Idaho Life Insurance

All group life policies must include a grace period lasting how many days? 1. 7 2. 10 3. 20 4. 31

4. 31

In a life settlement contract, whom does the life settlement broker represent? 1. The insurer 2. The beneficiary 3. The life settlement intermediary 4. The owner

4. The owner

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? A They are always taxable to chronically ill insured. B They are always taxed. C There is a 10% penalty for early distribution of the death benefit. D They are tax free to terminally ill insured.

D They are tax free to terminally ill insured.

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance? 1. Marital status 2. Medical background 3. Gender 4. Occupation

2. Medical background

Annuities can be used to fund which of the following? A Estate creation B Retirement plans C Variable life insurance D Group life insurance

B Retirement plans

Which of the following statements is TRUE concerning the Accidental Death Rider? A This rider is only available to insureds over the age of 65. B It is only available in group insurance. C It will pay double or triple the face amount. D It is also known as a triple indemnity rider.

C It will pay double or triple the face amount.

A Universal Life insurance policy has two types of interest rates that are called A Option A and Option B. B Fixed and Variable. C Minimum and Target. D Guaranteed and Current.

D Guaranteed and Current.

Which of the following is an example of a limited-pay life policy? A Renewable Term to Age 70 B Level Term Life C Straight Life D Life Paid-up at Age 65

D Life Paid-up at Age 65

What type of life insurance is most commonly used for group plans? 1. Flexible premium whole life 2. Decreasing term 3. Annually renewable term 4. Whole life

3. Annually renewable term

Which is true about a spouse term rider? 1. Coverage is allowed for an unlimited time. 2. The rider is decreasing term insurance. 3. Coverage is allowed up to age 75. 4. The rider is usually level term insurance.

4. The rider is usually level term insurance.

Which of the following indicates the person upon whose life the annuity income amount is determined? 1. Owner 2. Insured 3. Annuitant 4. Beneficiary

3. Annuitant

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a A Convertible Term Policy. B Renewable Term Policy. C Decreasing Term Policy. D Whole Life Policy.

A Convertible Term Policy.

Annually renewable term policies provide a level death benefit for a premium that A Fluctuates. B Increases annually. C Decreases annually. D Remains level.

B Increases annually.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A The death benefit can be increased only by exchanging the existing policy for a new one. B The death benefit can be increased by providing evidence of insurability. C The death benefit cannot be increased. D The death benefit can be increased only when the policy has developed a cash value.

B The death benefit can be increased by providing evidence of insurability.

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? A Insured's annual expenses. B Effect of inflation on income over time. C Predicted needs of the family after the insured's death. D Insured's current and future income.

C Predicted needs of the family after the insured's death. *Predicted needs of the family after the insured's death are used in the Needs Approach.

A domestic insurer issuing variable contracts must establish one or more A Annuity accounts. B General accounts. C Separate accounts. D Liability accounts.

C Separate accounts. *Any domestic insurer issuing variable contracts must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account.

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? A A notice regarding replacement B A privacy notice C A buyer's guide D A policy summary

D A policy summary

Which of the following applicants could the insurer charge a higher rate of premium and NOT violate regulations regarding unfair discrimination? A An applicant who was born in another country B An applicant who is legally blind C An applicant who has been a victim of domestic abuse D An applicant who is a smoker

D An applicant who is a smoker

Which of the following is INCORRECT regarding a $100,000 20-year level term policy? A The policy premiums will remain level for 20 years. B If the insured dies before the policy expired, the beneficiary will receive $100,000. C The policy will expire at the end of the 20-year period. D At the end of 20 years, the policy's cash value will equal $100,000.

D At the end of 20 years, the policy's cash value will equal $100,000.

When must insurable interest exist in a life insurance policy? A At the time of policy delivery B When there is a change of the beneficiary C At the time of loss D At the time of application

D At the time of application

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A Experience Rating. B Group rate. C Insurer's scheduled rate. D Attained age.

D Attained age.

All of the following are duties and responsibilities of producers at the time of application EXCEPT A Explain the nature and type of any receipt the producer is giving to the applicant. B Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. C Check to make sure that there are no unanswered questions on the application. D Change any incorrect statement on the application by personally initialing next to the corrected statement.

D Change any incorrect statement on the application by personally initialing next to the corrected statement.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? 1. Equity Indexed Universal Life 2. Variable Universal Life 3. Universal Life - Option A 4. Universal Life - Option B

3. Universal Life - Option A

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? 1. Amount of interest 2. Size of each installment 3. Predetermined length of time stated in the contract 4. Length of income period

2. Size of each installment

Which of the following is NOT true regarding a Variable Universal Life policy? 1. The cash values are not guaranteed. 2. The death benefit is fixed. 3. The policyowner can participate in some of the investment decisions. 4. The minimum death benefit is guaranteed.

2. The death benefit is fixed.

If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? 1. Fixed period 2. Fixed amount 3. Lump sum 4. Life income

3. Lump sum

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? 1. The annuitant will always receive the current interest rate. 2. The annuitant will receive the lower of either the guaranteed minimum rate or current rate. 3. The annuitant will only receive the guaranteed minimum specified in the contract. 4. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

4. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

In terms of parties to a contract, which of the following does NOT describe a competent party? 1. The person must not be under the influence of drugs or alcohol. 2. The person must be of legal age. 3. The person must be mentally competent to understand the contract. 4. The person must have at least completed secondary education.

4. The person must have at least completed secondary education.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? 1. Concealment 2. Indemnity 3. Representation 4. Warranty

4. Warranty

With Adjustable Life, the owner can change all of the following EXCEPT A) The insured B) The death benefit C) The premium D) The length of time the coverage will last

A) The insured

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guranteed an income for life. Which settlement option should this policyowner select? A. Joint and Survivor B. Fixed-amount installments C. Fixed-period installments D. Life income

A. Joint and Survivor

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 Not subject to income taxation by the Federal Government.

Which of the following will NOT be an appropriate use of a deferred annuity? A Accumulating funds in an IRA B Funding a child's college education C Creating an estate D Accumulating retirement funds

C Creating an estate *Deferred annuities grow tax deferred, and are best suitable for accumulating retirement income or funds for children's college education. Unlike life insurance, annuities do not create an estate, but liquidate it.

Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death? A Viatical settlement B Estate conservation C Life insurance proceeds D State Education Waiver

C Life insurance proceeds

If an employer decides to change its life insurance policy to a similar one with a different insurer, which of the following describes the extent that replacement regulations will be exercised? A The type of life insurance policy obtained will determine which replacement regulations will be required. B The number of employees covered by the policy will determine which replacement regulations will be required. C Replacement regulations will not apply in this situation. D Special corporate replacement regulations will apply.

C Replacement regulations will not apply in this situation. *If a new life insurance policy is provided under a group life insurance policy covering employees or members of an association, replacement regulations do not apply.

What is the purpose of the buyer's guide? A To list all policy riders B To provide information about the issued policy C To allow the consumer to compare the costs of different policies D To provide the name and address of the agent/producer issuing the policy

C To allow the consumer to compare the costs of different policies

What is the purpose of a fixed-period settlement option? A To provide a guaranteed income for life B To provide a guaranteed amount of money each month C To provide a guaranteed income for a certain amount of time D To settle the insurance company's liability

C To provide a guaranteed income for a certain amount of time

An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances 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 If the primary beneficiary predeceases the insured

A lucky individual won 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? A Variable annuity B Flexible payment annuity C Deferred interest annuity D Immediate annuity

D Immediate annuity

The validity of an annuity contract cannot be contested after is has been in force for 2 years, except for nonpayment of premium. What is the name of this provision? A Indisputability B Validity Assurance C Protection of Validity D Incontestability

D Incontestability

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? A It will likely be the average premium issued to standard risks. B The applicant's habits and health do not affect the premiums. C It will likely be lower because the applicant is a preferred risk. D It will likely be higher because the applicant is a substandard risk.

D It will likely be higher because the applicant is a substandard risk.

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select? A Joint annuity B Cash refund annuity C Straight life D Joint and survivor

D Joint and survivor

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? A Variable Life B Adjustable Life C Graded Premium Life D Limited-pay Life

D Limited-pay Life

Key person insurance can provide protection for all of the following economic losses to a business except A. Provide deferred compensation retirement benefit if the insured key person survives to retirement B. Fund the expense of finding a suitable replacement C. Fund the cost of training a current employee to perform the duties of the deceased D Pay the death benefit to the estate of the insured.

D Pay the death benefit to the estate of the insured.

Which of the following is another term for the accumulation period of an annuity? A Premium period B Liquidation period C Annuity period D Pay-in period

D Pay-in period

An Adjustable Life policyowner can change which of the following policy features? A The mortality expense B The investment account C The insured D The coverage period

D The coverage period

When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed? A Forwarded to an investor B Each contract's separate account C The annuity owner's account D The insurance company's general account

D The insurance company's general account

The client chooses to buy an annuity product that was not recommended to him. Which of the following is true: A) The client may not buy an annuity unless it was recommended to him. B) The insurer must impose a penalty on the producer for violation of the suitability rule. C) The suitability rule applies. D) The suitability rule does not apply.

D) The suitability rule does not apply.

An agent selling variable annuities must be registered with 1. FINRA. 2. Department of Insurance. 3. The Guaranty Association. 4. SEC.

1. FINRA.

Variable Whole Life insurance is based on what type of premium? 1. Flexible 2. Graded 3. Level fixed 4. Increasing

3. Level fixed

A key person insurance policy can pay for which of the following? A Hospital bills of the key employee B Costs of training a replacement C Loss of personal income D Workers compensation

B Costs of training a replacement

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? A Cash refund B Installments for a fixed period C Installments for a fixed amount D Installment refund

B Installments for a fixed period

All advertisements are the responsibility of the A Department of Insurance. B Insurer. C Soliciting agent. D Advertising agency.

B Insurer.

Which of the following individuals must have insurable interest in the insured? A Underwriter B Producer C Policyowner D Beneficiary

C Policyowner

In order for a debtor group to qualify for group life insurance, what should be the minimum number of participants? A 10 B 25 C 50 D 100

D 100 *Life insurance policies can be issued to debtor groups if the group of eligible debtors is receiving new entrants at the rate of at least 100 persons a year, and if the group has 100 members at the time of initial issue.

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? A Variable life B Universal life C Whole life D Decreasing term

D Decreasing term *A decreasing term policy's face amount decreases as the amount of debt is reduced.

When an employee terminates coverage under a group insurance policy, coverage continues in force A For 60 days. B Until the employee can obtain coverage under a new group plan. C Until the employee notifies the group insurance provider that coverage conversion policy is issued. D For 31 days.

D For 31 days.

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive A Guaranteed minimum benefit. B The amount paid into the annuity. C The remainder of the principal. D Nothing; the payments will cease.

D Nothing; the payments will cease. *Straight or pure life annuity will pay a specific amount of income for the remainder of the annuitant's life. This payment will cease at death, regardless of the amount of principal that hasn't been paid out. There is no refund or payments to survivors.

The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. What is the insurance company's course of action? A) Deny only payment of the face amount but pay the rider since suicide is an accidental death B) Pay the face amount only because suicide is not an accident C) Pay twice the face amount. D) Deny any payment of the death benefit.

D) Deny any payment of the death benefit.

Which of the following is NOT an account of the Life and Disability Insurance Guaranty Association? A Property insurance B Life insurance C Disability insurance D Annuities

A Property insurance

What type of insurance would be used for a Return of Premium rider? 1. Decreasing Term 2. Annually Renewable Term 3. Increasing Term 4. Level Term

3. Increasing Term

A licensed producer must notify the Director within how many days of beginning to act in a life settlement broker capacity? A 7 days B 10 days C 14 days D 30 days

B 10 days

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 2% B 2.5% C 3% D Whatever interest rate the company deems appropriate

B 2.5%

The maximum time limit for reinstatement after a policy has elapsed is usually A 2 years. B 3 years. C 4 years. D 5 years.

B 3 years

All of the following entities regulate variable life policies EXCEPT A The SEC. B The Insurance Department. C The Guaranty Association. D Federal government.

C The Guaranty Association.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? A The policy will be interpreted as if the insured did not have an answer to the question. B The policy will be void. C The insurer may deny coverage later, because of the information missing on the application. D The policy will be interpreted as if the insurer waived its right to have an answer on the application.

D The policy will be interpreted as if the insurer waived its right to have an answer on the application.

Which of the following is NOT true of life settlements? A They could be used for a key person coverage. B They could be sold for an amount greater than the current cash value. C They involve insurance policies with large face amounts. D The seller must be terminally ill.

D The seller must be terminally ill.

The LEAST expensive first-year premium is found in which of the following policies? A Level Term B Annually Renewable Term C Increasing Term D Decreasing Term

B Annually Renewable Term *Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level? A Annuitization B Bail-out C Surrender D Nonforfeiture

B Bail-out

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) A Aleatory contract. B Executive bonus. C Key person policy. D Fraternal association.

B Executive bonus.

What does "level" refer to in level term insurance? A Interest rate B Face amount C Premium D Cash value

B Face amount *Level term policies maintain level death benefit (or face amount) throughout the term of the policy. In level term insurance, the premium also remains consistent over the years, unlike the premiums of many policies, which increase as the policyholder ages.

All life insurance and all disability insurance in connection with loans or other credit transactions is subject to the provisions of the A Disability Code. B Insurance Code. C Credit stipulations. D Loan regulations.

B Insurance Code.

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? A Single premium policy B Jumping juvenile policy C Limited pay whole life policy D Modified life insurance policy

B Jumping juvenile policy *While many policies provide a level death benefit, Jumping Juvenile policies provide a low face amount in the early years and then increase, usually by 5 times the amount, when the insured reaches an age specified in the policy (usually age 21).

Which of the following settlement options in life insurance is known as straight life? A Fixed amount B Life income C Single life D Life with period certain

B Life income

Which provision allows the policy owner an opportunity to resume a policy that has lapsed? A Continuation B Reinstatement C Grace period D Resumption

B Reinstatement

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A Disclosure rule B Replacement rule C Reinstatement rule D Conversion rule

B Replacement rule

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called? A Inflation adjustment B Surrender charge C Termination penalty D Bail-out charge

B Surrender charge

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. B The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. C The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. D The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.

B The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Policy loans can be created from which type of life insurance policy? A Term life B Whole life C Temporary D Credit life

B Whole life

What of the following is a correct statement concerning assignment? A) Assignment of policy proceeds if an insured dies is always chosen by the insurer B) Assignment refers to the person who will receive the benefits of a policy should an insured die C) Assignment refers to the person who owns the policy D) Assignment refers to the producer who wrote the policy.

B) Assignment refers to the person who will receive the benefits of a policy should an insured die *A policy may be assignable or not assignable, as provided by its terms. The beneficiary may be changed upon the insured or policyowner's request, by a pledge or transfer of title. If the beneficiary is changed, the insured must deal with the assignee until its home office has received written termination of the original assignment.

A whole life policy is surrendered for a reduced-paid-up policy. The cash value is the new policy will A) Reduce to the pre-surrender value B) Continue to increase C) Remain the same D) Decrease over time

B) Continue to increase

Credit life insurance and credit disability insurance can be issued in all of the following terms EXCEPT: A) Individual policies issued to debtors on a term plan, or disability benefit provisions in individual policies of credit life insurance B) Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on a permanent plan C) Group policies of disability insurance issued to creditors on a term plan insuring debtors, or disability benefit provisions in a group credit life insurance policies to provide such coverage D) Individual policies of life insurance issued to debtors on the term plan.

B) Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on a permanent plan *term plan only!

If a creditor has claims against an insured, what may the insurer do with the proceedings of a life insurance policy? A) Reinvest the death benefit B) Hold the proceeds C) Pay the creditors D) Place the proceeds in a trust

B) Hold the proceeds *All individual life insurance policies must entitle the beneficiary to the proceeds of the policy, regardless of any creditor's claims. If the insured agrees, the insurer may hold the proceeds of a policy if a creditor has claims against the insured.

in making an annuity recommendation to a consumer the producer must have reasonable grounds to believe that the annuity A) Is not subject to taxes B) Is suitable C) Is not too expensive D) Doesn't have surrender charges

B) Is suitable

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs? A Interest-sensitive Whole Life B Decreasing Term C Adjustable Life D Single Premium Whole Life

C Adjustable Life *Adjustable life policies allow for increases or decreases in the face amount or premium, so long as the premium is sufficient to pay for the mortality. Any increase in face amount requires proof of insurability.

The accelerated benefits provision will provide for an early payment of the death benefit when the insured A Has earned enough credits. B Becomes disabled. C Becomes terminally ill. D Needs to borrow money.

C Becomes terminally ill.

Which of the following is TRUE about a class designation? A It is not allowed. B It determines the succession of beneficiaries. C Beneficiaries are not identified by name. D Beneficiaries must be part of the insured's immediate family.

C Beneficiaries are not identified by name.

All of the following information about a customer must be used in determining annuity suitability EXCEPT A Financial experience. B Annual income. C Beneficiary's age. D Tax status.

C Beneficiary's age. *To ensure suitability of annuity products, producers must obtain relevant information about the consumer's age, income, financial status, tax status, financial experience and objectives. Beneficiary's age is not a suitability factor.

Which of the following is true of the taxation of cash values in a business life insurance policy? A Cash values are not taxable. B Cash values are taxed immediately. C Cash values grow tax deferred. D Cash values are tax deductible.

C Cash values grow tax deferred. *The cash value of a business owned life insurance policy or an employer provided policy accumulates on a tax-deferred basis and is taxed in the same manner as an individually owned policy.

The Life and Disability Insurance Guaranty Association maintains funds in all of the following types of accounts, EXCEPT A Annuities. B Disability insurance. C Casualty insurance. D Life insurance.

C Casualty insurance.

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to A Lower its insurability standards. B Refuse to issue the policy. C Charge a higher premium. D Require a yearly medical examination.

C Charge a higher premium.

What characteristic makes whole life permanent protection? A Guaranteed level premium B Living benefits C Coverage until death or age 100 D Guaranteed death benefit

C Coverage until death or age 100

Which of the following is NOT fundable by annuities? A A person's retirement B Estate liquidation C Death benefits D Cash accumulation for any reason

C Death benefits *Annuities are most commonly used to fund a person's retirement, but they can technically be used to accumulate cash for any reason. Annuities can also be used to liquidate an estate. Annuities do not provide death benefits; those are provided by life insurance.

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) A Flexible Annuity. B Immediate Annuity. C Equity Indexed Annuity. D Variable Annuity.

C Equity Indexed Annuity.

An agent selling variable annuities must be registered with A The Guaranty Association. B SEC. C FINRA. D Department of Insurance.

C FINRA.

A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal? A Inclusive term B Children's term C Family term D Other- insured term

C Family term

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? A Life income period certain B Extended term C Fixed amount D Fixed period

C Fixed amount

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? A Unfair discrimination B Errors and omissions C Fraud D Defamation

C Fraud

The Medical Information Bureau (MIB) was created to protect A Insureds from unreasonable underwriting requirements by the insurance companies. B Medical examiners that perform insurance physical examinations. C Insurance companies from adverse selection by high risk persons. D Insurance departments from lawsuits by policyowners.

C Insurance companies from adverse selection by high risk persons.

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an A Endowment. B Nonqualified annuity. C Modified endowment contract. D Accelerated benefit policy.

C Modified endowment contract.

Which of the following documents must be provided to the policyowner or applicant during policy replacement? A Buyer's Guide and Policy Summary B Policy illustrations C Notice Regarding Replacement D Disclosure Authorization Form

C Notice Regarding Replacement

Annuities can be used to fund which of the following? A Group life insurance B Estate creation C Retirement plans D Variable life insurance

C Retirement plans

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? A A corporation can be an annuitant as long as the beneficiary is a natural person. B The contract can be issued without an annuitant. C The annuitant must be a natural person. D A corporation can be an annuitant as long as it is also the owner.

C The annuitant must be a natural person. *Owners of annuities can be individuals or entities like corporations and trusts, but the annuitant must be a natural person, whose life expectancy is taken into consideration for the annuity.

In the event of replacement, the replacing insurance company must obtain from the current producer all of the following EXCEPT A A list of the applicant's life insurance or annuity contracts to be replaced. B A copy of the replacement notice provided to the applicant. C The new policy's first premium payment. D None of the above. All are required to be obtained from the current producer.

C The new policy's first premium payment.

All of the following statements are true regarding installments for a fixed amount EXCEPT A This option pays a specific amount until the funds are exhausted. B The annuitant may select how big the payments will be. C The payments will stop when the annuitant dies. D Value of the account and future earnings will determine the time period for the benefits.

C The payments will stop when the annuitant dies. *Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.

Which of the following determines the cash value of a variable life policy? A The policy's guarantees. B The premium mode C The performance of the policy portfolio D The company's general account

C The performance of the policy portfolio

Which of the following products requires a securities license? A Equity Indexed annuity B Deferred annuity C Variable annuity D Fixed annuity

C Variable annuity

The main difference between immediate and deferred annuities is A The number of insureds. B The amount of each payment. C When the income payments begin. D How the annuity is purchased.

C When the income payments begin.

In policy replacement situations, insurers must provide a free-look period of how many days? A) 5 days B) 10 days C) 20 days D) 30 days

C) 20 days

Which of the following is NOT a standard exclusion in life insurance policies? A) War and military service B) Aviation C) Disability D) Hazardous occupation

C) Disability

An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this? A) Automatic premium loan B) Incontestability C) Grace period D) Waiver of premium

C) Grace period

Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance? A) The law of large numbers B) Agent's Report C) Insurance application D) MIB

C) Insurance application

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT A) It builds cash value B) If the insured lives to age 100, the policy matures, and the face amount is paid to the policyowner C) It does not have a guaranteed death benefit D) It is funded by a level premium

C) It does not have a guaranteed death benefit *it DOES have a guaranteed death benefit

What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured? A) Not affect the amount payable to the beneficiary B) Eliminate the death benefit C) Reduce the death benefit D) Increase the death benefit by the amount paid into LTC

C) Reduce the death benefit

The term "illustration" in a life insurance policy refers to A A depiction of policy benefits and guarantees. B Pictures accompanying a policy. C Charts and graphs. D A presentation of nonguaranteed elements of a policy.

D A presentation of nonguaranteed elements of a policy.

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 life insurance only D Any form of life insurance

D Any form of life insurance

Which of the following elements in an Indexed Universal Life policy is tied to an index? A Death benefit B Face amount C Premiums D Cash values

D Cash values

In a single employer group plan, what is the name of the policy issued to the employer? A Certificate of insurance B Employer-insurer contract C Certificate of authority D Master contract

D Master contract

Using a class designation for beneficiaries means A Not naming beneficiaries. B Naming an estate as the beneficiary. C Naming each beneficiary by his or her name. D Naming beneficiaries as a group.

D Naming beneficiaries as a group.

Which of the following can surrender a deferred annuity contract? A Only the insurance company for nonpayment of premiums B The beneficiary after the owner's death C A deferred annuity cannot be surrendered. D Only the annuity owner

D Only the annuity owner

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a A Statement of good health. B Backdated receipt. C Warranty. D Premium receipt.

D Premium receipt.

Which of the following best defines the "owner" as it pertains to life settlement contracts? A A financial entity that sponsors the transaction B A fiduciary for the contract C The insurance provider D The policyowner of the life insurance policy

D The policyowner of the life insurance policy

If a life insurer holds the proceeds of any policy it issues, which of the following is true? A The proceeds will be more likely to be subject to a creditor's claims against a beneficiary. B Death benefits will be increased as an incentive. C Premiums will be decreased as an incentive. D The proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner.

D The proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner. *A life insurer may hold the proceeds of any policy it issues, provided the insured agrees. These proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner.

How must a replacing producer respond to an applicant wishing to replace existing life insurance? A The producer must collect the existing policies and turn them over to the replacing insurer. B The producer must request the permission of the existing insurer. C The producer has no specific duties. D The producer must provide the applicant with a Notice Regarding Replacement.

D The producer must provide the applicant with a Notice Regarding Replacement.

What is the purpose of a disclosure statement in life insurance policies? A To obtain important underwriting information from the applicant B To help consumers compare policy prices C To protect agents and insurers against lawsuits D To explain features and benefits of a proposed policy to the consumer

D To explain features and benefits of a proposed policy to the consumer

In a variable life insurance policy, all of the following assets are held in the insurance company's general account, EXCEPT: A) Mortality reserves B) Face amount reserves C) Incidental benefit amounts D) Cash surrender values

D) Cash surrender values

As an insurer's field underwriter, a producer has all of the following responsibilities EXCEPT A) Completing applications B) Soliciting insurance contracts C) Collecting premiums D) Issuing policies on behalf of the insurer

D) Issuing policies on behalf of the insurer

When would a 20-pay whole life policy endow? A After 20 payments B In 20 years C When the insured reaches age 100 D At the insured's age 65

When the insured reaches age 100 *A limited-pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years.

Which of the following is a provision found in life insurance policies? a. Payor benefit b. Reinstatement c. Return of premium d. Guaranteed insurability

b. Reinstatement *the rest are Riders

The death benefit in a variable universal life policy 1. Depends on the performance of a separate account. 2. Is guaranteed to be higher than when the policy is originally issued. 3. Is fixed. 4. Always equals the face amount stated in the policy.

1. Depends on the performance of a separate account.

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called 1. Guaranteed insurability. 2. Waiver of cost of insurance. 3. Accelerated benefits. 4. Cost of living.

1. Guaranteed insurability.

Which of the following best describes annually renewable term insurance? 1. It is level term insurance. 2. It requires proof of insurability at each renewal. 3. Neither the premium nor the death benefit is affected by the insured's age 4. It provides an annually increasing death benefit.

1. It is level term insurance.

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 1. Paid-up additions. 2. One-year term purchase. 3. Accumulation at interest. 4. Reduction of premiums.

1. Paid-up additions.

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? 1. Payor Benefit 2. Jumping Juvenile 3. Juvenile Premium Provision 4. Waiver of Premium

1. Payor Benefit

The insurance company underwriter could find information concerning the personal activities and character of an applicant from which of the following reports? 1. Producer's report 2. Attending physician 3. Insurance company who provided the prior coverage 4. Medical Information Bureau

1. Producer's report

All of the following are characteristics of a group life insurance plan EXCEPT 1. There is a requirement to prove insurability on the part of the participants. 2. The participants receive a Certificate of Insurance as their proof of insurance. 3. A minimum number of participants is required in order to underwrite the plan. 4. The cost of the plan is determined by the average age of the group.

1. There is a requirement to prove insurability on the part of the participants.

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military? 1. War or military service 2. Limited benefit 3. Aviation 4. Hazardous occupation

1. War or military service

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 1. $30,000 2. $70,000 3. $100,000 4. A survivor benefit determined by the insurance company

2. $70,000

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? 1. Liquidation period 2. Depreciation period 3. Annuitization period 4. Pay-out period

2. Depreciation period

What is the purpose of a conditional receipt? 1. It is given only to applicants who fully prepay the premium. 2. It is intended to provide coverage on a date prior to the policy issue. 3. It guarantees that a policy will be issued in the amount applied for. 4. It serves as proof that the applicant has been determined insurable.

2. It is intended to provide coverage on a date prior to the policy issue.

Which statement is NOT true regarding a Straight Life policy? 1. It has the lowest annual premium of the three types of Whole Life policies. 2. Its premium steadily decreases over time, in response to its growing cash value. 3. The face value of the policy is paid to the insured at age 100. 4. It usually develops cash value by the end of the third policy year.

2. Its premium steadily decreases over time, in response to its growing cash value.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? 1. Physical 2. Morale 3. Moral 4. Legal

2. Morale

.If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a 1. Rollover. 2. Settlement option. 3. Nontaxable exchange. 4. Nonforfeiture option.

2. Settlement option.

Replacement rules do not apply in all of the following situations EXCEPT 1. The new contract is with the same insurer and a conversion privilege is being exercised. 2. The existing life insurance is a nonconvertible term policy with less than 10 years to expire. 3. The solicitation is made by mail. 4. None of the above. Replacement rules do not apply in any of the above situations.

2. The existing life insurance is a nonconvertible term policy with less than 10 years to expire.

All of the following are true of an annuity owner EXCEPT 1. The owner is the party who may surrender the annuity. 2. The owner must be the party to receive benefits. 3. The owner pays the premiums on the annuity. 4. The owner has the right to name the beneficiary.

2. The owner must be the party to receive benefits.

All of the following are true of the Survivorship Life policy EXCEPT 1. It can insure more than 2 lives. 2. The premium is based on the age of each insured. 3. The death benefit is not paid until the last death. 4. The premium would be lower than in a joint life policy.

2. The premium is based on the age of each insured.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? 1. Straight whole life 2. Universal life 3. Variable whole life 4. Decreasing term

2. Universal life

When is the earliest a policy may go into effect? 1. After the underwriter reviews the policy 2. When the application is signed and a check is given to the agent 3. When the first premium is paid and the policy has been delivered 4. When the insurer approves the application

2. When the application is signed and a check is given to the agent

Because of the imposed blackout period, the surviving spouse will not receive social security benefits until 1. He or she becomes fully insured. 2 The age of 59 1/2 3 He or she qualifies for retirement benefits 4. The age of 65

3 He or she qualifies for retirement benefits

Under which of the following circumstances would an insurer pay accelerated benefits? 1. An insured is looking for a way to put her daughter through college. 2. A couple wants to build a house and would like to make a larger down payment. 3. An insured is diagnosed with cancer and needs help paying for her medical treatment. 4. A couple is nearing retirement and needs a steady stream of income.

3. An insured is diagnosed with cancer and needs help paying for her medical treatment.

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? 1. Investment performance of the insured 2. Statewide predetermined annual interest rate 3. Insurer's guaranteed minimum rate of interest 4. Investment performance of the company

3. Insurer's guaranteed minimum rate of interest

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT 1. It build cash value. 2. If the insured lives to age 100, the policy matures, and the face amount is paid to the insured. 3. It does not have a guaranteed death benefit. 4. It is funded by a level premium

3. It does not have a guaranteed death benefit.

Which of the following best describes pure life annuity? 1. It is also known as refund life annuity. 2. It guarantees to pay out all the proceeds. 3. It provides the highest monthly benefit. 4. It continues payments to the beneficiary when the annuitant dies.

3. It provides the highest monthly benefit.

If a retirement plan or annuity is qualified, this means 1. Dividends will be paid until payments are distributed. 2. It is not permitted by the IRS. 3. It satisfies IRS requirements for favorable tax treatment. 4. It has unlimited uses.

3. It satisfies IRS requirements for favorable tax treatment.

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? 1. Fixed amount option 2. Interest only option 3. Life income with period certain 4. Joint and survivor

3. Life income with period certain

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? 1. Single life 2. Fixed-amount 3. Life income with period certain 4. Joint and survivor

3. Life income with period certain

When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would 1. Eliminate pre-existing conditions. 2. Help him meet a sales quota for that period. 3. Lower the insured's premium. 4. Shorten the contestability period.

3. Lower the insured's premium.

The following are features of the Indexed Universal Life EXCEPT 1. Adjustable death benefit. 2. Policy's cash value is dependent on the performance of the equity index. 3. Sale of this product requires a securities license. 4. Flexible premium.

3. Sale of this product requires a securities license.

Which of the following best details the underwriting process for life insurance? 1. Issuance of policies 2. Reporting and rejection of risks 3. Selection, classification, and rating of risks 4. Solicitation, negotiation and sale of policies

3. Selection, classification, and rating of risks

Prior to selling annuity products a producer must complete how many hours of annuity training? 1. 10 hours 2. 12 hours 3. 1 hour 4. 4 hours

4. 4 hours

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? 1. 7 days 2. 10 days 3. 3 days 4. 5 days

4. 5 days

Which nonforfeiture option has the highest amount of insurance protection? 1. Conversion 2. Decreasing Term 3. Reduced Paid-up 4. Extended Term

4. Extended Term

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? 1. He will have to pay a penalty regardless of his age. 2. He will not have to pay a penalty, regardless of his age. 3. He cannot withdraw money from his MEC before age 59½. 4. He will have to pay a penalty if he is younger than 59½.

4. He will have to pay a penalty if he is younger than 59½.

What is the term for the entity that an agent represents regarding contractual agreements with third parties? 1. Client 2. Designee 3. Insured 4. Principal

4. Principal

If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans? 1. The policy is withheld until payments are met. 2. The loan amount is charged to the beneficiaries. 3. The loans are waived. 4. The loan amounts are deducted from the death benefit.

4. The loan amounts are deducted from the death benefit.

If there is a criminal prosecution taken against a producer in another jurisdiction, when must the producer report that to the Director? 1. Immediately 2. There is no requirement for reporting actions taken in other jurisdictions. 3. Within 30 days of the initial pretrial hearing date 4. Within 30 days of the final disposition of the matter

4. Within 30 days of the final disposition of the matter

In an annuity, the accumulated money is converted into a stream of income during which time period? A Annuitization period B Accumulation period C Amortization period D Conversion period

A Annuitization period

Which of the following is NOT a type of whole life insurance? A Level term B Single premium C Straight life D Limited payment

A Level term

If an agent wishes to sell variable life policies, what license must the agent obtain? A Securities B Adjuster C Surplus Lines D Personal Lines

A Securities

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? A The cash value will be paid to the annuitant's estate. B The premium value will be paid to the annuitant's estate. C All benefits will be forfeited. D The cash value will be paid to the state government.

A The cash value will be paid to the annuitant's estate.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A The date of medical exam B The date of policy delivery C The date of issue D The date of application

A The date of medical exam

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? A Withdrawals are not taxable. B Distributions before age 59 1/2 incur a 10% penalty on policy gains. C Policy loans are taxable distributions. D Accumulations are tax deferred.

A Withdrawals are not taxable.

According to the entire contract provisions, the entire contract includes all of the following Except A) a buyer's guide B) The life insurance policy C) a copy of the application D) Any riders or amendments

A) a buyer's guide

Which of the following is guaranteed under a variable whole life insurance policy? A) minimum death benefit B) interest rates C) cash value D) stock performance

A) minimum death benefit

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 Insurance Index B Policy Summary C Illustrations D Buyer's Guide

D Buyer's Guide

Which of the following is NOT an example of a valid insurable interest? A Business partners in each other's lives B Employer in key employee's life C Child in parents' lives D Debtor in the life of the creditor

D Debtor in the life of the creditor *The three recognized areas in which insurable interest exists are as follows: a policyowner insuring their own life, the life of a family member (relative or spouse), or the life of a business partner, key employee, or someone who has a financial obligation to the policyowner. A debtor does not have an insurable interest in the creditor.

The mode of premium payment A Is the factor that determines the amount of dividends in a policy. B Is the method used to compute the cash surrender value of the policy. C Does not affect the amount of premium paid. D Is defined as the frequency and the amount of the premium payment.

D Is defined as the frequency and the amount of the premium payment.

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as A The previous premium payments were high enough to create an excess of premium. B The policyowner cannot skip premiums without the policy lapsing. C The next month's premium is sufficient to cover both the current premium amount and the skipped amount. D The policy contains sufficient cash value to cover the cost of insurance.

D The policy contains sufficient cash value to cover the cost of insurance.

What is the purpose of key person insurance? A To provide health insurance to the families of key employees B To insure retirement benefits are available to all key employees C To maintain an account that insures the owner of a company remains solvent D To lessen the risk of financial loss because of the death of a key employee

D To lessen the risk of financial loss because of the death of a key employee

The death benefit under the Universal Life Option B A Gradually increases each year by the amount that the cash value increases. B Decreases by the amount that the cash value increases. C Increases for the first few years of the policy, and then levels off. D Remains level.

A Gradually increases each year by the amount that the cash value increases. *Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? A Level term B Term to specified age C Ordinary life policy D Limited pay whole life

A Level term

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will A Pay the policy proceeds only if it would have issued the policy. B Pay the policy proceeds up to an established limit. C Not pay the policy proceeds under any circumstances. D Automatically pay the policy proceeds.

A Pay the policy proceeds only if it would have issued the policy.

If an agent fails to obtain an applicant's signature on the application, the agent must A Return the application to the applicant for a signature. B Sign the application for the applicant. C Sign the application, stating it was by the agent. D Send the application to the insurer with a note explaining the absence of signature.

A Return the application to the applicant for a signature.

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? A Return the application to the applicant for completion B Issue a policy anyway since the application has been submitted C Ask the producer who solicited the policy to complete and resign the application D Fill in the blanks to the best of the insurer's knowledge

A Return the application to the applicant for completion

Which of the following statements about group life is correct? A The cost of coverage is based on the ratio of men and women in the group. B The premiums are higher than in an individual policy because there is no medical exam. C The group sponsor receives a Certificate of Insurance. D The policy can be converted to an individual term insurance policy.

A The cost of coverage is based on the ratio of men and women in the group. *Group life insurance can be converted to an individual whole life, not a term, policy; the group life insurance premiums are usually lower than those of an individual policy; the group sponsor receives a master contract, while the participants receive certificates of insurance. The cost of the coverage is based on the average age of the group and the ratio of men to women.

Which of the following would NOT fall into the category of costs associated with death? A The expense of a vacation for surviving family members B Funeral expenses C Final medical expenses of the insured D Day to day expenses of maintaining the family

A The expense of a vacation for surviving family members

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? A The insured may choose to convert to term or permanent individual coverage. B The insured would not need to prove insurability for a conversion policy. C The insured may convert coverage to an individual policy within 31 days. D The premium for individual coverage will be based upon the insured's attained age.

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

All of the following are true of key person insurance EXCEPT A The plan is funded by permanent insurance only. B There is no limitation on the number of key employee plans in force at any one time. C The employer is the owner, payor and beneficiary of the policy. D The key employee is the insured.

A The plan is funded by permanent insurance only.

Are insurance company underwriters allowed to discriminate? A Yes, but not unfairly B No, higher risks pay higher premium C No, discrimination is an unfair practice D Yes, but only for gender

A Yes, but not unfairly *The company will discriminate in favor of good risks and not of poor risks; however, it cannot discriminate unfairly by using factors such as race or national origin in their underwriting.

The death protection component of Universal Life Insurance is always A Decreasing Term B Annually Renewable Term C Whole Life D Adjustable Life

B Annually Renewable Term *A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

What does "liquidity" refer to in a life insurance policy? A The insured receives payments each month in retirement. B Cash values can be borrowed at any time. C The death benefit replaces the assets that would have accumulated if the insured had not died. D The policyowner receives dividend checks each year.

B Cash values can be borrowed at any time.

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? A Underwriter's Report B Inspection Report C Medical Information Bureau's report D Agent's Report

B Inspection Report

Which of the following statements regarding HIV testing for life insurance purposes is NOT true? A HIV testing is regulated at the state level. B Insurers are barred from requesting HIV testing. C Positive test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant. D The testing practices must meet the criteria of the U.S. Department of Health and Human Services.

B Insurers are barred from requesting HIV testing.

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? A It must be assumed that the death of the insured will occur immediately. B Need is predicted using the number of years until the insured's retirement. C Coverage is based on the predicted needs of that family. D The death of an insured must be premature.

B Need is predicted using the number of years until the insured's retirement. *In the needs approach method, need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen immediately. The policy allows for benefits to be collected upon the insured's death.

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A Impose medical requirements on existing members. B Require evidence of insurability. C Require a higher premium. D Extend the open enrollment period.

B Require evidence of insurability.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as A Juvenile protection provision. B Survivor protection. C Life planning. D Survivorship insurance.

B Survivor protection.

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A 1 B 3 C 5 D 10

C 5

For variable products, underlying assets must be kept in A A money market account. B A general account. C A separate account. D A revenue account.

C A separate account. *Under a variable life insurance policy, assets must be placed in a separate fund, used primarily for the investment of stocks, bonds, and other security investment options.

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? A As of the first of the month after the policy issue B As of the policy issue date C As of the application date D As of the policy delivery date

C As of the application date

If an insured changes the premium payment mode from monthly to annually, what happens to the total premium? A Doubles B Increases C Decreases D Stays the same

C Decreases *Because the insurer would have the entire premium to invest for a full year, they would reduce the premium amount.

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? A Board of directors is the owner, and the board of directors pays the premium. B Company is the owner, and the company pays the premium. C Executive is the owner, and the executive pays the premium. D Company is the owner, but the executive pays the premium.

C Executive is the owner, and the executive pays the premium. *Executive buys the policy and pays the premium, and the employer reimburses the executive for cost (or pays a bonus in the amount of the premium). Since the executive is receiving compensation, the amount paid by the employer would be considered taxable income.

All of the following are business uses of life insurance EXCEPT A Funding against financial loss caused by the death of a key employee. B Funding business continuation agreements. C Funding against company's general financial loss. D Compensating executives.

C Funding against company's general financial loss. *Both life and health insurance can be used for a variety of purposes in a business setting, including the funding of business continuation agreements, compensating executives, and protecting the firm against financial loss resulting from the death or disability of key employees.

Who makes up the Medical Information Bureau? A Former insured B Physicians and paramedics C Insurers D Hospitals

C Insurers *The Medical Information Bureau is made up of insurers so the companies can compare the information they have collected on a potential insured with information other insurers may have discovered.

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A Whole Life B Ordinary Life C Joint Life D Decreasing Term

C Joint Life *A Joint Life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death.

What are the licensing requirements for someone who sells variable universal life insurance? A Securities B Universal life and variable products C Life insurance and securities D Life insurance

C Life insurance and securities

Which Universal Life option has a gradually increasing cash value and a level death benefit? A Term insurance B Option B C Option A D Juvenile life

C Option A *Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

Which type of insurance is based on mutual agreements among subscribers? 1. Reinsurance 2. Reciprocal insurance 3. Mutual insurance 4. Limited liability

2. Reciprocal insurance

.Which two terms are associated directly with the way an annuity is funded? 1. Immediate or deferred 2. Renewable or convertible 3. Single payment or periodic payments 4. Increasing or decreasing

3. Single payment or periodic payments

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT 1. The interest is credited at a rate specified by the policy. 2. The policyholder has the right to withdraw the accumulations at any time. 3. The interest is not taxable since it remains inside the insurance policy. 4. The annual dividend is retained by the company.

3. The interest is not taxable since it remains inside the insurance policy. *The interest credited under this option is TAXABLE, whether or not the policyowner receives it.

What is the purpose of settlement options? 1. They guarantee a return of excess premiums. 2. They provide the beneficiary with the income he/she cannot outlive. 3. They determine how death proceeds will be paid. 4. They are guarantees built into the policy.

3. They determine how death proceeds will be paid.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? A 3 days B 5 days C 10 days D 14 days

A 3 days

At times, it is possible for a life insurance agent to affect a savings of premium rates by backdating an application for life insurance. What is the maximum amount of time that an application may be backdated? A 6 months B One year C It is not allowed. D It varies from insurer to insurer.

A 6 months

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A A debtor has an insurable interest in the life of a lender. B Business partners have an insurable interest in each other. C A married person has an insurable interest in their spouse. D An individual has an insurable interest in their own life.

A A debtor has an insurable interest in the life of a lender. *A lender has an insurable interest in the life of a debtor, but only to the extent of the debt. The debtor does not have an insurable interest in the life of the lender.

Which of the following will NOT be an appropriate use of a deferred annuity? A Creating an estate B Accumulating retirement funds C Accumulating funds in an IRA D Funding a child's college education

A Creating an estate

Which component increases in the increasing term insurance? A Death benefit B Cash value C Interest on the proceeds D Premium

A Death benefit

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight 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 $100,000

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? A $0 B $200 C $9,800 D $10,000

C $9,800

All life insurance policies must have a free-look period that lasts for at least A 7 days. B 10 days. C 20 days. D 30 days.

C 20 days. *All life insurance policies and annuity contracts must contain a provision permitting the owner to return the policy within 20 days of delivery for a full refund of premiums if, after examination of the policy, the purchaser is not satisfied for any reason.

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A 65 B 70 1/2 C 90 D 100

D 100 *Whole life insurance policies mature when the insured reaches the age of 100. The cash value at that time is scheduled to equal the face amount; therefore, when the insurance company pays the face amount, it also, in effect, pays the cash value.

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary? A A death benefit equal to the cash value of the policy B 50% of the death benefit C The face amount minus the premiums that would have been collected until the insured reached the age of 100 D A full death benefit

D A full death benefit *Whole life insurance policies guarantee the death benefit. If the insured lives to the age of 100, the insurance company pay the owner the face amount (equal the cash value). However, if the insured dies prior to the policy maturity date, the death benefit is paid to the beneficiary.

How many days notice must an insurer provide to an insured regarding the lapse of a policy due to outstanding loans? a) 7 days b) 10 days c) 15 days d) 30 days

d) 30 days

Which of the following losses would likely be covered under the accidental death rider? a-suicide b-mountain climbing accident c-death resulting from long term disability d-death caused by head on collision

d-death caused by head on collision

Which of the following is a risk classification used by underwriters for life insurance? 1. Excellent 2. Standard 3. Poor 4. Normal

2. Standard

An individual who violates a single provision of the Insurance Code may be fined up to A) 1,000 B) 5,000 C) 10,000 D) 15,000

A) 1,000

Which Universal Life option has a gradually increasing cash value and a level death benefit? A Juvenile life B Term insurance C Option B D Option A

D Option A

All of the following are Nonforfeiture options EXCEPT A Reduced paid-up B Interest only C Cash surrender D Extended term

B Interest only *Interest only is a settlement option.

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? 1. Collateral assignment 2. Insurable interest 3. Modification clause 4. Ownership provision

1. Collateral assignment

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? 1. Consideration 2. Good faith 3. Representation 4. Adhesion

1. Consideration

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 1. Entire contract. 2. Total contract. 3. Aleatory contract. 4. Complete contract.

1. Entire contract.

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? 1. Guaranteed insurability option 2. Dividend options 3. Guaranteed renewable option 4. Nonforfeiture options

1. Guaranteed insurability option

According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls? A 8am until 9pm B 10am until 10pm C 7am until 7pm D 7am until 9pm

A 8am until 9pm

An adjustable life policy can assume the form of: A Either term insurance or permanent insurance. B. Neither term insurance nor permanent insurance. C Only term insurance D Only permanent insurance.

A Either term insurance or permanent insurance.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A Equal to the original policy for as long as the cash values will purchase. B In lesser amounts for the remaining policy term of age 100. C Equal to the cash value surrendered from the policy D The same as the original policy minus the cash value

A Equal to the original policy for as long as the cash values will purchase.

If a health insurer does not belong to the Idaho Life and Health Guaranty Association, what limitations will be imposed on the insured's business? A It will not be authorized to transact insurance. B More frequent examinations by the Director C Nothing. Membership to this organization is optional. D Annual fine

A It will not be authorized to transact insurance.

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be A) Decreasing term B) Increasing term C) Flexible term D) Level term

A) Decreasing term

Variable life insurance is regulated by all of the following entities EXCEPT A) The U.S. Department of Treasury B) The SEC C) The Dept. of Insurance D) FINRA

A) The U.S. Department of Treasury

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death? A The former wife of the deceased insured B A minor son of the insured C A business partner of the insured D The wife of the deceased insured

B A minor son of the insured

Insurance in connection with credit transactions will NOT be subject to the provisions of the Insurance Code after what point? A After 10 years B After 15 years C After 20 years D Insurance of any kind is always subject to the provisions of the Insurance Code.

B After 15 years *All life and disability insurance in connection with loans or other credit transactions is subject to the provisions of the Insurance Code, except insurance in connection with a loan or credit transaction lasting longer than 15 years.

Which of the following statements is true? A Membership in the Life and Health Insurance Guaranty Association is optional but is encouraged with tax incentives. B All insurers must be members of the Life and Health Insurance Guaranty Association in order to transact insurance in Idaho. C All insurance consumers must be members of the Life and Health Insurance Guaranty Association in order to be protected against insurer insolvency. D Insurers only need to be members of the Life and Health Insurance Guaranty Association if the Director has reason to believe that they are at immediate risk for insolvency.

B All insurers must be members of the Life and Health Insurance Guaranty Association in order to transact insurance in Idaho.

Under an extended term nonforfeiture option, the policy cash value is converted to A A higher face amount than the whole life policy. B The same face amount as in the whole life policy. C The face amount equal to the cash value. D A lower face amount than the whole life policy.

B The same face amount as in the whole life policy.

Which of the following is TRUE about nonforfeiture values? A Policyowners do not have the authority to decide how to exercise nonforfeiture values. B They are required by state law to be included in the policy. C They are optional provisions. D A table showing nonforfeiture values for the next 10 years must be included in the policy.

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

Lyle has a $10,000 term life policy. He paid the $200 annual premium on February 1. Lyle fails to renew the policy and dies on February 28 of the following year. Minus interest, how much will the beneficiary receive from Lyle's insurance company? A $0 B $10,000 C $9,800 D $4,800

C $9,800

The following are features of the Indexed Universal Life EXCEPT A Adjustable death benefit. B Policy's cash value is dependent on the performance of the equity index. C Sale of this product requires a securities license. D Flexible premium.

C Sale of this product requires a securities license. *Indexed Universal Life policies have name of the same features as the Universal Life: flexible premiums, adjustable death benefits, and an investment component. However, the policy's cash value is dependent upon the performance of the equity index. Sale of the Indexed Universal Life products does not require a securities license.

If an individual's insurance ceases due to termination of employment, the insured is entitled to obtain an individual life insurance policy without having to provide proof of insurability. Which provision allows for this? A Replacement B Grace period C Transfer D Conversion

D Conversion *All group life insurance policies must contain a provision stating that if the insurance ceases because employment or membership is terminated, the insured is entitled to have issued by the insurer, without evidence of insurability, an individual life insurance policy without disability or other supplementary benefits. The insured must submit an application and pay the first premium within 31 days. This is called the Conversion provision.

An important fact about the financial status of an insurer was deliberately withheld. What describes this action? Loading False financial statement Defamation Twisting

False financial statement

When comparing a joint life policy to two individual life policies of the same amount on the same insured's, which is true: The joint life premium can only be paid monthly Joint life has a higher premium than the total of the two individual policies Joint life has a lower premium than the total of the two individual policies Joint life has a premium that is identical to the sum of the two individual policies

Joint life has a lower premium than the total of the two individual policies

In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits? A Blackout period B Nonpayment interval C Benefit reduction D Accumulation period

A Blackout period

What must happen when an individual policy or annuity has been personally delivered to the policyowner? A The policyowner must sign a delivery receipt. B The policyowner must pay the annual premium in full. C The producer must go over the policy with the policyowner. D A notary public must witness the exchange.

A The policyowner must sign a delivery receipt.

Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? A Vacation travel expenses B Travel expenses for family to come to the funeral C Debt cancellation D Day care

A Vacation travel expenses

Which of the following is a key distinction between variable whole life and variable universal life products? A Variable whole life has a guaranteed death benefit. B Variable universal life is regulated solely through FINRA. C Variable whole life allows policy loans from the cash value. D Variable universal life has a fixed premium.

A Variable whole life has a guaranteed death benefit. *Variable universal life insurance may or may not have a minimum death benefit, unlike variable whole life insurance which guarantees a minimum death benefit.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than A With the policy. B Upon issuance of the policy. C Within 30 days after the first premium payment was collected. D Prior to filling out an application for insurance.

A With the policy.

What type of life insurance is most commonly used for group plans? A Decreasing term B Annually renewable term C Whole life D Flexible premium whole life

B Annually renewable term

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? A The key employee is the owner and the employer is the beneficiary. B The employer is the owner and beneficiary. C The employer is the owner and the key employee is the beneficiary. D The key employee is the owner and beneficiary.

B The employer is the owner and beneficiary.

All of the following are true about variable products EXCEPT A Policyowners bear the investment risk. B The premiums are invested in the insurer's general account. C The minimum death benefit is guaranteed. D The cash value is not guaranteed.

B The premiums are invested in the insurer's general account.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? A The group has not been established for long enough. B The purpose of the group was to purchase life insurance. C Their profession poses too high of a risk for the insurer. D There are not enough people in the group to qualify for group life insurance.

B The purpose of the group was to purchase life insurance. *In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A The amount of insurance. B The type of investment. C The length of coverage. D The premium.

B The type of investment.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? A When the agent submits the application to the company and the company issues a conditional receipt B When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health C On the designated effective date D On the application date

B When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

All of the following could own group life insurance EXCEPT A An alumni group. B A debtor group. C A group needing low-cost life insurance. D A group sponsored by an employer.

C A group needing low-cost life insurance. *Groups purchasing group life insurance must be formed for a reason other than purchasing insurance.

Variable Whole Life insurance is based on what type of premium? A Flexible B Graded C Level fixed D Increasing

C Level fixed

An employee quits his job on May 15 and doesn't 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 month's 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 The insurer will pay the full death benefit from the group policy to the beneficiary. *The employee usually has a period of 31 days after terminating from the group in order to exercise the conversion option. During this time, the employee is still covered under the original group policy.

All of the following are true regarding a decreasing term policy EXCEPT A The contract pays only in the event of death during the term and there is no cash value. B The face amount steadily declines throughout the duration of the contract. C The payable premium amount steadily declines throughout the duration of the contract. D The death benefit is $0 at the end of the policy term.

C The payable premium amount steadily declines throughout the duration of the contract.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT A The employer pays a bonus to a selected employee to fund the policy. B It is considered a nonqualified employee benefit. C The policy is owned by the company. D Any type of insurance policy may be used.

C The policy is owned by the company.

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be A Determined by the health of the insured. B Based on the issue age of the insured. C Discounted. D Adjusted to the insured's age at the time of renewal.

D Adjusted to the insured's age at the time of renewal.

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 Required a premium increase each renewal.

Which of the following policies would be classified as a traditional level premium contract? A Adjustable Life B Universal Life C Variable Universal Life D Straight Life

D Straight Life

Which of the following is an example of liquidity in a life insurance contract? A The death benefit paid to the beneficiary B The flexible premium C The money in a savings account D The cash value available to the policyowner

D The cash value available to the policyowner

Which of the following best defines target premium in a universal life policy? A The maximum amount the policyowner may pay on a policy B The minimum amount to make sure the policy is annually renewable C The corridor of insurance D The recommended amount to keep the policy in force throughout its lifetime

D The recommended amount to keep the policy in force throughout its lifetime *The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

Which Universal Life option has a gradually increasing cash value and a level death benefit? 1. Option A 2. Juvenile life 3. Term insurance 4. Option B

1. Option A

Which of the following types of agent authority is also called "perceived authority"? 1. Express 2. Implied 3. Fiduciary 4. Apparent

4. Apparent

The grace period for an individual life insurance policy issued in Idaho is A 30 days. B 60 days. C 7 days. D 10 days.

A 30 days.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A It does not guarantee that the entire principal amount will be paid out. B It is a life contingency option. C The beneficiary receives the remainder of the principal amount upon the annuitant's death. D Payments can be made in installments and as a single cash refund.

A It does not guarantee that the entire principal amount will be paid out. *If the annuitant dies before the principal amount (the amount paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to his/her beneficiary. Pure life provides the highest monthly benefits for an individual annuitant.

Attempting to determine how much insurance a family would require based upon their financial objectives is known as A Needs approach. B Human life value approach. C Estate planning. D Viatical approach.

A Needs approach.

Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage? A No, the group must be formed for a purpose other than obtaining group insurance. B No, a group of individuals cannot apply for group coverage unless represented by an association or trust. C Yes, any group can apply for group coverage. D Yes, but only if the group is over 35 people.

A No, the group must be formed for a purpose other than obtaining group insurance.

In which of the following instances would the premium be tax deductible? A Premiums paid by an employer on a $30,000 group term life insurance plan for employees B Premiums paid by an individual on his/her own life insurance C Premiums paid by a mother on her son's policy D Premiums paid by an employer on the life of a key person

A Premiums paid by an employer on a $30,000 group term life insurance plan for employees

the guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following except: A Purchase of a new home B Approximately every 3 years between the ages of 25 and 40. C Birth of a child. D Marriage.

A Purchase of a new home

Which of the following entities protects policy owners, insureds, and beneficiaries from financial losses caused by insurers that are unable to perform their contractual obligations? A The Idaho Life and Health Guaranty Association B Director C Federal Association of Insurers D Insurer's Guild

A The Idaho Life and Health Guaranty Association

Which is NOT true about beneficiary designations? A The beneficiary must have insurable interest in the insured. B The beneficiary may be a natural person. C The policy does not have to have a beneficiary named in order to be valid. D Trusts can be valid beneficiaries.

A The beneficiary must have insurable interest in the insured.

Which of the following best describes what the annuity period is? A The period of time during which accumulated money is converted into income payments B The period of time from the accumulation period to the annuitization period C The period of time during which money is accumulated in an annuity D The period of time from the effective date of the contract to the date of its termination

A The period of time during which accumulated money is converted into income payments

Which of the following may request that a policy's beneficiary be changed? A The policyowner B The "new" beneficiary C Only the primary beneficiary and/or the policyholder D The original beneficiary

A The policyowner

Which of the following is TRUE regarding the premium in term policies? A The premium is level for the term of the policy. B Only level term policy has a level premium. C The premium in term policies is not based on the insured's age. D Decreasing term policy will have a decreasing premium.

A The premium is level for the term of the policy.

Insurance companies can defer a policy loan request for up to six months, unless the reason for the loan is A To pay the policy premium. B To pay for an emergency cost, which are defined by state statutes. C To pay for a dependent's educational costs. D To pay medical bills.

A To pay the policy premium. *Insurance companies can defer a policy loan request for up to six months, unless the reason for the loan is to pay the policy premium. A policy loan cannot bear interest in excess of 8% per year.

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? A Variable annuity B Annuity certain C Fixed annuity D Refund life

B Annuity certain *Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.

Which of the following entities is authorized to issue a license to an insurer? A Federal Association of Insurers B Director C MIB D State insurance board

B Director

Items stipulated in the contract that the insurer will not provide coverage for are found in the A Consideration clause. B Exclusions clause. C Insuring clause. D Benefit Payment clause.

B Exclusions clause.

Which of the following best describes a bail-out provision? A It decreases the annuity surrender value. B It allows the owner to surrender the annuity without a charge. C It waives the surrender charge for the annuitants confined to a long-term care facility. D It allows the owner to receive a higher interest rate at certain timeframe.

B It allows the owner to surrender the annuity without a charge.

What is the main purpose of the Seven-pay Test? A It guarantees the minimum interest. B It determines if the insurance policy is a MEC. C It requires level premium payments for 7 years. D It ensures that the policy benefits are paid out in 7 years.

B It determines if the insurance policy is a MEC.

Why is an equity indexed annuity considered to be a fixed annuity? A It is not tied to an index like the S&P 500. B It has a guaranteed minimum interest rate. C It has modest investment potential. D It has a fixed rate of return.

B It has a guaranteed minimum interest rate.

A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy? A Joint limited annuity B Joint life C Joint and survivor D Life with period certain

B Joint life

What was created to keep telemarketers from calling consumers who do not wish contacted? A Call Control Registry B National Do Not Call Registry C Confidential No Call Act D Freedom of Information Act

B National Do Not Call Registry

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A Medical exam and parents' medical history B Proof of insurability is not required C Medical exam D Her parents' federal income tax receipts

B Proof of insurability is not required

All of the following statements about equity index annuities are correct EXCEPT A They invest on a more aggressive basis aiming for higher returns. B The annuitant receives a fixed amount of return. C They have a guaranteed minimum interest rate. D The interest rate is tied to an index such as the Standard & Poor's 500.

B The annuitant receives a fixed amount of return.

If the annuitant dies during the accumulation period, who will receive the annuity benefits? A The annuitant's estate B The beneficiary C The annuity owner D The insurance company

B The beneficiary

Which of the following is NOT true regarding a Variable Universal Life Polcy A The cash values are not guaranteed. B The death benefit is fixed. C The policyowner can participate in some of the investment decisions. D The minimum death benefit is guaranteed.

B The death benefit is fixed.

An insurance company has become insolvent. Many of its insureds have filed claims for benefits. Which of the following is true? A The insureds will recover their benefits through a class-action lawsuit. B The insureds will receive their benefit payments through the Life and Health Insurance Guaranty Association. C The insureds will receive benefits through a national insolvency program. D The insureds will not receive benefits unless the insurer becomes solvent again.

B The insureds will receive their benefit payments through the Life and Health Insurance Guaranty Association.

What happens if a deferred annuity is surrendered before the annuitization period? A Deferred annuities cannot be surrendered prior to the annuitization period. B The owner will receive the surrender value of the annuity. C The owner will only receive a refund of premium. D The insurer can only apply the surrender value toward another annuity.

B The owner will receive the surrender value of the annuity.

An insured receives his life insurance policy and is not satisfied with the provisions. He decides to return the policy within 25 days. What percentage of his premium will he be refunded? A) 100% B) 0% C) 50% D) 90%

B) 0%

For how long is an insurance company allowed to defer policy loan requests? A 30 days B 60 days C 6 months D 1 year

C 6 months

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? A Paid-up options B Extended term C Cash surrender D Reduced paid-up

C Cash surrender

What provision in a life or health insurance policy extends coverage beyond the premium due date? A Automatic premium loan B Waiver of premium C Grace period D None of the above

C Grace period

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A The payments are not guaranteed for life. B The insurer determines the amount for each payment. C It is a life contingency option. D It will pay the benefit only for a designated period of time.

C It is a life contingency option. *This option pays for a specific amount of time only, and there are no life contingencies.

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? A It is taxable only if it exceeds the amounts paid for premiums by 50%. B It is automatically taxable. C It is only taxable if the cash value exceeds the amount paid for premiums. D It is not considered to be taxable.

C It is only taxable if the cash value exceeds the amount paid for premiums.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? A Risk exposure B Morbidity C Life expectancy D Mortality rate

C Life expectancy

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? A The Consideration Clause B Assignment Rights C Owner's Rights D The Entire Contract Provision

C Owner's Rights

Which of the following riders would NOT cause the Death Benefit to increase A Cost of Living Rider B Accidental Death Rider C Payor Benefit Rider D Guaranteed Insurability Rider

C Payor Benefit Rider It does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A The beneficiary will receive the lump sum, plus interest. B The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. C The beneficiary will only receive payments of the interest earned on the death benefit. D The beneficiary must pay interest to the insurer.

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

Which of the following is true? A Insurance policies are never assignable. B Whether a policy is assignable is a decision reserved exclusively for the policyholder. C The terms of the policy will state whether the policy is assignable and to what extent. D Insurance policies are always assignable.!

C The terms of the policy will state whether the policy is assignable and to what extent.

The minimum interest rate on an equity indexed annuity is often based on A The returns from the insurance company's separate account. B The annuitant's individual stock portfolio. C The insurance company's general account investments. D An index like Standard & Poor's 500.

D An index like Standard & Poor's 500.

When an annuity is written, whose life expectancy is taken into account? A Beneficiary B Life expectancy is not a factor when writing an annuity. C Owner D Annuitant

D Annuitant *The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.

An insured receives an annual life insurance dividend check. What term best describes this arrangement? A Reduction of Premium B Annual Dividend Provision C Accumulation at Interest D Cash option

D Cash option

All of the following are mandatory life insurance policy provisions EXCEPT A Misstatement of age. B Incontestability. C Grace period. D None of the above. All are mandatory.

D None of the above. All are mandatory.

During replacement of life insurance, a replacing insurer must do which of the following? A Guarantee a replacement for each existing policy B Designate a new producer for a replaced policy C Send a copy of the Notice Regarding Replacement to the Department of Insurance D Obtain a list of all life insurance policies that will be replaced

D Obtain a list of all life insurance policies that will be replaced *The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

The premiums paid by the employer in a business life insurance policy are A Tax deductible by the employee. B Always taxable to the employee. C Never taxable to the employee. D Tax deductible by the employer.

D Tax deductible by the employer.

Which of the following is NOT true regarding Equity Indexed Annuities? A The insurance company keeps a percentage of the returns. B They have guaranteed minimum interest rates. C They are less risky than variable annuities. D They earn lower interest rates than fixed annuities.

D They earn lower interest rates than fixed annuities. *Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities.