Primerica Exam 3

3. Revocable beneficiary.

#10. Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. Bonnie should have her husband named as thea)Tertiary beneficiary.b)Irrevocable beneficiary.c)Revocable beneficiary.d)Secondary beneficiary. If her husband is named as the revocable beneficiary, Bonnie would be the policyowner and could make changes to the contract. Her husband would receive the death benefit.

1. Apparent

13. Which type of authority is based on the actions, words, or deeds of the principal?a)Apparentb)Expressc)Lingering impliedd)Implied Apparent authority is the appearance of, or the assumption of, authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

2. Transfer

14. When a homeowner purchases insurance on his home, what risk management technique is he practicing?a)Retentionb)Transferc)Avoidanced)Sharing When insurance is purchased, the insured is, in return for the payment of the premium, transferring the risk of financial loss by certain perils to the insurance company.

2. Require evidence of insurability.

16. If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer maya)Increase medical requirements on existing members.b)Require evidence of insurability.c)Require a higher premium.d)Prolong the open enrollment period. In group underwriting the evidence of insurability is usually not required of each participant unless he or she is enrolling for coverage outside of the normal enrollment period.

4. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

19.In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? (Choose from the following options) 1. The annuitant will always receive the current interest rate. 2. The annuitant will receive the lower of either the guaranteed minimum rate or current rate. 3. The annuitant will only receive the guaranteed minimum specified in the contract. 4. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

2. 30 days

22.A flexible premium universal life insurance policy must provide a grace period of (Choose from the following options) 1. 10 days. 2. 30 days. 3. 60 days. 4. 90 days.

4. An unfair trade practice.

26.If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association that would be considered (Choose from the following options) 1. A misrepresentation 2. An accurate statement 3. A legal representation of the Association 4. An unfair trade practice.

3. LEVEL

30.A man wants to buy a life insurance policy in which he can count on guaranteed minimum benefits. Which type should he buy? (Choose from the following options) 1. Solid 2. Fixed 3. Level 4. Variable

3. Until the beneficiary's death

32.How long will the beneficiary receive payments under the single life settlement option? (Choose from the following options) 1. For a specified period of time 2. Until the insured's age 100 3. Until the beneficiary's death 4. Until the insured's death

2. Non-participating policy

40.A policy that does not pay dividends to policyowners is a (Choose from the following options) 1. Mutual life policy 2. Non-participating policy 3. Participating policy 4. Whole life policy.

2. Reciprocity

43.A producer in Ohio wants to become a producer in Michigan. The Department will waive certain examination requirements, provided that Ohio would waive these same requirements if a Michigan producer sought licensure in Ohio. What term is used to describe this phenomenon? (Choose from the following options) 1. Equanimity 2. Reciprocity 3. Equality 4. Fair exchange

3. Automatic premium loan

46.A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? (Choose from the following options) 1. Incontestability period 2. Assignment 3. Automatic premium loan 4. Waiver of premium

4. A new Commissioner or Director is put into office. An appointment by an insurer is based upon the person maintaining a valid insurance license. Although the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.

48. All of the following events will terminate a producer's certificate of appointment EXCEPTa)A producer's license expires and is not renewed.b)A termination issued by the appointing insurer.c)A producer's license is suspended or revoked by the Department of Insurance.d)A new Commissioner or Director is put into office. An appointment by an insurer is based upon the person maintaining a valid insurance license. Although the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.Next

1. Annually Renewable Term

All other factors being equal, the least expensive first-year premium payment is found ina)Annually Renewable Term.b)Increasing Term.c)Decreasing Term.d)Level Term. Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.

2) Fraud.

An agent is trying to convince a potential insured to buy a policy from him, so he misrepresents the benefits of the policy. This is an example of (Choose from the following options)1. Indemnity.2. Fraud.3. Defamation.4. Concealment.

4) Nothing, due the insured's reaching the maximum age.

An employer provides a group life plan for its employees; it is $50,000 of term to age 65. When one of the employees was hired 10 years ago, he misstated his age and told the employer he was 50, when in fact he was 56 years old. The insured employee died last week. His beneficiary will receive (Choose from the following options)1. The amount of death benefit the premium would have purchased at his correct age.2. Nothing, due to the misstatement of age.3. $50,000.4. Nothing, due the insured's reaching the maximum age.

2. Waiver

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? (Choose from the following options) 1. Aleatory 2. Waiver 3. Estoppel 4. Subrogation

1. Fraternal insurer

An organization that, in addition to other activities, provides a formal insurance plan to its members is classified as a (Choose from the following options) 1. Fraternal insurer 2. Mutual company 3. Stock company 4. Reciprocal association.

2. Obtain a list of all life insurance policies that will be replaced

During replacement of life insurance, a replacing insurer must do which of the following? (Choose from the following options) 1. Send a copy of the Notice Regarding Replacement to the Department of Insurance 2. Obtain a list of all life insurance policies that will be replaced 3. Guarantee a replacement for each existing policy 4. Designate a new producer for a replaced policy

4) Reduction

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? (Choose from the following options) 1. Transfer 2. Avoidance 3. Retention 4. Reduction

1. The policy will terminate when the cash value is reduced to nothing.

If an insured continually uses the automatic premium loan option to pay the policy premium, (Choose from the following options) 1. The policy will terminate when the cash value is reduced to nothing 2. The face amount of the policy will be reduced by the automatic premium loan amount 3. The cash value will continue to increase 4. The insurer will increase the premium amount.

1)6 years.

Michigan insurance policies can specify a time limit during which legal action against the insurer can be taken. This time limit, however, has to be at least (Choose from the following options) 1. 6 years 2. 3 years 3. 4 years 4. 5 years.

1.It allows for up to 15 excess credit hours to be carried forward to the next reporting period.

Michigan's continuing education requirement has each of the following characteristics EXCEPT (Choose from the following options) 1. It allows for up to 15 excess credit hours to be carried forward to the next reporting period 2. At least 3 hours must cover ethics 3. It requires satisfactory completion of at least 24 hours of approved training every biennium 4. Other than the 3 hours of ethics, licensees may take courses in any line.

2. Premium receipt

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a (Choose from the following options) 1. Warranty 2. Premium receipt 3. Statement of good health 4. Backdated receipt.

3. An index like Standard & Poor's 500.

The equity in an equity index annuity is linked to (Choose from the following options) 1. The annuitant's individual stock portfolio 2. The insurance company's general account investments 3. An index like Standard & Poor's 500 4. The returns from the insurance company's separate account.

3. Fiduciary responsibility

The requirement that agents not commingle insurance monies with their own funds is known as (Choose from the following options) 1. Express authority 2. Accepted accounting principal 3. Fiduciary responsibility 4. Premium accountability.

4. The period of time during which accumulated money is converted into income payments The "annuity period" is the time during which accumulated money is converted into an income stream.

Which of the following best describes what the "annuity period" is? (Choose from the following options) 1. The period of time spanning from the accumulation period to the annuitization period 2. The period of time during which money is accumulated in an annuity 3. The period of time spanning from the effective date of the contract to the date of its termination 4. The period of time during which accumulated money is converted into income payments

4. Telling a client that his first premium will be waived if he purchased the insurance policy today

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? (Choose from the following options) 1. Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest 2. Charging a client a higher premium for the same policy as another client in the same insuring class 3. Making deceptive statements about a competitor 4. Telling a client that his first premium will be waived if he purchased the insurance policy today

d)Creditor is the policyowner.

Which of the following is true about credit life insurance? (Choose from the following options) 1. Debtor is the annuitant 2. Creditor is the insured 3. Debtor is the policy beneficiary 4. Creditor is the policyowner.

3. It may last for the lifetime of the annuitant or for a shorter period of time.

Which of the following is true regarding the annuity period?a)It is also referred to as the accumulation period.b)It is the period of time during which the annuitant makes premium payments into the annuity.c)It may last for the lifetime of the annuitant or for a shorter period of time.d)During this period of time the annuity payments grow interest tax deferred. The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

2)The annuitant assumes the risks on investment.

Which of the following is true regarding variable annuities? (Choose from the following options) 1. A person selling variable annuities is required to have only a life agent's license 2. The annuitant assumes the risks on investment 3. The funds are invested in the company's general account 4. The company guarantees a minimum interest rate.

2. The annuitant assumes the risks on investment.

Which of the following is true regarding variable annuities? (Choose from the following options) 1. A person selling variable annuities is required to have only a life agent's license 2. The annuitant assumes the risks on investment 3. The funds are invested in the company's general account 4. The company guarantees a minimum interest rate.

1. An insured and his child are injured in the same accident, and the uninjured, nonworking spouse wants to collect hardship benefits from the cash value of the life policy

Which of the following situations would be addressed by The Uniform Simultaneous Death with a Common Disaster provision? (Choose from the following options) 1. An insured and his child are injured in the same accident, and the uninjured, nonworking spouse wants to collect hardship benefits from the cash value of the life policy 2. The insured and primary beneficiary are injured in the same car accident, and the beneficiary dies within 30 days of the insured 3. Two beneficiaries of a life insurance policy are both killed in the same car accident. Because there are no remaining beneficiaries, the insured must select new ones 4. Both the insured and beneficiary are severely injured and want to request advanced benefits to pay for hospitalization and subsequent medical treatment.

4)Option B

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? (Choose from the following options) 1. Corridor option 2. Variable option 3. Option A 4. Option B

4. Implied

Which type of authority is based on the actions, words, or deeds of the principal? (Choose from the following options) 1. Apparent 2. Express 3. Lingering implied 4. Implied