Life Exam

The advantage of reinstating an original life policy is

the premiums are based on the younger age

Under a Renewable Term policy,

the renewal premium is calculated on the basis of the insured's attained age

All of these are considered to be a benefit under Social Security, EXCEPT for:

unemployment

The free-look provision begins

upon receipt of the policy by the policy owner

A(n) _____ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.

variable

When is it appropriate for a producer's spouse to be the primary beneficiary on an applicant's life insurance policy?

when insurable interest exists

When does a life insurance contract become effective if the initial premium is not collected during the application process?

when producer delivers policy and collect initial premium

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

whole life

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a:

$25,000 individual whole life policy

An producer who violates a cease and desist order may, after a hearing, be fined up to

$500

Which of the following types of term life policies most likely contains a Renewability feature?

10 Year Convertible Term

A Cost of Living rider gives the insured

Additional death benefits

Which of the following consists of an offer, acceptance, and consideration?

Contract

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing term rider

Who makes the legally enforceable promises in a unilateral contract?

Insurance company

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n):

Insuring agreement

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life Income

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

K buys a policy where the premium stays fixed for the first 5 years. The premium than 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 is NOT an element of Life insurance premiums?

Morbidity rate

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends

A policyowner is able to choose the frequency of premium payments through what policy feature?

Premium Mode

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:

Representations

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

What is Old Age and Survivors Health Insurance (OASDHI) also known as?

Social Security

Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?

Split-dollar plan

What type of life insurance are credit policies issued as?

Term

What kind of life insurance product covers children under their parent's policy?

Term rider

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA

The Consideration clause in a life insurance policy indicates that a policy owner's consideration consists of a completed application and

The initial premium

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life

Group life insurance policies are generally written as:

annually renewable term

A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the

cost of insurance

All of these are characteristics of an Adjustable Life policy EXCEPT:

face amount can be adjusted using policy dividends

Paying insurance premiums on a more frequent basis will cause the policy to have

higher premiums

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

In an individual retirement account (IRA), rollover contributions are:

not limited by dollar amount

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

If a producer completes an insurance application, collects the initial premium, and issues the appropriate receipt,

Coverage will be contingent upon the insurer's underwriting policies

At what time must a policy owner have insurable interest on the insured in order for the life policy to be valid?

At the time of application

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

Who is not eligible to receive commissions from the sale of an insurance product?

Corporate executive

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

How are Roth IRA distributions normally taxed?

Distribution are received tax-free

Which of these statements in INCORRECT regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

A Universal Life policy is sometimes referred to as unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the

Expense charges

Which of the following Nonforfeiture options offers the highest death benefit?

Extended term

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

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible Installment Deferred

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

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

Dividends paid from a life insurance policy are

Issued by the insurer

Credit Life insurance is:

Issued in an amount not to exceed the amount of the loan

At what point does an informal agreement become a binding contract?

When consideration is provided by one of the parties to the contract

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Level

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Life Annuity with Period Certain