Life Insurance Exam

Insuring Clause

Which provision of a life insurance policy states that the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

family term rider

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

The insured's premiums will be waived until she is 21.

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

level term

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

survivor protection

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Certain groups of employees only

A tax-sheltered annuity is a special tax-favored retirement plan available to

A policy is reissued with a reduction in cash value

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

The interest is not taxable since it remains inside the insurance policy.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

the owner must be the party to receive benefits

All of the following are true of an annuity owner EXCEPT

the guaranty association

All of the following entities regulate variable life policies EXCEPT

the policy is owned by the company

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

profit-sharing plan

An employer has sponsored a qualified retirement plan for its employees where the employees where the employer will contribute money wherever a profit is realized. What is this called?

paid-up additions

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?

cash option

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

the period of time during which accumulated money is converted into income payments

Best description of what an annuity period is:

One-Year Term Option

Dividend option in which the policyowner uses the dividend as a single premium to purchase one-year term protection is referred to as

are subject to vesting requirements

Employer contributions made to a qualified plan..

They are not included as income for the employee, but are taxable upon distribution

How are contributions to a tax-sheltered annuity treated with regards to taxation?

fixed period

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

settlement option

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a?

the owner

In a life settlement contract, whom does the life settlement broker represent?

Regulates consumer reports

The Federal Fair Credit Reporting Act does what

Protect private customer information filed with a financial institution.

The Gramm-Leach-Bliley Act was passed to

tax deductible contributions

The advantage of qualified plans to employers is

annually renewable term

The death protection component of Universal Life Insurance is always..

Annually Renewable Term

The least expensive first year premium payment is found in.. (level term)

Incontestability Clause

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the?

When the income payments begin

The main difference between immediate and deferred annuities is...

to purchase a smaller amount of the same type of insurance as the original policy

The paid-up addition option uses the dividend to..

The death benefit can be increased by providing evidence of insurability.

The policyowner of an adjustable life policy wants to increase the death benefit. In order to to do that, what may happen?

interest only option

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. What settlement option should the policyowner choose?

Tax deductible by the employer

The premiums paid by the employer in a business life insurance policy are

convertible term policy

The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a...

an individual variable life policy

To which of the following policies would the State regulations on illustrations NOT apply?

Nothing, the payments will cease

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive

The same face amount as in the whole life policy

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

Must be informed of the source of the report

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

owners rights

What explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

Coverage ends and the policy cannot be reinstated

What happens when a policy is surrendered for its cash value?

It has the highest amount of insurance protection

What is the benefit of choosing extended term as a nonforfeiture option?

Common Disaster Clause

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

$2,500

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

6 months

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

Buy-sell agreements are normally funded with a life insurance policy

What is true concerning a buy-sell agreement?

increasing term

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

Universal Life

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

it is reduced to the amount of what the cash value would buy as a single premium

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

extended term

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

for 31 days

When an employee terminates coverage under a group insurance policy, coverage continues in force

return 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 of the premiums paid. Which rider is attached to the policy?

Reduced Paid-Up Option

Which nonforfeiture option provides coverage for the longest period of time

the seller must be terminally ill

Which of the following is NOT true of life settlements?

It does not guarantee that the entire principal amount will be paid out

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?

They are required by state law to be included in the policy

Which of the following is TRUE about nonforfeiture values?

beneficiaries are not identified by name

Which of the following is true about a class designation?

universal life -option A

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

life income

Which of the following settlement options in life insurance is known as straight life?

the policy owner is entitled to policy loans

Which of the following statements is correct regarding a whole life policy?

Variable Universal Life

Which of the following types of policies allows for a flexible premium and a variable investment component

premium amounts and surrender values

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

Being permanently disabled

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Both guarantee that the principal and interest will be fully paid out

Which of the following would be TRUE of both the fixed period and fixed amount settlement options?

target premium

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

One party accepts the exact terms of the other party's offer

Which statement best describes agreement as it relates to insurance contracts?

limited pay whole life

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?

Joint and Survivor

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?

conservation

a legally acceptable attempt by an existing insurer to dissuade a current policy owner from the replacement of existing life insurance is called..

Payor Benefit

a married couple purchase a life insurance policy on their newborn baby. they are concerned about what may happen to the policy if either one of them were unable to continue making payments due to death or disability. what policy rider should their agent recommend

30 days

a producer receives notice that his license has been terminated. if the producer wants to have the charges reviewed in court, within what time period must the request be made?

Department of Insurance

a proposed policy form includes accelerated benefits. before the policy can legally be used, it must be approved by which of the following

a percentage of the face amount

a viatical settlement is a transaction outside of the life insurance policy where the owner sells the life insurance policy for which of the following

the payable premium amount steadily decreases throughout the duration of the contract

all are true regarding a decreasing term policy EXCEPT

contributions are tax deductible

all of the following are true of a non qualified deferred compensation plan EXCEPT

Reports may be sent to anyone who requests one

all of the following are true regarding the fair credit reporting act EXCEPT

The policy face amount remains level throughout the life of the policy

all of the following statements about indexed whole life insurance are correct EXCEPT

Simplified Employee Pension Plan (SEP)

an IRA purchased a small employer to cover employees is known as

Misrepresentation

an insurance agent visits a potential client and explains various types of policies. the customer displays lack of interest, so the agent guarantees higher dividends than he knows would be possible. which term describes what the agent has done

document stating which policies are being proposed for replacement and copy of notice or annuity form

an insured decides to replace his life insurance policy with one offered by a different insurer. which of the following should the old insurer submit to the new insurer?

straight life

annuitant does = nothing to beneficiary. what type of policy is this?

Issuing policies on behalf of the insurer

as an insurers field underwriter, a producer has all of the following responsibilities EXCEPT

sensitive whole life

current assumption life =

by the business

executive bonus is not owned by who

6 months

for how long is an insurance company allowed to defer policy loan requests

90 days

how long can you wait to reinstate a license

STOLI (stranger-originated life insurance)

if a life insurance policy is purchased by someone who has no insurable interest in the insured, it is considered

Guarenteed Insurability Rider

if a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving proof of insurability, what's the rider

immediately

if a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan

when the policy is delivered

if the policy summary for a life insurance policy is not given when the applicant is taken, when must the policy summary be given to the policy owner

when an insurer's underwriter approves coverage

in forming an insurance contract, when does acceptance usually occur

30 days from the date the contract is executed

in the state of illinois, a viatical settlement contract must contain an unconditional right to cancel. how long does this right remain in effect?

securities, producer, FINRA

licenses needed for variable insurance

The face value of the policy is payable to the beneficiary upon the death of the insured.

life insurance creates an immediate estate. which of the following best explains this statement

selection, classification, and risk selection

life insurance is classified by

not be lost

nonforfeiture values guarantee what about cash value

dividend

paid-up additions used what to purchase smaller amounts of the same type of insurance as original policy

25%

replacement is a sale that may result in existing insurance coverage being borrowed against in the form of a loan for more than what min percentage of its value

life solicitation rule

ronald is buying life insurance policies. he is unclear which one to buy, and his insurer explains the costs of similar plans, in addition to their basic features. which rule requires the insurer to disclose such information

insurance interest

stranger oriented are in direct opposition to

earning are tax deferred

tax advantage of qualified retirement

needs to be approved by the IRS

tax qualified annuities...

maintain records related to replacement for 3 years

the duty of the replacing insurer must keep records for how many years

spouse term and children's term

the family term rider incorporates

at the application date

the full premium was submitted with the application for life insurance, and the policy was issued two weeks after as requested. when does the policy coverage become effective?

$500

the replacement regulation does not apply to situations in which the total existing coverage to be replaced represents less than

Misrepresentation

the replacement regulation minimizes..

death benefit

the term "fixed" in fixed annuity refers to all of the following EXCEPT

6 credits

to attain currently insured status under social security, a worker must have earned at least how many credits during the last 13 quarters

non renewable coverage expiring in 8 years

to which of the following situations does the replacement regulation apply

when replacing a policy with a different insurer that is under different ownership than the current company

under what conditions must an insured sign a notice regarding replacement of life insurance or annuity form

if there is a transfer for value

under which of the following conditions would life insurance proceeds be taxable by the federal government

the U.S. department of treasury

variable life insurance is regulated by all of the following entities EXCEPT

limited, straight life, and single premium

what are the ways to pay in a whole life policy

specific information about the policy

what is NOT included in the buyers guide

Minimum Death Benefit

what is guaranteed under a variable whole life insurance policy

it provides the highest monthly benefit

what is true regarding pure life annuity settlement options

it requests the policy owner to pay all overdue premiums with interest before the policy is reinstated

what statement regarding the reinstatement provision is true

variable, group, and annuities

what types of plans are exempt under life solicitation

prior to initial premium

when should buyers guide be distributed

a general account

where are premiums from fixed annuities invested

variable whole life

which of following types of insurances is investment based, has a level fixed premium, and a non guaranteed cash value

application

which of the following is the basic source of information used by the company in the risk selection process

a director of an insurance company

which of the following would NOT be allowed to offer insurance advice for a fee or commission in this state

MIB

which of the following would provide an underwriter with information concerning an applicants health history

producer

whose responsibility to make sure application is complete

health insurance policies in force

all of the following information needs to be included on an application for life insurance EXCEPT

Fair Credit Reporting Act

an applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts

currently insured

an employee dies having 6 quarters of coverage during the previous 13-quarter period. what status of coverage does the employee have under social security

3 years

the policy loans provision states that the insurer must advance to the policy owner a sum up to the policy's cash value after the full amount of premiums have been paid for how long

75%

what is the maximum percentage of the face amount of a life insurance policy that can be paid in an acceleration of benefits

100%

what percentage of a company's employees must take part in a noncontributory group life plan

income payments begin within 1 year from the date of purchase

which of the following is NOT true regarding a deferred annuity

Term insurance

which of the following types of insurance products would be appropriate for an individual with low income and high insurance needs

the owner of a shop

which of the following would NOT be eligible for coverage under key person

Whole Life/Universal Life

which policy accumulates cash value

applicants who may require a larger death benefit in the future should buy convertible term insurance

which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs

company

who bears all the risk in a fixed annuity