Life Insurance Exam 2

Who can make changes to the policy once it is in effect?

An executive officer of the insurer

All of the following statements are correct regarding credit life insurance EXCEPT

Benefits are paid to the borrower's beneficiary.

An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds

$50,000

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?

$50,000

What is the penalty for IRA distributions that are below the required minimum for the year?

50%

A tornado that destroys property would be an example of which of the following?

A peril

All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?

A60-year-old man

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

How are state Insurance Guaranty Associations funded?

By their members - authorized insurers

The type of insurance sold to a debtor and designed to pay the amount due due on a loan of the debtor dies before the loan is repaid is called

Credit life

The insurance company underwriter could find information concerning the personal activities and character of an applicant from which of the following report?

Producers report

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

Which of the following is true regarding a market value adjusted annuity?

The owner is guaranteed a fixed interest rate for a specific period of time.

J applied for a life insurance policy on January 10. The policy was issued on January 31. J's agent was vacationing at the time the policy was issued, so I did not receive the policy until February 18. J decides that he does not want the policy When would I need to return the policy to the insurer in order to receive a full refund of premium paid?

February 28th, or 10 days aften the time the policy is delivered.

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first.

What kind of policy does NOT typically require proof of insurability?

Group insurance

What type of insurance would be used for a Return of Premium rider?

Increasing Term

What type of insurance would be used for a return of premium rider

Increasing Term

Which of the following statements regarding HIV testing for life insurance is not true?

Insurers are barred from requesting HIV testing

In Modified Life policies, what happens to the premium?

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

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

Policy summary

Which of the following will be included in a policy summary?

Premium amounts and surrender values

The insurance company underwriter could find information concerning the personal activities and character of an applicant from which of the following reports?

Producer's report

In this state a temporary license may be issued for all of the following reasons EXCEPT

Producer's retirement.

Another name for a substandard risk classification is

Rated

The Federal Fair Credit Reporting Act

Regulates consumer reports.

All of the following are beneficiary designations except

Specified

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?

Spendthrift provision

Which of the following would help prevent a universal life policy from lapsing?

Target premium

The interest earned on policy dividends is

Taxable

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

J transferred his life insurance policy to his son two years before his death. Which of the following is true?

The entire face value of the policy will be included in J's taxable estate.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death

Which of the following best defines target premium in universal life

The recommended amount to keep the policy in force through out its lifetime

What is true about a spouse term rider

The rider is usually level term insurance

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy.

Where active employment is a condition of insurance, a group life insurance policy must contain a continuation of coverage provision during a period of total disability by

Timely payment of premium that would not have been required from the insured had total disability not occurred

What life insurance policy is considered interest sensitive

Universal life

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

Upon the last death

An insurance company receives an application with some information missing and issues the policy anyway. What is this called?

Waiver

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

If an applicant for a life insurance policy and person to be insured by the policy are 2 different people, the underwriter would be concerned about

Whether an insurable interest exists between the individuals

The two types of assignments are

absolute and collateral

For a retirement plan to be qualified, it must be designed for the benefit of

employees

Mortality- Interest + Expense =

gross premium

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

Military service or war