Insurance test
D6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies? A30 days B3 months C5 months D6 months
Term policies
provide for the greatest amount of coverage for the lowest premium.
DDebtor in creditor
Which of the following is NOT an example of insurable interest? ABusiness partners in each other BEmployer in employee CChild in parent DDebtor in creditor
BSeparate accounts.
A domestic insurer issuing variable contracts must establish one or more AGeneral accounts. BSeparate accounts. CLiability accounts. DAnnuity accounts.
AA peril
A tornado that destroys property would be an example of which of the following? AA peril BA pure risk CA loss DA physical hazard
AConditional
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? AConditional BAdhesion CPersonal DUnilateral
AConvertible Term Policy.
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a AConvertible Term Policy. BRenewable Term Policy. CDecreasing Term Policy. DWhole Life Policy.
DLevel term
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? ATerm to specified age BOrdinary life policy CLimited pay whole life DLevel term
CThe original age is used for premium determination
What is the advantage of reinstating a policy instead of applying for a new one? AThe face amount can be increased BThe cash values have gained interest while the policy was lapsed CThe original age is used for premium determination DProof of insurability is not required
BIt is intended to provide coverage on a date prior to the policy issue.
What is the purpose of a conditional receipt? AIt is given only to applicants who fully prepay the premium. BIt is intended to provide coverage on a date prior to the policy issue. CIt guarantees that a policy will be issued in the amount applied for. DIt serves as proof that the applicant has been determined insurable.
DIt is reduced to the amount of what the cash value would buy as a single premium.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? AIt is increased when extra premiums are paid. BIt decreases over the term of the policy. CIt remains the same as the original policy, regardless of any differences in value. DIt is reduced to the amount of what the cash value would buy as a single premium.
CConsideration
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? AContract of adhesion BAcceptance CConsideration DLegal purpose
BReturn of premium
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? APremature death BReturn of premium CCost of living DDecreasing term
A10 days
If a hearing is scheduled for a producer who has violated regulations regarding unfair trade practices, the Superintendent must send a prior notice within how many days of the hearing? A10 days B14 days C20 days D30 days
DAdjusted to the insured's age at the time of renewal.
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 ADetermined by the health of the insured. BBased on the issue age of the insured. CDiscounted. DAdjusted to the insured's age at the time of renewal.
CProof of insurability is not required.
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? AHer parents' federal income tax receipts BMedical exam and parents' medical history CProof of insurability is not required. DMedical exam
CFunding against general company financial loss.
All of the following are business uses of life insurance EXCEPT AFunding against financial loss caused by the death of a key employee. BFunding business continuation agreements. CFunding against general company financial loss. DCompensating executives.
DThe loss may be intentional.
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT AThe loss must not be catastrophic. BThere must be a sufficient number of homogeneous exposure units to make losses reasonably predictable. CThe loss produced by the risk must be definite. DThe loss may be intentional.
BTo create an estate
Which of the following is the best reason to purchase life insurance rather than annuities? ATo liquidate a sum of money over a lifetime BTo create an estate CTo liquidate a sum of money over a period of years DTo create regular income payments
CAdmitted
Which of the following is the closest term to an authorized insurer? ALicensed BLegal CAdmitted DCertified
BTo purchase a smaller amount of the same type of insurance as the original policy.
The paid-up addition option uses the dividend ATo accumulate additional savings for retirement. BTo purchase a smaller amount of the same type of insurance as the original policy. CTo purchase a one-year term insurance in the amount of the cash value. DTo reduce the next year's premium.
DTarget premium
Which of the following would help prevent a universal life policy from lapsing? AFace amount BAdjustable premium CCorridor of insurance DTarget premium
BSpecified.
All of the following are beneficiary designations EXCEPT APrimary. BSpecified. CTertiary. DContingent.
Groups purchasing group life insurance must
must be formed for a reason other than purchasing insurance.
BThe premiums are invested in the insurer's general account.
All of the following are true about variable products EXCEPT APolicyowners bear the investment risk. BThe premiums are invested in the insurer's general account. CThe minimum death benefit is guaranteed. DThe cash value is not guaranteed.
ALoss.
The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as ALoss. BExposure. CHazard. DRisk.
BThe producer
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom? AThe applicant BThe producer CThe beneficiary of the applicant DThe insurance company
CContracts of adhesion.
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as AAleatory contracts. BBinding contracts. CContracts of adhesion. DUnilateral contracts.
BFree of federal income taxation.
If taken as a lump sum, life insurance proceeds to beneficiaries are passed AWithout interest. BFree of federal income taxation. CTax-deductible. DPart tax-free and part taxable.
CCash surrender
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? APaid-up options BExtended term CCash surrender DReduced paid-up
DDiscrimination.
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered ATwisting. BControlled business. CAdverse selection. DDiscrimination.
DWhen the insured reaches age 100
When would a 20-pay whole life policy endow? AAt the insured's age 65 BAfter 20 payments CIn 20 years DWhen the insured reaches age 100
ALife Paid-up at Age 65
Which of the following is an example of a limited-pay life policy? ALife Paid-up at Age 65 BRenewable Term to Age 70 CLevel Term Life DStraight Life
CA salaried employee who advertises and solicits insurance
Which of the following would be required to be licensed as an insurance producer? AA salaried full-time employee who furnishes information for group insurance BAn insurance company director who performs executive, administrative and managerial duties CA salaried employee who advertises and solicits insurance DA person whose activities are limited to producing insurance advertisements
DInsurable interest and consent
A life insurance policy has a legal purpose if both of which of the following elements exist? AUnderwriting and reciprocity BOffer and counteroffer CPolicyowners and named beneficiaries DInsurable interest and consent
ARequired a premium increase each 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 ARequired a premium increase each renewal. BBuilt cash values. CRequired proof of insurability every year. DDecreased death benefit at each renewal.
DRevocable beneficiary.
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the ASecondary beneficiary. BContingent beneficiary. CIrrevocable beneficiary. DRevocable beneficiary.
AOn the agent's birthday every odd-numbered year
An insurance agent was born in 1983. He obtained his New York insurance license in 2014. When will the agent's license expire? AOn the agent's birthday every odd-numbered year BJanuary 1st every even-numbered year CEvery year on the license issue date DEvery 2 years on the license issue date
BCaptive agent.
An insurance producer who by contract is bound to write insurance for only one company is classified as a/an AIndependent producer. BCaptive agent. CSolicitor. DBroker.
BInterest
During partial withdrawal from a universal life policy, which portion will be taxed? ALoan BInterest CCash value DPrincipal
DAny form of life insurance
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? ATerm insurance only BPermanent insurance only CUniversal life insurance only DAny form of life insurance
AThe amount to be repaid under the contract.
The initial amount of credit life insurance may NOT exceed AThe amount to be repaid under the contract. BAn amount set by statute and adjusted regularly for inflation. CThe borrower's monthly income. DThe borrower's annual income.
AEntire contract.
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 AEntire contract. BTotal contract. CAleatory contract. DComplete contract.
CDecember 31 of the year that contains the fifth anniversary of the owner's death.
When must an IRA be completely distributed when a beneficiary is not named? ADecember 31 of the year following the year of the owner's death. BDue date of the deceased owner's final tax return including extensions. CDecember 31 of the year that contains the fifth anniversary of the owner's death. DDue date of beneficiary's tax return including extensions.
AWhat requirements the producer needed to meet to obtain the insurance license.
Which of the following is NOT required for a producer to tell a prospect? AWhat requirements the producer needed to meet to obtain the insurance license. BFrom what outside sources the insurer would seek information regarding the insured CHow the insurer would use any outside information regarding the applicant DAn explanation of products that the insurer is selling
DNeed is predicted using the number of years until the insured's retirement.
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? ACoverage is based on the predicted needs of that family. BThe death of an insured must be premature. CIt must be assumed that the death of the insured will occur immediately. DNeed is predicted using the number of years until the insured's retirement.
CWarranty
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? AIndemnity BRepresentation CWarranty DConcealment
CThe policyowner is entitled to policy loans.
Which of the following statements is correct regarding a whole life policy? AThe policy premium is based on the attained age. BThe death benefit may increase or decrease during the policy period. CThe policyowner is entitled to policy loans. DCash values are not guaranteed.
AUniversal life
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? AUniversal life BFlexible life CVariable life DAdjustable life
AReplacement rule
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? AReplacement rule BReinstatement rule CConversion rule DDisclosure rule
DThe balance of the loan will be taken out of the death benefit.
f a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? AThe policy beneficiary receives the full death benefit. BThe policy beneficiary takes over the loan payments. CThe policy is rendered null and void. DThe balance of the loan will be taken out of the death benefit.
C$200,000
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? A$0 B$100,000 C$200,000 D$100,000 plus the total of paid premiums
AIf the primary beneficiary predeceases the insured
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? AIf the primary beneficiary predeceases the insured BThe primary and contingent beneficiaries share death benefits equally CWith the primary beneficiary's written consent DIf the insured died from accidental means
DTerm
Children's riders attached to whole life policies are usually issued as what type of insurance? AVariable life BAdjustable life CWhole life DTerm
AEqual to the original policy for as long as the cash values will purchase.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? AEqual to the original policy for as long as the cash values will purchase. BIn lesser amounts for the remaining policy term of age 100. CEqual to the cash value surrendered from the policy DThe same as the original policy minus the cash value
DIndemnity
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? AStop-loss BConsideration CReasonable expectations DIndemnity
BReduced paid-up
Which nonforfeiture option provides coverage for the longest period of time? AAccumulated at interest BReduced paid-up CExtended term DPaid-up option
CA minor son of the insured
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? AThe wife of the deceased insured BThe former wife of the deceased insured CA minor son of the insured DA business partner of the insured
CUniversal Life - Option A
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? AEquity Indexed Universal Life BVariable Universal Life CUniversal Life - Option A DUniversal Life - Option B
AThe cost of coverage is based on the ratio of men and women in the group.
Which of the following statements about group life is correct? AThe cost of coverage is based on the ratio of men and women in the group. BThe premiums are higher than in an individual policy because there is no medical exam. CThe group sponsor receives a Certificate of Insurance. DThe policy can be converted to an individual term insurance policy.
APremium amounts and surrender values
Which of the following will be included in a policy summary? APremium amounts and surrender values BCopies of illustrations and application CComparisons with similar policies DPrimary and secondary beneficiary designations
BIts premium steadily decreases over time, in response to its growing cash value.
Which statement is NOT true regarding a Straight Life policy? AIt has the lowest annual premium of the three types of Whole Life policies. BIts premium steadily decreases over time, in response to its growing cash value. CThe face value of the policy is paid to the insured at age 100. DIt usually develops cash value by the end of the third policy year.
BA producer who owns his own field office.
Who is included in the definition of an agent? AAgents of title insurance companies. BA producer who owns his own field office. CA salaried employee of the insurer who does not solicit insurance or receive a commission DAn agent who devotes only 25% of his time to the solicitation of insurance contracts and does not receive commission
DThe employer is the owner and beneficiary.
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? AThe employer is the owner and the key employee is the beneficiary. BThe key employee is the owner and beneficiary. CThe key employee is the owner and the employer is the beneficiary. DThe employer is the owner and beneficiary.
DThe amount of the distribution is reduced by the amount of a 20% withholding tax.
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? ANo taxes are due since the plan participant is over age 59 1/2. BThere is a 10% early withdrawal penalty. CThe amount distributed is subject to ordinary income tax.
ACost of Living Rider
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? ACost of Living Rider BValue Adjustment Rider CReturn of Premium Rider DInflation Rider
DVariable
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? ATerm BSecurities CStock DVariable
CCash value
What limits the amount that a policyowner may borrow from a whole life insurance policy? AAmount stated in the policy BFace amount CCash value DPremiums paid
BPayor Benefit
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? AWaiver of Premium BPayor Benefit CJumping Juvenile DJuvenile Premium Provision
BThe insureds' medical history
Which of the following are generally NOT considered when underwriting group insurance? AThe size of the group BThe insureds' medical history CThe nature of the group DThe group's past claim experience
CFunds exceeding the premium paid are taxable as ordinary income.
Which is TRUE about the cash surrender nonforfeiture option? AThe policy remains active for some time after the policyholder opts for cash surrender. BThe policyholder receives the original cash value of the policy. CFunds exceeding the premium paid are taxable as ordinary income. DAfter the cash surrender, the insured is covered for a grace period of 1 month.
AThe performance of the policy portfolio
Which of the following determines the cash value of a variable life policy? AThe performance of the policy portfolio BThe company's general account CThe policy's guarantees. DThe premium mode
BSettlement option.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a ARollover. BSettlement option. CNontaxable exchange. DNonforfeiture option.
AMust allow the policyowner to return the policy for a full refund.
Regarding the free-look provision, the insurance company AMust allow the policyowner to return the policy for a full refund. BCannot charge a premium after 10 days. CMust issue a free policy for 30/31 days. DMust issue a free policy for 10 days.
BIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
Which of the following best describes the MIB? AIt is a rating organization for health insurance. BIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. CIt is a government agency that collects medical information on the insured from the insurance companies. DIt is a member organization that protects insured against insolvent insurers.
AA policy summary
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? AA policy summary BA notice regarding replacement CA privacy notice DA buyer's guide
ARescission.
After issuing a policy, an insurance company discovers that the policyholder concealed information on the application. The insurance company wants to cancel the policy and give back the money the policyholder has paid. This is an example of ARescission. BRefund. CContestability. DRenewal.
DThe plan is funded by permanent insurance only.
All of the following are true of key person insurance EXCEPT AThere is no limitation on the number of key employee plans in force at any one time. BThe employer is the owner, payor and beneficiary of the policy. CThe key employee is the insured. DThe plan is funded by permanent insurance only.
DReinstatement provision
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? AWaiver of premium provision BIncontestable clause CGrace period DReinstatement provision
DAttending Physician Statement
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? AA complete medical record BSworn health affidavit from the applicant CStatement of Continued Good Health DAttending Physician Statement
BInspection report.
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) AAttending Physician Statement. BInspection report. CMedical Information Bureau report. DMedical examination.
AThe policyowner can specify the way proceeds are split in the policy.
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? AThe policyowner can specify the way proceeds are split in the policy. BThe way proceeds are split between beneficiaries is decided by which type of policy is chosen. CLife insurance policies may have only one beneficiary. DThe proceeds will be split evenly between the two beneficiaries.
CWhen the application is signed and a check is given to the agent
When is the earliest a policy may go into effect? AWhen the insurer approves the application BAfter the underwriter reviews the policy CWhen the application is signed and a check is given to the agent DWhen the first premium is paid and the policy has been delivered
DExtended Term
Which nonforfeiture option has the highest amount of insurance protection? AConversion BDecreasing Term CReduced Paid-up DExtended Term
BThe name of the primary and secondary beneficiaries
Which of the following is NOT required on an illustration used in the sale of a life insurance policy? AUnderwriting or rating classification upon which the illustration is based BThe name of the primary and secondary beneficiaries CGeneric name of policy DName of insurer
CAutomatic premium loan
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? AReinstatement BReduced paid-up option CAutomatic premium loan DExtended term
BPayor Benefit Rider
Which of the following riders would NOT cause the Death Benefit to increase? AAccidental Death Rider BPayor Benefit Rider CGuaranteed Insurability Rider DCost of Living Rider
CThe interest is not taxable since it remains inside the insurance policy.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT AThe interest is credited at a rate specified by the policy. BThe policyholder has the right to withdraw the accumulations at any time. CThe interest is not taxable since it remains inside the insurance policy. DThe annual dividend is retained by the company.
AAleatory
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? AAleatory BGood health CAdhesion DConditional
BThose who have been insured under the plan for at least 5 years
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? AThose who have no history of claims BThose who have been insured under the plan for at least 5 years CThose who have worked in the company for at least 3 years DThose who have dependents
AUnilateral
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? AUnilateral BUnidirectional CAleatory DConditional
DDividends are not taxable.
Which of the following is true regarding taxation of dividends in participating policies? ADividends are taxable only after a certain amount is accumulated annually. BDividends are taxable in some life insurance policies and nontaxable in others. CDividends are considered income for tax purposes. DDividends are not taxable.
AGuaranteed and Current.
A Universal Life insurance policy has two types of interest rates that are called AGuaranteed and Current. BOption A and Option B. CFixed and Variable. DMinimum and Target.
BIncreases annually.
Annually renewable term policies provide a level death benefit for a premium that AFluctuates. BIncreases annually. CDecreases annually. DRemains level.
DDeath benefit
Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type? APremium BCash value CNonforfeiture values DDeath benefit
CTax deductible.
Traditional IRA contributions are ANever tax deductible. BPartially tax deductible depending on the income level. CTax deductible. DDeducted based on the income level.
CFace amount
What does "level" refer to in level term insurance? ACash value BInterest rate CFace amount DPremium
CTransfer
When an individual purchases insurance, what risk management technique is he or she practicing? ASharing BRetention CTransfer DAvoidance
ABoth the principal and interest will be liquidated over a selected period of time.
Which of the following best describes fixed-period settlement option? ABoth the principal and interest will be liquidated over a selected period of time. BOnly the principal amount will be paid out within a specified period of time. CThe death benefit must be paid out in a lump sum within a certain time period. DIncome is guaranteed for the life of the beneficiary.
B40
A candidate for a life and health agent license would need to complete how many hours of prelicensing education? A20 B40 C50 D90
BNotice Regarding Replacement
Which of the following documents must be provided to the policyowner or applicant during policy replacement? APolicy illustrations BNotice Regarding Replacement CDisclosure Authorization Form DBuyer's Guide and Policy Summary
DA whole life insurance policy is exchanged for a term insurance policy.
Which of the following is NOT an allowable 1035 exchange? AA whole life insurance policy is exchanged for a Universal life insurance policy. BAn annuity is exchanged for another annuity. CA life insurance policy is exchanged for an annuity.
