GA Life Insurance Exam
The date of the medical exam
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit a medical exam. If the policy is issued, what would the effective date be?
Refund the premiums paid only; no death benefit if insured commits suicide within 2 years of policy purchase
An insured committed suicide one year after his policy was issued. What will the insurer do?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean for the beneficiaries?
$20k
An insured owns a $50k whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20k. What would the face amount of the new term policy be?
Mutual
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did she purchase the policy?
Inspection report
An underwriter may obtain information on an applicant's hobbies, financial status, be habits by ordering a ___________
Adjusted each year to insured's attained age
Annually Renewable term policies' premiums are...
Equity indexed
Between equity indexed or fixed, which one of the two has a higher interest rate?
purchased with either lump sum or periodic payments; benefits start sometimes after 1 year within the date of purchase
Describe a deferred income payment under an annuity
multiple payments; the principal is created over time (used for deferred annuity only)
Describe a periodic (flexible) premium payment in an annuity
one lump sum payment; the principal is created immediately (both immediate and deferred)
Describe a single premium payment in an annuity
purchased with a single premium; income payments start within 12 months from the date of purchase
Describe an immediate income payment under an annuity
Fixed rate of return; general account
Describe the cash value in adjustable life
Guaranteed at a minimum level; general account
Describe the cash value in universal life
Not guaranteed; separate account
Describe the cash value in variable life
Coverage gradually decreases at a predetermined time
Describe the coverage under decreasing term
Flexible; set by policy owner with proof of insurability
Describe the face amount in adjustable life
Can increase or decrease to a stated minimum
Describe the face amount in variable life
Premiums paid until a certain time; coverage in effect until age 100
Describe the premium payments in limited payment whole life
Premiums paid in one lump sum; coverage continues to age 100
Describe the premium payments in single premium whole life
Can be increased or decreased by policy owners
Describe the premiums in adjustable life
Flexible; minimum or target
Describe the premiums in universal life
Fixed (if whole life); flexible (if universal life)
Describe the premiums in variable life
They increase due to attained age
Describe the premiums under Annually renewable term
Through and investigation and interviews with associates, friends and neighbors of the consumer
How is information from investigative consumer reports obtained?
Based on the joint average age of the insured
How is the premium determined in joint life and survivorship life?
5 days
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
The balance of the loan will be taken out of the full death benefit
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
To purchase a single premium policy for a reduced face amount.
If a whole life policy lapses or is surrendered prior to maturity, what can the cash value be used for?
Premium
The more frequently the premium is paid, the higher the _______
True
True or false: Annually renewable term renews each year without proof of insurability
False
True or false: Illustrations must be part of a contract.
True
True or false: In an equity indexed annuity, the insurance company keeps a percentage of the return.
False
True or false: In variable products, the premiums are invested in the insurer's general account.
False - the premium can be flexible
True or false: You have a fixed premium in universal life
True
True or false: an agent may not erase an answer on the application and put a correct answer
False
True or false: term policies develop a cash amount.
Cash surrender
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner?
Level fixed
Variable whole life insurance is based on what type of premium?
Basic policy, level death benefit, insured pays premium for life or until age 100
What are the characteristics of ordinary whole life?
Agreement, consideration, competent parties and legal purpose
What are the elements of a legal contract?
Pure protection, lasts for specific term, no cash value
What are the general characteristics of term life?
Permanent insurance with renewable term protection component
What are the key features in universal life?
Can be term or whole; can convert from one to the other
What are the key features of adjustable life?
Permanent protection, guaranteed face amount, guaranteed premium, guaranteed cash value, guaranteed elements until death or age 100, level premium, cash value and other living benefits
What are the main characteristics of whole life?
guaranteed, fixed payment amount, premiums in general account
What are the main features of a fixed annuity?
payment not guaranteed, premiums in separate account, and invested in stocks and bonds
What are the main features of a variable annuity?
interest rate tied to an index, earn higher rate than fixed, not as risky as variable or mutual fund
What are the main features of an indexed annuity?
Mortality, interest, and expense
What are the three factors in premium determination?
Level, increasing and decreasing
What are the three kinds of death benefit under term life?
Standard, substandard, preferred
What are the three risk classifications?
Fixed, variable, and indexed
What are the three types of annuities?
Straight life or guaranteed minimum
What are the two benefit payment options under annuities?
Insurance and cash account
What are the two components of a universal policy?
Option A: level death benefit / Option B: increasing death benefit
What are the two death benefit options in universal life?
Single premium and periodic premiums
What are the two options for premium payments under annuities?
Fixed and variable
What are the two underlying investments under an annuity?
Renewable and convertible
What are two main features of a term policy?
General information and medical information
What are two parts that make up an application?
When the need for protection declines from year to year
What circumstance is best for decreasing term?
The agent must obtain the premium and a statement of continued good health at the time of the policy delivery
What do you do if the premium isn't paid with the application?
Return the application to the applicant for completion
What do you do when an application is incomplete?
Face amount
What does "level" refer to in level term insurance?
FINRA registration, securities license, and a life insurance license
What does an agent need in order to sell variable life insurance?
Right to convert a term policy to permanent without evidence of insurability
What does it mean when a policy is convertible?
Able to renew policy without proof of insurability
What does it mean when a policy is renewable?
How often a premium is paid
What does mode mean?
Protects consumers against circulation of inaccurate or obsolete information
What does the Fair Credit Reporting Act protect?
It provides that at death prior to any given age, not only is the original face amount payable, but also premiums previously paid are payable to the beneficiary
What does the return of premium rider mean when added to a whole life policy?
Federal government, The SEC, The Insurance department
What entities regulate variable life policies?
Application, consumer reports, MIB, and risk classification
What goes into company underwriting?
Application completed and signed, agent's report, premiums with application and conditional receipt
What goes into the field underwriting by the agent?
payments are made into the annuity
What happens during the accumulation phase of an annuity?
payments are made to the annuitant from the annuity
What happens during the annuitization phase of an annuity?
Death benefit and premium
What is "level" under a level premium term?
Permanent insurance
What is a key feature in variable life?
Only one party is legally bound to do anything
What is a unilateral contract?
One party prepares the contract, the other party must accept it as is
What is an adhesion contract?
An exchange of unequal amounts
What is an aleatory contract?
Insuring one's own life, family member, or business partner
What is insurable interest?
$2,500
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
It is intended to provide coverage on a date prior to the policy issue
What is the purpose of a conditional receipt?
Agent's observation about the applicant that can assist in underwriting
What is the purpose of an agent's report?
Single life or Multiple life (joint/joint survivor)
What options do you have for how many lives can be covered under an annuity?
Immediate or deferred
What two options are there for when payment begins under annuities?
Increasing Term
What type of insurance would be used for a return of premium rider?
Flexible
What type of premium do both universal life and variable life policies have?
The policy will terminate when the cash value is reduced to nothing.
What will happen if an insured continually uses the automatic premium loan option to pay the policy premium?
Term rider
When attached to a permanent life insurance policy, what 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?
When the policy is signed and a check is given to the agent
When is the earliest a policy can go into effect?
At the time of application
When must insurable interest exit?
Fixed and equity indexed
Which annuities have guaranteed minimum interest rates?
Equity indexes annuities
Which annuity invests on an aggressive basis in order to yield higher returns?
Equity indexed
Which annuity is the less risky option?
Joint life
Which combination plan receives the death benefit upon the first death only?
Survivorship Life
Which combination plan receives the death benefit upon the last death only?
Standard
Which risk represents the majority of people?
Variable Universal Life Insurance
Which type of policy allows for a flexible premium and a variable investment component?
Annuitant: insured (must be a natural person) / Beneficiary: will receive any amount contributed to annuity / Owner: has all rights to policy (can be corporation or trust)
Who are the three parties involved in an annuity?
Limited Pay Whole Life
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would the right policy be for this client?
