Life Insurance

Which nonforfeiture option provides coverage for the longest period of time? a.) Extended term b.) Paid-up option c.) Accumulated at interest d.) Reduced paid-up

d.) Reduced paid-up

Which of the following is the best reason to purchase life insurance rather than annuities? a.) To liquidate a sum of money over a period of years. b.) To create regular income payments. c.) To liquidate a sum of money over a lifetime. d.) To create an estate.

d.) To create an estate.

The insured is also the policyowner of a whole policy. What age must the insured attain in order to receive the policy's face amount? a.) 65 b.) 70 1/2 c.) 90 d.) 100

d.) 100

In a single employer group plan, what is the name of the policy issued to the employer? a.) Certificate of insurance. b.) Employer-insurer contract. c.) Certificate of authority. d.) Master contract.

d.) Master contract.

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a.) Implied b.) Apparent c.) Assumed d.) Express

a.) Implied

Which of the following is NOT true regarding a Certificate of Authority? a.) It may be necessary for transacting business in a specific state. b.) It is an equivalent of insurance license. c.) It is issued by the state department of insurance. d.) It is issued to group insurance participants.

d.) It is issued to group insurance participants.

All of the following are business uses of life insurance EXCEPT a.) Compensating executives. b.) Funding against financial loss caused by the death of a key employee. c.) Funding business continuation agreements. d.) Funding against company's general financial loss.

d.) Funding against company's general financial loss.

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity ? a.) Investment performance of the company. b.) Investment performance of the insured. c.) Statewide predetermined annual interest rate. d.) Insurer's guaranteed minimum rate of interest.

d.) Insurer's guaranteed minimum rate of interest.

Which of the following statements is correct regarding a whole life policy? a.) The policyowner is entitled to policy loans. b.) Cash values are not guaranteed. c.) The policy premium is based on the attained age. d.) The death benefit may increase or decrease during the policy period.

a.) The policyowner is entitled to policy loans.

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as a.) Viatical approach. b.) Needs approach. c.) Human life value approach. d.) Estate planning.

b.) Needs approach.

What is the waiting period on a Wavier of Premium rider in life insurance policies? a.) 30 days b.) 3 months c.) 5 months d.) 6 months

d.) 6 months

When the insured selects the extended term non-forfeiture option, the cash value will be used to purchase term insurance with what face amount? a.) Equal to the original policy for as long as 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 as the cash values will purchase.

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? a.) It must be assumed that the death of the insured will occur immediately. b.) Need is predicted using the number of years until the insured's retirement. c.) Coverage is based on the predicted needs of that family. d.) The death of an insured must be premature.

b.) Need is predicted using the number of years until the insured's retirement.

Which of the following is NOT true of life settlements? a.) They could be used for a key person coverage. b.)The could be sold for an amount greater than the current cash value. c.) They involve insurance policies with large face amounts. d.) The seller must be terminally ill.

d.) The seller must be terminally ill.

What is the benefit of choosing extended term as a non-forfeiture option? a.) It can be converted to a fixed annuity. b.) It has the highest amount of insurance protection. c.) It matures at age 100. d.) It allows for coverage to continue beyond maturity date.

b.) It has the highest amount of insurance protection.

Which of the following statements is an accurate comparison between private and government insurers? a.) Private insurers provide insurance in areas where the government will not. b.) Private insurers may be authorized to transact insurance by a state insurance departments. c.) Insurance provided by the government is called federal insurance. d.) Private insurers offer fewer lines of insurance than government insurers.

b.) Private insurers may be authorized to transact insurance by a state insurance departments.

In addition to the premium charged for the coverage provided in the policy, a surplus lines broker may collect_____. a.) 1% to be deposited in the Surplus Lines Broker's Widow Fund(SLBWF). b.) State or federal taxes required on the policy. c.) 3% filing fee. d.) A per diem for time consumed in writing the risk.

b.) State or federal taxes required on the policy.

A 27-year old professional has limited income and can only budget $15 per month for life insurance. Which of the following life insurance policies would provide the largest face amount for that amount of premium? a.) 30-pay life insurance b.) Term insurance c.) Universal life d.) Ordinary whole life

b.) Term insurance

Which of the following describes the tax advantages of a qualified retirement plan? a.) Employer contributions are not taxed when paid out to the employees. b.) The earnings in the plan accumulate tax deferred. c.) Distributions prior to age 59 1/2 are tax deductible. d.) Employer contributions are deductible as a business expense when the employee receives benefits.

b.) The earnings in the plan accumulate tax deferred.

Which of the following protests the insured from an unintentional policy lapse due to a nonpayment of premium? a.) Reinstatement b.) Reduced paid-up option c.) Automatic premium loan d.) Extended term

c.) Automatic premium loan

In Modified Life policies, what happens to the premium? a.) It is higher the first policy years. b.) It varies at the beginning, but levels out by the end of the third year. c.) It is level at the beginning and increases after the first few years. d.) It always remains level.

c.) It is level at the beginning and increases after the first few years.

How long will the beneficiary receive payments under the single life settlement option? a.) For a specified period of time. b.) Until the insured's age of 100. c.) Until the beneficiary's death. d.) Until the insured's death.

c.) Until the beneficiary's death.

What does "liquidity" refer to in a life insurance policy? a.) The death benefit replaces the assets that would have accumulated if the insured had not died. b.) The policyowner receives dividend checks each year. c.) The insured receives payments each month in retirement. d.) Cash values can be borrowed at any time.

d.) Cash values can be borrowed at any time.

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary? a.) It will not affect the benefits paid to the beneficiary. b.) It will reduce the benefits paid up the beneficiary. c.) It will increase the benefits paid to the beneficiary. d.) It will decrease the benefits paid to the beneficiary.

d.) It will decrease the benefits paid to the beneficiary.