INSURANCE PRACTICE TEST REVIEW

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

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

Survivor protection.

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

The plan must be temporary.

According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

The primary beneficiary died before the insured.

If an applicant submits the initial premium with an application, which action constitutes acceptance?

The underwriters approve the application.

If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will Adjust the death benefit to what the premium would have

purchased at the actual age or gender

Which of the following would be required to become licensed as an insurance producer?

A customer service representative who solicits no more than one policy a year

Agent R is charged with committing a crime in another state, and is sentenced to 1 year in prison. Who is required to report the charges to the Florida Department of Insurance?

Agent R

If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?

Immediately

A Return of Premium term life policy is written as what type of term coverage?

Increasing

To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?

Insurable interest

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?

Joint life

J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan?

Qualified

When one insurer buys insurance from another company to minimize the effects of catastrophic losses, they are

Reinsuring

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer.

Who does the spendthrift clause in a life insurance policy protect?

The beneficiary

What happens to the face amount of a whole life policy if the insured reaches the age of 100?

The face amount is paid to the insured.

Which of the following bears the investment risk in a variable life insurance policy?

The policy owner

Which of the following is TRUE regarding premium in a 10-year level premium policy?

The premium will remain level for 10 years.

A policyowner who purchases an individual insurance policy and then asks for a refund within 2 weeks after the policy was delivered will receive

A full refund of the premium.

As it relates to life settlements, the term "owner" means

The owner of the original life policy.

What is the purpose or key-person insurance?

To cover decreased business revenues as a result of the death of a key employee

Which of the following types of insurance is investment based, has a level fixed premium, and a non guaranteed cash value?

Variable whole life

An insured is issued a life insurance policy in Florida and wishes to return it for a refund. How many days does the insured have for such an action?

14

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

Which of the following types of policies would NOT be subject to Florida regulations on life insurance solicitation?

Annuities

In whole life insurance, when is the policy cash value scheduled to equal the face amount?

At age 100

A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will

Continue to increase

Which of the following statements is true regarding SIMPLE plans?

Contributions and earnings are tax-deferred until funds are withdrawn.

Life insurance death proceeds are

Generally not taxed as income.

A life insurance application, all of the following signatures will be required EXCEPT

The home office underwriter

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called

Cost of living rider.

What are the two components of a universal policy?

Insurance and cash account

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT

Reports may be sent to anyone who requests one.

In a life insurance policy is purchased by someone who has no insurable interest in the insured, it is considered

STOLI.

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

Which of the following losses would likely be covered under the Accidental Death rider?

Death caused by a head-on collision.

If an insurer appoints a customer representative, the appointment needs to be filed with which of the following entities?

Department

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?

Grace period

The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the

Insuring clause

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

Interest-sensitive Whole Life.

Which of the following best describes pure life annuity?

It provides the highest monthly benefits.

If an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answers to those questions?

Never; the insurer has waived its right to those answers by issuing the policy

Joe moved last year and forgot to notify the Department of its change of address. He was charged a $250 fine. This year, Joe moves again and forgets to notify the Department within the required time. What will Joes penalty be?

Minimum fee of $500 or suspension/ revocation of license

Which of the following best defines the unfair trade practice or rebating?

Offering an inducement of something of value not specified in the policy

Key person insurance can provide protection for all of the following economic losses to a business EXCEPT

Pay the death benefit to the estate of the insured.

What does the application of contract of adhesion mean?

Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?

Size of each installment

Because of an injury, an insured has been unable to work for 9 months. He paid the policy premium for his life insurance for the first 6 months of disability, but didn't have to pay anything for the remaining 3 months, yet the policy remained in force. The policy includes

Waiver of premium

If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policy owner?

When the policy is delivered

A married couple purchases a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?

Payor benefit

All of the following statements about mutual insurance companies are correct EXCEPT

Policy dividends issued by mutual companies are guaranteed and not taxable.

Which of the following groups is NOT eligible for group life insurance?

Social groups

A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years?

7 years

Which of the following is a correct statement about annuities?

Fixed annuities do not provide protection against inflation

Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in application?

The application contains material misstatements.