Guarantee Exam
Your client want to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?
Joint and survivor
Which dividend option increases the death benefit?
Paid-up additions
What is the difference between a straight life policy and a 20-pay whole life policy?
Premium payment period
Which of the following will NOT be included in the buyers guide?
Specific information about the policy
What is the exclusion ratio used to determine?
The annuity benefit to be excluded from taxes
Which of the following is TRUE regarding premium in a 10-year level premium policy?
The premium will remain level for 10 years
An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered
delivered
If an agent follows the rules and terms of his agent contract, he is exercising his
express authority
To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
insurable interest
When comparing a joint life policy to two individual life policies of the same amount on the same insureds, which condition is true?
joint life has a lower premium than the total of the two individual policies
Annuities certain limit the amount paid by the annuity to a certain fixed
period or fixed amount
Who is required to inform applicants about information gathering practices?
producer
In a deferred annuity, the difference between the accumulation value and the surrender value is the
surrender charge
If an individual willfully violates provisions of the fair credit reporting act, what is the maximum civil penalty
$2,500
An insurer must maintain a complete record of all complaints it has received for at least
3 years?????
Where are premiums from fixed annuities invested?
A general account
When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?
As a fiduciary
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
Which provision may be added to a permanent life policy, at no cost that insures that the policy will not lapse so long as there is cash value?
Automatic Premium Loan Option
John and Joyce, joint beneficiaries, were to receive the proceeds of their fathers life Insurance policy as joint life with 10-year term certain. If John does after they had received proceeds for 7 months, what will Joyce receive?
Benefits for the next 9 years and 5 months
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Which of the following is true regarding taxation of dividends in participating policies?
Dividends are not taxable.
Under which of the following conditions would life insurance proceeds be taxable by the federal government?
If there is a transfer for value
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
Ben is injured at work and declared totally disabled. The doctors tell Ben it will be 4 months before he can go back to work. During these 4 months, Ben wants to be sure that his life insurance coverage through his employers group life insurance will continue. How can Bens coverage be continued during his disability?
Pay a premium that would've been required of the disability wouldn't have occurred
An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive
$70,000
An IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed?
10%
In a variable life insurance policy, all of the following assets are held in the insurance company's general account except
Cash surrender values
Which of the following is TRUE about credit life insurance?
Creditor is the policyowner.
An adjustable life policy can assume the form of
Either term insurance or permanent insurance
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate conservation
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
Adverse selection is a concept best described as
Risks with higher probability of loss seeking insurance more often than other risks.
Which of the following statements is true regarding thrift plans?
The employer contributes a certain amount for each dollar contributed by the employee.
All of the following are true of credit life EXCEPT
The insured names the beneficiary
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?
Withdrawals are not taxable
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
apparent
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of
coercion
Which of the following insurance principles states that ambiguities in a policy will always be constructed in favor of the insured?
Adhesion???
Which of the following is a correct statement about annuities?
Fixed annuities do not provide protection against inflation
If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?
Inform the insurance company
If a retirement plan or annuity is "qualified", this means
It satisfies all requirements of the Internal Revenue Service for favorable tax treatment.
The human life value approach to determining life insurance needs is based upon which of the following ideas?
Loss of breadwinner's income
Underwriters use all of the these methods to protect the insurer against adverse selection EXCEPT
Only accepting a small percentage of applicants
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?
Payor benefit
In a group life policy with a death benefit of more than $50,000
Premium cost for insurance above $50,000 is taxable as income to the employee
Life insurance creates an immediate estate. Which of the following best explains this statement?
The face value of the policy is payable to the beneficiary upon the death of the insured
All of the following are true of the survivorship life policy EXCEPT
The premium is based on the age of each insured
If an applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriters approve the application
What type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal Life
Considering the principles of liquidity, how would the policy owner use todays cash values in a life insurance policy?
Using it for emergencies
Which of the following is NOT a standard exclusion in life insurance policies?
disability
Which of the following is NOT a component of an insurance policy premium?
number of beneficiaries
All of the following are true of annually renewable term insurance EXCEPT
proof of insurability must be provided at each renewal
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
purchase of a new home
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Which of the following is correct regarding taxation of funds that accumulate in an Individual Retirement Account?
Funds accumulate tax deferred
An applicant has taken the written exam for his insurance license 4 times. His highest score was 65%. When can he apply for his license?
He must wait 6 months to score a 70%
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
Which of the following is NOT one of the independent rating services that publishes guides to insurance companies financial integrity?
NAIC
Which of the following is TRUE of level term insurance?
It is temporary protection
Variable insurance and variable annuities are regulated by
SEC, FINRA, and Departments of Insurance
Which of the following is NOT true of Section 1035 Policy Exchanges?
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT
It does not have a guaranteed death benefit
Which of the following is TRUE of a qualified plan?
It has a tax benefit for both employer and employee.