Life, Accident and Health Insurance
An underwriter may obtain information on an applicants finances, character, hobbies and habits by ordering a(n)... A. Agent's report B. Medical Information Bureau report C. Investigative consumer report D. Field underwriter report
C. Investigative consumer report
An immediate annuity purchased with the face amount at death or with the cash value at surrender can be referred as which of the following? A. Rollover option B. Settlement option C. Comprehensive annuity D. Functional annuity
B. Settlement option
A policy owner cancels his life policy but instructs the insurance company to transfer the cash value of the policy to an annuitant. This nontaxable transaction is called a ... A. Rollover B. Direct transfer C. 1035 exchange D.. Qualified distribution
C. 1035 exchange
Which of the following is NOT a term for the period of time during which annuitant of the beneficiary receives income? A. Pay-out period B. Liquidation period C. Accumulation period D. Annuitization period
C. Accumulation period
The death protection component of Universal Life Insurance is always... A. Variable Life B. Increasing Term C. Annually Renewable Term D. Whole life
C. Annually Renewable Term
A tax-sheltered annuity is a special tax-favored retirement plan available to... A. Anyone B. Certain age groups only C. Certain groups of employees only D. Certain groups depending on factors such as race, gender and age
C. Certain groups of employees only
In life insurance, an insurable interest between the policy owner and the insured must exist... A. At the time of death B. When the policy is delivered C. On the date specified in the policy D. At the time of application
D. At the time of application
Life income joint and survivor settlement option guarantees... A. Payment of interest on death proceeds B. Payout of the entire death benefits C. Equal payments to all recipients D. Income for 2 or more recipients until they die
D. Income for 2 or more recipients until they die
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may... A. Require a higher premium B. Extend the open enrollment period C. Increase medical requirements on existing members D. Require evidence of insurability
D. Require evidence of insurability
In a deferred annuity, the difference between the accumulation value and the surrender value is the... A. Front-end load B. Mortality charge C. Interest D. Surrender charge
D. Surrender charge
In life insurance, which of the following is NOT required to have an insurable interest in the insured? A. The applicant B. The policy owner C. The insured D. The beneficiary
D. The beneficiary
When an annuity is written, whose life expectancy is taken into account? A. Annuitant B. Beneficiary C. Owner D. Life expectancy is not a factor when writing an annuity
A. Annuitant
Which type of retirement account allows contributors to continue beyond age 70.5 and does not force discrimination to start at age 70.5? A. Roth IRA B. Traditional IRA C. Spousal IRA D. Flexible IRA
A. Roth IRA
In the state of NY, investors can contribute up to a lifetime maximum for the college expenses of a designated beneficiary. What is the name of this plan? A. Section 529 Plan B. Section 457 Plan C. Scholarship fund D. Roth IRA
A. Section 529 Plan
Which of the following policies would NOT offer a policy loan option? A. Term life B. Whole life C. Universal life D. Variable universal life
A. Term life
All of the following statements are true regarding tax qualified annuities EXCEPT A. Withdrawls are taxed B. Employer contributions are not tax deductible C. Tax accumulation is deferred D. They must be approved by the IRS
B. Employer contributions are not tax deductible
Which of the following premium modes would result int he highest annual cost for a life insurance policy? A. Semi-annual B. Annual C. Monthly D. Quarterly
C. Monthly
Level premium term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of the specified period of time, the policy premium will be... A. Adjusted to the insureds age at the time of renewal B. Level with the previous premium C. Decreased because the insured is renewing the contract D. Waived
A. Adjusted to the insureds age at the time of renewal
Which concept is associated with exclusion ratio? A. Annuities payments B. Dividends distribution C. How exclusion riders affect premiums D. Policy provision
A. Annuities payments
An insured notices that the face value of her life insurance policy has been raised by 7% as a result of the economic inflation rate increase. What is the name of the rider that many have caused this change? A. Cost of living rider B. Accelerated benefit rider C. Living need rider D. Payor rider
A. Cost of living rider
In life insurance policies, cash value increases... A. Grow tax deferred B. Are income taxable immediately C. Are taxed annually D. Are only taxed when he owner reaches age 65
A. Grow tax deferred
Employer contributions made to a qualified plan... A. Have no vesting requirement B. Are subject to vesting requirements C. Are taxable D. Are tax deductible by the employees
A. Have no vesting requirement
Who makes up the Medical Information Bureau? A. Insurers B. Hospitals C. Former insured D. Physicians and paramedics
A. Insurers
An insured decided to surrender his Whole Life insurance policy which he purchased 30 years ago. The insured was paying annual premiums of $500 while the policy was in force (which added up t0 $15,000). When he surrendered the policy, the cash surrender value was $18,000. What part of the surrender value would be income taxable? A. $1,000 B. $3,000 C. $15,000 D. $18,000
B. $3,000
For a retirement plan to be qualified, it must be designed for the benefit of... A. IRS B. Employees C. Key employee D. Employer
B. Employees
Which of the following describes the specific information about a policy? A. Illustrations B. Buyers guide C. Producers report D. Policy Summary
D. Policy Summary
All of the following are examples of risk retention EXCEPT... A. Deductibles B. Copayments C. Self-insurance D. Premiums
D. Premiums
Which of the following is NOT true regarding the annuitant? A. The annuitants life expectancy is taken into consideration for the annuity B. The annuitant receives the annuity benefits C. The annuitant must be a natural person D. The annuitant cannot be the same person as the annuity owner
D. The annuitant cannot be the same person as the annuity owner
If an insurer meets the state's finical requirements and is approved to transact business in the state, it is considered to be.. A. Domestic B. Authorized C. Qualified D. Certified
B. Authorized
If an application for a life insurance policy is found to be a substandard risk, the insurance company is most likely to... A. Refuse to issue the policy B. Charge a higher premium C. Require a yearly medical examination D. Lower its insurability standards
B. Charge a higher premium
Which of the following is the foundation of the statistical prediction of loss upon which rates for insurance are calculated? A. Law of averages B. Law of large numbers C. Adverse selection D. Field underwriting
B. Law of large numbers
To meet the Entire Contract provision, a policy must contain... A. A buyer's guide to life insurance B. A listing of the insureds former insurers for incontestability provisions C. A copy of the original application for insurance D. A declaration page with a summary of insureds
C. A copy of the original application for insurance
Which of the following must an agent receive in order to sell variable life insurance policies? A. Certificate of authority B. SEC registration C. FINRA registration D. Variable products license
C. FINRA registration
Events or conditions that increase the chances of an insured loss occurring are referred to as... A. Risks B. Perils C. Hazards D. Exposures
C. Hazards
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 policies B. Ordinary Life policies C. Joint Life policy D. Individual Endowment policies
C. Joint Life policy
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 does this describe? A. Life with period certain B. Joint and survivor C. Joint life D. Pure life
C. Joint life
Which of the following is an example of apparent authority? A. The agent puts up a sign with the logo of the insurance company without express permission B. The agent accepts a premium payment after the end of the grace period C. The agent accepts a premium during the grace period D. The agent has business cards and stationery printed
C. The agent accepts a premium during the grace period
Which of the following is an example of liquidity in a life insurance contract? A. Flexible premiums B. The death benefit paid to the beneficiary C. The cash value available to the policy owner D. The funds in a savings account
C. The cash value available to the policy owner
A projection of insurance needs that is based upon the capitalization of an applicants future earnings is... A. Needs approach B. Blackout approach C. Lump-sum approach D. Human life value approach
D. Human life value approach
An agent selling variable annuities must be registered with... A. FINRA B. SEC C. NAIC D. The Guaranty Association
A. FINRA
What is the primary source of information used in insurance underwriting? A. Investigative reports B. Application for insurance C. Attending physicians statement D. MIB report
B. Application for insurance
Which of the following types of insurers issues participating policies? A. A fraternal insurer B. A stock insurer C. A mutual insurer D. An authorized insurer
C. A mutual insurer
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy? A. The Key Person is the owner and beneficiary B. The Key Person is the owner and the employer is the beneficiary C. The employer is the owner and beneficiary D. The employer is the owner and the Key Person is the beneficiary
C. The employer is the owner and beneficiary
Which of the following distinguishes a Group Life Policy form an Individual Life Insurance Policy? A. Higher underwriting costs B. Reduced adverse selection C. Lower persistency D. Higher premium
B. Reduced adverse selection
Which of the following terms are associated with the way an annuity is funded? A. Increasing or decreasing B. Immediate or deferred C. Single life or multiple lives D. Single premium or periodic payments
D. Single premium or periodic payments
What is the primary purpose for a 401K plan? A. Accumulating funds for retirement B. Accumulating education funds C. Receiving dividends over a certain period of time D. Receiving life insurance settlements
A. Accumulating funds for retirement
If an insured surrenders his life insurance policy, which statement is true regarding he cash value of the policy? A. It is only taxable is the cash value exceeds the amount paid for premiums B. It is not considered taxable C. It is taxable only if it exceeds the amounts paid for the premiums by 50% D. It is automatically taxable
A. It is only taxable is the cash value exceeds the amount paid for premiums
What is the advantage of having a qualified annuity? A. Higher dividends B. Favorable tax treatment C. No filing with the IRS D. Receiving a lump sum benefit tax free
B. Favorable tax treatment
Who does the spendthrift clause in a life insurance policy protect? A. The insured B. The beneficiary C. The policy owner D. The creditors
B. The beneficiary
All of the following apply to defined plans EXCEPT... A. The employer is responsible for providing promised retirement benefits B. They are qualified plans and cannot discriminate C. Contributors are tied to the company profits D. Benefits are based on a specified formula that incorporated years of service, salary and age of retirement
C. Contributors are tied to the company profits
All of the following are dividend options EXCEPT A. Accumulation at interest B. Reduction of premium C. Fixed-period installments D. Paid-up additions
C. Fixed-period installments
Life insurance death benefits paid in a lump sum are generally... A. Taxed as a capital gain B. Taxed as ordinary income C. Not taxed as income D. Taxable to the extent that they exceed 7.5% of the beneficiaries adjusted gross income
C. Not taxed as income
The authority granted to an agent through the agent' contract is referred to as... A. Apparent authority B. Implied authority C. Absolute authority D. Express authority
D. Express authority
Which of the following will NOT be an appropriate use of a deferred annuity? A. Accumulating funds in the IRA B. Funding a childs college education C. Creating an estate D. Accumulating retirement funds
C. Creating an estate
Which of the following is TRUE regarding the IRS Section 457 plan? A. It is a deferred compensation plan B. Contributors to the plan re unlimited C. It is a plan for the public educators and nonprofit organizations D. Contributors and earnings are tax deductible
A. It is a deferred compensation plan
A life insurance policy owner has an outstanding policy loan. What will the insurer most likely do? A. Cancel the policy B. Charge interest on the loan C. Require payment of additional premium D. Asses a fine
B. Charge interest on the loan
Because an insurance policy is a legal contract, it must conform to the laws governing contracts which require all of the following elements EXCEPT... A. Offer and acceptance B. Conditions C. Legal purpose D. Consideration
B. Conditions
Which of the following features makes whole life insurance permanent protection? A. Guaranteed death benefit B. Coverage until death of age 100 C. Living benefits D. Guaranteed level premium
B. Coverage until death of age 100
Which of the following is true about credit life insurance? A. Debtor is the policy beneficiary B. Creditor is the policy owner C. Debtor is the annuitant D. Creditor is the insured
B. Creditor is the policy owner
In insurance transactions, fiduciary responsibility means... A. Commingling premiums with agent's personal funds B. Handling insurer's funds in a trust capacity C. Maintaining a good credit record D. Being liable with respect to payment of claims
B. Handling insurer's funds in a trust capacity
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? A. Consideration B. Indemnity C. Stop-loss D. Limited Benefits
B. Indemnity
In an traditional IRA plan, who would be allowed catch-up contributions? A. Anyone with earned income B. Individuals age 50 or older C. Individuals who have dependents D. Individuals who contribute less than the allowed maximum amount
B. Individuals age 50 or older
What does an annuity protect the contact owner against? A. Estate taxes B. Living longer than expected C. Leaving beneficiaries without income D. The financial impact cause by the premature death of the owner
B. Living longer than expected
An Equity Indexed Annuity will grow based upon... A. A diversified portfolio of individual stocks and bonds B. Performance of a recognized index C. A moderate rate of interest D. A rate of interest determined by the banking system
B. Performance of a recognized index
Your client plans to retire at age 50. He would like to purchase an annuity that would provide income from the time he retires to the age when social security and other pension funds become available. What settlement option should he consider? A. Fixed annuity B. Refund annuity C. Annuity certain D. Variable annuity
C. Annuity certain
A key person insurance policy can pay for which of the following? A. Workers compensation B. Hospital bills of the key employee C. Costs of training a replacement D. Loss of personal income
C. Costs of training a replacement
Which of the following best describes annually renewable term insurance? A. Neither the premium nor the death is affected by the insured's age B. It provides annually increasing death benefits C. It is a level term insurance D. It requires proof of insurability at each renewal
C. It is a level term insurance
Which of the following is an example of a limited-pay life policy? A. Level Term Life B. Straight Life C. Life Paid-up at Age 65 D. Renewable Term to Age 70
C. Life Paid-up at Age 65
All of the following would be different between qualified and nonqualified retirement plans EXCEPT... A. Taxation of contributors B. IRS approval requirements C. Taxation on accumulation D. Taxation of withdrawals
C. Taxation on accumulation
Which statement regarding insurable risks is NOT correct? A. Insurance cannot be mandatory B. The insurable risk needs to be statistically predictable C. Losses must be measurable D. Insureds cannot be randomly selected
D. Insureds cannot be randomly selected
Which services are associated with Standard & Poor's and AM Best? A. Investigating violation of The Fair Credit Reporting Act B. Providing employment histories for investigative consumer reports C. Storing medical information collected by insurance companies D. Rating the financial strength of insurance companies
D. Rating the financial strength of insurance companies
If an annuitant dies before annuitization occurs, what will the beneficiary receive? A. Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount B. Either the amount paid into the plain or the cash value, whiter is the lesser amount C. Amount paid into the plan D. Cash value of the plan
A. Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
SIMPLE Plans require all of the following EXCEPT... A. No more than 100 employees B. Minimum annual compensation C. At least 1,000 employees D. No other qualified plan can be used
A. No more than 100 employees
The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the insureds death, the proceeds of the policy will go to... A. The insureds estate B. Probate C. The state D. The beneficiary's estate
A. The insureds estate
A teacher may defer a portion of his earned income into an... A. SIMPLE plan B. 529 plan C. 403(B) TSA D. HR-10 plan
C. 403(B) TSA
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. Marriage B. Birth of child C. Purchase of a new home D. Every 3 years between ages of 25 and 40
C. Purchase of a new home
When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed? A. The annuity owners account B. Each contracts separate account C. The insurance company general account D. Forwarded to an investor
C. The insurance company general account
An insured stopes making payments on a loan taken from his cash value policy. What will most likely happen? A. The insurer will not permit the policy owner to take out any more loans B. The policy will be reduced to an extended term option C. The policy will terminate when the loan amount with interest equals or exceeds the cash value D. The insurer will increase the interest rate on the loan and charge a penalty
C. The policy will terminate when the loan amount with interest equals or exceeds the cash value
A Straight Life policy charges... A. An increasing annual premium for the life of the insured B. A decreasing annual premium for the life of the insured C. A variable annual premium for the life of the insured D. A level annual premium for the life of the insured
D. A level annual premium for the life of the insured
All of the following would be eligible to establish a Keogh retirement plan? A. A sole proprietor of a film development store with no employees B. A hair dresser who operates her business in her home C. The president and employee of ones family corporation D. A sole proprietor of a service station who employs four employees
C. The president and employee of ones family corporation
For what reason may a life insurance producer backdate a life insurance policy? A. To shorten the period of contestability B. To meet sales quota established by the insurer C. To avoid an increase in premium rate for the insured D. To make a policy effective during a period when the agents appointment was in forces
C. To avoid an increase in premium rate for the insured
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death? A. Survivorship life B. Joint life C. Group life D. Universal life
B. Joint life
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 companies liability quickly
C. To provide a guaranteed income for a certain amount of time
Keogh plans are provided specifically for... A. Public educators B. The self-employed C. Government employees D. Retired individuals
B. The self-employed
Which of the following is NOT true regarding the accumulation period of an annuity? A. It is the period over which the annuitant makes payments into the annuity B. It is the period during which the annuitant payments earn interest C. It is also known as the pay-in period D. It would not occur in a deferred annuity
D. It would not occur in a deferred annuity
A man falls from the rood of his house while fixing it and damages his spinal caiman enough to render him disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following will he receive? A. Monthly premium wavier and mostly income B. Percentage of medical costs pads by the insurer C. Payments for life D. Yearly premium wavier and income
A. Monthly premium wavier and mostly income
Which of the following protects the insured from an unintentional policy lapse due to nonpayment of premium? A. Reinstatement B. Reduce- paid up C. Automatic premium loan D. Extended term
C. Automatic premium loan
Which of the following is NOT consideration not he part of an insured? A. Premium payment B. Promise to submit timely claims C. Representations on the application D. Submitting a Statement of Good Health
B. Promise to submit timely claims
Events in which the principal has both the chance of winning or losing are classified as... A. Retained risk B. Speculative risk C. Dual Risk D. Pure Risk
B. Speculative risk
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? A. Conditional B. A legal, but unethical contract C. Unilateral D. Adhesion
C. Unilateral
Which Universal Life option has gradually increasing cash value and level death benefit? A. Option A B. Option B C. Annually renewable term D. Ajustable life
A. Option A
A policy owner has purchased a life insurance policy from a participating company and started to receive quarterly dividends. He has instructed the company to apply the dividends to the policy to increase the death benefit. The dividend option that the policy owner has chosen is called... A. Paid-up additions B. One year term purchase C. Accumulation at interest D. Reduction of premiums
A. Paid-up additions
Term policies can be Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type? A. Premium B. Death benefit C. Cash value D. Nonforfeiture values
A. Premium
What is the benefit of choosing extended term as a nonforfeiture option? A. It can be converted to a fixed annuity B. It has the highest amount of insurance protection C. It matures at age 100 D. It allows for coverage to continue beyond maturity date
B. It has the highest amount of insurance protection
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 nothing because the employee has terminated his group insurance and hasn't started the individual one B. The insurer will pay the full death benefit from the group policy to the beneficiary C. The insurer will pay a reduced death benefit to beneficiary D. The insurer will pay the death benefit minus one month premiums
B. The insurer will pay the full death benefit from the group policy to the beneficiary
