Chapter 1-4 Review Exam

J's employment was terminated on Aug 1st, 2007. He was covered under a group life insurance policy for $100k. John died of a heart attack on Aug 29, 2007. He did not elect to convert his group life policy to an individual one. How much will his beneficiary receive from his group life policy?

$100k

M owns a $50k Whole life policy with a $50k accidental death benefit rider. While driving to work, M has a heart attack then crashes his car and dies. How much will the policy pay to his beneficiary?

$50k

J owns a $100k policy with a $40k cash value and a 6% interest rate. On Jan 1st, he borrows $5k and pays one years interest in advance. During the year, he does not repay any part of the loan or the interest. If he dies on December 31st, the beneficiary is entitled to a maximum of -

$95k

F owns a $100k term life policy with a monthly premium of $100, due on the 1st of each month. F failed to make his July 1st premium and died on July 20th. How much will his beneficiary receive?

$99,900

B purchased a $250k 5 year Non-renewable term life policy and named his wife as the beneficiary. If he dies 8 yrs later, how much will his wife receive from the policy?

0

when A policyowner may change the beneficiary without his or her knowledge or approval this is known as

a revocable beneficiary

The grace period in a life insurance policy begins

When the premium is due

Representations are -

a statement that is true to the best knowledge of the applicant

what is not a mode of payment in a life policy

bi-weekly

A company decides to purchase Key Employee Life insurance for its vice president of operations. Which statement is incorrect a. company is the policy owner b. company is the applicant c. employee names the beneficiary d. employee gives consent to be insured

employee names the beneficiary

Reinstatement of a life insurance policy requires an insured to do actions except -

make collateral assignment to the insurer

An employer paid life insurance policy is called

non-contributory group life

An applicant makes an offer to the insurer when they

pay an initial premium with the application

In life insurance, insurable interest must exist at the time the

producer writes an application on a proposed insured

Standard non-forfeiture benefits include

reduced paid up insurance

Social Security retirement benefits are NOT determined by

sex

A tax free exchange of one life insurance policy or annuity for another is called

1035 exchange

A policy that provides lifetime protection for an insured with premiums payable for 20 years is called a

20-pay life

Under a Traditional IRA, owners must begin to receive payments from their accounts by the time they reach age -

70 1/2

An insurer that shares its profits with its policyowners is known as

A MUTUAL insurer

A report of previously submitted life insurance applications to other insurers is known as

A Medical Information Bureau report (MIB)

A life insurance policy that fails to meet the seven pay test is called

A modified endowment contract

A payor benefit rider provides what benefit

A temporary waiver of premium should the payor die, until the insured reaches a predetermined age

If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase:

Additional coverage at specified ages

In a life policy, a special benefit that prepays a portion of a death benefit during the lifetime of an insured in the event of a specified illness

An acceleration of life insurance benefit

Two business partners own life insurance on each other. If one person dies, which of the following contracts will allow the other partner to buy 100% of the business interest?

Buy and Sell agreement

Mr. T owns a $100k term life policy with a $100k AD&D rider. Mr. has an accident and loses his leg. What would Mr. T receive ?

Capital Sum

What group life plan requires at least 75% of the eligible members to participate?

Contributory

What amount must decrease in a decreasing term policy

Death Benefit

What prevents the producer from unilaterally amending a policy?

Entire contract

TRUE OR FALSE - In a stock insurance company their policy holders vote for the members of the board of directors -

FALSE - stockholders = stock insurance , policy holders = mutual insurance

A policy's dividends paid on a life insurance contract are considered taxable income - TRUE or FALSE

FALSE - not considered taxable

An insurance company incorporated in Indiana, with its home office in Texas, is licensed to conduct business in all states except Pennsylvania. In Texas, this company would best be described as which insurer?

Foreign

What feature allows an insurance policy to remain in force for a specified number of days beyond the premium due date?

Grace period provision

The provision that addresses misstatements made by applicant on an application is

Incontestability Clause

When proceeds are left with the insurer and earnings sent to the beneficiary

Interest-only

The term used to indicate that a policy beneficiary cannot be changed is

Irrevocable

A contract that promises to pay an income to an insured until their death is called

Life Annuity

Which is best used for estate planning purposes

Survivorship Life

R has just graduated from law school. R knows his future earnings will be much higher than they are now, but wants to purchase a permanent policy now to cover future needs. Which policy would best suite R's needs -

Modified whole life

Interest paid on a policy loan is...?

Not tax deductible

The right to change a beneficiary is reserved for the

Policyowner

What makes Universal Life insurance different from other forms of permanent insurance is

Premium Schedule

The primary purpose of an annuity is to

Provide income for retierment

Statements made by an applicant for insurance on the application are considered to be

Representations

A modification to a life policy is called a

Rider

What provision in a life policy specifies the manner in which proceeds will be paid to a beneficiary on the death of the insured?

Settlement options

What states the terms of coverage during the underwriting process

The conditional receipt

An insurance producer takes an application for a life policy but does not collect the initial premium. On delivery of the policy to the proposed insured, the producer must collect the initial premium and what else?

The insured's signed statement of continued good health

If an insurer wants to obtain an HIV test from an applicant

They must obtain the applicant's written consent