Primerica Life Exam (State)

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

a

A "certification of license status" report can be run on any currently licensed New Jersey producer, but can only contain information on formal disciplinary actions taken within the past a. 7 years. b. 10 years. c. 6 months. d. 4 years.

?

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a. False advertising b. Defamation c. Coercion d. Misrepresentation

?

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? a. The insured and the policyowner b. Beneficiary c. Insured d. Policyowner

?

Items stipulated in the contract that the insurer will not provide coverage for are found in the a. Consideration clause. b. Exclusions clause. c. Insuring clause. d. Benefit Payment clause.

b

How is the Insurance Guaranty Association funded? a. By NAIC b. By the Government c. By its members - authorized insurers d. By the Department of Insurance

c

Why should the producer personally deliver the policy when the first premium has already been paid? a. To find out how the family has been doing since the initial presentation b. To make sure the policy is not stolen or lost c. To help the insured understand all aspects of the contract d. To ensure the producer gets paid commission

c

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of a. Loading. b. Defamation. c. Twisting. d. Coercion.

d

All of the following are among the Commissioner's broad powers EXCEPT a. Appoint and remove officers employed within the Department. b. Report to the Governor about the Department's operations. c. Formulate and adopt rules and regulations of companies and licensees. d. Have interest in insurance companies regulated by the Department.

d

The Commissioner may revoke a producer's license for all of the following reasons EXCEPT a. Commingling of funds. b. Misrepresenting the terms of a policy. c. Acting in a fiduciary capacity. d. Accepting business from an unlicensed person.

c

The paid-up addition option uses the dividend a. To reduce the next year's premium. b. To accumulate additional savings for retirement. c. To purchase a smaller amount of the same type of insurance as the original policy. d. To purchase a one-year term insurance in the amount of the cash value.

c

The requirement that agents must account for all insurance funds collected, and are not permitted to comingle those funds with their own is known as a. Insurance-related conduct. b. Fiscal responsibility. c. Fiduciary responsibility. d. Premium accountability.

c

The two types of assignments are a. Complete and partial. b. Complete and proportionate. c. Absolute and collateral. d. Absolute and partial.

c

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a. Payment of premium. b. Delivery receipt. c. Signed waiver of premium. d. Statement of good health.

c

What is the purpose of settlement options? a. They guarantee a return of excess premiums. b. They provide the beneficiary with the income he/she cannot outlive. c. They determine how death proceeds will be paid. d. They are guarantees built into the policy.

c

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

c

If a life insurance policy has an irrevocable beneficiary designation, a. The beneficiary can only be changed with written permission of the beneficiary. b. The beneficiary cannot be changed for at least 2 years. c. The owner can always change the beneficiary at will. d. The beneficiary cannot be changed.

a

A key person insurance policy can pay for which of the following? a. Hospital bills of the key employee b. Costs of training a replacement c. Loss of personal income d. Workers compensation

b

All of the following would be different between qualified and nonqualified retirement plans EXCEPT a. IRS approval requirements b. Taxation on accumulation c. Taxation of withdrawals d. Taxation of contributions

b

The Waiver of Cost of Insurance rider is found in what type of insurance? a. Joint and Survivor b. Juvenile Life c. Universal Life d. Whole Life

c

The company has issued a policy and delivered it to Producer B on May 1st, Monday. By what date must the policy be delivered to the insured? a. May 2nd (immediately) b. May 31st (within a month) c. May 10th (within 10 calendar days) d. May 12, Friday (within 10 business days)

c

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

d

A producer's appointment lasts for how long? a. 2 years b. 3 years c. 5 years d. Until it is terminated

d

Why is an equity indexed annuity considered to be a fixed annuity? a. It is not tied to an index like the S&P 500. b. It has a guaranteed minimum interest rate. c. It has modest investment potential. d. It has a fixed rate of return.

?

The company owes premium money to the insured. The insurer gave the funds to the producer to return to the insured. Within how many days must the producer pay the insured? a. 5 b. 10 c. 14 d. 30

a

What license or licenses are required to sell variable annuities? a. Only a securities license b. No license is required c. Both a life insurance license and a securities license d. Only a life insurance license

c

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? a. Life income period certain b. Extended term c. Fixed amount d. Fixed period

c

Which of the following must an insurer obtain in order to transact insurance within a given state? a. Business entity license b. Insurer's license c. Certificate of authority d. Producer's certificate

c

Provided that it is a first offense, what is the maximum penalty for failing to respond to a subpoena? a. $100 b. $10,000 c. $5,000 d. $500

c

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a. 100% participation of members is required in noncontributory plans. b. Each member covered receives a policy. c. Coverage cannot be converted when an individual leaves the group. d. Premiums are determined by age, occupation, and individual underwriting.

?

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a. The customer has no knowledge of this action. b. The customer's associates, friends, and neighbors provide the report's data. c. They provide additional information from an outside source about a particular risk. d. They provide information about a customer's character and reputation.

?

The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the: a. Counties b. Federal Government c. Insurers in a state d. States

?

Fred is the owner of a whole life insurance policy. Some of the details involving benefit payments are not expressed in the policy, but the insurer proposed an arrangement 10 years ago. Fred has still not agreed formally to the terms of the proposal. When the policy matures, what will the insurer do? a. Hold Fred's money in its general fund until it can come to a formal agreement with Fred b. Execute the terms of the proposed agreement, while charging Fred a penalty of no more than 2.5% of the monthly payout until an agreement is established c. Execute the terms of the proposed agreement, since Fred did not formally disagree d. Hold Fred's money in a segregated fund until it can come to a formal agreement with Fred

a

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? a. The death benefit will be smaller. b. The death benefit will be forfeited. c. The death benefit will be the same as the original face amount. d. The death benefit will be larger.

a

J applied for a life insurance policy on January 10. The policy was issued on January 31. J's agent was vacationing at the time the policy was issued, so J did not receive the policy until February 18. J decides that he does not want the policy. When would J need to return the policy to the insurer in order to receive a full refund of premium paid? a. February 28th, or 10 days after the time the policy is delivered. b. The time varies from one policy to another. c. It was already too late when J received the policy because the 10-day free-look period had expired. d. Anytime, because the agent did not deliver the policy promptly.

a

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? a. Reduction of premium b. Paid-up addition c. Accumulation at interest d. Cash option

a

What is the purpose of a conditional receipt? a. It is intended to provide coverage on a date prior to the policy issue. b. It guarantees that a policy will be issued in the amount applied for. c. It serves as proof that the applicant has been determined insurable. d. It is given only to applicants who fully prepay the premium.

a

Which of the following authorities is in charge of investigating claims held against licensees? a. Commissioner b. Governor c. State law enforcement d. Federal Bureau of Investigation

a

Which of the following entities is held responsible for the contents of an insurer's advertisement on local TV station? a. The insurance company b. The Department of Insurance c. The TV station d. The Guaranty Association

a

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

a

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a. Replacement rule b. Reinstatement rule c. Conversion rule d. Disclosure rule

a

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

b

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a. The date of application b. The date of medical exam c. The date of policy delivery d. The date of issue

b

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? a. Estoppel b. Material misrepresentation c. Waiver d. Utmost Good Faith

b

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? a. Grace period b. Reinstatement provision c. Waiver of premium provision d. Incontestable clause

b

Credit Life insurance a. Has a maximum term for insurance of 20 years. b. Insures the life of a debtor. c. Is purchased on an installment basis. d. Insures the life of a creditor.

b

How is an insurance consultant different from an insurance producer? a. A consultant represents the insurer. b. A consultant does not sell policies, but only offers advice. c. A consultant does not need an insurance license. d. A consultant does not get paid commissions.

b

If a company has a Simplified Employee Pension plan, what type of plan is it? a. An undefined contribution plan for large businesses b. A qualified plan for a small business c. The same as a 401(k) plan d. The same as an IRA, with the same contribution limits

b

If a producer has been convicted of a crime, he or she must notify the Commissioner within a. 20 days. b. 30 days. c. 10 days. d. 15 days.

b

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

b

If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence? a. 7 am b. 8 am c. 9 am d. Noon

b

In which of the following instances would the premium be tax deductible? a. Premiums paid by an employer on the life of a key person b. Premiums paid by an employer on a $30,000 group term life insurance plan for employees c. Premiums paid by an individual on his/her own life insurance d. Premiums paid by a mother on her son's policy

b

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

b

Representations are written or oral statements made by the applicant that are a. Immaterial to the actual acceptability of the insurance contract. b. Considered true to the best of the applicant's knowledge. c. Guaranteed to be true. d. Found to be false after further investigation.

b

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

b

What is the benefit of choosing extended term as a nonforfeiture option? a. It can be converted to a fixed annuity. b. It has the highest amount of insurance protection. c. It matures at age 100. d. It allows for coverage to continue beyond maturity date.

b

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? a. Premature death b. Return of premium c. Cost of living d. Decreasing term

b

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? a. Nonadmitted b. Foreign c. Domestic d. Alien

b

Which of the following best describes a misrepresentation? a. Discriminating among individuals of the same insuring class b. Issuing sales material with exaggerated statements about policy benefits c. Making a deceptive or untrue statement about a person engaged in the insurance business d. Making a maliciously critical statement that is intended to injure another person

b

Which of the following best details the underwriting process for life insurance? a. Reporting and rejection of risks b. Selection, classification, and rating of risks c. Solicitation, negotiation and sale of policies d. Issuance of policies

b

Which of the following is NOT allowed in credit life insurance? a. Creditor becoming a policy beneficiary b. Creditor requiring that a debtor buys insurance from a certain insurer c. Creditor having a collateral assignment on the policy d. Creditor requiring that a debtor has a life insurance

b

Which of the following is another term for the accumulation period of an annuity? a. Annuity period b. Pay-in period c. Premium period d. Liquidation period

b

Which of the following licenses is required for a surplus lines producer? a. Adjusters b. Property and Casualty c. Credit insurance d. Life and Health

b

Which of the following provide(s) funding for the New Jersey Life and Health Guaranty Association? a. Insolvent insurers b. Member insurers c. Tax payers d. Fundraising

b

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

b

A person takes out a loan in order to pay off his house. He dies several years later, having paid off only a small portion of the debt. Which of the following is true? a. The lender will not recover this money. b. The federal government will pay the balance to the lender. c. If the lender has credit insurance, this amount will be paid to the lender. d. The state government will pay the balance to the lender.

c

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called a. Living need rider. b. Payor rider. c. Cost of living rider. d. Accelerated benefit rider.

c

A small employer owns a group health insurance policy. The employer neglects to pay the premium by the payment due date. The employer fails to pay the premium yet again by the end of the grace period. Which of the following will happen? a. The certificate holders will be transferred to another policy. b. The certificate holders will have to pay for all claims that were incurred after the premium due date. c. The policy will terminate. d. The policy will continue for the certificate holders only.

c

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? a. She can only convert her coverage without proof of insurability if she has the master policy. b. She must apply for a new policy, which requires her to provide proof of insurability. c. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. d. She will still be covered under the group plan, but will have to pay an individual policy premium.

c

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

c

If an insurer and insured have a dispute about whether a particular loss is covered under a policy, which authority will settle the dispute? a. Federal Insurance Regulation Board b. Consumer Protection Agency c. Court system d. Commissioner

c

In a survivorship life policy, when does the insurer pay the death benefit? a. Half at the first death, and half at the second death b. If the insured survives to age 100 c. Upon the last death d. Upon the first death

c

In which of the following situations is it legal to limit coverage based on marital status? a. Legal separation during the application process b. Divorce within the last six months of applying for insurance c. It is never legal to limit coverage based on marital status. d. Excessive number of divorces, as defined by the Insurance Code

c

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

d

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

d

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a. Dividend options b. Guaranteed renewable option c. Nonforfeiture options d. Guaranteed insurability option

d

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a. One-year term purchase. b. Accumulation at interest. c. Reduction of premiums. d. Paid-up additions.

d

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

d

The Paul vs. Virginia case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today? a. The decision has changed. Insurance and securities are now regulated by the same federal agency. b. It still stands in full. Insurance is not considered to be interstate commerce, and is not subject to regulation by the federal government. c. It still stands in full. Insurance and securities are still regulated by two distinct agencies. d. The decision has changed. Insurance is considered to be interstate commerce, and is subject to regulation by the federal government.

d

Through which branch(es) of the government is insurance currently regulated? a. Legislative b. Judicial c. Executive d. All of the above

d

What is the purpose of the buyer's guide? a. To provide the name and address of the agent/producer issuing the policy b. To list all policy riders c. To provide information about the issued policy d. To allow the consumer to compare the costs of different policies

d

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will a. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. b. Return the premium to Y's estate, since it has no obligation to pay the death claim. c. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued. d. Issue the policy anyway and pay the face value to the beneficiary.

d

Which of the following entities established the Do-Not-Call Registry? a. The Better Business Bureau b. The NAIC c. The Consumer Protection Agency d. The Federal Trade Commission

d

Which of the following is NOT required information a producer must provide before soliciting insurance? a. The nature of producer's relationship with the insurer being represented b. The name of the insurer the producer represents c. Producer's name d. Producer contact information

d

Which of the following is a duty of the Commissioner of insurance in this state? a. Imprison Insurance Code violators b. Establish insurance rates c. Appoint individual producers d. Amend rules and regulations

d

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

d