Life Practice Test One - Missed Answers

When an individual life insurance policy is being replaced by an insurer using an agent, the policyowner must be given an unconditional ride to a full refund of premiums if the policy is returned within

20 days.

What is the waiting period on a waiver of premium rider in life insurance policies?

6 months. Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.

An insurer must pay interest on death benefits payable under the terms of a life insurance policy...

An insurer must pay interest on death benefits payable under the terms of a life insurance policy insuring the life of any person who was a resident of this state at the time of death.

If the benefits from a life insurance policy are not paid to the beneficiary within 90 days, what is the minimum interest rate the insurer will have to pay on the 91st day?

Benefits payable that have not been paid to the beneficiary within 90 days of the receipt of proof of death will accure interest starting on the 91st day, and the stated rate %8 minimum plus 3.

An agent selling variable annuities must be registered with

FINRA. Because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities.

Under which installment option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

Fixed amount. Under the installments for a fixed amount option, the annuitant selects the amount of each payment, the insurer determines how long they will pay benefits. this options pays a specific amount until the funds are exhausted. There are no life contingencies.

What is true about the cash surrender nonforfieture option?

Funds exceeding the prmeium paid are taxable as ordinary income. The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. One the policyholder opts for cash surrender, the policy is immediately inactive.

The Washington Insurance Code regulation regarding policy replacement applies to which of the following types of transactions?

Immediate annuity contract. Credit life insurance, group contracts, and policies issued and replaced by the same insurer are except from replacement regulations

In forming an insurance contract, when does acceptance usually occur?

In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

List correct statements regarding insurable risk:

Insurance cannot be mandatory. The insurable risk needs to be statistically predictable. An insurable risk must invovle a loss that is definite as to cause, time and amount.

All of the following are true about variable products:

Insurers selling variable products invest their customer's monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return, customers must bear the investment risk.

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 states on the application. What will the company do?

Pay a reduced death benefit. The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex, and identity.

According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls?

Permissible calling hours for telemarketers are between 8am and 9pm.

The purpose of insurance regulation is to

Promote the public welfare.

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

Term. children's term riders provide term insurance with coverage expiring when the minor reaches a certain age.

Describe a bail-out provision:

Some annuity contracts contain a bail-out provision. This provision allows the owner to surrender the annuity without charge if the interest rates drop a specified amount within a certain timeframe.

Which of the following is an example of a limited-pay life policy?

Life Paid-up at age 65. Limited pay whole life premiums are all paid by the time the insured reaches 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, no the maturity.

The premium of a survivorpship life policy compared with that of a joint life policy would be

Lower. Survivorship Life is much the same as joint life in that it insurer two or more lives for a premium that is based on a joint age. The major difference is that survivor ship life pays the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

Which non forfeiture option provides coverage for the longest period of time?

Reduced paid-up. The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.

Under a group plan for an Association, the term "employee" may include

Retired employees of the association. Retired employees of the association may be covered under the association group policy as employees for plan purposes.

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

Settlement option. A settlement options is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.

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

Survivor protection Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestle in the event of the insured's death. This is known as survivor protection.

What is the Human Life Value Approach?

The Human Life value approach is used in determining the value of an individual's life requires the calculation or probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicated needs of the family after the insured's death are used to the needs approach.

All of the following statements are true regarding installments for a fixed period annuity settlement option

Under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits and the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.

Which insurance policy is exempt from the Life Insurance Policy Illustration guidelines?

Variable Life Insurance. Excluded from these guidelines are variable life insurance, individual and group annuity contracts, credit life insurance and life insurance policies with no illustrated death benefits on any individual exeeding ten thousand dollars.