Life Practice Exam - 280 Q's
A life insurance policy that combines term insurance protection, a flexible premium, and cash value accumulation is: A. Universal Life B. Variable Life C. Increasing Term Life D. Variable/Universal Life
A
Distributions from a Traditional IRA must begin no later than age: A. 59.5 B. 70.5 C. 65 D. 55
B
If a person wants to invest a lump sum in an annuity that may appreciate along with market and economic conditions, they should buy a: A. Deferred Annuity B. Variable Annuity C. Flexible premium Annuity D. Fixed Annuity
B
If an applicant for a Life insurance policy is found to be a substandard risk, the insurance company is most likely to: A. Refuse to issue the policy B. Charge an extra premium C. Require a yearly medical exam D. Lower its insurability standards
B
In which of the following would you have insurable interest? A. Your neighbor B. Your spouse C. Your friend D. Your co-worker
B
Replacement of an existing Life insurance policy may be detrimental 有害的 to a customer for all of the following reasons EXCEPT: A. It is unlawful B. They may be rejected by their new insurer because their health has changed C. The suicide clause starts over on their new policy D. Their new policy will probably cost more since they are older
A
Statements made by an applicant for a Life insurance policy that are supposed to be true are referred to as: A. Representations B. Facts C. Warranties D. Information
A
What type of Term Life insurance has a level premium and a policy limit that goes down over time? A. Decreasing Term B. Level Term C. Increasing Term D. Convertible Term
A
What type of notice is used to show all of the services or supplies that were billed to Medicare during a 3-month period, what Medicare paid, and what the patient may owe the provider? a. MSN b. CPT c. OPPS d. HCPCS
A
When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group: A. Contributory B. Participatory C. Noncontributory D. Nonparticipatory
A
When using a policy illustration, producers must obtain a signed and dated statement from the applicant attesting to the fact that the applicant received a copy of the illustration and understands nonguaranteed elements illustrated are subject to change.
TRUE
Variable Annuity
The type of annuity in which the values grow according to performance of the investment medium and in which the benefit may fluctuate according to market performance is called a:
Which of the following CORRECTLY describes the original purpose of Medicaid?
To improve the health of people who might otherwise go without medical care for themselves and their children
Jack and Jill are insured on a "Joint Life" insurance policy: The policy will pay: A. Only when Jack dies B. Only when they both die as a result of the same accident C. When either Jack or Jill dies D. Only when Jill dies
C
John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: A. 30 B. 60 C. 100 D. 70
C
Life insurance Producers (agents) have the authority to: A. Sign policies B. Issue contracts C. Collect premiums and deliver policies D. Bind coverage
C
On a life paid up at age 65 (LP65) policy, when will the cash value equal the face amount of the policy? A. When all the policy premiums have been paid up B. 20 years from the date of purchase C. At age 100 D. At age 65
C
Once completed and signed by the applicant, a producer may change an application: A. With the verbal consent of the applicant B. At anytime C. If the applicant initials the change D. With consent of his manager
C
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? B. Limited Pay policy C. Term D. Whole Life
C
Business health insurance can be divided into two separate categories:
(1) employee benefit plans and (2) business continuation plans.
In Florida, Medicare supplement policies require a free look period to last how long?
30 days
According to the NAIC Uniform Health Insurance Policy Provision Law, an individual has how many days in which to file Proof of Loss, if reasonably possible?
90 days
A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a: A. Immediate Annuity B. Equity Indexed Annuity C. Variable Annuity D. Deferred Annuity
A
Social Security should be considered one's primary source of disability income coverage. True False
FALSE
Term life insurance should always be used in buy / sell agreements. True False
FALSE
15. Which of the following is a rider that allows a terminally ill person to access at least a portion of the death benefit proceeds prior to death? a. Waiver b. Living benefit c. Supplement d. Addendum
B
Under the Notice of Claim provision in a health insurance policy, the insured must give written notice to the insurance company within a maximum of how many days after incurring a covered loss?
20 Days
Individuals covered by a group plan receive
A certificate of insurance
Agent Corrine accepts a premium for a lapsed disability policy. The reinstatement becomes effective for any illness after _______ from the date of acceptance.
10 Days
The HMO contract, certificate or member's handbook must be delivered within _____ working days after approval of the enrollment by the HMO.
10 Days
According to the NAIC Model Law, health insurance contracts have how many mandatory provisions?
12
If one becomes totally disabled, Social Security disability benefits will begin after:
5 months
Under Medicare Part A, a benefit period starts when a patient enters the hospital and ends when that patient has been out of the hospital for _______ days.
60 Days
Once Medicare Part B participants have satisfied their annual deductible, Part B will pay ______ of covered expenses.
80%
A client applied for Life insurance on October 1st. The application was approved and the policy was issued on October 10th. It was delivered to the customer on October 18th. When did the Free Look start? A. October 18th B. October 31st C. October 1st D. October 10th
A
A corporation may use tax deferred annuities for all of the following purposes EXCEPT: A. To accumulate tax deferred earnings on corporate assets B. To fund structured settlements C. To fund deferred compensation plans for key employees D. To fund the corporate pension plan
A
A customer buys a $25,000 Life insurance policy with a $25,000 Accidental Death Benefit rider attached. If he dies of cancer, how much will his policy pay? A. $25,000 B. Nothing C. $75,000 D. $50,000
A
A life insurance policy that combines term insurance protection, a flexible premium, and cash value accumulation is: A. Universal life B. Variable life C. Increasing term life D. Equity indexed life insurance
A
A life insurance policy that covers two parties, but only pays when the last party dies is known as: A. Survivorship Life B. Contingent Life C. Joint Life D. Other insured Life
A
A life insurance settlement option in which the beneficiary chooses to have proceeds paid out in equal amounts until they are exhausted is known as the: A. Fixed amount option B. Fixed period option C. Period certain option D. Life income option
A
A person has an unlimited insurable interest in: A. Their own life B. The life of a friend C. Their father-in-law D. The life of their neighbor
A
A prospect's statements made in the application for insurance constitute a part of which of the following? A. Consideration Clause B. Incontestability Clause C. Subrogation Clause D. Co-insurance Clause
A
A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is: A. Automatic Premium Loan B. Mode of Payment C. Extended Term Option D. Reduced Paid-Up Option
A
A statement that an applicant for Life insurance makes on their application that is the truth to the best of their knowledge is considered to be a(n): A. Representation B. Warranty C. Guaranty D. Affidavit
A
All of the following are a part of a Life insurance policy, EXCEPT the: A. Conditional Receipt B. Insuring Clause C. Incontestability Clause D. Copy of the application
A
All of the following are characteristics of Universal life insurance EXCEPT: A. Agents must obtain an NASD securities license B. Death benefits are tax free to beneficiaries C. Premiums are flexible D. There is a guaranteed minimum rate of return on the cash value
A
All of the following are life insurance dividend options EXCEPT: A. Reduced paid up B. Paid up additions C. Apply to premium when due D. Interest
A
All of the following are true about Universal Life EXCEPT: A. The insured may increase the premium, but not the cash value B. A current interest rate is used when interest rates are above the industry standard C. If cash values increase too fast, the policy may be classified as a modified endowment D. Premiums are flexible and may be changed at the option of the insured
A
All of the following are true about immediate annuities EXCEPT: A. There is no beneficiary B. They pay for the lifetime of the annuitant C. They are often used in structured settlements D. There is no accumulation period
A
All of the following are true regarding Key Employee life insurance EXCEPT: A. Premiums are tax deductible for the employer B. The employer is the policy owner and the beneficiary C. Proceeds are not taxable D. It is a policy based on third party ownership
A
An Annuity is designed to provide which of the following financial features? I. The liquidation of principal and interest II. Favorable tax treatment （tax deferral） III. The creation of an estate A. I and II B. I and III C. II and III D. I, II, and III
A
An applicant for life insurance misstated his age as 30, when he was really 40. Although the correct premium for his $100,000 policy should have been $1,000 a year, he only paid $750 a year. At his death 10 years later, how much will the beneficiary receive? A. $75,000 B. $100,000, less the total amount of the accumulated underpaid premiums due C. $100,000, since death occurred after the end of the 2 year contestability clause D. Nothing, the contract is void
A
An applicant forgot to mention on her application for Life insurance the heart condition that she suffered as a child, since she has not had any issues in over 30 years. She purchased Life insurance from you and then, 5 years later, died of the heart condition. Which of the following is correct? A. The insurer will pay the claim B. The insurer will contest the claim for fraud C. The insurer does not have to pay the claim under the Incontestability Clause D. Fraud includes not only intent to deceive but also accidental omission
A
An insurable interest must exist when: A. Life insurance policy is issued B. Death proceeds become payable C. A policy is surrendered for cash D. Cash values are borrowed
A
Annuities are commonly used for all of the following EXCEPT: A. To provide protection in the event of death B. To supplement retirement income C. To fund structured settlements D. To fund deferred compensation plans
A
As a professional surgeon, which type of disability coverage would offer the most liberal definition of benefits triggers for the policy holder in terms of benefit receipt if the insured were to break their hand? a. Own occupation b. Employer provided c. Social Security d. Business overhead
A
At the death of the insured, the beneficiary can make all of the following changes to the settlement option pre-selected by the policy owner prior to death EXCEPT: A. Change fixed amount to lump-sum B. Change lump-sum to interest option C. Change lump-sum to fixed amount D. Change lump-sum to fixed period
A
Automatic Premium Loan is not available on which of the following types of Life insurance policies: A. 5 year Level Term B. Life Paid-Up at age 65 C. Traditional Whole Life D. 20 Pay Life
A
Dividend projections may be included in a proposal for Life insurance when which of the following is true? A. There is a clear statement that payment of future dividends is not guaranteed B. The applicant has requested that they be included C. The projected amounts do not exceed the dividends previously paid by the same insurance company D. The projected amounts are calculated on the basis of the Commissioners' Standard Ordinary Mortality Tables
A
Dividend projections may be included in a proposal for Life insurance: A. When there is a clear statement that they are not guaranteed B. Only upon the request of the applicant C. When they are required to be applied to future premiums due D. When past results are used as the basis for future projections
A
Employer contributions to a qualified plan earn tax deferred interest, which primarily benefits the: A. Employee B. Plan trustee C. Employer D. IRS
A
If a client wants cash value life insurance with a flexible premium and an adjustable death benefit that will allow the policy owner a choice of various cash value investment options, he should buy: A. Variable/Universal Life B. Variable Life C. Universal Life D. Adjustable Life
A
If a client who has a "modified endowment contract" (MEC) takes a premature distribution prior to age 59 1/2, the penalty tax will be: A. 10% B. 28% C. 15% D. 7.50%
A
If a three person business partnership wants to buy Life insurance to fund a cross-purchase buy/sell agreement, how many policies would you have to sell: A. Six B. Nine C. One D. Three
A
If an application is incomplete: A. The insurer will return it to producer B. The policy is void C. The insurer will issue a policy D. The insurer will deny the application
A
If an employee whose retirement plan is 60% vested terminates employment: A. 40% is forfeited B. All is forfeited C. 60% is forfeited D. Nothing is forfeited
A
If you exercise the re-entry option offered on some term insurance policies, you would expect: A. The premium to change B. The face amount to change C. The dividend option to change D. The policy period to change
A
In order to sell variable life insurance you must be registered with which of the following? A. The NASD B. The State C. The SEC D. The NYSE
A
KEOGH Plans (HR 10s): A. Were initially set up to benefit the self employed or partners B. Do not have to cover eligible employees C. May be set up by corporations for the benefit of their employees D. Have no maximum contribution limits
A
Life insurance policies often exclude coverage for all of the following, EXCEPT: A. Accidental death B. War C. Suicide D. Dangerous hobbies
A
Life insurance underwriters order investigative reports primarily to discover more about the applicant's: A. Lifestyle B. Occupation C. Health D. Credit
A
On life insurance, the Misstatement of Age clause permits: A. The face amount to be adjusted to what the correct premium would have purchased B. The premium to be adjusted to reflect the correct age C. The face amount to be paid at death, less any overdue incorrect premiums D. The insurer to void a claim during the first 2 years due to misrepresentation
A
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: A. Incontestability clause B. Misstatement of Age clause C. Insuring clause D. Reinstatement clause
A
The insured party has no part in determining the wording of an insurance contract. In this respect, insurance contracts are considered to be __________. a. Contracts of Adhesion b. Contracts of Forbearance c. Contracts by Regulation d. Contracts by Law
A
Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Tim Watson II. Mike Carson III. Deborah Carson A. I and II B. I only C. I, II, and III D. II and III
A
When giving a client a conditional receipt which of the following is true? A. The coverage will begin at earliest as of the date of application or when the client passes a physical, whichever is later B. Coverage begins as of date of application C. In order for coverage to begin the applicant must pay all premiums D. You never collect a premium until you deliver the policy
A
When pledging Life insurance as collateral for a bank loan, the policy owner must: A. Make a collateral assignment to the bank B. Name the bank as additional insured C. Make an absolute assignment to the insurer D. Designate the bank as lien holder
A
When someone other than the insured is the owner of a Life insurance policy, the owner may do all of the following without the insured's consent, EXCEPT: A. Increase the amount of insurance B. Surrender the policy for its cash value C. Change the beneficiary D. Make a policy loan
A
Which life insurance rider allows policy proceeds to be paid out prior to the insured's death: A. Accelerated benefits B. Automatic premium loan C. Paid up additions D. Cash surrender
A
Which of the following contracts requires that a series of benefit payments be made at specified intervals? A. Annuity B. Ordinary Whole Life C. Modified Whole Life D. 20-Pay Life
A
Which of the following is CORRECT regarding designating a contingent beneficiary? A. They would receive the policy proceeds when the primary beneficiary pre-deceases the insured B. They are never eligible to receive the policy proceeds C. They would receive the policy proceeds when the insured pre-deceases both the primary and contingent beneficiary D. They would receive the policy proceeds when the insured pre-deceases the primary beneficiary
A
Which of the following is an example of a Limited-Pay Life policy: A. 20-Pay Life B. 10 year Renewable Term Life C. Traditional Whole Life D. Variable Life
A
Which of the following is an example of a Limited-Pay Life policy? A. 20-pay whole life B. Whole Life C. Universal life D. Renewable Term to Age 70
A
Which of the following is true about ROTH IRAs? A. Qualified distributions are tax free B. Distributions must begin by age 70 1/2 C. Rollovers are not permitted D. Contributions are tax deductible
A
Which of the following is true about the Insuring Clause? A. It contains the insurer's enforceable promise to pay covered claims B. It states that the insurer may contest a claim for material misrepresentation C. It requires that the application be attached to the policy D. It states the policy owner's rights
A
Which of the following is true regarding Stranger-originated Life insurance (STOLI) policies? A. The concern is that the owner does not have an insurable interest B. These policies are legal in all states C. Owning Life insurance on your spouse is an example of a STOLI policy D. An Investor-originated Life insurance (IOLI) policy is materially different from a Stranger-originated Life insurance (STOLI) policy
A
Which of the following is true regarding a variable life policy? A. The insurer decides how to invest the premium paid in B. The premium is variable, depending upon the performance of the variable account C. The insured decides how to invest the premium paid in D. The insured determines the premium amount to be paid
A
Which of the following is true regarding the tax implications of a participating Individual Life insurance policy sold by a mutual insurer? A. Proceeds paid to a beneficiary are not taxable B. Premiums are tax deductible C. Interest earned on dividends is not taxable D. Dividends are taxable
A
Which of the following statements about the Misstatement of Age provision in a Life insurance policy is true? A. If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable B. If the insured's age has been overstated, it provides that a premium refund and the face amount of the policy will be payable C. It is an optional provision D. It becomes inoperative after the expiration of the policy's Contestable period
A
Which of the following statements is true about exercising a Guaranteed Insurability option? I. The new insurance is available at the original issue age rate II. Evidence of insurability is not required III. The insured can exercise the option at any time after the age of 21 IV. The maximum purchase is specified in the contract A. II and IV B. I, II, and III C. III and IV D. I and II
A
Which of the following will have to meet an insurable interest requirement in order for a policy to issue? a. Beneficiary b. Insured c. Insured's dependents d. All of the above e. Both a and b only
A
Which of these is a rider that would ensure you can purchase additional insurance coverage, at specified ages, regardless of health? A. Guaranteed Insurability Rider B. Child Term Rider C. Waiver of Premium Rider D. Payor Benefit Rider
A
Which rider will allow the insured to increase his coverage without a physical exam after the policy is issued: A. Guaranteed Insurability B. Other Insured C. Payor Benefit D. Waiver of Premium
A
You have an insurable interest in which of the following? A. Your business partner B. Your best friend C. Your boyfriend D. Your co-worker
A
Which of the following most accurately and completely describes an application?
A written request from an applicant to an insurer requesting the insurer to issue a policy on the basis of the information contained in the application
Which of the following statements about the Benefit Period in a disability income policy is correct? (A)The shorter the Benefit Period, the lower the premium. (B)The longer the Benefit Period, the lower the premium. (C)The Benefit Period will not begin until the first year after the Waiting Period is over. (D)The Benefit Period will not begin until the second year after the Waiting Period is over
A) The shorter the benefit period, the lower the premium.
Two-thirds of the annuity units accumulated by the annuitant
An annuitant received monthly payments from a variable annuity under a Joint and Two-Thirds Survivor option. If the primary annuitant dies, what will the surviving annuitant receive?
The performance of the account was less than the previous month's performance.
An investor is in the annuity stage of a variable annuity purchased 15 years ago. During the present month, he receives a check for an amount less than the previous month's payment. What event(s) would have caused the check to be lower?
If the insurer opts to terminate an Optionally Renewable health policy, the cancelation usually takes place on:
Anniversary Dates or Premium Due Dates
A Fireman purchases whole life insurance with the waiver of premium rider attached. If he becomes totally disabled at age 60, how long will the rider pay the premiums? A. To age 100 B. To age 100 or prior death C. Six months D. To age 65
B
A Life insurance rider, that allows a terminally ill client to obtain part of his death benefit while he is still living, is called: A. Accidental Death and Dismemberment rider B. Accelerated benefits rider C. Cost of Living rider D. Term rider
B
A business owner with a fluctuating income who wants a life insurance policy that can be changed to suit economic conditions should buy: A. Variable life B. Adjustable life C. Equity indexed life D. Interest-sensitive Whole life
B
A client buys a $100,000 life insurance policy and names his two children, Jack and Jill, as his primary beneficiaries and his spouse as contingent beneficiary. If both the insured and his son Jack die as a result of the same accident, how will the proceeds be paid? A. 1/2 to the spouse and 1/2 to Jill B. All to Jill C. 1/2 to Jill and 1/2 to Jack's estate D. All to his spouse
B
A client buys a $50,000 Whole Life policy on himself and wants to add $25,000 in Term coverage for his spouse. He should add which of the following riders to his policy? A. Spousal Rider B. Other Insured Rider C. Additional Insured Rider D. Family Rider
B
A client buys a Life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will: A. Deny the claim B. Deny the claim, but refund the premium C. Pay half of the claim D. Pay the claim in full
B
A client with a participating Life insurance policy receives both interest and dividends. What are the tax implications? A. Neither are taxable B. The interest is taxable, but the dividends are not C. The dividends are taxable, but the interest isn't D. Both are taxable as ordinary income
B
A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should: A. Rate the policy and obtain any additional premium required B. Refuse to deliver the policy or to accept any premium offered C. Deliver the policy as it was issued D. Obtain the premium from the prospect and send it to the company immediately
B
Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage? A. 28 B. 31 C. 15 D. 21
B
All of the following are considered to be owner's rights under a Life insurance policy, EXCEPT: A. Taking a policy loan B. Changing an irrevocable beneficiary C. Selecting a settlement option prior to death D. Changing a dividend option
B
All of the following are factors in determining the amount of Key Person life insurance an employer should buy on an employee EXCEPT: A. The amount it would cost to conduct a job search for a replacement B. The amount of group life coverage the employee already has C. The amount it would cost to train a replacement D. The amount of income lost until the key person can be replaced
B
All of the following are true about Group life insurance EXCEPT: A. It is convertible to whole life B. It is convertible to term life C. It is usually annual renewable term D. It has no cash value
B
All of the following are true about Universal Life insurance EXCEPT: A. There is a minimum guaranteed interest rate B. Cash values are invested in a separate account maintained by the insurer C. It pays a current interest rate that changes year to year D. A risk "corridor" must be maintained by the insurer
B
All of the following are true about the Guaranteed Insurability Rider (GIR) EXCEPT: A. Coverage may be increased in the future without a physical exam B. Future increases are based upon the insured's original age C. This rider is usually available only to applicants under age 35 D. Most insurers allow increases on 5 or more future "option" dates
B
All of the following are true, EXCEPT: A. Universal Life insurance is a type of interest sensitive Life insurance B. Universal Life insurance has a fixed premium C. In order to sell a variable product, the producer must be registered with the NASD D. Variable/Universal Life insurance has a flexible premium
B
All of the following types of insurance contracts must contain non-forfeiture provisions EXCEPT: A. Annuities B. Term C. Whole life D. Variable Life
B
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation, EXCEPT: A. The applicant has the right to obtain disclosure of the substance of the information in the consumer report from the reporting agency B. The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report C. The reporting agency cannot issue any report containing adverse information about the applicant that predates the report by more than seven years, except in the case of a bankruptcy, which may be reported for a 14-year period D. The applicant has the right to obtain the identity of other inquirers who have obtained consumer reports on him within the past six months from the reporting agency
B
An insured paid $4,000 in premiums on his whole life policy over a period of time. When his cash value equaled $6,500, he elected to take cash surrender. How much is taxable: A. $2,500 B. $6,500 C. $4,000 D. None, life insurance benefits are never taxable
B
An insured's premium for Life insurance is based mainly upon their: A. Occupation B. Risk classification C. Age D. Gender
B
Application, Underwriting and Policy Delivery (Life) All of the following are true regarding Adjustable Whole Life insurance, EXCEPT: A. It allows the insured to adjust the face amount B. It is available only to persons age 60 or younger C. It allows the insured to adjust the premiums D. It allows the insured to adjust the length of protection
B
At age 30, Tom Morris wishes to purchase a Whole Life policy. His producer explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response? A. Straight Life will accumulate cash value faster. B. 20-Pay Life will accumulate cash value faster. C. Both plans will accumulate cash value at the same rate. D. The rate of cash-value accumulation depends on the profitability of the insurance company.
B
At retirement, an insured surrenders an individual whole life policy and requests a lump sum distribution of the cash value. When received, what will the tax consequences be: A. The proceeds are fully taxable as ordinary income B. Only the amount in excess of the premiums paid is taxable C. The proceeds are fully taxable as a capital gain D. The proceeds are entirely tax free
B
Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the: A. Policy owner's wife B. Policy owner C. Policy owner's children D. Policy owner's estate
B
How can a beneficiary/spouse of an annuitant who dies during the accumulation period avoid current taxation on the benefits? A. They can take lump sum now but defer taxes to a later time B. They can continue the contract by selecting a life income or installment pay out option C. Since annuities are life insurance products, there is no tax due D. They may select the tax free death benefit
B
If an existing client of a producer wants to buy another Life insurance policy, the producer should: A. Complete and sign the application on behalf of the customer B. Have the customer come in and complete and sign a new application C. Submit an unsigned application to the insurer referring to existing underwriting information D. Advise the customer that no physical exam is required since he is an existing client
B
If an insured designates an irrevocable beneficiary on their Life insurance policy, they could do which of the following without the consent of that beneficiary: A. Take a policy loan B. Change a dividend option C. Take cash surrender D. Appoint a new primary beneficiary
B
If the insured dies 5 years after he bought a Life insurance policy and the insurer determines that there was material misrepresentation on his application, they will: A. Deny the claim B. Pay the claim C. Deny the claim but refund the premium D. Pay only a portion of the claim
B
If the insured understated his age and the error is discovered after the insured's death, the insurance company will: A. Pay the claim, less a deduction for the amount of the underpaid premium B. Pay the amount that the premium paid would have purchased at the correct age C. Deny the claim under the Incontestability clause D. Refund all premiums paid plus accumulated interest
B
In most states, when a group life insurance plan is written on a contributory basis, the group plan must insure at least: A. 50% of the eligible group members B. 75% of the eligible group members C. 100% of the eligible group members D. No participation requirements apply to contributory group plans
B
Jack and his wife Lyn just purchased a home with a 15-year mortgage. Wanting to make sure that Lyn would be able to pay off the mortgage balance in the event of Jack's death, Jack had a "temporary" need for life insurance. What type of policy should Jack purchase? a. Whole Life Insurance b. Term Life Insurance c. Variable Life Insurance d. A Viatical Settlement
B
Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add? A. Payor Rider B. Other Insured Rider C. Guaranteed Insurability Rider D. Term Rider
B
Jim names his spouse Mary as primary beneficiary and his two children, Scott and Suzy, as contingent beneficiaries. If Jim and Mary both die as a result of the same auto accident, the proceeds of Jim's Life insurance policy will be paid to: A. Scott only B. Scott and Suzy equally C. Jim's estate D. Mary's heirs
B
John, who had a life insurance policy with a death benefit, died on August 31st, after a long bought with cancer. He had been hospitalized for a month before his death. His wife contacted the insurance company to file her claim for the death benefit on September 5th, after John's burial, and after she had time to collect her emotions to deal with her personal loss. The insurance agent filed the papers to process the claim with his supervisor, and the death benefit was settled on October 30th. Were any laws violated in this scenario? a. No, the agent filed the paperwork within 30 days of the claim. b. Yes, the claim was not settled within 30 days of the claim. c. No, there are suspicions around the death of John. d. Yes, the claim was not settled within 15 days of the claim.
B
Margaret May wants to name her husband as the beneficiary of her Life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as: A. Irrevocable beneficiary B. Revocable beneficiary C. Secondary beneficiary D. Tertiary beneficiary
B
Most insurance contracts sold by banks are backed by: A. FDIC B. The State Guaranty Association C. The Federal government D. The State government
B
Parents are considering opening traditional IRAs for their two children, ages six and eight. Why should they consider something other than IRAs? A. Minors are not permitted to have IRAs B. It is unlikely that the children have any earned income C. Any earned income in the IRA accounts would be taxable to the parents D. Future rollovers would not be permitted
B
Premature distributions from a Traditional IRA prior to age 59 1/2 are subject to: A. Ordinary income tax B. Ordinary income tax plus a 10% penalty C. Capital gains tax plus a 6% penalty D. A 50% IRS penalty
B
Since insurance contracts are written by the insurance company and can only be changed by the insurance company, they are considered to be: A. Aleatory contracts B. Contracts of Adhesion C. Unilateral contracts D. Contracts of Utmost Good Faith
B
The Life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness is: A. Automatic Premium Loan B. Waiver of Premium C. Accidental Death and Dismemberment D. Guaranteed Insurability
B
The provision in a Life insurance policy that provides protection against unintentional policy lapse is known as the: A. Payor clause B. Automatic Premium Loan provision C. Reduction of Premium option D. Waiver of Premium benefit
B
The regulations regarding the replacement of Life insurance do not apply to: A. Whole life B. Credit life C. Individual Term life D. Limited pay Whole life
B
To add coverage for a child to yourWhole Life policy you would purchase which of these riders? A. Guaranteed Insurability Rider B. Child Term Rider C. Waiver of Premium Rider D. Payor Benefit Rider
B
Variable/Universal life insurance: A. Has a guaranteed cash value B. Allows the insured to self direct the cash value C. Guarantees the rate of return D. May be sold by any licensed Life insurance Producer
B
When purchasing a deferred annuity, when do the rights of ownership begin? A. Date of application B. Date of contract C. Date of annuitization D. Date of contract delivery
B
Which Life insurance Mode of Payment would result in the lowest cost? A. Monthly B. Annual C. Semi-annual D. Quarterly
B
Which life insurance rider allows the insured to purchase additional amounts of insurance at specified intervals in the future without a physical exam? A. Paid up option B. Guaranteed insurability C. Accidental death benefit D. Extended term option
B
Which of the following Settlement Options might provide payments that exceed the proceeds of the policy and the interest earned? A. Fixed Period B. Life Annuity C. Interest Only D. Fixed Amount
B
Which of the following deals with a set of relationships where one person is authorized to act on behalf of another in order to create a legal relationship with a third party. a. Law of principals b. Law of agency c. Law of third parties d. None of the above
B
Which of the following individual policy conversions is usually permitted without any evidence of insurability? A. Conversion from a Whole Life policy to a Term policy B. Conversion from a Term policy to a Whole Life policy C. Conversion to a lower-premium plan D. Conversion to a larger amount of insurance
B
Which of the following is not true about Group Life insurance? A. It must be convertible B. There are no participation requirements C. The grace period is usually 31 days D. Premiums may be contributory or noncontributory, at the employer's option
B
Which of the following is not true regarding Equity Indexed annuities: A. They are designed to keep up with inflation B. Producers must also have a FINRA or NASD license C. Their performance is usually linked to the S&P 500 stock index D. They have a guaranteed minimum rate of return
B
Which of the following statements about a Renewable Term policy is true? A. It is renewable at the option of the insurance company B. It is renewable at the option of the insured C. It is renewable at the option of the insurance company, with proof of insurability D. It is renewable at the option of the insured, with proof of insurability
B
Which of the following statements is false? A. With an Immediate Annuity the payments begin right away, the contract is annuitized in the beginning B. On an Equity-indexed product, when the index performs well, the client's premiums due will go down C. Survivorship Life insurance is used in estate planning D. An Annuity is designed in case you live too long
B
Which of the following statements is true about the premium payment schedule for a Whole Life policy? A. Premiums are payable for a designated period of time only, after which coverage is no longer provided B. Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death C. One premium, in the amount of the insured's choice, is payable at the time of application, and the balance of the premiums is deducted from the face amount of the policy at the time of the insured's death D. Premiums are payable until the insured's retirement only, after which coverage is continued automatically until the insured's death
B
Which of the following statements regarding the USA Patriot Act is correct? A. It requires every insurance agency to file a Currency Transaction Report (CTR) for each cash transaction that exceeds $10,000 B. It was designed to prevent and detect terrorism C. It requires FINCEN to file a Currency Transaction Report (CTR) to the Insurance Commissioner D. It requires every financial institution to file a Currency Transaction Report (CTR) for each cash transaction that exceeds $100,000
B
Which rider would pay the insured a lump-sum if he was blinded in an accident? A. Payor Benefit B. Accidental Death and Dismemberment C. Waiver of Premium D. Guaranteed Insurability
B
Your client is currently enrolled in a 401k at their place of employment. Which of the following is CORRECT in regards to your client and an IRA? A. Your client is not eligible to have an IRA since he already has a qualified plan where she works B. Any person who has earned income may fund an IRA, regardless of their participation in a qualified plan at their place of employment C. Your client will only be able to fund the IRA if she is over age 70 ½ D. Your client may only fund the IRA to the extent that she has underfunded her 401k
B
A $10,000 Life insurance policy with a Triple Indemnity clause has been in force for three years. The insured is injured in a train wreck and dies in a hospital five months later. The death proceeds payable under the policy would be: A. $30,000 B. $20,000 C. $10,000 D. $ -0-
C
A client contributed $100,000 to a 403b tax sheltered annuity (TSA) via payroll deduction over a period of time. His account is now valued at $190,000. When he takes cash surrender at age 60, what amount is subject to taxes? A. $90,000 B. None C. $190,000 D. $100,000
C
A parent who wishes to have complete control of their son's life insurance policy until the son reaches age 25 can do so through the use of which of the following? A. Consideration Clause B. Insuring Clause C. Ownership provision D. Payor provision
C
A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a: A. Deferred Compensation plan B. Key Employee Life policy C. Buy and Sell Agreement D. Surviving Shareholder plan
C
A producer makes a presentation to a 45-year-old customer comparing a $100,000 20 Pay Whole Life policy to a $100,000 Life Paid-Up at 65 policy. Assuming that both policies are offered by the same insurer, which of the following is true? A. The Life Paid-up at 65 policy would accumulate cash values faster B. The 20-Pay Life policy would have a higher annual premium C. They are exactly the same D. Both policies would reach maturity at the end of their premium paying period
C
A producer sends a completed and signed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When would coverage start? A. On the date the application was signed B. The date of the conditional receipt C. When the producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health D. When the underwriter received the application and unsigned check
C
A producer submits a completed and signed application to the underwriter along with the first premium check. After checking the results of the physical exam, the underwriter issues a 'rated' policy. Which of the following will not be required: A. Additional premium to be collected at policy delivery B. A statement that the applicant's health has not changed since the physical exam C. A new completed and signed application D. An explanation of the rating or premium surcharge to the client
C
A tax deferred exchange of life insurance policies is permitted when exchanging all EXCEPT: A. A life insurance policy for an annuity B. A life insurance policy for another life insurance policy C. An annuity for a life insurance policy
C
A(n) __________ in an insurance contract is a statement by the issuing insurance company that sets out the essential element of insurance - to pay for losses covered in the policy. a. Beneficiary designation b. Premium amount c. Insuring clause d. Rider
C
All of the following are correct regarding Group Life insurance, EXCEPT: A. On a contributory group the premium is shared between the employer and the employee B. On a noncontributory group the premium is paid 100% by the employer C. On Group Life the beneficiary could be the employer D. On Group Life the beneficiary could be the spouse or kids of the employee
C
All of the following are differences between Straight Whole Life and a Life Paid up at age 65 (LP65) policy EXCEPT: A. The rate of cash value accumulation B. The annual premiums C. The maturity date D. The premium paying period
C
All of the following are eligible to purchase a 403-b Tax Sheltered Annuity (TSA) EXCEPT: A. University professors B. Public school teachers C. University students D. Public school administrators
C
All of the following are false regarding convertible term insurance EXCEPT: A. All term insurance is convertible B. Conversion is based upon original age C. No physical exam is required D. You may convert to any amount
C
All of the following are parties to a life insurance contract EXCEPT: I. Insurer II. Underwriter III. Beneficiary IV. Owner V. Insured a. II only b. III only c. II, III, and V d. All are parties to a life insurance contract
C
All of the following are true of Deferred Annuities EXCEPT: A. Most are considered to be non-qualified plans B. They could be purchased with single, level or flexible premium payments C. They are not subject to IRS early withdrawal penalties D. They are tax deferred during the accumulation (pay in) period
C
All of the following are true regarding group credit life insurance EXCEPT: A. The policy limit may not exceed the amount of the loan B. The creditor is the policyholder and the beneficiary C. Proceeds are payable to the spouse upon the death of the insured debtor D. It is usually written as decreasing term insurance
C
All of the following are true when a person buys Life insurance on the life of another person EXCEPT: A. They have all the rights of ownership B. They must have an insurable interest in that person at the time of application C. The policy proceeds will be taxable to the policy owner when the insured dies D. This is called Third Party ownership
C
All of the following are true when you appoint an Irrevocable Beneficiary on your life insurance policy EXCEPT: A. They have a vested interest in your policy B. You cannot take a policy loan without their consent C. You cannot make any policy changes without their consent D. They cannot be changed without their consent
C
All of the following are true, when a person buys Life insurance on the life of another person, EXCEPT: A. They have all the rights of ownership B. They must have an insurable interest in that person at the time of application C. The policy proceeds will be taxable to the policy owner when the insured dies D. This is called Third-Party ownership
C
An agent is in need of generating business. He gets an idea of asking his client to let his policy lapse so that the agent can sell him a new similar policy. Is this permissible and, if not, what is this action called? a. No; Rebating b. No; Bait and switch c. No; Twisting d. Yes; it is perfectly acceptable
C
An insurance producer selling a Variable Annuity whose cash value depends on the performance of an underlying investment account must be registered with: A. The National Association of Life Underwriters B. The National Association of Insurance Commissioners C. The Financial Industry Regulatory Authority (FINRA, formerly the NASD) D. The Chartered Life Underwriters
C
An insured died during the Grace Period of her Life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary? A. The cash value of the policy, if any B. The full face amount of the policy C. The face amount of the policy less any earned premiums D. A refund of any premiums paid
C
An insured who owns a $100,000 whole life policy with a cash value of $40,000 elects the extended term non-forfeiture option. What will the face amount of her new policy be? A. $60,000 B. $40,000 C. $100,000 D. $80,000
C
Annuities are underwritten by: A. Securities firms B. Insurance Agents C. Insurance companies D. Banks
C
Corporate owned life insurance proceeds may be used for the following purposes: I. To find, replace, and train a new employee or executive II. To fund other corporate debt obligations III. To redeem the deceased employee's stock a. III only b. I and III only c. All of the above d. None of the above
C
Grandma owns a policy on her grandchild. Which rider would kick in if Grandma should die tomorrow? A. Child Term Rider B. Guaranteed Insurability Rider C. Payor Benefit Rider D. Waiver of Premium Rider
C
HIPAA is designed to do which of the following? A. Protect financial information B. Ensure that anyone who would like to get insurance is able to purchase it C. Protect health information D. Protect credit information
C
If a life insurance policyholder dies in the grace period, the policy will pay: A. The face amount, less any loans B. Nothing, since the policy lapses as of the due date C. The face amount, less any loans and overdue premiums D. The face amount
C
If an application for Life insurance is not complete: A. The insurer will reject it B. The insurer will consider it to be void C. The insurer will return it to the producer D. The insurer will issue the policy and request additional information
C
If the premium due is not paid, a Life insurance policy will lapse: A. At the end of the policy period B. On the premium due date C. At the end of the grace period D. On the policy anniversary date
C
In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments? A. Waiver of Premium provision B. Reduction of Premium option C. Payor Benefit Rider D. Reduced Paid-Up option
C
Life insurance becomes effective when: A. The applicant writes the check and receives a conditional receipt B. When the producer signs the application C. When the conditions in the conditional receipt are satisfied D. When the insurer receives the application at their home office
C
Mr. Baugh elects to make a direct rollover of his traditional IRA from one trustee to another trustee at age 35. How is this taxed? A. All is taxed as capital gain in the year of the rollover B. Income taxes are incurred, but the 10% IRS penalty is waived C. There is no current tax implication D. All is taxed as ordinary income in the year of the rollover
C
On January 1, 2011, an insured bought a $100,000 Term life insurance policy for an annual premium of $200. If he dies on January 27, 2012 without paying his renewal premium, how much will the policy pay? A. Nothing, since the policy has lapsed B. $100,000, less any outstanding loans C. $99,800
C
On July 1st, 2010, a 30 year old client bought a traditional whole life policy with a face amount of $100,000, an annual premium of $1,000 and the automatic premium loan rider. He died on August 15th, 2011 without paying any more premiums. How much will the policy pay to his beneficiary? B. $100,000, less the overdue premiums and indebtedness C. Zero D. $99,000
C
On March 8th, a prospect filled out an application for a Life insurance policy, but paid no premium. The underwriter approved the application on March 14th and issued the policy on March 15th. The producer delivered the policy on March 25th and collected the first premium. The coverage became effective on: A. March 14th B. March 8th C. March 25th D. March 15th
C
Regardless of actual events, the common disaster provision in a life insurance policy decrees that when the insured and the primary beneficiary both die as a result of the same accident: A. The primary beneficiary died before the contingent beneficiary B. The contingent beneficiary died before the primary beneficiary C. The primary beneficiary died before the insured D. The insured died before the primary beneficiary
C
Survivors need life insurance proceeds to pay all of the following EXCEPT: A. Funeral expenses B. Mortgage obligations C. Unemployment tax liabilities D. Children's college expenses
C
The "deductible" in a long-term care insurance policy is referred to as the __________. a. Deductible b. Coinsurance c. Elimination period d. Copayment
C
The Employees Retirement Income Security Act (ERISA) requires all of the following EXCEPT: A. Uniform treatment of all eligible employees B. Vesting of employer contributions after a period of time C. Employer contributions to be made in after tax dollars D. Favorable tax treatment for both the employer and employees
C
The amount of annuity benefits included in the value of the estate of a deceased "life income only" annuitant is: A. The interest earned in the annuity account B. The amount of the premium paid C. Zero D. The amount of future benefits to be paid
C
The components of a long-term care insurance policy include all of the following EXCEPT: a. Elimination period b. Benefit amount c. Own occupation d. Benefit duration
C
The life insurance policy provision that prevents the insurer from modifying a policy after it has been issued is the: A. Insuring Clause B. Consideration Clause C. Entire Contract Clause D. Incontestability Clause
C
The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is: A. $200,000 B. $100,000 C. $2,000 D. $ -0-
C
The time period covered by the Free Look provision of a Life insurance contract starts: A. When the contract is issued and mailed to the agency office from the home office of the insurance company B. When the contract is received in the agency office and given to the producer C. When the insured receives the contract and makes the first premium payment, if needed D. When the insured receives the contract and a "right to look" receipt
C
What Life insurance policy provision applies if a policy lapsed last year and the insured wants it back? A. Assignment B. Non-forfeiture C. Reinstatement D. Grace Period
C
What are the tax implications when an annuitant elects to take cash surrender of a deferred annuity during the accumulation period at age 56: A. Only the interest is taxable as ordinary income B. All the funds distributed are taxable as ordinary income C. Only the interest is taxable as ordinary income, plus a 10% early withdrawal penalty D. All of the funds distributed are taxable as a capital gain
C
What is the most common component in all life insurance policies? a. Living benefits b. Waiver of premium c. Death benefit d. Cost of living rider
C
When a life insurance policy lapses or is surrendered prior to maturity, any built up cash value may be used to buy a lesser amount of the same type of insurance. When this is done, the new policy would be known as: A. Paid up additions B. Converted insurance C. Reduced paid up insurance D. Extended term insurance
C
Which of following is not true about Whole life insurance: A. It has a guaranteed cash value B. It provides coverage to age 100 or prior death C. It is convertible to Term life without a physical exam D. It is considered to be permanent insurance
C
Which of the following is NOT correct regarding Ordinary Whole Life policies? A. Ordinary Whole Life is a type of permanent insurance B. Coverage lasts for your own life C. The cash value grows more quickly in the beginning years of the policy D. The premiums payments are owed annually until you die or reach age 100
C
Which of the following is a Non-forfeiture Option that provides continuing cash value buildup? A. Extended Term B. Cash Surrender C. Reduced Paid-Up D. Deferred Annuity
C
Which of the following is incorrect regarding Term insurance? A. It may be convertible to Whole Life B. It is used for temporary situations C. Conversion and renewal is done at original age D. Level Term may be renewed
C
Which of the following is true about the Misstatement of Age provision: A. It allows the insurer to contest a claim during the first 2 years B. It allows the insurer to change the premium C. It allows the insurer to void the contract D. It allows the insurer to adjust benefits
C
Which of the following is true regarding Modified Endowment Contracts (MECs): A. Policy loans are not taxable B. They are regulated under federal securities laws as investment products C. A 10% IRS penalty applies to cash surrenders under age 59 ½ D. They are considered to be tax 'qualified' plans under IRS rules
C
Which of the following is true regarding a 20-pay life policy sold to a 40-year-old client: A. It will reach maturity at age 60 B. Premiums must continue until age 100 C. The policy will be paid-up at age 60 D. The cash value will equal the face amount at age 60
C
Which of the following is true regarding a Life insurance beneficiary: A. They must sign the application B. They must have an insurable interest C. They receive tax free proceeds D. They must be a relative
C
Which of the following needs to have an insurable interest for an underwriter to issue an insurance policy? a. Owner b. Insurer c. Beneficiary d. Insured
C
Which of the following persons are eligible for a traditional IRA? A. Any single person earning less than $30,000 a year B. Any married person earning less than $50,000 a year C. Any person with earned income D. Any person
C
Which of the following properly describes an Adjustable Whole Life policy? A. It is a combination of Term plus Equity-indexed Life B. It is a combination of Level Term plus Decreasing Term C. It is a combination of Term plus Whole Life D. It is a combination of Term plus Variable Life
C
Which of the following statements is incorrect? A. The Other Insured rider adds Term coverage on another person to a Whole Life policy B. The AD&D rider pays out if the insured dies in an accident C. The Consideration Clause includes the first premium and answers on the application, but no signature of the applicant is required D. The free look starts at policy delivery
C
Which type of annuity has no accumulation period? A. A Single Premium Deferred Annuity B. A Flexible Premium Deferred Annuity C. A Single Premium Immediate Annuity D. A Level Premium Deferred Annuity
C
Why does whole life insurance cost more than annuities? A. Whole life cash values earn less than annuity cash values B. Annuities never have a beneficiary C. Whole life premiums must also include the cost of mortality D. Annuities are not subject to non-forfeiture provisions
C
With proper notice and authorization, insurers may report underwriting information that an applicant lists on their application for Life insurance to the: A. State insurance department B. Anyone who requests it C. Medical Information Bureau (MIB) D. Fair Credit Reporting Association
C
The HMO concept that service providers are paid a fixed monthly fee for each member is called:
Capitation
Agents must secure ____________________ prior to the use of any advertisement not furnished by the insurer.
Company Approval
13. A beneficiary on a life insurance policy will receive what value upon the death of the insured? a. Cash value b. Surrender value c. Investment value d. Death benefit
D
8. All of the following can be considered life-changing events that could result in a change in the amount of life insurance coverage needed EXCEPT: I. Birth of a child II. Divorce III. Marriage IV. Change in job title a. I, II, and III b. II and III only c. I only d. IV only
D
A Buy/Sell Agreement is important when selling which type of Life insurance: A. Split Dollar Plans B. Group Life C. Key Person Life D. Partnership Life
D
A Joint Life Annuity: A. Must cover both husband and wife B. Pays until the last party dies C. Has no guaranteed rate of return D. Payments stop when the first party dies
D
A __________ is the amount that an insured person is expected to pay for a medical expense at the time of the visit. a. Deductible b. Reimbursement c. Corridor d. Copayment
D
A beneficiary designation that prevents阻止 the policy owner from making certain changes in the policy is: A. Revocable （可变的） B. Contingent （有条件的） C. Primary （原始的） D. Irrevocable （不可变的）
D
A business client is looking for ways to decrease its monthly premiums. To get down to the premium level sought after by the company, the agent realizes they have to go to a high deductible health plan. As part of your advice to the business, what should you include in your discussion? a. HMO b. PPO c. POS d. HSA
D
A client buys a Life policy on July 1st and dies of suicide on December 20th. The insurance company will: A. Deny claim 否决 B. Pay claim C. Refund premiums to the estate 遗产 D. Refund premiums paid, less any loans, to the beneficiary
D
A customer buys $20,000 Life insurance policy with a $20,000 AD&D rider. The rider will pay double if the insured dies of which of the following? A. Heart attack B. Cancer C. During an operation to remove spleen D. Car accident
D
A father, age 60, and his son, age 30, both want to purchase $100,000 immediate annuities. All of the following are true about these contracts EXCEPT: A. The father would receive higher monthly payments B. The premiums would be the same on both contracts C. Neither contract is subject to underwriting D. The father's premium would be higher due to his age
D
A life insurance policy might be purchased on the life of a child for all of the following reasons EXCEPT: A. To help pay for the child's future educational needs B. To pay for the child's funeral expenses C. To solve an insurability problem the child may later develop D. To provide benefits to the child if the parents die
D
A life insurance policy sold to each spouse, rather than a joint life policy, would have all EXCEPT: A. A combined higher premium B. Two separate premiums C. Coverage for both spouses separately D. Coverage only for the first spouse to die
D
A life insurance policy whose cash value will fluctuate depending upon the performance of a separate account is: A. Ordinary Life B. Limited-pay Life C. Universal Life D. Variable Life
D
A life policy may include provisions that do all of the following EXCEPT: A. Require evidence of insurability in order to reinstate a lapsed policy B. Exclude coverage if death is caused by suicide C. Adjust proceeds if the insured's age is misstated on the application D. Extend the contestable period beyond 2 years
D
A producer completes an application for Life insurance and sends it to the underwriter who approves it and issues the policy. When is coverage effective: A. Immediately B. On the date the client signed the application C. On the date the underwriter approved the application D. When the producer delivers the policy and picks up the premium
D
Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. The maximum amount that Mr. Metz will be able to convert is which of the following? A. $500 B. $1,000 C. $1,500 D. $2,000
D
All are true about the duties of a Life insurance Producer (agent) EXCEPT: A. When soliciting insurance, the true name of the insurer must be disclosed B. Both the agent and the applicant must sign the application C. A Conditional Receipt is given when the applicant pays the initial premium D. The agent has a fiduciary duty to sell only profitable policies on behalf of the insurer
D
All of the following are Non-Forfeiture Options on a cash value Life insurance policy EXCEPT: A. Extended Term B. Cash Surrender C. Reduced Paid-Up D. Automatic Premium Loan
D
All of the following are correct, EXCEPT: A. The fact that a Life insurance policy is conditional means that future events must occur B. If a client forgets to mention something on the application that is not considered fraud C. The USA PATRIOT Act was created after September 11, 2001 D. HIV test results may be disclosed to the producer
D
All of the following are non-forfeiture options on a whole life policy EXCEPT: participating whole life A. Extended term B. Reduced paid up C. Cash surrender D. Paid up additions
D
All of the following are true about Equity Indexed annuities EXCEPT: A. They are designed to keep up with the rate of inflation B. They are issued by insurance companies C. They have investment risk D. They have no early withdrawal penalties
D
All of the following are true about Group Life insurance EXCEPT: A. Conversion is to an individual policy issued by the same insurer B. Conversion is to a more expensive policy C. It is convertible for 31 days after termination of employment D. Conversion is subject to insurability
D
All of the following are true about a preferred risk for life insurance EXCEPT: A. The premium is lower than the premium charged for a standard risk B. The applicant has a longer than average life expectancy C. The premium is lower than the premium charged for someone who smokes D. The rates and benefits are based on the 1980 CSO Mortality Table
D
All of the following are true about life insurance policies EXCEPT: A. Term insurance has lower premiums than Whole in the early years of the contract B. A Limited Pay Whole Life policy provides coverage for the life time of the insured C. If the insured understates his age, the policy will pay less than the face amount at death D. Limited Pay Whole Life policy requires premiums to be paid until death or policy maturity
D
All of the following are true regarding Life insurance "Accelerated Benefits" EXCEPT: A. They apply if the insured has a terminal illness B. They allow part of the death benefit to be paid out prior to death C. They reduce the amount payable at death D. They constitute a policy loan
D
All of the following are true regarding the various types of whole life insurance EXCEPT: A. A single premium may buy a paid up policy for life B. A limited pay policy and a straight whole life policy both reach maturity at age 100 C. A 20 pay life policy is paid up at the end of the premium paying period D. A life paid up at age 65 (LP65) reaches maturity at age 65
D
All of the following are true when the Waiver of Premium rider is enacted, EXCEPT: A. The policy still pays dividends B. The cash value grows more slowly C. The face amount remains unchanged D. The face amount is now less
D
An annuitant has paid monthly premiums into a deferred annuity over a period of time totaling $20,000. Due to tax deferred earnings in the account, his account balance at age 60 is $30,000. If he now takes a partial withdrawal of $5,000, how much is taxable: A. None, since he withdrew less than his cost basis B. None, since benefits of life insurance products are never taxable C. $10,000 D. $5,000
D
An insurable interest must exist when: B. A Life insurance policy is cancelled C. At all times D. Policy ownership is transferred
D
An insurance company will grant an advance from the cash value of a Life insurance policy when the policy owner requests which of the following? A. A low-interest dividend loan B. A policy loan C. A loan from Extended Term Insurance D. An automatic premium loan
D
An insured paid in $4,000 in premiums on his whole life policy over a period of time. When his cash value equaled $7,000, he elected to take a policy loan in the amount of $5,000. All are true about this situation EXCEPT: A. The face amount payable will be reduced if he dies with this loan outstanding B. Loans are not taxable C. The insurer will charge annual interest on this loan until it is repaid D. $1,000 of the loan is taxable since it exceeds his cost basis
D
An insured's premium is based mainly upon: A. Occupation B. Age C. Gender D. Risk classification
D
As a marketing tool, Ted, a health insurance agent, offered to send an applicant and his wife on a weekend vacation to a local resort to induce the applicant to purchase a policy. Is this practice permitted and, if not, what is it called? a. No; Misrepresentation b. No; Twisting c. Yes; it is perfectly acceptable d. No; Rebating
D
Group Life insurance is convertible: A. To Term Life insurance at any time at the option of the employee B. To an increased amount of Whole Life insurance, at the employee's option C. Based upon the employee's original age at time of employment D. For a specified period of time after termination of employment without a physical exam
D
If the insured lies about his a ge, all of the following would occur, EXCEPT: A. The insurer will adjust the benefit down, if the insured said he was younger than he was B. The insurer uses the premium paid at the correct age and pays the death benefit C. The insurer will adjust the benefit up, if the insured overstated his age D. The insurer will refund overpaid premiums, if the insured said he was older than he was
D
In the formation of a Life insurance contract, the special significance of a Conditional Receipt is that it: A. Guarantees the applicant that a policy will be issued in the amount applied for in the application B. Serves as proof that the producer has determined the applicant to be fully insurable for coverage by the insurance company C. Is given by the producer only to applicants who fully prepay all scheduled premiums in advance of policy issue D. Is intended to provide coverage on a date earlier than the date of the issuance of the policy
D
Insurable interest must exist: A. In order to be named as beneficiary B. At the time of loss C. Continuously D. At the time of application
D
Life insurance underwriters look at a variety of factors when determining the acceptance of an applicant. These factors can include: a. Health history b. Occupation c. Hobbies d. All of the above e. Both a and b only
D
Most Term Life insurance: A. Has a guaranteed cash value B. Is renewable to age 100 C. Is renewable with evidence of insurability D. Is convertible to permanent Whole Life without a physical exam
D
On Life insurance, the purpose of the Entire Contract Clause is to: A. Spell out the rights of the beneficiary B. Require that the insurer attach the application to the policy at issue C. Spell out the rights of the policy owner D. Limit the policy to the contract plus the application, if attached
D
On a health insurance claim form, the exact procedures that were performed for the insured are represented by standard codes that are referred to as __________. a. RVU codes b. AMA codes c. HCPCS codes d. CPT codes
D
On life insurance, which of the following are true about a beneficiary designation by "class"? A. Class designations may not include minor children B. All persons designated must be individually named C. Class designations may not be used when the insured has more than one child D. The beneficiaries need not be designated by name
D
Permanent life insurance policies always have two components. What are they? I. Death benefit II. Cash value III. Living Benefits IV. Conversion Benefit a. I, II, III and IV b. I, II and III c. II and IV d. I and II
D
Premium payments on a 20 pay life (20PL) insurance policy will continue until: A. Age 65 B. Age 100 C. 20 years or death of insured, whichever comes later D. 20 years or death of insured, whichever comes first
D
Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-yearamortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay? A. A $50,000 Whole Life policy B. A $50,000 20 Pay Life policy C. A $50,000 Level Term policy for 20 years D. A $50,000 Decreasing Term policy for 20 years
D
Since only one party to an insurance contract makes an enforceable promise, insurance contracts are considered to be: A. Contracts of Adhesion B. Aleatory contracts C. Contracts of Utmost Good Faith D. Unilateral contracts
D
The clause that states the insurer's promise to pay the policy benefits in accordance with the contract's provisions is the: A. Incontestability Clause B. Beneficiary Clause C. Consideration Clause D. Insuring Clause
D
The contingent beneficiary will receive policy proceeds when: A. No beneficiary has been designated B. The insured pre-deceases the primary beneficiary C. The insured pre-deceases all designated beneficiaries D. The primary beneficiary pre-deceases the insured
D
The dividend option, which allows the insured to purchase a Paid Up Whole Life policy, is: A. Cash surrender B. Extended Term C. Policy loan D. Paid-up option
D
The interest that accrues on a Life insurance policy loan: A. Must be paid by the beneficiary B. Is added to the amount of the death benefit C. Must be paid every year D. Is added to the amount of the loan
D
The life policy that has the highest cost if not kept in force for a long period of time is: A. Decreasing term B. Annual renewable term C. Level term D. Whole life
D
The penalty for taking a policy loan as a premature distribution on a life insurance policy that has been classified as a Modified Endowment Contract (MEC) is: A. 7.50% B. 5% C. None, life insurance policies are not subject to early withdrawal penalties D. 10%
D
The purpose of the Grace Period is to: A. Give the insurer time to determine the cause of death B. Protect the insurer against adverse selection C. Give the beneficiary time to prove that insurable interest exists D. Protect the policy owner against unintentional lapse
D
To be enforceable in court, there must be an exchange of value between the parties to the contract, which is known as: A. Acceptance B. Offer C. Mutual agreement D. Consideration
D
Traditional IRAs have a premature distribution penalty for distributions taken prior to age: A. 65 B. 70 ½ C. 55 D. 59 ½
D
Upon the insured's death 5 years after he bought the policy, the insurer determines that there was material misrepresentation on application: A. They will deny the claim B. They will refund premiums C. They will pay a portion of the claim D. They must pay the claim
D
What type of permanent Life insurance develops an immediate cash value? A. Limited Pay Whole Life B. Adjustable Whole Life C. Ordinary (Straight) Whole Life D. Single Premium Whole Life
D
When a life insurance agent solicits insurance, collects premiums and delivers policies while acting in the best interests of an insurer, they are acting as a: A. Managing general agent (MGA) B. Third party administrator (TPA) C. Trustee D. Fiduciary
D
Which federal law governs consumer investigative reports: A. Privacy Protection Act B. Telephone Communication Protection Act C. Employee Retirement Income Security Act D. Fair Credit Reporting Act
D
Which of the following annuitization options will give the annuitant the highest payout amount? A. Life income with a 30-year period certain B. Life income with a 5-year period certain C. Life income with refund D. Life income (straight life)
D
Which of the following correctly describes the Doctrine of Waiver and Estoppel? A. It gives the insured a period of time to return the policy for a full refund B. It defines what is admissible in court C. It allows the insurer to contest a claim for 2 years D. It states that if the insurer accepts an incomplete application, the insurer cannot contest a claim related to whatever was left blank
D
Which of the following is an incorrect statement regarding the Fair Credit Reporting Act? A. An applicant must be given post-notification B. An applicant must be given pre-notification C. The Fair Credit Reporting Act applies when pulling an investigative report on an applicant D. As a consumer you can never contest your credit report
D
Which of the following is not a form of health insurance? I. Dental insurance II. Vision insurance III. Disability insurance IV. Long-term care insurance a. I only b. II only c. All of the above d. None of the above
D
Which of the following is not considered to be a 'qualified' plan? A. 403b Tax Sheltered Annuity B. IRA C. Keogh D. Split Dollar
D
Which of the following is not true regarding the provisions of the federal Fair Credit Reporting Act: A. It applies to consumer reports ordered in relation to credit, insurance or employment B. If adverse action is taken as a result of a report, the customer must be informed of the specific reason for such action C. If adverse action is taken as a result of a report, the customer must be informed of the source of the report D. If adverse action is taken as a result of a report, the insurer must give the customer a copy of the report
D
Which of the following is true regarding KEOGH (HR 10) plans? A. The maximum contribution 15% of earned income B. They are non-qualified plans C. They are for employees of public educational institutions D. They are for the self employed or partners only
D
Which of the following is true regarding Life insurance beneficiaries? A. They must have an insurable interest B. They must sign the application C. They must be a relative D. They receive tax free proceeds
D
Which of the following is true when the insurer issues a 'rated' policy: A. Coverage is effective immediately B. It is considered to be acceptance of the risk C. No additional premiums will be due D. It is considered to be a counteroffer 还价
D
Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation? A. Term B. Annuity C. Limited-Pay Life D. Whole Life
D
Which of the following statements about a typical Suicide clause in a Life insurance policy is true? A. Suicide is covered for a specific period of years and excluded thereafter B. Suicide is covered as long as the policy is in force C. Suicide is excluded as long as the policy is in force D. Suicide is excluded for a specific period of years and covered thereafter
D
Which of the following statements about the Reinstatement provision is true? A. It guarantees the reinstatement of a policy that has been surrendered for cash B. It provides for reinstatement of a policy regardless of the insured's health C. It permits reinstatement within 10 years after a policy has lapsed D. It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated
D
Which of the following statements is true about a policy assignment? A. It is valid during the insured's lifetime only, because the death benefit is payable to the named beneficiary B. It permits the beneficiary to designate the person or persons to receive the benefits C. It is the same as a beneficiary designation D. It transfers the owner's rights under the policy to the extent expressed in the assignment form
D
Which of the following types of Life insurance has a tax deductible premium: A. Partnership Life B. Whole Life C. Key Person Life D. Group Life
D
Which rider will waive the premium on a policy written for a child if the policy owner becomes disabled due to accident or sickness? A. Guaranteed Insurability B. Waiver of Premium C. Accidental Death and Dismemberment D. Payor benefit
D
Which type of life insurance is considered to be more risky based on its investment component? a. Level Term Life Insurance b. Whole Life Insurance c. Decreasing Term Life Insurance d. Variable Life Insurance
D
You have a client that is a real estate agent. Which of the following types of permanent protection is best for this type of client? A. Universal life B. Variable life C. Survivorship life D. Adjustable life
D
Living benefits on a life insurance policy can be typically be accessed via: a. Lump sum b. Regular installments c. Loan d. All of the above e. Both a and b
E
When constructing a major medical insurance policy, several criteria must be established, including: a. Policy deductible b. Maximum out-of-pocket amount c. Elimination period d. All of the above e. Both a and b only
E
Which of the following limits coverage under an insurance contract?
Exclusions
Health insurance renewability provisions, reserves, and claims are the same as with life insurance.
False
Medicare Part A is optional once an individual applies for Social Security benefits, has an annual deductible and coinsurance.
False
The ______________________ gives the Chief Financial Officer power to regulate financial planners.
Florida Insurance Code
Life With Period Certain
Guaranteed income for the annuitant's lifetime; and if the annuitant dies before the period certain has expired, the policy pays the beneficiary in periodic installments until the end of the designated period. What annuity payout option is described?
Which of the following is NOT a typical type of long-term care coverage?
Hospice Care
In disability income underwriting, __________ is the most important factor.
Income
The categories of health policies include all EXCEPT:medical (A) expenses. (B) disability income. (C) Accidental Death and Dismemberment (AD&D). (D)indemnity.
Indemnity
A Hospital Expense policy that pays a flat amount per day for hospital room and board pays benefits on what basis?
Indemnity plan
Any profits derived with Fraternal Benefit Societies are considered:
Non Taxable
In what phase of the selling process are serious problems of misrepresentation likely to occur?
Presentation of recomendations
The "one time only" period in a health policy when the policy first starts is called the _______________ Period.
Probationary
The _____________ period specified in a disability insurance policy is the period of time that must elapse following the effective date of the policy before benefits are payable.
Probationary
sliding.
Representing to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of insurance when such coverage or product is not required is an example of:
A Life insurance policy of which the cash value is over-funded according to IRS rules is known as: A. A Variable Life Contract B. A Variable/Universal Life Contract C. A Universal Life Contract D. A Modified Endowment Contract
S
The state government agency(ies) involved in the regulation of the insurance industry in the State of Florida is/are the:
State Legislature, the Department of Financial Services, the Office of Insurance Regulation, and the State Court System.
Starting principal, interest, and income period
The amount of an annuity payment is based upon which of the following factors?
Investment Configuration
The annuity _____________________ allows for a fixed rate of return or a variable rate of return.
two months
The data on the annual report provided to annuity owners which states the units credited to the contract and the dollar value of a unit must be updated no more than ____________ prior to the date the report is mailed.
Payout Period
Which annuity structure gives the recipient options of receiving returns for a specified term or for life, or a combination of both?
Unilateral
Which of the following legal terms indicates that a life insurance contract contains the enforceable promises of only one party?
Mrs. Glenridge lapsed her disability policy May 29th. She reinstated it on June 1st. She claimed coverage for an accident that occurred on June 3rd. Is the claim valid?
YES - In case of an accident, coverage is effective immediately upon reinstatement.
Variable Annuities
____________ annuities use annuity units at time of retirement to determine the amount of benefits.
A stop-loss feature in a major medical policy specifies the maximum:
amount the insured must pay toward covered expenses
An annual premium at 3% reserve interest assumption will be _________ than at a 3 1/2% reserve interest assumption.
greater
The probationary period in disability income policies applies to:
sickness only, not accidents.
Coinsurance may be defined as:
the sharing of expenses by the insured and the insurer - a form of risk retention.
