Guaranteed 2
All of the following are true of credit life EXCEPT
The insured names the beneficiary
If an annuity has a guaranteed minimum interest rate, this means
The interest rate will never drop below the guaranteed minimum
All of the following are true regarding the waiver of cost of insurance rider EXCEPT
The rider expires when the insured reaches age 60
When an insured terminated membership in the insured group, the insured can convert to
Whole life without proof of insurability
Which of the following insurance principles states that ambiguities in a policy will always be constructed in favor of the insured?
adhesion
What is the difference between a straight life policy and a 20-pay whole life policy?
Premium payment period
What is the tax penalty for withdrawing money from an annuity prior to age 59 1/2?
10%
How much notice must the Commissioner give a producer before an examination is conducted?
15 days
Which of the following indicates the person upon whose life the annuity income amount is determined?
Annuitant
J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan?
Qualified
Which of the following will not be included in the buyers guide?
Specific information about the policy
Who does the spendthrift clause in a life insurance policy protect?
beneficiary
Which of the following is NOT a standard exclusion in life insurance policies?
disability
Where are premiums from fixed annuities invested?
general account
Annuities certain limit the amount paid by the annuity to a certain fixed
period or fixed amount
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?
When the policy is delivered
Restoring an insured financially after a claim is known as
Indemnity
An insurer appoints a producer as its agent in January 2nd. by what date must the insurer file a notice of appointment?
January 17
The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?
Loss of the breadwinners income
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?
Paid-up additions
An adjustable life policy can assume the form of
Either term insurance or permanent insurance
In a deferred annuity, the difference between the accumulation value and the surrender value is the
Surrender charge
Which of the following statements concerning the Medical Information Bureau is correct?
The Medical Information Bureau assists underwriters in evaluating and classifying risks.
What is the exclusion ratio used to determine?
The annuity benefit to be excluded from taxes
Which of the following is permissible reason for an insurance company to contest payment of a claim based on statements in the application ?
The application contains material misstatements
What is the main reason to purchasing an industrial life policy?
To cover funeral expenses
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is the concept called?
Exposure
Which type of authority is found in the agent's contract?
Express
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
Because of the imposed blackout period, the surviving spouse will not receive social security benefits until
He or she qualifies for retirement benefits
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
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
Interest only
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 regarding pure life annuity settlement option?
It provides the highest monthly benefit
An Equity Indexed Annuity will grow based upon
Performance of a recognized index
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?
Accumulation period
An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?
3 days
What kind of penalty will be imposed on qualified distributions paid out before age 59 1/2?
50%
*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
Which of the following is correct statement about annuities?
Fixed annuities do not provide protection against inflation
Which of the following terms refers to the nontaxable portion of each annuity benefit payment?
Cost base
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate conservation
Which of the following is the distinguishing characteristic of the interest-adjusted net cost method?
Considering the time value of money in comparing life insurance costs
Which of the following statements is true regarding SIMPLE plans?
Contributions and earnings are tax-deferred until funds are withdrawn.
What does the Guaranty Association guard against?
Insurer insolvency
Which of the following would be considered a peril?
fire
If a retirement plan or annuity is "qualified", this means
it satisfies IRS requirements for favorable tax treatment
All of the following are true of annually renewable term insurance EXCEPT
proof of insurability must be provided at each renewal
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
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
Which of the following best describes life annuity with period certain option?
(d) It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary
Which of the following is an example of a physical hazard?
diabetes
If an agent follows the rules and terms of his agent contract, he is exercising his
express authority
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT
Pay next year's premium in advance
Insurance provides a means to
transfer loss
If the annuitant dies before the annuity start date, which of the following is true?
The interest is taxable
When a settlement option is chosen at death, how are the monthly income payments taxed?
The principal portion is generally income tax-free while the interest portion is taxed as ordinary income
What is the purpose of the surrender charge in a deferred annuity?
To compensate the company for loss of investment value
Refusing to pay claims without conducting a reasonable investigation based upon all available information is an example of
Unfair traid
What type of an interest rate is guaranteed in universal life policies?
contract interest rate
Which of the following is NOT a component of an insurance policy premium?
number of beneficiaries
Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?
occupation
Which of the following would NOT be eligible for coverage under key person?
owner of a shop
Key person insurance can provide protection for all the following economic losses to a business EXCEPT
pay the death benefit to the estate of the insured
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
Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is
taxed as ordinary income
During a replacement, the existing insurer must send a letter to the insured, informing them of their right to receive information about the existing policy within
60 days
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
In a life insurance application, all of the following signatures will be required EXCEPT
Home office underwriter
Which of the following riders provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years?
Living Needs Rider
An insurance company that is owned by the policyholders is called a
Mutual insurer
Which of the following governs the nontaxable exchange of certain life insurance policies and annuities?
Replacement rule
A Fraternal Benefit Society
nonprofit benevolent organizations that provide insurance to its members
Which of the following is NOT a characteristic of variable insurance and annuities?
Benefits are determined solely based on the policy premium
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out
While completing a life insurance application the applicant realizes that she should not have answered an earlier question differently. What should the agent do to make the necessary change?
Cross out