Chapter 1
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
What kind of policy allows withdrawals or partial surrenders?
Universal Life
When would a 20-pay whole life policy endow?
When the insured reaches age 100.
What would help prevent a universal life policy from lapsing?
Target Premium
What is attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?
Term Rider
What is not true about beneficiary designations?
The beneficiary must have an insurable interest in the insured.
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. The rider is called...
Guaranteed Insurability
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured.
The two types of assignments are
Absolute and collateral
A customer doesn't mind paying a higher premium as long as they get a life insurance product that allows for a faster growth of cash value. What kind of policy would you recommend?
An Endowment Policy
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash Option
The term "fixed" in a fixed annuity refers to everything but this...
Death Benefit because annuities don't provide one.
Who bears all of the investment risk in a fixed annuity?
The Annuitant
What information will be stated in the consideration clause of a life insurance policy?
The amount of premium payment
What is the term for how frequently a policyowner is required to pay the policy premium?
Mode
Max penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
2500
The death protection component of Universal Life Insurance is always...
Annually Renewable Term
The policy owner wants to makes 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 policy owner choose?
Interest only option
Which product requires a securities license?
Variable Annuity
Which regulatory authority participated in creating the National Do Not Call Registry?
FTC
What type of insurance provides increasing death benefits as the insured ages?
Increasing Term
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
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
An insured and his wife are both involved in a head on collision. The husband dies instantly, and the wife dies after 15 days. The company pays the death benefit - what provision did the policy have?
Common Disaster
Which Act protects consumers against the circulation of inaccurate or obsolete personal or financial information?
Fair Credit Reporting Act
Both Universal Life and Variable Universal Life have what type of premium?
Flexible Premium
The automatic premium loan provision is activated at the end of the...
Grace Period
Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement?
Recipient's life expectancy and amount of principal
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium
In an annuity, the accumulated money is converted into a stream of income during this period...
Annuitization Period
Which of the following policy components contains the company's promise to pay?
Insuring clause
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level Term
How long does an Insurer have to comply when a consumer requests additional information concerning an investigate consumer report?
5 days
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
Military Service of War
Paid-up Option uses dividend to:
Purchase a smaller amount of the same type of insurance as the original policy.
Under an extended term nonforfeiture option, the policy case value is converted to
The same face amount as in the whole life policy.
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.
What does "level" refer to in level term insurance?
Face Amount
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit Rider. When would the rider waive the payment of premium?
If the father is disabled for more 6 months
The winner of the state lottery will be getting a check for each month of the next 25 years. What type of annuity product is the state most likely using to provide these benefits?
Immediate Annuity.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid up
What is provided in the reinstatement provision
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.
What is true about nonforfeiture values?
They are required by state law to be included in the policy.
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
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 for this client?
Limited pay whole life
Where are the premiums of a variable product invested?
In a separate account from the company's general investment for their purposes.
In order for an annuity to be issued what must the annuitant must be?
A person
Illustration
A presentation of non guaranteed elements of a policy.
The accelerated benefits provision will provide for an early payment of the death benefit when the insured...
Becomes terminally ill
If the policy includes a free look period of at least 10 days, the Buyer's Guide must be delivered to the applicant?
With the Policy
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
The three risk classifications that denote risk level of insureds are?
Standard, Substandard and Preferred