Life Insurance Test Correction

In a life settlement contract, whom does the life settlement broker represent? A. The owner B. The insurer C. The beneficiary D. The life settlement intermediary

A

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A. Signed waiver of premium B. Statement of good health C. Payment of premium D. Delivery receipt

A

Using a class designation for beneficiaries mean A. Naming beneficiaries as a group B. Not naming beneficiaries C. Naming an estate as the beneficiary D. Naming each beneficiary by his or her name

A

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A. Making comparisons between different policies B. Stating that the insurance policy is a share of stock C. Exaggerating the benefits provided in the policy D. Stating that the competitors will arbitrarily increase their premiums each year

A

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 would the life insurance premiums? A. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums B. The insured's premiums will be waived until she is 21 C. The premiums will become tax deductible until the insured's 18th birthday D. Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected

B

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

B

An insurance policy that only requires a payment of premium at its inception, provided insurance protection for the life of the insured, and matures at the insured's age 100 is called A. Graded premium whole life B. Single premium whole life C. Modified Endowment Contract (MEC) D. Level term life

B

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? A. Pay the full death benefit and refund excess premium B. Pay a reduced death benefit C. Pay the full death benefit D. Pay nothing; there was a misrepresentation on the application

B

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as A. Binding contracts B. Contracts of adhesion C. Unilateral contracts D. Aleatory contracts

B

How often is a resident insurance producer required to pay license fees? A. Annually B. Every 2 years C. Every 4 years D. It's a one-time fee

B

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? A. The insurer may deny coverage later, because of the information missing on the application B. The policy will be interpreted as if the insurer waived its right to have an answer on the application C. The policy will be interpreted as if the insured did not have an answer to the question D. The policy will be void

B

In forming an insurance contract, when does acceptance usually occur? A. When an insured submits an application B. When an insurer's underwriter approves coverage C. When an insurer delivers the policy D. When an insurer receives an application

B

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A. Guaranteed B. Not taxable since the IRS treats them as a return of a portion of the premium paid C. Paid at a fixed rate every year D. Taxable as ordinary income

B

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? A. Rebating B. Misrepresentation C. Concealment D. Unfair claim practice

B

The automatic premium loan provision is activated at the end of the A. Policy period B. Grace period C. Elimination period D. Free-look period

B

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A. The death benefit can be increased only by exchanging the existing policy for a new one B. The death benefit can be increase by providing evidence of insurability C. The death benefit cannot be increased D. The death benefit can be increased only when the policy has developed a cash value

B

The premium of a survivorship life policy compared with that of a joint life policy would be A. Half the amount B. Lower C. Higher D. As high

B

The regulation regarding replacement of life insurance and annuities helps minimize A. Illegal policy renewal B. Misrepresentation and incomplete disclosures C. The need for replacement D. Unnecessary replacement

B

Under an extended term nonforfeiture option, the policy cash value is converted to A. A higher face amount than the whole policy B. The same face amount as in the whole life policy C. The face amount equal to the cash value D. A lower face amount than the whole life policy

B

What does "level" refer to in level term insurance? A. Interest rate B. Face amount C. Premium D. Cash value

B

What is the advantage of reinstating a policy instead of applying for a new one? A. The cash values have gained interest while the policy was lapsed B. The original age is used for premium determination C. Proof of insurability is not reported D. The face amount can be increased

B

What must an insurer present to a prospective policy purchaser before the initial premium is paid? A. Policy Summary B. Buyer's Guide C. Conditional receipt D. Policy illustrations

B

Which of the following is NOT true regarding the accumulation period of an annuity? A. It is also known as the pay-in period B. It would not occur in a deferred annuity C. It is the period during which the annuity payments earn interest D. It is the period over which the owner makes payments into an annuity

B

Which two terms are associated directly with the way an annuity is funded? A. Renewable or convertible B. Single payment or periodic payments C. Increasing or decreasing D. Immediate or deferred

B

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? A. Reduction of premium B. Accumulation at interest C. Paid-up option D. One-year term

C

Which of the following is NOT the consideration in a policy? A. The premium amount paid at the time of application B. The promise to pay covered losses C. The application given to a prospective insured D. Something of value exchanged between parties

C

Who is a third-party owner? A. An employee in a group policy B. An irrevocable beneficiary C. A policyowner who is not the insured D. An insurer who issues a policy for two people

C

According to the entire contract provision, what document must be made part of the insurance policy? A. Buyer's Guide B. Agent's report C. Outline of coverage D. Copy of the original application

D

All of the following are true regarding rebates EXCEPT A. Rebates are only allowed if specifically stated in the policy B. Rebating can be anything of monetary value given as an inducement to purchase insurance C. Dividends are not considered to be rebates D. Rebates are allowed if it is in the best interest of the client

D

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? A. The insurer will pay a reduced death benefit to the beneficiary B. The insurer will pay the death benefit minus one month's premium C. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one D. The insurer will pay the full death benefit from the group policy to the beneficiary

D

An insured has chosen joint and 2/3 survivor as the settlement options. What does this mean to the beneficiaries? A. The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time B. The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies C. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies D. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

D

The advantage of qualified plans to employers is A. Tax-free earnings B. No lump-sum payments C. Taxable contributions D. Tax-deductible contributions

D

Traditional IRA contributions are tax deductible based on which of the following? A. How long the plan has been in force B. Owner's age C. IRA limit D. Owner's income

D

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 A. Until the policyowner reaches age 65 B. For at least 20 years C. Until the policyowner's age 100, when the policy matures D. For 20 years or until death, whichever occurs first

D

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? A. Adhesion B. Subrogation C. Warranty D. Aleatory

D

Which of the following would help prevent a universal life policy from lapsing? A. Face amount B. Adjustable premium C. Corridor of insurance D. Target premium

D

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? A. Entire contract clause B. Beneficiary clause C. Consideration clause D. Insuring clause

D

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? A. Interest-sensitive whole life B. Life annuity with period certain C. Increasing term D. Limited pay whole life

D