Insurance exam #1

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called

Paid-up additions

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount

A domestic insurer issuing variable contracts must establish one or more

Separate accounts

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments on the interest earned on the death benefit

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options, EXCEPT

Reduction of premium

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal

What is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Defamation

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will be purchase

When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount

In life insurance policies, cash value increases

Grow tax deferred.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life expectancy

What is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

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

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?

The insurer

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

When would a 20-pay whole life policy endow?

When the insured reaches age 100

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant

With the policy

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

interest-sensitive Whole Life