Life Insurance Exam
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
How many days' notice must an insurer provide before terminating the appointment of an independent agent?
180 days
Group life insurance may be issued to any association that insures how many members?
25
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance
All of the following could own group life insurance EXCEPT
A group needing low cost life insurance.
An individual was involved in a court case, wherein a victim insurer's loss totaled $10,000. That individual was caught making a misrepresentation under oath. What kind of violation is it?
A third degree felony
The minimum interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500
The minimum interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500.
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice
All'other factors being equal, the least expensive first-year premium payment is found in
Annually Renewable Term
When an annuity is written, whose life expectancy is taken into account?
Annuitant
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
When must insurable interest exist in a life insurance policy?
At the time of application
The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called
Avoidance.
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed
What license or licenses are required to sell variable annuities?
Both life insurance license and securities license
Which of the following best describes fixed-period (period certain) settlement option?
Both the principal and interest will be liquidated over a selected period of time
Carol is insured under her employers group life insurance plan at her place of employment. All of the following statements about her coverage are true EXCEPT?
Carol could choose what type of insurance her conversion policy provided (term or permanent)
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral assignment
Which of the following is TRUE about credit life insurance?
Creditor is the policyowner
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
Depreciation period
Which of the following will NOT be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
All of the following actions can be described as twisting EXCEPT
Explaining to client the advantagls of permanent insurance over term and suggesting changine policies
A man wants to buy a life insurance policy in which he can count on guaranteed minimum benefits. Which type should he buy?
Fixed
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?
Fixed period
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
Guaranteed insurability rider
If life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider,
What type of annuity can be purchased with a single premium and provides benefit payments immediately?
Immediate
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?
Income tax on distributions and no penalty,
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?
Income tax on distributions and no penalty.
A life insurance policy has a legal purpose if both of which of the following elements exist?
Insurable interest and consent
Which of the following protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment
Insurance Guaranty Association
What are the two components offa universal policy?
Insurance and cash account
Who makes up the Medical Information Bureau?
Insurers
Which of the following is true regarding the spendthrift clause in life insurance policies
It can protect the policy proceeds from creditors of the beneficiary
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
Which of the following best describes the MIB?
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following best describes annually renewable term insurance?
It is level term insurance.
Which of the following is TRUE regarding the antity period?
It may last for the lifetime of the annuitant.
Which of the following is true about the premium on the children's rider in a life insurance policy?
It remains the same no matter how many children are added to the policy.
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
Juvenile Life is classified as any life insurance purchased by a minor.
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of
Option B
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
Which clause stipulates that life insurance premiums can be paid in advance of policy issuance?
Payment of Premium Clause
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit Rider
Which of the following riders would NOT cause the death benefit to increase
Payor Benefit Rider
Based on Human Life Value Approach, which of the following is NOT used to calculate an individuals life value?
Predicted needs of the family after the insureds death
All of the following are examples of risk retentionEXCEPT
Premiums
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount.
Which type of insurance is based on mutual agreement among the subscribers?
Reciprocal Insurance
Which type of insurance is based on mutual agreements among subscribers?
Reciprocal insurance
Which type of insurance is based on mutual agreements among subscribers?
Reciprocal insurances
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurability
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life.
If a person has been convicted of a felony involving dishonesty and wants to obtain an insurance license, which of the following is true?
Special permission must be granted by the superintendent
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
Survivor protection
A 60 year old participant in a 401K plan takes a distribution and rolls it over within 60 days. Which of the following is true?
The amount of distribution is reduced by the amount of 20% withholding tax
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% withholding tax
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment.
In a fixed annuity which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
The annuity owner dies during the accumulation period without naming a beneficiary. Annuitys cash value exceeds premiums paid. Which of the following is TRUE?
The cash value will be paid to the annuitants estate
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exarn. If the policy is issued, what would be the policy's effective date?
The date of medical exam
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam (whichever is later)
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
The employer is the owner and beneficiary
Which of the following are generally NOT considered when underwriting group insurance?
The insureds' medical history
An agent has held an active license in good standing for the past 10 years, but this year, the agent's appointment with his insurer has been terminated for over 60 days. Which of the following is true of the agent's license?
The license will expire,
All of the following are true regarding decreasing term policy except
The payable premium amount steadily decreases throughout the duration of the contract
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the animuitart dies
All of the following statements are true regarding installments for a fixed amount except
The payments will stop with the annuitant dies
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
All of the following statements concerning the use of life insurance as an executive bonus are correct except
The policy is owned by the company (policy is owned by the employee)
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount with interest equals or exceeds the cash valuel
The owner of a life insurance policy wishes to name 2 beneficiaries for the policy proceeds. What will the solicitation insurance producer say?
The policyowner can specify the way proceeds are split in the policy
In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this?
The risht to determine the wording of a policy
In an adjustable life policy all of the following can be changed by the policyowner except
The type of investment
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
Annuity contracts grow tax deferred. That means that
There is no current taxation upon the growth in the annuity
When an individual purchases insurance, what risk management technique is he or she practicing?
Tranfer
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal life
When would a 20-pay whole life policy endow?
When the insured reaches age 100
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?
Withdrawn amounts are taxed on a last in, first out basis.
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly
In a group life insurance policy, the employer may select all of the following EXCEPT
beneficiary
The automatic premium loan provision is activated at the end of the
grace period
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
it will increase because the insured will be 5 years older than when the policy was originally purchased,
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
loint Life
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?
the insured's premiums will be waived until she is 21.