Quiz
How soon after a notice of hearing is made may the hearing be conducted? A-No less than 45 days B-No less than 10 days C-No less than 20 days D-No less than 30 days
C-No less than 20 days A hearing will occur not less than 20 days from the date of the hearing notice.
Which of the following statements about the reinstatement provision is true? A-It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. B-It permits reinstatement within 10 years after a policy has lapsed. C-It provides for reinstatement of a policy regardless of the insured's health. D-It guarantees the reinstatement of a policy that has been surrendered for cash.
A-It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. Upon policy reinstatement, the policyowner will be required to pay all back premiums plus interest, and may be required to repay any outstanding loans and interest.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A-Proof of insurability is not required. B-Medical exam C-Her parents' federal income tax receipts D-Medical exam and parents' medical history
A-Proof of insurability is not required. Correct! If a Children's erm rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can convert their coverage to a new policy without having to issue proof of insurability.
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? A-Reduction of premium B-Accumulation at interest C-Paid-up option D-One-year term
C-Paid-up option With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.
All of the following are true regarding insurance policy loans EXCEPT A-The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. B-Policyowners can borrow up to the full amount of their whole life policy's cash value. C-Policy loans can be made on policies that do not accumulate cash value. D-The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies.
C-Policy loans can be made on policies that do not accumulate cash value. Correct! The policy loan option is only found in policies that contain cash value.
Which of the following information will be stated in the consideration clause of a life insurance policy? A-The time period allowed for the payment of premium B-The conditions for insurability C-The amount of premium payment D-The parties to the contract
C-The amount of premium payment The consideration clause states the value that offered by the insured is thepremium and statements made in the application, so it will include the information about the amount and The consideration clause states that the value offered by the insured is the frequency of premium payments.
If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans? A-The loan amount is charged to the beneficiaries. B-The loans are waived. C-The loan amounts are deducted from the death benefit. D-The policy is withheld until payments are met.
C-The loan amounts are deducted from the death benefit. In the event an insured dies, any outstanding policy loans and accrued interest is deducted from the policy procee Loans cannot exceed the cash value of the policy.
All of the following statements are correct regarding credit life insurance EXCEPT A-Benefits are paid to the borrower's beneficiary. B-The amount of insurance permissible is limited per borrower. C-Premiums are usually paid by the borrower. D-Benefits are paid to the creditor.
A-Benefits are paid to the borrower's beneficiary. In credit life insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.
Which of the following is TRUE about nonforfeiture values? A-Policyowners do not have the authority to decide how to exercise nonforfeiture values. B-They are required by state law to be included in the policy. C-They are cptional provisions. D-A table ing nonforfeiture values for the next 10 years must be included in the policy.
B-They are required by state law to be included in the policy. Nonforfeiture values are required by state law to be included in the policy, and cannot be altered by the policyowner. A table showing the nonforfeiture values for the next 20 years must be inciuded in the policy.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A-It is increased when extra premiums are paid. B-It decreases over the term of the policy. C-It remains the same as the original policy, regardless of any differences in value. D-It is reduced to the amount of what the cash value would buy as a single premium.
D-It is reduced to the amount of what the cash value would buy as a single premium. In a reduced paid-up policy, the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence the name. The new policy accumulates in cash value until its maturity or the insured's death.
Which of the following settlement options in life insurance is known as straight life? A-Single life B-Life with period certain C-Fixed amount D-Life income
D-Life income The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary's death.
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A-The beneficiary must pay interest to the insurer. B-The beneficiary will receive the lump sum, plus interest. C-The primary beneficiary will receive the death benefit and the secondary beneficiaries share the interest payments. D-The beneficiary will only receive payments of the interest earned on the death benefit.
D-The beneficiary will only receive payments of the interest earned on the death benefit. With the Interest Only settlement option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals (monthly, quarterly, semiannually, or annually).
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 forfeited. B-The death benefit will be the same as the original face amount. C-The death benefit will be larger. D-The death benefit will be smaller.
D-The death benefit will be smaller. If an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by that amount, plus the amount of earnings lost by the insurance company in interest income.
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? A-Fixed period B-Fixed amount C-Lump sum D-Life income
C- Lump Sum Upon the death of the insured, or endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unjess the recipient chooses an optional mode of settlement.
Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? A-guaranteed insurability B-Payor benefits C-Long term care D-Accidental death
C-accidental death Long-term care rider provides for the payments of part of the death benefit (called accelerated benefits) in order to take care of the insured's healthcare expenses, which are incurred in a nursing or convalescent home
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A-Guaranteed insurability rider. B-Paid-up additions option. C-Cost of living provision. D-Nonforfeiture option.
A-Guaranteed insurability rider. The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? A-1 year B-2 years C-5 years D-7 years
B-2 years The incontestability clause prevents an insurer from denying a claim due to statements in the application after the policy has been in force for 2 years, even if there has been a material misstatement of facts or concealment of a material fact.
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A-Slandering B-Defamation C-Undercutting D-Twisting
B-Defamation Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A-An offer to share in commissions generated by the sale. B-Dividends from a mutual insurer. C-An offer of employment. D-Stocks, securities,
B-Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.
Which of the following policy components contains the company's promise to pay? A-Entire contract provision B-Insuring clause C-Premium mode D-Owner's rights
B-Insuring clause The insuring clause contains the company's promise to pay.
Which of the following documents must be provided to the policyowner or applicant during policy replacement? A-Policy illustrations B-Notice Regarding Replacement C-Disclosure Authorization Form D-Buyer's Guide and Policy Summary
B-Notice Regarding Replacement During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? A-Assignment Rights B-Owner's Rights C-The Entire Contract Provision D-The Consideration Clause
B-Owner's Rights Policyowners can learn about their ownership rights by referring to the policy.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A-Medical exam and parents' medical history B-Proof of insurability is not required. C-Medical exam D-Her parents' federal income tax receipts
B-Proof of insurability is not required. If a Children's Term rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can convert their coverage toa new policy without having to issue proof of insurability.
16: 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 included in the policy? A-Guaranteed insurability option B-Dividend options C-Guaranteed renewable option D-Nonforfeiture options
A-Guaranteed insurability option The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? A-Automatic premium loan B-Extended term C-Reinstatement D-Reduced paid-up option
A-Automatic premium loan charge. This is a special type of loan that Automatic premium loan provision is not required, but is commonly added to contracts with a cash value at no additional prevents the unintentional lapse of a policy due to nonpayment of the premium.
Which nonforfeiture option has the highest amount of insurance protection? A-Conversion B-Decreasing Term C-Reduced Paid-up D-Extended Term
D-Extended Term The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.
The interest earned on policy dividends is A-Nontaxable. B-Tax deductible. C-40% taxable, similar to a capital gain. D-Taxable.
D-Taxable. Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider.
Which of the following is TRUE about credit life insurance? A-Creditor is the policyowner. B-Debtor is the annuitant. C-Creditor is the insured. D-Debtor is the policy beneficiary.
A-Creditor is the policyowner. In credit life insurance, the creditor is the policyowner and the beneficiary; the debtor is the insured.
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?
A minor son of the insured
Which of the following is the closest term to an authorized insurer? A-Legal B-Admitted C-Certified D-Licensed
A-Admitted Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.
An insured committed suicide one year after his life insurance policy was issued. The insurer will A-Refund the premiums paid. B-Pay the policy's cash value. C-Pay the full death benefit to the beneficiary. D-Pay nothing.
A-Refund the premiums paid. If the insured commits suicide within 2 years following the policy effective date, the insurer's liability is limited to a refund of premium.
The accelerated benefits provision will provide for an early payment of the death benefit when the insured
Becomes terminally ill.
The conversion provision required by state law gives the certificate holder the right to convert group life coverage to an individual life policy without A-Providing evidence of insurability. B-Terminating employment. C-Requesting individual coverage. D-Paying future premiums.
A-Providing evidence of insurability. At the end of group coverage due to termination of employment or membership, the certificate holder is entitled to convert coverage to an individual policy without providing evidence of insurability.
A participating insurance policy may do which of the following? A-Require 80% participation B-Pay dividends to the policyowner C-Provide group coverage D-Pay dividends to the stockholder
B-Pay dividends to the policyowner A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.
Which of the following features is available in term life insurance? A-policy loans B-renewability C-investments D-cash values
B-renewability Term life insurance provides death benefits protection without any savings, investment or cash value components for the term of the coverage period. Term insurance can be renewable and convertible
All of the following are Nonforfeiture options EXCEPT A-Extended term B-Reduced paid-up C-Interest only D-Cash surrender
C-Interest only Nonforfeiture values include cash surrender, extended term and reduced paid-up. Interest only is a settlement option.
What is the waiting period on a Waiver of Premium rider in life insurance policies? A-30 days B-3 months C-5 months D-6 months
D-6 months Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family the policy to provide members? A-Accidental death and dismemberment rider B-Guaranteed insurability rider C-Change of insured rider D-Term rider
D-Term rider Term riders may be used to customize a permanent life insurance policy to meet the needs of the policyowner.
All of the following statements concerning dividends are true EXCEPT
Dividend amounts are guaranteed in the policy.
For what reason may a life insurance producer backdate a life insurance policy? A-To make a policy effective during a period when the agent's appointment was in force B-To shorten the period of contestability C-To avoid an increase in premium rate for the insured D-To meet sales quotas established by the insurer
C-To avoid an increase in premium rate for the insured Agents may backdate policies up to 6 months in order to obtain a better premium rate for the insured.
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? A-Cost of Living Rider Value B-Adjustment Rider C-Return of Premium Rider D-Inflation Rider
A-Cost of Living Rider deflation. This rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value. The Cost of Living rider annually adjusts the policy's face value in accordance with the national rate of inflation or of the policy constant over time.
All of the following statements concerning dividends are true EXCEPT A-Dividend amounts are guaranteed in the policy. B-Lower insurance company costs generate higher dividends. C-They stem from favorable underwriting experience. D-Favorable investment results generate higher dividends. be guaranteed.
A-Dividend amounts are guaranteed in the policy. Dividends cannot be guaranteed.
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A-If the daughter is disabled for more than 3 months B-If the daughter is disabled for any length of time C-If the father is disabled for more than 6 months D-If the father is disabled for at least a year father in this example,
C-If the father is disabled for more than 6 months Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months.
Which is NOT true about beneficiary designations? A-The beneficiary must have insurable interest in the insured. B-The beneficiary may be a natural person. C-The policy does not have to have a beneficiary named in order to be valid. D-Trusts can be valid beneficiaries.
A-The beneficiary must have insurable interest in the insured. A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have to have an insurable interest in the policyholder.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? A-Automatic premium loan B-Extended term C-Reinstatement D-Reduced paid-up option
A-Automatic premium loan Automatic premium loan provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.
Life income joint and survivor settlement option guarantees A-Income for 2 or more recipients until they die. B-Payment of interest on death proceeds. C-Payout of the entire death benefit. D-Equal payments to all recipients.
A-Income for 2 or more recipients until they die. The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.
Under which of the following circumstances would an insurer pay accelerated benefits? A-A couple wants to build a house and would like to make a larger down payment. B-An insured is diagnosed with cancer and needs help paying for her medical treatment. C-A couple is nearing retirement and needs a steady stream of income. D-An insured is looking for a way to put her daughter through college.
B-An insured is diagnosed with cancer and needs help paying for her medical treatment. Accelerated benefits are paid when insureds endure financial hardship due to severe illness. They may request immediate payment of some portion of the policy's death benefit, usually 50-100%, depending on the insurer. Benefits are not taxable.
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-Accidental death B-Return of premium C-Cost of living D-Decreasing term
B-Return of premium The Return of Premium Rider pays the beneficiary not only the face amount of the policy but also the amount that had been paid in premiums. The rider stipulates that death must occur pior to a certain age in order for the premium amount to be returned. The Return of Premium Rider is funded by using increasing term insurance.
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A-One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. B-The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. C-The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. D-The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.
B-The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. When the reduced option is written as "joint and 2/3 survivor," the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.
The insured under $100,000 life insurance policy with triple indemnity rider or accidental death was killed in a car accident. It was determined that the accident was his fault. The triplet indemnity writer in the policies specifics that death must not be contributed to by the insured in any manner. In this case what was the policy beneficiary receive? A-$0 B-$50,000 (50% of policy value) C-$100,000 D-$300,000 ( triple the amount of policy value)
C-$100,000 The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple indemnity rider is void, but the beneficiary will still receive the policy's death benefit.
Which of the following is true about the mandatory free look in a Life Insurance policy? A-It applies only to term life insurance policies. B-It is optional on all life insurance policies. C-It commences when the policy is delivered. D-It commences when the application is signed.
C-It commences when the policy is delivered. The free look provision is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid.
During replacement of life insurance, a replacing insurer must do which of the following? A-Designate a new producer for a replaced policy B-Send a copy of the Notice Regarding Replacement the Department of Insurance C-Obtain a list of all life insurance policies that will be replaced D-Guarantee a replacement for each existing policy The replacing
C-Obtain a list of all life insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.
Paul is a producer in Michigan and wants to become a producer in Minnesota. The Department will waive certain examination requirements, provided that Michigan would waive these same requirements if a Minnesota producer sought licensure in Michigan. What term is used to describe this phenomenon? A-Equality B-Fair exchange C-Equanimity D-Reciprocity
D-Reciprocity "Reciprocity" occurs when the state in which the person resides accords the same privilege to residents of Minnesota.
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to A-Probate. B-The state. C-The beneficiary's estate. D-The insured's estate.
D-The insured's estate. In the absence of a viable beneficiary, proceeds will be paid to the estate of the insured.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT A-The annual dividend is retained by the company. B-The interest is credited at a rate specified by the policy. C-The policyholder has the right to withdraw the accumulations at any time. D-The interest is not taxable since it remains inside the insurance policy.
D-The interest is not taxable since it remains inside the insurance policy. The interest credited under this option is TAXABLE, whether or not the policyowner receives it.
Which is true about a spouse term rider? A-Coverage is allowed for an unlimited time. B-The rider is decreasing term insurance. C-Coverage is allowed up to age 75. D-The rider is usually level term insurance.
D-The rider is usually level term insurance. The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? A-Common Disaster B-Accidental Death C-Survivor Life D-Second-to-Die
A-Common Disaster Under the uniform simultaneous death law, common disaster provision, the law will assume that the primary beneficiary die first in a common disaster as long as the beneficiary dies within a specific period of time following the death ofthe insured (usually 30 days). This provides that the proceeds will be paid to either the contingent beneficiary or the insured's beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of Under the Uniform Simultaneous Death Law, Common Disaster provision, the law will assume that the primary estate, if no contingent beneficiary is designated.
Nonforfeiture values guarantee which of the following for the policyowner? A-That the policy premiums will never increase B-That the cash value will not be lost C-That the dividends will be paid annually D-That the death benefit will be paid in a lump sum
B-That the cash value will not be lost Because permanent life insurance policies have cash values, there are certain guarantees built into the policy that cannot be forfeited by the policyowner. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered.
What is a required grace period for life insurance policies issued in this state? A-10 days B-15 days C-1 month D-3 months
C-1 month In this state, the required grace period is 1 month.
Replacing insurers must maintain evidence of the Notice Regarding Replacement for a minimum of how many years? A-1 year B-3 years C-5 years D-6 years
D-6 years The replacing insurer must maintain evidence that all the requirements for replacement transactions were met for at least 6 years. That evidence would include the Notice Regarding Replacement and any other replacement documents.
The accelerated benefits provision will provide for an early payment of the death benefit when the insured A-Needs to borrow money. B-Has earned enough credits. C-Becomes disabled. D-Becomes terminally ill.
D-Becomes terminally ill. The accelerated benefits provisions allow the owner to be advanced a significant portion of the death benefit when the insured is terminally ill
A legally acceptable attempt by an existing insurer to dissuade a current policy owner from the replacement of existing life insurance is called A-solicitation B-rebating C-retention D-conservation
D-Conservation Conservation means any attempt by the existing insurer or it's producers, or buy a broker to dissuade a current policy owner from the replacement of existing life insurance or annuity.
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called A-Consideration. B-Conditions. C-Utmost good faith. D-Acceptance.
A-Consideration. "Consideration" is the value offered by the insured to the insurer, and vice versa. The insured makes accurate statements in the application and remits premium payments. In exchange, the insurer provides benefits as stipulated in the contract.
Which of the following statements is TRUE about a policy assignment? A-It transfers rights of ownership from the owner to another person. B-It is the same as a beneficiary designation. C-It permits the beneficiary to designate the person to receive the benefits. D-It authorizes an agent to modify the policy.
A-It transfers rights of ownership from the owner to another person. The policyowner may assign a part of the policy (collateral assignment) or the entire policy (absolute assignment).
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A-One-year term option. B-Paid-up option. C-Accelerated endowment. D-Paid-up additions.
A-One-year term option. The dividend is utilized to purchase one-year term insurance.
The Ownership provision entitles the policyowner to do all of the following EXCEPT A-Assign the policy. B-Designate a beneficiary. C-Set premium rates. D-Receive a policy loan.
C-Set premium rates. The insurer sets premium rates based upon underwriting considerations.
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? A-$0 B-$100,000 C-$200,000 D-$100,000 plus the total of paid premiums
C/$200,000 The beneficiary would most likely receive twice the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A-In lesser amounts for the remaining policy term of age 100. B-Equal to the cash value surrendered from the policy C-The same as the original policy minus the cash value D-Equal to the original policy for as long as the cash values will purchase.
D-Equal to the original policy for as long as the cash values will purchase. With this option, the cash value is used as a single premium to purchase the same face amount as the original policy for as long a period of time as the cash will buy at the insured's current age.
Units with the same or similar exposure to loss are referred to as A-Catastrophic loss exposure B-insurable risks C-law of large numbers D-Homogeneous
D-homogenous The basis of insurance is sharing risk in between a larger homogeneous group with similar exposure to loss
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? A-Fixed period B-Life with period certain C-Fixed amount D-Interest only
A-Fixed period Under the fixed-period installments option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. The payments will continue for the specified period even if the recipient dies before the end of that period.
What type of insurance would be used for a Return of Premium rider? A-Level Term B-Decreasing Term C-Annually Renewable Term D-Increasing Term
D-Increasing Term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
To which of the following life products do the Replacement Regulations apply? A-Group life insurance B-Credit life insurance C-Coverage under a binding receipt issued by the same company D-Individual annuity
D-Individual annuity The Replacement Regulations do not apply to credit life insurance, group life insurance or group annuities, and to coverage under a binding or conditional receipt issued by the same insurer.
Which of the following would NOT constitute an eligible group for life insurance? A-Creditor-debtor group B-Family group C-Employer-employee group D-Labor union
B-Family group A family would not constitute a group eligible to purchase group life insurance.
All of the following are true regarding rebates EXCEPT A-Rebates are only allowed if specifically stated in the policy. B-Rebating can be anything of economic value, given as an inducement to buy. C-Dividends are not considered to be rebates. D-Rebates are allowed if it's in the best interest of the client.
D-Rebates are allowed if it's in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.
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-Waiver of premium provision B-Incontestable clause C-Grace period D-Reinstatement provision
D-Reinstatement provision A lapsed policy may be reinstated within 3 years by paying back premiums, with interest, and proving insurability.
What provision in an insurance policy extends coverage beyond the premium due date? A-Grace period B-Free look C-Automatic premium loan D-Waiver of premium
A-Grace period Grace period is a mandatory provision found in all life and health insurance policies that provides coverage for a perlod of time after the premium becomes past due.
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? A-Paid-up options B-Extended term C-Cash surrender D-Reduced paid-up
C-Cash surrender Correct! Once the cash surrender value is paid, the contract is over.
All of the following are true regarding the guaranteed insurability rider EXCEPT A-The insured may purchase additional insurance up to the amount specified in the base policy. B-It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. C-This rider is available to all insureds with no additional premium. D-The insured may purchase additional coverage at the attained age.
C-This rider is available to all insureds with no additional premium. The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A-The premiums will become tax deductible until the insured's 18th birthday. B-Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. C-The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. D-The insured's premiums will be waived until she is 21.
D-The insured's premiums will be waived until she is 21. If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.
