life insurance

#45. An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? a) Nothing b) $50,000 c) $100,000 d) $200,000

$100,000

An insurer must present a buyer's guide and policy summary prior to accepting the applicant's initial premium, unless the policy contains an unconditional refund provision within at least how many days? 10 15 20 30

10

All of the following actions may be brought against an insurance agency found guilty of withholding knowledge of an appointed licensee's violation of the Insurance Code EXCEPT A fine of no more than $300,000. Suspension of the agency's license. Revocation of the agency's license. A cease and desist order.

A fine of no more than $300,000.

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an Self-insurer. Authorized insurer. Local insurer. Certified insurer.

Authorized insurer.

In order to receive a commission, a person is required to Be licensed as an insurance producer. Sell, solicit, or negotiate insurance. Defer his/her commissions to the insurer. Assign the commission to the Department of Insurance.

Be licensed as an insurance producer.

All of the following information about a customer must be used in determining annuity suitability EXCEPT Beneficiary's age. Tax status. Financial experience. Annual income.

Beneficiary's age.

All of the following are personal uses of life insurance EXCEPT Buy-sell agreement. Survivor protection. Estate creation. Cash accumulation.

Buy-sell agreement.

An insurance producer license may be renewed if the producer has paid the applicable fees, submitted the renewal form to the Commissioner, and Passed the required renewal examination. Completed continuing education requirements. Claimed residence in the State of Tennessee. Met all sales goals of the appointing insurer.

Completed continuing education requirements.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT An offer of employment. Stocks, securities, or bonds. An offer to share in commissions generated by the sale. Dividends from a mutual insurer.

Dividends from a mutual insurer.

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? Twisting Defamation False advertising Unfair claims

False advertising

All of the following are dividend options EXCEPT Fixed-period installments. Accumulated at interest Reduction of premium. Paid-up additions.

Fixed-period installments.

Life insurance death proceeds are Generally not taxed as income. Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income. Taxed as a capital gain. Taxed as ordinary income.

Generally not taxed as income

Stranger-originated life insurance policies are in direct opposition to the principle of Law of large numbers. Good faith. Indemnity. Insurable interest.

Insurable interest.

All of the following are Nonforfeiture options EXCEPT Cash surrender Extended term Reduced paid-up Interest only

Interest only

What is the main purpose of the Seven-pay Test? It guarantees the minimum interest. It determines if the insurance policy is a MEC. It requires level premium payments for 7 years. It ensures that the policy benefits are paid out in 7 years.

It determines if the insurance policy is a MEC.

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? It will likely be the average premium issued to standard risks. The applicant's habits and health do not affect the premiums. It will likely be lower because the applicant is a preferred risk. It will likely be higher because the applicant is a substandard risk.

It will likely be higher because the applicant is a substandard risk.

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used??? Fixed period Fixed amount Lump sum Life income

Lump sum

For the purpose of making an investigation, the Commissioner does NOT have the power to do which of the following? Make testimony and documents available to the public Subpoena witness Examine witness under oath Obtain evidence in the form testimony and documents

Make testimony and documents available to the public

What is the term for how frequently a policyowner is required to pay the policy premium? Mode Schedule Grace period Consideration

Mode

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the One-year term option. Paid-up option. Accelerated endowment. Paid-up additions.

One-year term option.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will Pay the policy proceeds only if it would have issued the policy. Pay the policy proceeds up to an established limit. Not pay the policy proceeds under any circumstances. Automatically pay the policy proceeds.

Pay the policy proceeds only if it would have issued the policy.

Who might receive dividends from a mutual insurer???? Subscribers Stockholders Agents Policyholders

Policyholders

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? Return of premium Cost of living Decreasing term Premature death

Return of premium

Which of the following statements about a suicide clause in a life insurance policy is true? Suicide is excluded for a specific period of years and covered thereafter. Suicide is covered for a specific period of years and excluded thereafter. Suicide is covered as long as the policy is in force. Suicide is excluded as long as the policy is in force.

Suicide is excluded for a specific period of years and covered thereafter.

The interest earned on policy dividends is 40% taxable, similar to a capital gain. Taxable. Nontaxable. Tax deductible.

Taxable.

Children's riders attached to whole life policies are usually issued as what type of insurance? Variable life Adjustable life Whole life Term

Term

Nonforfeiture values guarantee which of the following for the policyowner? That the death benefit will be paid in a lump sum That the policy premiums will never increase That the cash value will not be lost That the dividends will be paid annually

That the cash value will not be lost

All of the following entities regulate variable life policies EXCEPT The Insurance Department. The Guaranty Association. Federal government. The SEC.

The Guaranty Association.

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? The policy beneficiary receives the full death benefit. The policy beneficiary takes over the loan payments. The policy is rendered null and void. The balance of the loan will be taken out of the death benefit.

The balance of the loan will be taken out of the death benefit.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean???? The beneficiary will receive the lump sum, plus interest. The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. The beneficiary will only receive payments of the interest earned on the death benefit. The beneficiary must pay interest to the insurer.

The beneficiary will only receive payments of the interest earned on the death benefit.

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? The insurer will pay the death benefit minus one month's premium. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. The insurer will pay the full death benefit from the group policy to the beneficiary. The insurer will pay a reduced death benefit to the beneficiary.

The insurer will pay the full death benefit from the group policy to the beneficiary.

How is it determined whether an insurer is allowed to write business in a state? The insurer's location of incorporation will determine whether a company is domestic, foreign, or alien. The insurer's net income will determine whether a company will be allowed to write business in a state. The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien. The insurer's domicile will determine whether an insurance company is domestic, foreign, or alien.

The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien.

Which of the following statements is TRUE concerning irrevocable beneficiaries? They may be changed at any time. They can never be changed. They may be changed only on the anniversary date of the policy. They can be changed only with the written consent of that beneficiary.

They can be changed only with the written consent of that beneficiary.

All of the following are true regarding the guaranteed insurability rider EXCEPT The insured may purchase additional insurance up to the amount specified in the base policy. It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. This rider is available to all insureds with no additional premium. The insured may purchase additional coverage at the attained age.

This rider is available to all insureds with no additional premium.

What is the purpose of key person insurance? To provide health insurance to the families of key employees To insure retirement benefits are available to all key employees To maintain an account that insures the owner of a company remains solvent To lessen the risk of financial loss because of the death of a key employee

To lessen the risk of financial loss because of the death of a key employee

When may an insurance company use suicide as a defense against paying a death claim? At no time When death occurs within a specified period of time after the policy was issued Only when there was a witness to the event At any time suicide can be proven

When death occurs within a specified period of time after the policy was issued

The main difference between immediate and deferred annuities is The amount of each payment. When the income payments begin. How the annuity is purchased. The number of insureds.

When the income payments begin.

Which of the following types of insurance policies would perform the function of cash accumulation? Increasing term Whole life Term life Credit life

Whole life

How soon from the submission of a notice of claim must an insurer acknowledge the receipt of the notice? 10 days 20 days 30 days 60 days

30 days

Which of the following is NOT true regarding prelicensing education requirements for insurance producers in this state? 50% of prelicensing education must be completed in a classroom. Prelicensing courses must be approved by the Commissioner. Applicants must complete 20 hours of training for each line of authority. Online and classroom courses are allowed.

50% of prelicensing education must be completed in a classroom

What is the waiting period on a Waiver of Premium rider in life insurance policies? 30 days 3 months 5 months 6 months

6 months

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary? 50% of the death benefit The face amount minus the premiums that would have been collected until the insured reached the age of 100 A full death benefit A death benefit equal to the cash value of the policy

A full death benefit

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be???? Based on the issue age of the insured. Discounted. Adjusted to the insured's age at the time of renewal. Determined by the health of the insured.

Adjusted to the insured's age at the time of renewal. Determined by the health of the insured.

All of the following would be considered rebating EXCEPT An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. An agent offers to share his commission with a policyholder. An agent offers tickets to a baseball game as an inducement to buy insurance. An agent misrepresents policy benefits to convince a policyowner to replace policies.

An agent misrepresents policy benefits to convince a policyowner to replace policies.

Both Universal Life and Variable Universal Life have a Flexible premium. Level fixed premium. Decreasing premium. Increasing premium.

Both Universal Life and Variable Universal Life have a Flexible premium. Level fixed premium. Decreasing premium. Increasing premium.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? Insurance Index Policy Summary Illustrations Buyer's Guide

Buyer's Guide

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? Paid-up options Extended term Cash surrender Reduced paid-up

Cash surrender

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? If the father is disabled for at least a year If the daughter is disabled for more than 3 months If the daughter is disabled for any length of time If the father is disabled for more than 6 months

If the father is disabled for more than 6 months

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? Term to specified age Ordinary life policy Limited pay whole life Level term

Level term

If an agent wishes to sell variable life policies, what license must the agent obtain? Adjuster Surplus Lines Personal Lines Securities

Securities

If a producer is found to have committed unfair trade practices or fraud, the Commissioner has the authority to do all of the following EXCEPT Refuse to renew the producer's license. Sentence the producer to jail time. Levy a civil penalty against the producer. Place the producer on probation.

Sentence the producer to jail time.

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? Stock Mutual Reciprocal Fraternal

Stock

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? The key employee is the owner and beneficiary. The key employee is the owner and the employer is the beneficiary. The employer is the owner and beneficiary. The employer is the owner and the key employee is the beneficiary.

The employer is the owner and beneficiary.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT The annual dividend is retained by the company. The interest is credited at a rate specified by the policy. The policyholder has the right to withdraw the accumulations at any time. The interest is not taxable since it remains inside the insurance policy.

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

Which of the following best describes what the annuity period is? The period of time during which accumulated money is converted into income payments The period of time from the accumulation period to the annuitization period The period of time during which money is accumulated in an annuity The period of time from the effective date of the contract to the date of its termination

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

All of the following are true of key person insurance EXCEPT The plan is funded by permanent insurance only. There is no limitation on the number of key employee plans in force at any one time. The employer is the owner, payor and beneficiary of the policy. The key employee is the insured.

The plan is funded by permanent insurance only.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begain? When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health On the designated effective date On the application date When the agent submits the application to the company and the company issues a conditional receipt

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

The main difference between immediate and deferred annuities is The number of insureds. The amount of each payment. When the income payments begin. How the annuity is purchased.

When the income payments begin.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant Prior to filling out an application for insurance. With the policy. Upon issuance of the policy. Within 30 days after the first premium payment was collected.

With the policy.

#1. An insurance producer may NOT act as an agent for an insurer until he or she has been a) Commissioned. b) Endorsed. c) Appointed. d) Approved.

c) appointed

When would a 20-pay whole life policy endow? At the insured's age 65 After 20 payments In 20 years When the insured reaches age 100

d) When the insured reaches age 100

What are the two components of a universal policy? Separate account and policy loans Insurance and cash account Insurance and investments Mortality cost and interest

insurance and cash account

Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives???? Inspection Report Agent's Report General Information Medical Information

medical information

Methods used to pay the death benefits to a beneficiary upon the insured's death are called Designation options. Beneficiary provisions. Death benefit options. Settlement options.

settlement options

All of the following are true about variable products EXCEPT The minimum death benefit is guaranteed. The cash value is not guaranteed. Policyowners bear the investment risk. The premiums are invested in the insurer's general account.

the premiums are invested in the insurer's general account