ExamFX life Simulated Exam

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?

$200,000

By how many days does the discontinuance of a group insurance policy reduce the time limit for providing notice of claim or proof of loss?

0 days

Which of the following is the closest term to an authorized insurer?

Admitted

Which of the following would be considered a nonmedical insurance application?

An application on which the medical information is completed by the applicant and the agent only

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

An endowment policy

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

A universal life policy is best described as a/an

Annually Renewable Term policy with a cash value account

The Ownership provision entitles the policyowner to do all of the following EXCEPT

Assignment of premium

In a direct rollover, how is the money transferred from one plan to the new one?

From trustee to trustee

What does "level" refer to in level term insurance?

face amount

All of the following are true about variable products EXCEPT

the premiums are invested in the insurer's general account

Which of the following life insurance policies would be considered interest sensitive?

universal life

he 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?

2 years

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

9800

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amopunt

Equal to the original policy for as long as a period of time that the cash values will purchase

A man purchased a $90000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

Immediate

A lucky individual wont the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

Which of the following is NOT true about a group annuity?

It can be owned by individual employees

What is the benefit of choosing extended term as a non forfeiture option?

It has the highest amount of insurance protection

A life insurance policy has lapsed, and the policyowner would like to reinstate it. In order to initiate the reinstatement process, he must submit an application to his insurer. Which of the following is true?

It is the policyowner's responsibility to request the reinstatement application; the insurer must then deliver it within 30 days.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

In which of the following instances would the premium be tax deductible?

Premiums paid by an employer on a $30000 group term life insurance plan for employees

Which two terms are associated directly with the way an annuity is funded?

Single Payment or periodic payments

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

Single premium whole life

n employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

The insured may choose to convert to term or permanent individual coverage

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

When would a 20-pay whole life policy endow?

When insured reaches age 100

. 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?

fixed period

The automatic premium loan provision is activated at the end of the

grace period

The type of term insurance that provides increasing death benefits as the insured ages is called

increasing term

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

interest only option

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used

lump sum

Which option for Universal Life allows beneficiary to collect both the death benefit and cash value upon death of insured?

option B

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?

reduction of premium

Which of the following would NOT be considered a misrepresentation on the part of the insurer?

Backdating policies to secure a lower premium for the insured

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral Assignment

A nonresident licensed producer decides to conduct business under an assumed name. Which of the following is true?

Nonresident producers may not conduct business under any name besides legal names.

Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT

Some of the premiums were paid in an attempt to defraud creditors

Which of the following statements about a suicide clause in a life insurance policy is true?

Suicide is excluded for a specific period of years and covered thereafter.

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

Term rider

The Supreme Court stated that insurance is interstate commerce and is therefore subject to regulation by the federal government in the decision of what case?

The U.S. vs. the South-Eastern Underwriters Association

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy.

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout duration of contract

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

n applicant for a producer's license has successfully completed all of the steps necessary to obtain the license. The soon-to-be producer does not want to wait until he receives his license in order to begin working. Which of the following is possible?

The person can obtain a temporary work authority

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

the full death benefit

All of the following are general requirements of a qualified plan EXCEPT

the plan must provide an offset for social security benefits

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?

limited pay whole life

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

paid-up additions

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

the benefit is received tax free

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

the beneficiary will receive greater of the money paid into the annuity or cash value

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

A SEC registration Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.

Which of the following types of insurance policies is most commonly used in credit life insurance?

Decreasing term

An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of

a client