Life and Health Insurance
In a replacement situation, all of the following must be considered EXCEPT A. Limitations B. Exclusions C. Assets D. Benefits
C. Assets
How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? A. As soon as possible B. Within 20 days C. Within 60 days D. Within 90 days or as soon as reasonably possible, but not exceed 1 year
D. Within 90 days or as soon as reasonably possible, but not exceed 1 year
What information is gathered in Parts 1 & 2 of the application?
Part 1 includes general information including name, age, address, DOB, gender, income, marital status and occupation Part 2 includes medical information
Representation VS Warranty
Representations are statements believed to be true to the best of one's knowledge. A warranty is an absolutely true statement upon which the validity of the insurance policy depends.
Insurance transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the cost of unexpected losses to many individuals.
What is insurance?
The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's A. Attained age B. Assumed age C. Average age D. Issue age
A. Attained age
The term "fixed" in a fixed annuity refers to all of the following EXCEPT A. Death benefit B. Guaranteed rate of interest C. Equal annuity payments D. Amount and length of payments
A. Death benefit
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount? A. Equal to the original policy for as long a period of time that the cash values will purchase. B. In lesser amounts for the remaining policy term of age 100 C. Equal to the cash value surrendered from the policy D. The same as the original policy minus the cash value
A. Equal to the original policy for as long a period of time that the cash values will purchase.
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount? A. Equal to the original policy for as long a period of time that the cash values will purchase. B. In lesser amounts for the remaining policy term of age 100. C. Equal to the cash value surrendered from the policy. D. The same as the original policy minus the cash value.
A. Equal to the original policy for as long a period of time that the cash values will purchase.
The automatic premium loan provision is activated at the end of the A. Grace period B. Free-look period C. Elimination period D. Policy period
A. Grace period
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options
A. Guaranteed insurability option
A health insurance policy lapses but is reinstated within an acceptance timeframe. How soon from the reinstatement date will coverage for accidents become effective? A. Immdiately B. After 14 days C. After 21 days D. After 31 days
A. Immdiately
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) A. Inspection report B. Medical Information Bureau report C. Medical examination D. Attending Physician's Statement
A. Inspection report
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT A. Other insurance coverages B. Family health history C. Alcohol and tobacco consumption D. Recent surgeries
A. Other insurance coverages
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? A. Payor Benefit B. Jumpin Juvenille C. Juvenille Premium Provision D. Waiver of Premium
A. Payor Benefit
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A. Reduction of premium B. Paid-up addition C. Accumulation at interest D. Cash option
A. Reduction of premium
Which health insurance provision describes the insured's right to cancel coverage? A. Renewal provision B. Policy duration provision C. Insuring clause D. Cancellation provision
A. Renewal provision
An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary? A. Revocable B. Primary C. Contingent D. Irrevocable
A. Revocable
Before a customer's agent delivers his policy, the insurer makes a last-minute change to the policy. The agent informs the customer of this change, and he accepts it. What must the agent do now? A. The agent should ask the customer to sign a statement acknowledging that he is aware of the change. B. Nothing. After the explanation, the agent is not legally bound to do anything else. C. The agent must notify the beneficiary of the change in policy. D. If the change would affect the premium, the agent must have the customer sign a statement acknowledging the change.
A. The agent should ask the customer to sign a statement acknowledging that he is aware of the change.
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? A. The balance of the loan will be taken out of the death benefit. B. The policy beneficiary receives the full death benefit. C. The policy beneficiary takes over the loan payments. D. The policy is rendered null and void.
A. The balance of the loan will be taken out of the death benefit.
Who bears all of the investment risk in a fixed annuity? A. The insurance company B. The owner C. The beneficiary D. The annuitant
A. The insurance company
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT A. The policy is owned by the company B. Any type of insurance policy may be used C. The employer pays a bonus to a selected employee to fund the policy D. It is considered a nonqualified employee benefit
A. The policy is owned by the company
Which of the following is NOT true of life settlements? A. The seller must be terminally ill B. They could be used for a key person coverage C. They could be sold for an amount greater than the current cash value D. They involve insurance policies with large face amounts
A. The seller must be terminally ill
Which of the following statements is TRUE concerning irrevocable beneficiaries? A. They can be changed only with the written consent of that beneficiary B. They may be changed at any time C. They can never be changed D. They may be changed only on the anniversary date of the policy
A. They can be changed only with the written consent of that beneficiary
According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT A. Unearned premiums are retained by the insurance company. B. The insurer must provide the insured a written notice of the cancellation C. Claims incurred before cancellation must be honored D. An insurance company may cancel the policy a any time
A. Unearned premiums are retained by the insurance company.
What are the four elements of an insurance contract?
Agreement- Offer and acceptance Consideration Competent parties Legal purpose
The minimum number of credits required for partially insured status for Social Security disability benefits is A. 4 credits B. 6 credits C. 10 credits D. 40 credits
B. 6 credits
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive? A. 10% federal death benefit income tax, plus the amount of the accelerated benefit. B. Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit. C. There are no deductions taken from death benefit. D. Penalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income.
B. Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit.
The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the A. Master policy B. Entire contract C. Certificate of Insurance D. Aleatory contract
B. Entire contract
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? A. Company is the owner, and the company pays the premium B. Executive is the owner, and the executive pays the premium C. Company is the owner, but the executive pays the premium D. Board of directors is the owner, and the board of directors pays the premium
B. Executive is the owner, and the executive pays the premium
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance he can afford at this time, he wants to e sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Nonforfeiture options B. Guaranteed insurability option C. Dividend options D. Guaranteed renewable option
B. Guaranteed insurability option
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability , the policy includes a A. Nonforfeiture option B. Guaranteed insurability rider C. Paid-up additions option D. Cost of living provision
B. Guaranteed insurability rider
The policyowner wants to make 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 policyowner choose? A. Fixed amount option B. Interest only option C. Life income with period certain D. Joint and survivor
B. Interest only option
A guaranteed renewable disability insurance policy A. Cannot be cancelled by the insured before age 65. B. Is renewable at the insured's option to a specific age. C. Is renewable at the option of the insurer to a specified age of the insured. D. Is guaranteed to have a level premium for the life of the policy.
B. Is renewable at the insured's option to a specific age.
Which of the following statements is TRUE about a policy assignment? A. It authorizes an agent to modify the policy. B. It transfers rights of ownership from the owner to another person C. It is the same as the beneficiary designation D. It permits the beneficiary to designate the person to receive the benefits
B. It transfers rights of ownership from the owner to another person
What are the licensing requirements for someone who sells variable universal life insurance? A. Universal life and variable products B. Life insurance and securities C. Life insurance D. Securities
B. Life insurance and securities
What is the term for how frequently a policyowner is required to pay the policy premium? A. Consideration B. Mode C. Schedule D. Grace period
B. Mode
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. Which option would allow her to do this? A. Cash option B. Reduction of premium C. Paid-up option D. Accumulation at interest
B. Reduction of premium
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached to the policy? A. Premature death B. Return of premium C. Cost of living D. Decreasing term
B. Return of premium
If an applicant does not receive a new insurance policy, who would be held responsible? A. The applicant B. The agent C. The state D. The insurer
B. The agent
Which of the following is INCORRECT concerning a noncontributory group plan? A. The employee pays 100% of the premiums B. The employees receives individual policies C. They help to reduce adverse selection against the insurer D. They require 100% employee participation
B. The employees receives individual policies
A 40-year old man buys a whole life policy and names his wife as his beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the proceeds will go to A. The insurance company B. The insured's estate C. The insured's firstborn child D. Both children who share equally on per-capita basis
B. The insured's estate
Which of the following is true regarding health insurance underwriting for a person with HIV? A. The person may only be declined if he/she has symptoms. B. The person may not be declined for medical coverage solely based on HIV status. C. A person may be declined for HIV but not AIDS. D. The person may be declined.
B. The person may not be declined for medical coverage solely based on HIV status.
The policyowner of a universal life policy may skip paying the premium and the policy will not lapse as long as A. The next month's premium is sufficient to cover both the current premium amount and the skipped amount B. The policy contains sufficient cash value to cover the cost of insurance C. The previous premium payments were high enough to create an excess of premium D. The policyowner cannot skip premiums without the policy lapsing
B. The policy contains sufficient cash value to cover the cost of insurance
All of the following benefits are available under Social Security EXCEPT A. Death benefits B. Welfare benefits C. Old-age and retirement benefits D. Disability benefits
B. Welfare benefits
The main difference between immediate and deferred annuities is A. The amount of each payment B. When the income payments begin C. How the annuity is purchased D. The number of insured's
B. When the income payments begin
An insured owns a $50,000 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 $20,000. What would be the face amount of the new term policy? A. $20,000 B. $25,000 C. $50,000 D. The face amount will be determined by the insurer.
C. $50,000
What is a material misrepresentation? A. Any misstatement by the producer B. Concealment C. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company D. Any misstatement made by the applicant for insurance
C. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision A. The elimination period will be extended 6 months for each year of age misstatement B. Because the misstatement occurred more than 2 years ago, it has no effect. C. Amounts payable under the policy will reflect the insured's correct age. D. The contract will be deemed void because of the misstatement of age
C. Amounts payable under the policy will reflect the insured's correct age.
Which of the following would be considered a nonmedical insurance application? A. An application submitted with the agent's report B. Any application for life insurance C. An application on which the medical information is completed by the applicant and the agent only D. An application that does not ask any questions abut the applicant's medical history
C. An application on which the medical information is completed by the applicant and the agent only
Which of the following products will protect an individual from outliving his or her money? A. Adjustable life policy B. Permanent Life insurance C. Annuity D. Joint and survivor policy
C. Annuity
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? A. Incontestability period B. Assignment C. Automatic premium loan D. Waiver of premium
C. Automatic premium loan
The accelerated benefits provision will provide for an early payment of the death benefit when the insured A. Has earned enough credits B. Becomes disabled C. Becomes terminally ill D. Needs to borrow money
C. Becomes terminally ill
According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT A. Late payments B. Failure to pay off a loan C. Disputes regarding consumer report information D. Tax delinquencies
C. Disputes regarding consumer report information
Which of the following entitles can legally bind to coverage? A. Federal Insurance Board B. Agent C. Insurer D. The insured
C. Insurer
What is the benefit of choosing extended term as a nonforfeiture option? A. It allows for coverage to continue beyond maturity date. B. It can be converted to a fixed annuity. C. It has the highest amount of insurance protection. D. It matures at age 100
C. It has the highest amount of insurance protection.
Under the Fair Credit reporting act, individuals rejected for insurance due to information contained in a consumer report A. Must be advised that a copy of the report is available to anyone who requests it. B. May sue the reporting agency in order to get inaccurate data corrected. C. Must be informed of the source of the report. D. Are entitled to obtain a copy of the report from the party who ordered it.
C. Must be informed of the source of the report.
An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? A. Approved the application B. Issued the policy C. Neither approved the application nor issued the policy D. Both approved the application and issued the policy
C. Neither approved the application nor issued the policy
Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss? A. Claims Initiation B. Consideration C. Notice of Claim D. Loss Notification
C. Notice of Claim
Which of the following riders would NOT cause the death benefit to increase? A. Cost of living rider B. Accidental Death rider C. Payor benefit rider D. Guaranteed insurability rider
C. Payor benefit rider
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a A. Nonforfeiture option B. Rollover C. Settlement option D. Nontaxable exchange
C. Settlement option
Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy? A. Guaranteed insurability rider B. Payor benefit rider C. Substitute insured rider D. Term rider
C. Substitute insured rider
Nonforfeiture values guarantee which of the following for the policyowner? A. That the death benefit will be paid in a lump sum B. That the policy premiums will never increase C. That the cash value will not be lost D. That the dividends will be paid annually
C. That the cash value will not be lost
Which of the following is NOT true regarding the annuitant? A. The annuitant receives the annuity benefits B. The annuitant must be a natural person C. The annuitant cannot be the same person as the annuity owner D. The annuitant's life expectancy is taken into consideration for the annuity
C. The annuitant cannot be the same person as the annuity owner
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? A. The insured's estate B. The primary beneficiaries estate C. The insured's contingent beneficiary D. The insurance company
C. The insured's contingent beneficiary
On a health insurance application, a signature is required from all of the following individuals EXCEPT A. The policyowner B. The agent C. The spouse of the policyowner D. The proposed insured
C. The spouse of the policyowner
An absolute assignment is a A. Change of beneficiary B. Change of insurer C. Transfer of all ownership rights in a policy D. Transfer of some ownership rights in a policy
C. Transfer of all ownership rights in a policy
Which of the following statements regarding the taxation of Modified Endowment Contract is FALSE? A. Policy loans are taxable distributions B. Accumulations are tax deferred C. Withdrawals are not taxable D. Distributions before age 59 1/2 incur a 10% penalty on policy gains
C. Withdrawals are not taxable
Which of the following is NOT an example of a business use of life insurance? A. Executive Bonuses B. Key Person C. Workers compensation D. Buy-sell Funding
C. Workers compensation
What is the waiting period on a waiver of premium rider in life insurance policies? A. 30 days B. 3 months C. 5 months D. 6 months
D. 6 months
According to the Entire Contract provision, a policy must contain A. A declarations page with a summary of insureds B. Buyer's guide to life insurance C. Listing of the insured's former insurer(s) for incontestability provisions D. A copy of the original application for insurance
D. A copy of the original application for insurance
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is A. An executive annuity plan B. Subject to government standards C. Illegal D. A nonqualified annuity plan
D. A nonqualified annuity plan
A insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? A.Unilateral B. Conditional C. Personal D. Adhesion
D. Adhesion
An agent is ready to deliver a policy to a applicant but has not yet received payment. Upon delivery, the agent collects the applicants premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? A. Offer her a secondary policy B. Ask the applicant to sign a statement that acknowledges that the policy had been delivered C. Collect a late payment fee D. Ask her to sign a statement of good health
D. Ask her to sign a statement of good health
SIMPLE plans require all of the following EXCEPT A. No other qualified plan can be used B. No more than 100 employees C. Employees must receive a minimum of $5,000 in annual compensation D. At least 1,000 employees
D. At least 1,000 employees
To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? A. When the applicant credit is checked B. When the policy is delivered C. At the initial interview D. At the time of the application
D. At the time of the application
A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a A. Key person policy B. Split-Dollar Plan C. Stock redemption plan D. Buy-sell agreement
D. Buy-sell agreement
What is he clause that describes the method of paying the death benefit in the event that the insured and beneficiary and both killed in the same accident? A. Spendthrift clause B. Settlement clause C. Nonforfeiture clause D. Common Disaster clause
D. Common Disaster clause
Which of the following is NOT typically excluded from life policies? A. Self-inflicted death B. Death that occurs while a person is committing a felony C. Death due to war or military service D. Death due to plane crash for a fare-paying passenger
D. Death due to plane crash for a fare-paying passenger
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A. Spouse rider B. Children's rider C. Additional insured rider D. Family term rider
D. Family term rider
Who must pay for the cost of a medical examination required in the process of underwriting? A. Applicant B. Underwriters C. Department of Insurance D. Insurer
D. Insurer
What is the benefit of choosing extended term as a nonforfeiture option? A. It matures at age 100 B. It allows for coverage ton continue beyond maturity date C. It can be converted to a fixed annuity D. It has the highest amount of insurance protection
D. It has the highest amount of insurance protection
Which of the following is NOT true regarding policy loans? A. Policy loans can be repaid at death B. An insurer can change interest on outstanding policy loans C. A policy loan may be repaid the policy is surrendered D. Money borrowed from the cash value is taxable
D. Money borrowed from the cash value is taxable
Which option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? A. Corridor option B. Variable option C. Option A D. Option B
D. Option B
Which of the following factors determines the amount of each installment paid in a life income option arrangement? A. Projected income B. Recipient's health and death benefits C. Projected life insurance and health insurance D. Recipient's life expectancy and amount of principal
D. Recipient's life expectancy and amount of principal
What is the best way to change an application? A. Erase the previous answer and replace it with the new answer. B. White-out the previous answer C. Draw a line through the incorrect answer and insert the correct one D. Start over with a fresh application
D. Start over with a fresh application
All of the following would be different between qualified and nonqualified retirement plans EXCEPT A. Taxation of withdrawals B. Taxation of contributions C. IRS approval requirements D. Taxation on accumulation
D. Taxation on accumulation
Which is true regarding obtaining underwriting sources? A. The insurer does not need to inform the applicant of how the information is gathered; informing only of the sources is sufficient. B. The insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources. C. It is illegal to obtain information from outside sources in order to determine an applicant's insurability. D. The applicant must be informed of the sources contacted and how the information is being gathered.
D. The applicant must be informed of the sources contacted and how the information is being gathered.
What is the purpose of a disclosure statement in life insurance policies? A. To obtain important underwriting information from the applicant B. To help consumers compare policy prices C. To protect agents and insurers against lawsuits D. To explain features and benefits of a proposed policy to the consumer
D. To explain features and benefits of a proposed policy to the consumer
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A. Universal life- option B B. Equity Indexed Universal Life C. Variable Universal life D. Universal Life- option A
D. Universal Life- option A
What is the name of the insured who enters into a viatical settlement? A. Third party B. Contingent C. Viatical broker D. Viator
D. Viator
In a group health policy, a probationary period is intended for people A. Who had a pre-existing condition at the time they joined the group B. Who had additional coverage through a spouse C. Who want lower premiums D. Who joined the group after the effective date
D. Who joined the group after the effective date
