insurability is not required. c)Most term policies contain a convertibility option. d)Upon conversion, the premium for the permanent policy will be based upon attained age.

a)Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

When would a 20-pay whole life policy endow? a)When the insured reaches age 100 b)At the insured's age 65 c)After 20 payments d)In 20 years

a)When the insured reaches age 100

Which of the following would help prevent a universal life policy from lapsing? a)Corridor of insurance b)Target premium c)Face amount d)Adjustable premium

b)Target premium

Which of the following statements is true concerning the creditors of the deceased insured? a)The creditors of the deceased insured have no rights to the proceeds of life insurance under any circumstances. b)The creditors have rights to the proceeds if they can show evidence of valid assignment. c)Anyone may put a lien against the proceeds of a life insurance policy. d)None of the above is true.

b)The creditors have rights to the proceeds if they can show evidence of valid assignment.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a)The policyholder has the right to withdraw the accumulations at any time. b)The interest is not taxable since it remains inside the insurance policy. c)The annual dividend is retained by the company. d)The interest is credited at a rate specified by the policy.

b)The interest is not taxable since it remains inside the insurance policy.

In forming an insurance contract, when does acceptance usually occur?a)When an insured submits an application b)When an insurer's underwriter approves coverage c)When an insurer delivers the policy d)When an insurer receives an application

b)When an insurer's underwriter approves coverage

How soon after the due date should the insurer pay the agent appointment fees? a)Immediately b)Within 10 days c)Within 30 days d)Within 60 days

b)Within 10 days

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a)Life with period certain b)Fixed amount c)Interest only d)Fixed period

d)Fixed period

Who makes up the Medical Information Bureau? a)Hospitals b)Former insured c)Physicians and paramedics d)Insurers

d)Insurers

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? a)Moral b)Legal c)Physical d)Morale

d)Morale

An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?a)Refuse to pay the death benefit because of the misstatement on the application b)Pay a decreased death benefit c)Sue for the right to not pay the death benefit d)Pay the death benefit

d)Pay the death benefit

The insurance company underwriter could find information concerning the personal activities and character of an applicant from which of the following reports? a)Attending physician b)Insurance company who provided the prior coverage c)Medical Information Bureau d)Producer's report

d)Producer's report

An insured committed suicide one year after his life insurance policy was issued. The insurer will a)Pay the policy's cash value. b)Pay the full death benefit to the beneficiary. c)Pay nothing. d)Refund the premiums paid.

d)Refund the premiums paid.

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a)Unfair Trade Practices Law b)The Guaranty Association c)Consumer Privacy Act d)The Fair Credit Reporting Act

d)The Fair Credit Reporting Act

Who is responsible for paying producer appointment fees? a)The Commissioner's office b)The Department of Insurance c)The producer d)The appointing insurer

d)The appointing insurer

Which of the following best describes what the annuity period is? a)The period of time from the accumulation period to the annuitization period b)The period of time during which money is accumulated in an annuity c)The period of time from the effective date of the contract to the date of its termination d)The period of time during which accumulated money is converted into income payments

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

All of the following are true regarding the guaranteed insurability rider EXCEPT a)The insured may purchase additional coverage at the attained age. b)The insured may purchase additional insurance up to the amount specified in the base policy. c)It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. d)This rider is available to all insureds with no additional premium.

d)This rider is available to all insureds with no additional premium.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a)3 days b)5 days c)10 days d)14 days

a)3 days

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a)Cash option b)Reduction of Premium c)Annual Dividend Provision d)Accumulation at Interest

a)Cash option

A producer who fails to separate premium monies from his own personal funds is guilty of a)Commingling. b)Larceny. c)Embezzlement. d)Theft.

a)Commingling.

Which of the following is another term for an authorized insurer? a)Legal b)Admitted c)Certified d)Licensed

b)Admitted

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? a)Assumed' b)Apparent c)Express d)Implied

b)Apparent

What happens when a policy is surrendered for its cash value? a)The policy can be converted to term coverage. b)Coverage ends and the policy cannot be reinstated. c)Coverage ends but the policy can be reinstated at any time. d)The policy can be reinstated by paying back all policy loans and premiums.

b)Coverage ends and the policy cannot be reinstated

All of the following statements are true regarding tax-qualified annuities EXCEPT a)Withdrawals are taxed. b)Employer contributions are not tax deductible. c)Annuity earnings are tax deferred. d)They must be approved by the IRS.

b)Employer contributions are not tax deductible.

Violation of unfair discrimination law may result in all of the following penalties EXCEPT a)Imprisonment. b)Fines of up to $1,000 for each act. c)Suspended licenses. d)Refusal to renew licenses.

b)Fines of up to $1,000 for each act.

The premium of a survivorship life policy compared with that of a joint life policy would be a)Half the amount. b)Lower. c)Higher. d)As high.

b)Lower

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of a)Rebating. b)Misrepresentation. c)Concealment. d)Unfair claim practice.

b)Misrepresentation.

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a)Paid-up additions. b)One-year term option. c)Paid-up option. d)Accelerated endowment.

b)One-year term option.

All of the following are true regarding rebates EXCEPT a)Dividends are not considered to be rebates. b)Rebates are allowed if it is in the best interest of the client. c)Rebates are only allowed if specifically stated in the policy. d)Rebating can be anything of monetary value given as an inducement to purchase insurance.

b)Rebates are allowed if it is in the best interest of the client.

What is the civil penalty for violating a cease and desist order of the Commissioner? a)$1,000 b)$5,000 c)$10,000 d)$50,000

c)$10,000

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the 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? a)$0 b)$50,000 (50% of the policy value) c)$100,000 d)$300,000 (triple the amount of policy value)

c)$100,000

The death protection component of Universal Life Insurance is always a)Adjustable Life b)Decreasing Term c)Annually Renewable Term d)Whole Life

c)Annually Renewable Term A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

A producer must do all of the following when delivering a new policy to the insured EXCEPT a)Collect any premium due. b)Explain the rating procedures if the policy is rated differently than applied for. c)Disclose commissions earned from the sale of the policy. d)Explain the policy provisions, riders, and exclusions.

c)Disclose commissions earned from the sale of the policy.

An agent selling variable annuities must be registered with a)The Guaranty Association. b)SEC. c)FINRA. d)Department of Insurance.

c)FINRA.

Which of the following is an example of an unfair claims settlement practice?a)Making claims payments which clearly indicate under which coverage payment has been made b)Using arbitration when the insured and insurer cannot reach agreement c)Failure to promptly settle a claim when liability has been clearly established d)Denying coverage after a reasonable investigation has been conducted

c)Failure to promptly settle a claim when liability has been clearly established

A Universal Life insurance policy has two types of interest rates that are called a)Fixed and Variable. b)Minimum and Target. c)Guaranteed and Current. d)Option A and Option B.

c)Guaranteed and Current.

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?a)Agent's Report b)Underwriter's Report c)Inspection Report d)Medical Information Bureau's report

c)Inspection Report

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? a)Whole Life b)Ordinary Life c)Joint Life d)Decreasing Term

c)Joint Life

Which nonforfeiture option provides coverage for the longest period of time?a)Paid-up option b)Accumulated at interest c)Reduced paid-up d)Extended term

c)Reduced paid-up

Insurance producers that do not have company appointments are considered a/an a)Agent. b)Producer. c)Representative of the consumer. d)Managing General Agent.

c)Representative of the consumer.`

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? a)Accelerated benefit provision b)Loan provision c)Spendthrift provision d)Settlement option

c)Spendthrift provision

Which of the following statements about group life is correct? a)The group sponsor receives a Certificate of Insurance. b)The policy can be converted to an individual term insurance policy. c)The cost of coverage is based on the ratio of men and women in the group. d)The premiums are higher than in an individual policy because there is no medical exam.

c)The cost of coverage is based on the ratio of men and women in the group.

Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? a)Debt cancellation b)Day care c)Vacation travel expenses d)Travel expenses for family to come to the funeral

c)Vacation travel expenses **slow down and read the question

the termination of marital property rights may be reversed for all of the following reasons except... a. the spouse was named as beneficiary by class b. the divorce or annulment decree or judgment is not recognized as valid c. the spouse named as beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation d. the beneficiary can prove the couple were living together as husband and wife or planning to remarry

c. the spouse named as beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation

In order for a foreign insurer to do business in this state, it must apply for and obtain a)A solvency certificate. b)A nonresident insurer license. c)NAIC approval. d)A certificate of authority.

d)A certificate of authority.

A tax-sheltered annuity is a special tax-favored retirement plan available to a)Anyone. b)Certain age groups only. c)Certain groups depending on factors such as race, gender, and age. d)Certain groups of employees only.

d)Certain groups of employees only.

Representations are written or oral statements made by the applicant that are a)Guaranteed to be true. b)Found to be false after further investigation. c)Immaterial to the actual acceptability of the insurance contract. d)Considered true to the best of the applicant's knowledge.

d)Considered true to the best of the applicant's knowledge.

Which of the following will NOT be an appropriate use of a deferred annuity?a)Accumulating retirement funds b)Accumulating funds in an IRA c)Funding a child's college education d)Creating an estate

d)Creating an estate

All of the following are true regarding the guaranteed insurability rider EXCEPT. a)The insured may purchase additional coverage at the attained age. b)The insured may purchase additional insurance up to the amount specified in the base policy. c)It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. d)This rider is available to all insureds with no additional premium.

d)This rider is available to all insureds with no additional premium.

when the insured initiates the cancellation of a policy, the unearned premium will be refunded on a... a. extended term basis b. per occurrence basi sc. pro rata basis d. short rate basis

d. short rate basis