Insurance liscense

dividend options

Accumulated at interest Reduction of premium. Paid-up additions.

#4. When is the earliest a policy may go into effect?

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

When would a 20-pay whole life policy endow? a) At the insured's age 65 b) After 20 payments c) In 20 years d) 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 statements is true about businessowners policies (BOPs)? a) If a business wants to customize a BOP, the business must convert to a personal lines policy. b) BOPs may be customized by adding optional coverages. c) Insurers prefer to exclude standard coverages in BOPs as a way of offering customized coverage. d) Because of federal regulations, BOPs cannot be customized.

BOPs may be customized by adding optional coverages.

To what organization must all admitted insurers belong?

b) The Insurance Guaranty Association

Nonforfeiture options

cash surrender, extended term and reduced paid-up. Interest only is a settlement option.

37. What are the two components of a universal policy? (Choose from the following options) 1. Mortality cost and interest 2. Separate account and policy loans 3. Insurance and cash account 4. Insurance and investments

3. Insurance and cash account

What kind of deductible is applied between basic coverage and major medical coverage?

Corridor deductible

An agent selling variable annuities must be registered with a) FINRA. b) Department of Insurance. c) The Guaranty Association. d) SEC.

FINRA -securities license in addition to a life agent's license in order to sell variable annuities.

This policy provision gives an insured a certain number of days to go over the policy and make sure that it covers what is expected.

Income for 2 or more recipients until they die.

Children rider premium

It remains the same no matter how many children are added to the policy.

Which two terms are associated directly with the premium?

Level or flexible

The paid-up addition option uses the dividend a) To reduce the next year's premium. b) To accumulate additional savings for retirement. c) To purchase a smaller amount of the same type of insurance as the original policy. d) To purchase a one-year term insurance in the amount of the cash value.

To purchase a smaller amount of the same type of insurance as the original policy.

Which of the following premium payment modes will incur the lowest overall payment? a) Annual b) Semi-annual c) Quarterly d) Monthly

a) Annual Annual premiums are the only modes of payment that do not result in service fee, so the overall payment will be lower.

Which of the following is true about the premium on the children's rider in a life insurance policy? (Choose from the following options) 1. It remains the same no matter how many children are added to the policy. 2. It decreases when the oldest child reaches the age of 21. 3. It increases when a newborn baby is added to the policy. 4. It decreases when an adopted child is added to the policy.

1. It remains the same no matter how many children are added to the policy.

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?

Limited-pay Life

at the end of 10 years level term policy

The insured may renew the policy for another 10 years, but at a higher premium rate.

16. M is the owner of a $100,000 life policy with a triple indemnity rider for accidental death. When M is killed in a car accident, it is determined that the accident was his fault. The triple indemnity rider in M's policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. Since M contributed to his death, the triple indemnity rider is void, but the beneficiary will still receive the policy's face amount.

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 As a general rule, premiums paid for life insurance are not tax deductible. The exception to this rule is when an employer buys group term life insurance for his employees since it is considered a business expense.

a) Premiums paid by an employer on a $30,000 group term life insurance plan for employees As a general rule, premiums paid for life insurance are not tax deductible. The exception to this rule is when an employer buys group term life insurance for his employees since it is considered a business expense.

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) Discounted. b) Adjusted to the insured's age at the time of renewal. c) Determined by the health of the insured. d) Based on the issue age of the insured.

b) Adjusted to the insured's age at the time of renewal If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? a) Nonforfeiture Clause b) Common Disaster Clause c) Spendthrift Clause d) Settlement Clause The Common Disaster Clause provision states that when an insured and beneficiary die in a common accident, and the beneficiary dies before or within a specific period of time after the insured, the insurer will proceed as if the insured outlived the beneficiary.

b) Common Disaster Clause

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? a) Fixed-amount b) Life income with period certain c) Joint and survivor d) Single life The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

b) Life income with period certain

Which of the following is a characteristic of a Reciprocal Insurance Exchange? a) Stock holders share in any profits b) Issues nonassessable policies c) The chief administrator of the insurer is called an "attorney-in-fact". d) Normally write all lines of insurance

c A "reciprocal" is an unincorporated aggregation of individuals, called subscribers, who exchange insurance risks. If the premiums charged for coverage are not sufficient to pay the losses of the group, subscribers may be assessed an additional premium. A reciprocal is administered by an attorney-in-fact who is empowered to bind each subscriber to assume a share of the losses of the group.

Which policy provision found on the first page of the policy makes clear that both parties to the contract must contribute something of value for the contract to be effective?

consideration clause

What are the two components of a universal policy?

insurance and cash account

22. Which of the following licensees are not compensated directly related to the amount of insurance sold?

insurance consultant not insurance adjuster

Group life insurance policies must permit covered employees to continue coverage for themselves and dependents (if covered under the policy) for a specified period of time if their group coverage is terminated for any of the following reasons, EXCEPT a) Termination because of a slow-down in the business. b) Termination because of illness. c) Reduction of hours so the employee is no longer classified as full-time. d) Termination because of misconduct on the part of the employee.

misconduct

The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the

spendthrift clasue

Pete borrowed $10,000 from the bank. This demand loan, plus the interest, is to be repaid in 6 months. What type of insurance coverage would be used to secure this loan? a) Increasing term coverage. b) Level term coverage. c) Endowment insurance. d) Decreasing term coverage. Demand loans are secured with level term coverage for the term of the note.

level term coverage

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

A Modified Endowment Contract.

Which of the following is NOT true regarding a nonqualified retirement plan? a) Contributions are not currently tax deductible. b) It can discriminate in benefits and selecting participants. c) Earnings grow tax deferred. d) It needs IRS approval.

D irs approval

44. All of the following are features and requirements of the Living Needs Rider EXCEPT (Choose from the following options) 1. The remainder of the policy proceeds is payable to the beneficiary at the insured's death. 2. It provides funds for medical and nursing home expenses to a terminally ill insured. 3. Diagnosis must indicate that death is expected within 3 years. 4. It is usually available at no additional charge.

Diagnosis must indicate that death is expected within 3 years.

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 a) Shorten the contestability period. b) Eliminate pre-existing conditions. c) Help him meet a sales quota for that period. d) Lower the insured's premium.

Lower Premium An agent may backdate an application for up to 6 months to accomplish a lower premium rate for the insured.

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? a) Incontestable clause b) Grace period c) Reinstatement provision d) Waiver of premium provision

Reinstatement Provision A lapsed policy may be reinstated within 3 years by paying back premiums, with interest, and proving insurability.

24. Which of the following would help prevent a universal life policy from lapsing? (Choose from the following options) 1. Adjustable premium 2. Corridor of insurance 3. Target premium 4. Face amount

Target premium 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.

For an individual who is NOT covered by an employer-sponsored plan, IRA contributions are a) Never tax deductible. b) Partially tax deductible depending on the income level. c) Tax deductible. d) Deducted based on the income level.

Tax Deductible

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?

The date of medical exam

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

The death benefit is not fixed, and may increase or decrease over the life of the policy depending on the investment performance of the underlying sub-account. It cannot, however, decrease below the initial face amount of the policy.

The paid-up addition option uses the dividend a) To reduce the next year's premium. b) To accumulate additional savings for retirement. c) To purchase a smaller amount of the same type of insurance as the original policy. d) To purchase a one-year term insurance in the amount of the cash value.

to purchase smaller amount of the same type of insurance as the original policy

when several similar or related small companies join forces to create a large pool of people that the insurer will accept as a group?

Multiple-employer trusts

Liability insurance would pay for losses caused by a) The insured. b) A third party. c) The insurer. d) An uninsured individual.

the insured

In personal auto policies, which of the following types of coverage gives a total amount per claim to be used wherever needed, instead of setting maximums for bodily injury and property damage?

combined single limit (CSL)

. Life income joint and survivor settlement option guarantees

income of 2 or more till they die