INSURANCE
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
A 15year mortgage is best protected by what kind of life policy?
15 year decreasing term
What year was the McCarran-Ferguson Act enacted?
1945
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-pay life accumulates cash value faster than straight life
In order for an insurance contract to be legally binding it must have ?
4 essential elements -offer and acceptance -consideration -legal purpose -competent parties
A 15 year mortgage is best protected by what kind of life policy?
A 15 year decreasing term policy
Which of these is an element of a variable life policy?
A fixed level premium
A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of_____?
Adhesion (A CONTRACT OFFERED INTACT TO ONE PARTY BY ANOTHER UNDER CIRCUMSTANCES REQUIRING THE SECOND PARTY TO ACCEPT OR REJECT THE CONTRACT IN TOTAL WITHOUT HAVING THE OPPORTUNITY TO BARGAIN OVER THE WORDING)
How long does the coverage normally remain on a limited-pay life?
Age 100
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first 6 months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory (amount insured will pay in premiums is unequal to he amount that the insurer will pay in the even of a loss)
The amount of monthly disability benefits pWhat is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?ayable under social security is affected by which of the following factors?
Amount of the benefits available form other sources
All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT?
Bilateral ONLY : -UNILATERAL -ALEATORY -ADHESION
Variable whole life insurance can be describes as?
Both insurance and securities product
A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT?
Change the policy's interest rate
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
Insurance contracts are known as _______ because certain future conditions or acts must occ ur before any claims can be paid
Conditional
Which of the following consists of an offer, acceptance and consideration?
Contract
Which of these require and offer, acceptance and consideration?
Contract
Insurance contract
Insurance policy is a legal contract contract law defines a contract as a legally binding agreement between two or more parties where a promise of benefit is exchanged for a consideration
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
Who ha the option to renew a renewable term policy?
Insured
A life insurance arrangement which circumvents insurable interest statutes is called?
Investor- originated life insurance
Which of these arrangements allows on to bypass insurable interest laws?
Investor-originated life insurance (Done when an investor (stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collects the death benefit when the insured dies)
Credit life insurance is ?
Issued in an amount not to exceed the amount of the loan
The offer is accepted when?
It has been approved by the insurance company's underwriters
If an insurance contract has an insurance interest and the insured has provided written consent, it has?
LEGAL PURPOSE
Stranger originated life insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal purpose (insurance interest)
Which of these would be considered a limited-pay life policy?
Life paid-up at age 70
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them except:?
Modified whole life
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified whole life
Which of these life products is NOT considered interest- sensitive ?
Modified whole life
Which of these is NOT a type of agent authority?
PRINCIPAL
The consideration on the part of the insurance company is a promise to ?
Pay in the event of loss
The consideration on the part of th insurrection is the ?
Payment premium
Insurance policies are considered aleatory contracts because
Performance is condition upon a future occurrence (means there is an element of chance and potential fro unequal exchange of value or consideration for both parties)
A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the ?
Policy loan provision
Which of these describe a participating insurance policy?
Policy owners are entitled to receive dividends
Which of the following information is NOT required to be included in a whole life policy?
Policy's guaranteed dividend table
Who elects the governing body os a mutual insurance company?
Policyholders
A limited-pay life policy has ?
Premium payments limited to a specific number of years
Which of these characteristics is consistent with a straight life policy?
Premiums are payable for as long as there is insurance coverage in force
What is the consideration given by an insurer in the consideration clause of a life policy?
Promise to pay death benefit to a named beneficiary
Statements made on an insurance application that are believed to be true to the best of the applicants knowledge are called?
Representations (statements made on an insurance application that are believed to be true to the best of the applicants knowledge are called representations)
A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as
Risk retention group
Which of the following is considered an element of a variable life policy?
Underlying equity investment
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
Life and health insurance policies are?
Unilateral contracts
The cash value in a ________ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest and expense factors.
Universal
Which of the following life insurances polices combine term insurance with an investment element ?
Universal life
S, age 40 is looking to buy a life insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be ?
Universal life (characterized by flexible premiums and adjustable death benefit)
A term life insurance policy matures
Upon death of the insured
When is the face amount paid under a joint life and survivor policy?
Upon death of the last insured
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable life
Which policy requires an agent to register with the national association of securities dealers (NASD) before selling?
Variable life
S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does s own?
Variable whole life
Which of these is considered a statement that is assured to be true in every respect?
Warranty
At what. Point does an informal agreement become a binding contract?
When consideration is provided by one of the parties to the contract
When must insurance interest be present in order for a life insurance policy to be valid?
When the application is made
At what point foes a whole life insurance policy endow?
When the cash value equals the death benefit
What is the face amount of a whole life policy paid?
When the insured dies or at the policy's maturity date which ever happens first
A life insurance policy that provides a policy owner with cash value along with a level face amount is called ?
Whole life
What kind of life policy either pays the face value upon death of the insured or when the insured reached age 100?
Whole life
A return of premium life insurance policy is ?
Whole life and increasing term
Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year term coverage for his wife on the same policy. Which of these policies did Y purchase?
Whole life policy with an other insurer rider
A policy that becomes modified endowment contract (MEC)?
Will lose many tax advantages
If a 10-year term life policy contains a renewability provision, the policy will renew ?
Without evidence of insurability
What does a face amount plus cash value policy pay upon the insureds death ?
face amount plus the policy's cash value
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have ?
Insurable interest in the proposed insured
A policy of adhesion can only be modified by the?
Insurance company
Whole life insurance is sometimes referred to as. Straight life what does the word "straight" indicate when using the phrase?
The duration of premium payments
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
The combination of whole life and ______term insurance is referred to as a family income policy?
Decreasing
Credit life insurance is typically issued with which of the following types of coverage?
Decreasing term
What type of life policy has death benefit that adjusts periodically and is written for a specific period of time ?
Decreasing term
F needs life insurance that provides coverage for only a. Limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
S is closed to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
Term insurance has which of the following characteristics?
Expires at the end of the policy period
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?
F
What doe a face amount plus cash value policy pay upon the insureds death?
Face amount plus the policy's cash value
What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?
Fair credit reporting act
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family maintenance policy
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representation will void a policy
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
Which of the following actions require a policy owner to provide proof of insurability in an adjustable life policy ?
Increase face amount
A life insurance policy would be considered a wagering contract WITHOUT?
Insurable interest
Which of the following types of permanent life insurance policies odder th engines to initial cash value?
Single premium
Which of the following types of permanent life insurance policy offers the highest initial cash value?
Single premium
What type of policy covers 2 people and pays upon the death of the last insured?
Survivorship
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase ?
Ten-year endowment
What type of life insurance are credit policies issued as?
Term
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?
Term life
What type of life insurance fives the greatest amount fo coverage fro a limiter period of time?
Term life
The amount of coverage on a group credit life policy is limited to ?
The insureds total loan value
Under a renewable term policy
The renewable premium is calculated on the basis of the insureds attained age
The consideration clause of an insurance contract includes?
The schedule and amount of premium payments
