Simulate exam practice test
What is the minimum age for purchasing a life insurance policy in this state?
15
The commissioner is elected to a term that lasts for how many years?
4
A rider attached to a life insurance policy that provides coverage on the insureds family members is called the a. juvenile rider b. payor rider c. other insured rider d. change of insured rider
c
Who can make a fully deductible contribution to a traditional IRA? a. anybody; all ira contributions are fully deductible regardless of income level b. someone making contributions to an educational IRA c. a person whose contributions are funded by a return on investment d. an individual not covered by an employer sponsored plan who has earned income
d
How can a person become the commissioner?
Election
Continuing education requirements must be met every a. 1 year b. 2 years c. 3 years d. 4 years
b
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a. complete contract b. entire contract c. total contract d. aleatory contract
b
An agent selling variable annuities must be registered with
FINRA
What type of annuity can be purchased with a single premium and provides benefit payments immediately?
Immediate
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may a. prolong the open enrollment period b. increase medical requirements on existing memners c. require evidence of insurability d. require a higher premium
c
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is true?
The cash value will be paid to the annuitants estate
Which of the following best describes an insurance company that has been formed under the laws of this state? a. domestic b. sovereign c. alien d. foregin
a
Which of the following best describes annually renewable term insurance? a. it is level term insurance b. it requires proof of insurability at each renewal c. neither the premium nor the death benefit is affected by the insureds age d. it provides an annually increasing death benefit
a
All other factors being equal, which of the following individuals would receive the largest monthly check fromm a single premium straight life immediate annuity? a. a 50 year old woman b. a 60 year old man c. a 60 year old woman d. a 50 year old man
b
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) a. SEP b. 403b plan TSA c. Keogh plan d. roth IRA
b
According to agency law, the producer always represents the a. public b. state insurance department c. insurance company d. client
c
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? a. $10,000 b. $7,000 c. $3,000 d. $13,000
c
What type of premium do both Universal Life and Variable Universal Life policies have? a. decreasing b. increasing c. flexible d. level fixed
c
Which of the following documents must be provided to the policyowner or applicant during policy replacement? a. buyers guide and policy summary b. policy illustrations c. notice regarding replacement d. disclose authorization form
c
All of the following statements are true regarding installments for a fixed period annuity settlement option except a. it will pay the benefit only for a designated period of time b. the payments are not guaranteed for life c. the insurer determines the amount for each payment d. it is a life contingency option
d
Which of the following is not an example of insurable interest? a. business partners in each other b. employer in employee c. child in parent d. debtor in creditor
d
Which component increases in the increasing term insurance? a. interest on the proceeds b. premium c. death benefit d. cash value
death benefit
The Gramm Leach Billey Act was passed to a. protect private customer information filed with a financial institution b. define insurance as interstate commerce c. allow consumers access to credit and private consumer reports d. allow insurance companies access to medical information for underwriting purposes
a
Which type of life insurance policy generates immediate cash value? a. single premium b. level term c. decreasing term d. continuous premium
a
An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders? a. 1.2% b. 2.5% c. 3.3% d. whatever interest rate the company deems appropriate
b
A long stretch of nation 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. value adjustment rider b. return of premium rider c. inflation rider d. cost of living rider
d
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a. built cash values b. required proof of insurability every year c. decreased death benefit at each renewal d. required a premium increase each renewal
d
How are contributions to a tax-sheltered annuity treated with regards to taxation? a. they are never taxed b. they are taxed as income for the employee c. they are taxed as income for the employee, but are tax free upon withdrawal d. they are not included as income for the employee, but are taxable upon distribution
d
What is the waiting period on a waiver of premium rider in life insurance policies?
6 months
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
Mortality-interest+Expense=
Gross Premium
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability income benefit rider. Which of the following benefits will he receive?
Monthly premium waiver and monthly income
Which of the following will included in a policy summary?
Premium amounts and surrender value
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? a. joint life policy b. survivorship life policy c. second to die d. family income policy
a
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is a. modified endowment contract b. accelerated benefit policy c. endowment d. nonqualified annuity
a
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? a. medical records b. application c. interviews d. state records
b
Death benefits payable to a beneficiary under a life insurance policy are generally a. exempt from income taxation if over $10,000 b. not subject to income taxation by the federal government c. subject to income taxation by the federal government d. exempt from income taxation if under $10,000
b
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 larger b. the death benefit will be smaller c. the death benefit will be forfeited d. the death benefit will be the same as the original face amount
b
In an annuity, the accumulated money is converted into a stream of income during which phase? a. conversion period b. annuitization period c. payment period d. amortization period
b
Which of the following statements about group life is correct? a. the group sponsor receives a certificate of insurance b. the policy can be converted to an individual term insurance policy c. the cost of coverage based on the ratio of men and women in the group d. the premiums are higher than in an individual policy because there is no medical exam
c
If a contract provides a set amount of income for two or more persons with the income stopping upon the death of the insured, it is called a
joint life annuity
The term illustration in a life insurance policy refers to a. pictures accompanying a policy b. charts and graphs c. a presentation of nonguaranteed elements of a policy d. a depiction of policy benefits and guarantees
a presentation of nonguaranteed elements of a policy
All of the following statements are true regarding tax qualified annuities except? a. employer contributions are not tax deductible b. annuity earnings are tax deferred c. they must be approved by the IRS d. withdrawals are taxed
a.
A 60 year old participant in a 401k plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a. the amount distributed is subject to ordinary income tax b. the amount of distribution reduced by the amount of a 20% withholding tax c. no taxes are due since the plan participant is over age 59 1/2 d. there is a 10% early withdrawal penalty
b
Which of the following applies to the 10 day free look privilege? a. it can be waived only by the insurance company b. its granted only at the option of the agent c. it permits the insured to return the policy for a full refund of premiums paid d. it allows the insured 10 days to pay the initial premium
c
Which of the following is true regarding the spendthrift clause in life insurance policies? a. it allows the beneficiary to select a different settlement option b. it is only used when the beneficiary is a minor c. it is the same as irrevocable settlement clause d. it can protect the policy proceeds from creditors of the beneficiary.
d
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? a. standard risk pays a higher premium than a substandard risk b. standard risk requires extra rating c. standard risk is also known as high exposure risk d. standard risk is representative of the majority of people
d
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a. interest sensitive whole life b. life annuity with period certain c. increasing term d. limited pay whole life
d
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called a. revocable designation b. irrevocable designation c. Stirpes designation d. class designation
d. classed designation
All of the following statements concerning the use of life insurance as an executive bonus are correct except a. the policy is owned by the company b. any type of insurance policy may be used c. the employer pays a bonus to a selected employee to fund the policy d. it is considered a nonqualified employee benefit
a
Which of the following is an example of a limited pay life policy? a. life paid up at age 65 b. renewable term to age 70 c. level term life d. straight life
a
All of the following are duties and responsibilities of producers at the time of application except a. check to make sure that there are no unanswered questions on the application b. change any incorrect statement on the application by personally initialing next to the corrected statement c. explain the nature and type of any receipt the producer is giving to the applicant d. probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information
b
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 requires the policy owner to pay all over due premiums with interest before the policy is reinstated c. it permits reinstatement within 10 years after a policy has lapsed d. it provides for reinstatement of a policy regardless of the insureds health
b
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a. statewide predetermined annual interest rate b. insurers guaranteed minimum rate of interest c. investment performance of the company d. investment performance of the insured
b
Which of the following will be included in a policy summary? a. comparisons with similar policies b. primary and secondary beneficiary designations c. premium amounts and surrender values d. copies of illustrations and application
b
An employee quits his job on May 15 and doesnt convert his Group life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? a. the insurer will pay the death benefit minus one months premium b. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one c. the insurer will pay the full death benefit from the group policy to the beneficiary d. the insurer will pay a reduced death benefit to the beneficiary
c
Which of the following is a true comparison between annuities and life insurance? a. both provide a lifetime income b. neither annuities nor life insurance subject to income taxes c. both annuities and life insurance use mortality tables d. annuities serve the same function as life insurance
c
Which of the following is not typically excluded from life policies? a. death that occurs while a person is committing a felony b. death due to war or military service c. death due to place crash for a fare paying passenger d. self inflicted death
c
Which of the following riders would not cause the death benefit rider to increase? a. cost of living rider b. accidental death rider c. payor benefit rider d. guaranteed insurability rider
c
An absolute assignment is a a. transfer of some ownership rights in a policy b. change of beneficiary c. change of insurer d. transfer of all ownership rights in a policy
d
An individual purchased a life insurance policy on his life naming his wife as a primary beneficiary, and their daughter as contingent beneficiary. Under what circumstance could the daughter collect the death benefit? a. the primary and contingent beneficiaries share death benefits equally b. with the primary beneficiary's written consent c. if the insured dies from an accident d. if the primary beneficiary predeceases the insured
d
During the withdrawal from a universal life policy, which portion will be taxed? a. cash value b. principal c. loan d. interest
d
Which of the following is the best reason to purchase life insurance rather than annuities? a. to liquidate a sum of money over a period of years b. to create regular income payments c. to liquidate a sum of money over a lifetime d. to create an estate
d
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a. term insurance only b. permanent insurance only c. universal insurance only d. any form of life insurance
d. Any form of life insurance
A producer agent must do all of the following when delivering a new policy to the insured except? a. collect the premium due b. explain the rating procedures if the policy is rated differently than applied for c. disclose commissions earned form the sale of the policy d. explain the policy provisions, riders, and exclusions
c
An insured is dissatisfied with her insurance policy and wants to negotiate certain provisions of the contract. what entity would her producer represent? a. the insurer b. the commissioner of insurance c. the government d. the insured
a
What type of annuity can be purchased with a single premium and provides benefit payments immediately? a. fixed b. immediate c. single premium d. deferred
b
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of a. breach of warranty b. concealment c. waiver d. fraud
b
If a person demands a hearing, the Commissioner of Insurance must set the hearing within a. 60 days b. 15 days c. 30 days 4. 10 days
c
An agent selling variable annuities must be registered with a. department of insurance b. the guaranty association c. SEC d. FINRA
c
What is the main difference between a stock company and a mutual company? a. ownership b. amount of death benefit c. number of producers d. types of whole life policies
a
All of the following are true of an annuity owner except a. the owner has the right to name the beneficiary b. the owner is the party who may surrender the annuity c. the owner must be the party to receive benefits d. the owner pays the premiums on the annuity
c
An individual purchased a $100,000 joint life policy on himself and his wife. 8 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
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a. predicted needs of the family after the insureds death b. insureds current and future income c. insureds annual expenses d. effect of inflation on income over time
a
Concerning Juvenile Life insurance, which of the following statements is INCORRECT? a. Juvenile life is classified as any life insurance purchased by a minor b. usually a parent or guardian is the applicant for insurance on the life of a minor c. it can be limited premium payment policy d. juvenile life is classified as any life insurance written on the life of a minor
a
An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. accumulation at interest b. cash option c. reduction of premium d. annual dividend provision
b
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 policy owner b. beneficiary c. insured d. policy owner
d
In an adjustable life policy all of the following can be changed by the policy owner except a. the length of coverage b. the premium c. the amount of insurance d. the type of investment
d
Under which of the following circumstances would an insurer pay accelerated benefits? a. a couple is nearing retirement and needs a steady stream of income b. an insured is looking for a way to put her daughter through college c. a couple wants to build a house and would like to make a larger down payment d. an insured is diagnosed with cancer and needs help paying for her medical treatment
d
Who makes up the Medical Information Bureau?
Insurers
All of the following are personal uses of life insurance except a. buy sell agreement b. survivor protection c. estate creation d. cash accumulation
a
In insurance transactions, fiduciary responsibility means a. handling insurer funds in a trust capacity b. maintaining a good credit record c. being liable with respect to payment of claims d. commingling premiums with agent's personal funds
a
The authority granted to an agent through the agents contract is referred to as a. absolute authority b. express authority c. apparent authority d. implied authority
b
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision making process? a. illustrations b. buyers guide c. insurance index d. policy summary
b
Which of the following terms best describes making false statements about the financial condition of any insurer that are intended to injure any person engaging in the business of insurance? a. standering b. defamation c. undercutting d. twisting
b
Which of the following is an example of a producer being involved in an unfair trade practice or rebating? a. making deceptive statements about a competitor b. telling a client that his first premium will be waived if he purchases the insurance policy tody c. inducing the insured to drop a policy in favor of another one when it is not in the insureds best interest d. charging a client a higher premium for the same as another client in the same insuring class
b
Which is true about the cash surrender nonforfeiture option? a. the policy remains active for some time after the policyholder opts for cash surrender b. the policyholder receives the original cash value of the policy c. funds exceeding the premium paid are taxable as ordinary income d. after the cash surrender, the insured is covered for a grace period of one month
c
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become a. smaller b. older c. more active d. larger
d