Chloelinda Training
4 #22 G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
5 #23 What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer? * 0% * 50% * 75% * 100%
100%
4 #2 A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
4 part 2 #20 A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? *Straight life accumulates faster than Limited-pay Life *20-Pay Life accumulates cash value faster than Straight Life *Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating *20-Pay Life and Straight Life accumulate cash value at the same rate
20-Pay Life accumulates cash value faster than Straight Life
4 #10 What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
6 #7 Which of these is NOT a characteristic of a Straight Life annuity? * Payments continue until the annuitant dies * No death benefit * Age and gender are factors of the income amount * A beneficiary will receive a lump-sum benefit if the annuitant dies
A beneficiary will receive a lump-sum benefit if the annuitant dies
4 #25 What advantage does an equity-indexed life insurance policy have over a variable life policy?
A minimum guaranteed rate of return
4 #13 All of these are characteristics of an Adjustable Life policy, EXCEPT: 1) adjustable premiums 2) adjustable premium payment period 3) combination of term and whole life insurance 4) face amount can be adjusted using policy dividends
ANSWER: face amount can be adjusted using policy dividends
4 part 2 #15 A policyowner who permanently changes the ownership of a life insurance policy is exercising which contractual option?
Absolute assignment
5 #21 What is the reason that insurance companies require a minimum number of employees participating in a group insurance plan? * Efficiency is maximized * Adverse selection is minimized * Profits are maximized * Claims are minimized
Adverse selection is minimized
5 #10 An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true? * Applicant can determine which items in the report to leave out * Insurer can obtain a copy of this report without the applicant's knowledge * Fee for the report is typically paid by the applicant * Applicant has a right to receive a copy of the report
Applicant has a right to receive a copy of the report
5 #14 Information needed for the underwriting process can be obtained from which of these sources? * Health Information Bureau (HIB) * Department of Insurance * Attending Physicians Reports (APS) * National Association of Insurance Commissioners (NAIC)
Attending Physicians Reports (APS)
4 part 2 #23 P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take? * Beneficiary will be denied the claim * Beneficiary will be denied the claim and refunded all paid premiums * Beneficiary will be paid the Death Benefit * Beneficiary will be paid a partial Death Benefit
Beneficiary will be paid the Death Benefit
4 part 2 #10 A life insurance company has determined that a recently deceased insured had understated her age at the time of application five years prior. How will this affect the insurer's claim disbursement? *Beneficiary will receive increased policy benefits *Beneficiary will receive reduced policy benefits *Beneficiary will receive nothing due to misrepresentation *Beneficiary will receive original face amount due to Incontestable Period
Beneficiary will receive reduced policy benefits
4 part 2 #2 A policy loan is made possible by which of these life insurance policy features? *Policy loan clause *Cash value provision *Owner's rights provision *Consideration clause
Cash value provision
5 #6 Which of these is NOT considered the responsibility of a producer in the underwriting process? * Collecting additional medical information if needed * Promptly sending the completed application to the insurance company * Forwarding any material personal observations to the insurer * Choosing the final approval date
Choosing the final approval date
5 #1 What must be given to a life insurance applicant when the agent receives an application and the initial premium?
Conditional receipt
5 #13 Sexual orientation, religious preference, and geographical location are not allowed to be used in the underwriting process. Why is this so? * Considered unfair discrimination * Too burdensome to prove * Prohibited by the MIB * Subject to change
Considered unfair discrimination
5 #17 If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? * Non-eligible * Noncontributory * Eligible * Contributory
Contributory
5 #4 Mike applied for life insurance and was issued a conditional receipt. He is later found to be an acceptable risk and is issued a policy. What is considered to be the effective date of this insurance contract? * Date the conditional receipt was issued * Date the policy was approved * Date of policy delivery * Date the insurer received the application
Date the conditional receipt was issued
4 #20 F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
4 part 2 #16 How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
5 #24 Which statement about group life insurance is INCORRECT? * Cost can be shared between employer and employee * Each employee requires evidence of insurability * A minimum number of employees participating may be required * Employer is issued a master policy
Each employee requires evidence of insurability
5 #19 An employer has a group life insurance plan in place for his employees. How would an employee with health problems be treated in this situation? * Approved on a graded basis * Not eligible for insurance on this plan * Eligible for standard coverage on this plan * Must pay a rating based on risk
Eligible for standard coverage on this plan
5 #16 What situation requires all eligible employees be covered under a group life insurance plan? * Entire premium paid by the employee * Entire premium paid by the employer * Premium is paid jointly by the employee and employees * Coverage given to employees is non-convertible
Entire premium paid by the employer
5 #11 During the underwriting process, all of these may be utilized to help determine a life insurance applicant's insurability, EXCEPT a(n): * Consumer report * Eye examination * Urine sample * Blood sample
Eye examination
4 part 2 #17 A life insurance policyowner falls behind on his premium payments and dies during the grace period. How will the insurer handle this claim?
Face amount will be paid minus the past due premium
4 #21 What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
4 #12 Universal Life insurance offers which of these features?
Flexible premiums and flexible face amount
4 part 2 #24 An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? * Refund of all premiums paid, plus interest * Refund of all premiums paid * Full face amount minus any past due premiums * Full face amount
Full face amount minus any past due premiums
5 #9 Which of these documents is signed by an applicant at policy delivery that certifies no change in health has occurred since the original application date? * Binding receipt * Good health statement * Agent's report * MIB disclosure
Good health statement
5 #25 Which statement regarding the certificate of insurance is accurate? It is an insurance contract between the employer and insurer Indicates proof of an employee's insurance coverage Each certificate of insurance is underwritten on an individual basis It is issued by the employer to the employee
Indicates proof of an employee's insurance coverage
6 #12 Which assumption concerning a Fixed Dollar Life annuity is correct? * Annuitant assumes no inflation risk * insurer assumes the inflation risk * Annuitant assumes the investment risk * Insurer assumes the investment risk
Insurer assumes the investment risk
4 part 2 #5 All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT: *Fixed Period *Interest Only *Fixed Amount *Life Income
Interest Only
6 #5 When compared to a fixed annuity, a variable annuity has what distinguishing feature?
Investment risk is assumed by the policyowner
5 #8 The initial premium for a life insurance policy is typically handled in what way? * The applicant mails it to the insurer after the policy has been approved * It is typically obtained by the producer and sent to the insurer * It is typically forwarded to the insurer by the applicant * The producer pays it from any commissions received
It is typically obtained by the producer and sent to the insurer
4 #3 Which type of life insurance is characterized as having two insureds and matures when the first insured dies?
Joint Life
4 #6 The type of life policy best suited to cover a husband and wife for mortgage protection would be:
Joint Life
4 #4 D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
5 #2 Life insurance underwriting would consider which of these factors as unimportant? * Age of the applicant * Weight of the applicant * Marital status of the applicant * Gender of the applicant
Marital status of the applicant
6 #9 What happens to the cash value of a market value adjusted annuity if it's surrendered early?
Market value adjustment is applied
4 #23 K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
5 #7 Which of these is NOT a factor in the underwriting process of a life insurance application? * Credit report * National origin * Age of applicant * Sex of applicant
National origin
4 part 2 #12 All of these statements concerning Settlement Options are true, EXCEPT: *Increased proceeds can be provided through accumulation of interest *Rapid depletion of proceeds can be avoided *Proceeds can be administered by the insurance company *Only the beneficiary may select
Only the beneficiary may select
6 #15 When an annuity is surrendered, who must sign the authorization to do so?
Owner
6 #10 Who assumes the investment risk in a Variable Life annuity?
Owner of the annuity
4 part 2 #22 In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? *Non-forfeiture *Entire Contract *Insuring Clause * Owner's Rights
Owner's Rights
4 part 2 #3 A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options? *Paid-Up Additional Insurance *Accumulate at Interest *Reduced Premiums *Cash
Paid-Up Additional Insurance
4 part 2 #8 Which statement is TRUE in regards to a policy loan? *Past-due interest payments not paid after 3 months will void the policy *Past-due interest on a policy loan is added to the total debt *Insurance companies can send delinquent interest accounts to a collection agency *Insurance companies can charge an interest rate based on the policyowner's credit report
Past-due interest on a policy loan is added to the total debt
4 part 2 #13 A rider that is normally associated with a Juvenile Life policy is called a:
Payor Benefit
4 #17 A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor provision
4 part 2 #11 A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the:
Policy Loan provision
4 #15 Which is true concerning a Variable Universal Life policy?
Policy owner controls where the investment will go and selects the amount of the premium payment
6 #8 Who typically makes the purchase payments in an individual annuity?
Policyowner
5 #22 Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? * Portion of the premiums paid for by the employer may be a tax deduction * Portion of the premiums paid for by the employee may be a tax deduction * Portion of the death proceeds are taxable to the beneficiary * Portion of the death proceeds are taxable to the estate
Portion of the premiums paid for by the employer may be a tax deduction
4 #19 Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
4 part 2 #14 Which of these Non-forfeiture Options continue a build-up of cash value? *Waiver of Premium * Extended Term * Reduced Paid-Up * Cash Surrender
Reduced Paid-Up
4 part 2 #9 The dividend option which reduces the annual premium payment of a life insurance policy is called the: *Reduction of premium option *Extended term option *Paid-up option *Interest-only option
Reduction of premium option
4 #8 T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Renewable
4 part 2 #18 S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy? *Accelerated death benefit rider *Return of premium rider *Family income rider *Term rider
Return of premium rider
5 #3 Which of these activities is considered hazardous to a life insurance underwriter? *Snow skiing * Scuba diving * Snorkeling * Water skiing
Scuba diving
6 #14 Which of these would NOT be a suitable situation for an immediate annuity? * A lottery winner who opted for a lump-sum payment * Setting up a college savings fund for a young child * A beneficiary collecting the face amount of a life insurance policy * Someone who just won a large settlement
Setting up a college savings fund for a young child
4 #16 What kind of life insurance product covers children under their parent's policy?
Term rider
4 #1 How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
4 part 2 #1 How are dividends from a participating life insurance policy normally treated?
Typically not subject to Federal income taxes
4 #5 What type of life insurance are characterized by separate accounts?
Variable
4 #11 What kind of life insurance offers the policy owner a cash value that is invested in a separate account?
Variable Life
4 part 2 #21 Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? * Joint Life * Adjustable Life * Variable Universal Life * Universal Life
Variable Universal Life
4 part 2 #7 When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? *Void the policy if found during the Contestable period *Void the policy, no matter when it is discovered *Void the policy at any time only if it is found to be material *Void the policy only if it is discovered during the Contestable period and proven to be material
Void the policy only if it is discovered during the Contestable period and proven to be material
4 part 2 #4 A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? *Accelerated Benefits *Waiver of Premium *Cost of Living *Return of Premium
Waiver of Premium
6 #3 When does interest income in a deferred annuity get reported for federal income taxes?
When the distributions are received
4 #7 Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
6 #11 A deferred annuity is used to:
accumulate funds for the future
6 #1 A product which can offer its owner a lifetime income stream is called an _______.
annuity
4 part 2 #6 The automatic premium loan provision is designed to: provide a source of revenue to the insurance company *avoid a policy lapse *allow a policyowner to request a policy loan *allow a policyowner to take out additional coverage *without evidence of insurability
avoid a policy lapse
4 part 2 #25 Variable Whole Life Insurance can be described as: * both an insurance and securities product * an insurance product only * a securities product only * the insurance company assumes the investment risk
both an insurance and securities product
5 #20 The policy provision that permits an employee to change from a group plan to an individual plan is called the: * assignment provision * conversion provision * certificate provision * modification provision
conversion provision
5 #18 An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be: * converted to an individual permanent policy at an individual rate * converted to an individual permanent policy at a group rate * continued at an individual rate * continued at a group rate
converted to an individual permanent policy at an individual rate
4 part 2 # 19 The function of a Discretionary Provision is to protect the: * beneficiary * policyowner * insurer * insured
insurer
4 #18 What kind of premium does a Whole Life policy have?
level
5 #12 A preferred life insurance premium can be obtained by an applicant exhibiting all of these factors, EXCEPT: * good credit history * living in the mountains * good health history * being a non-smoker
living in the mountains
4 #14 A life insurance policy that fails the 7-Pay Test is considered to be a Modified Endowment Contract. This type of policy will:
lose certain tax advantages
6 #4 The owner of a single premium deferred annuity is entitled to do all of these, EXCEPT: *make multiple premium payments *choose the length of the payout period *choose who will be the recipient of the annuity payments *cash surrender the contract
make multiple premium payments
5 #15 A signed good health statement would be collected by a life producer at the time of: * policy issue * application * policy delivery * physical examination
policy delivery
6 #6 During an annuity's liquidation phase, the annuitant normally:
receives benefit payments at stated intervals
6 #2 The interest earned on the cash value of an individually-owned annuity is considered to be:
tax-deferred
4 #24 The investment gains from a Universal Life Policy usually goes toward:
the cash value
4# 9 The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:
the cost
5 #5 The reason for backdating a policy is: * to avoid being considered a substandard risk due to a recent cancer diagnosis * to obtain a premium rate based on an earlier age *to decrease the face amount * to decrease the Contestable period
to obtain a premium rate based on an earlier age
6 #13 When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest, and then subtracting the:
withdrawals and expenses
