Life Insurance

In order for an Accidental Death Benefit to be paid, which of the following conditions would not have to be met?

Death must occur as a result of an occupation related accident.

Which of the below have generated the most complaints regarding unethical behavior?

Deceptive sales presentations

Which of the following federal acts attempts to protect the individual's right to privacy?

Fair Credit Reporting Act

Which of the following is not a common source of underwriting information?

Genetic analysis

Which of the following does not have an insurable interest in a young man?

His best friend

Which of the following statements is true about qualified retirement plans?

Regardless of company performance, Money-Purchase Plan contributions must be made to each eligible employee's fund each year.

Which of the below does not qualify as twisting in policy replacement?

Replacing policies after full disclosure of all relevant values and facts

Which of the following is not a prohibited sales tool?

SEC approved potential variable product rate value projections

Sandra, the policy owner, has named James an irrevocable beneficiary. Which of the below is correct?

Sandra can borrow from the policy only with James' permission.

Business continuation plans may be designed as entity plans. In close corporations the entity plans are classified as:

Stock Redemption Plans.

Which of the below are two NAIC developed programs that most states have adopted into their insurance codes?

The Advertising Code and The Unfair Trade Practices Act

The insurance contract is a "Contract of Adhesion" therefore, which of the below is not true about the application?

The agent and the applicant may compromise on the policy restrictions in order to provide coverage for everyone.

The producer's ethical obligations to which of the following is the least important?

The agent's creditors

Mortality figures are normally developed by studying and interpreting statistics:

developed from the deaths of millions of persons over long periods of time.

An application for group coverage is signed by the:

employer, who then receives and retains a master contract.

The premium that reflects mortality rates, assumed interest, and the policy's share of the company's operating expenses is called the:

gross premium

There are two basic methods for determining the proper amount of insurance for individuals. These two methods are:

human life value method and the needs analysis

Variable Universal Life cash values are:

invested in separate accounts selected by the policy owner

A worker can receive Social Security Disability if he or she:

is at least currently insured and totally disabled.

Which of the following statements about the Fair Credit Reporting Act is true?

it requires that an applicant be advised that a credit report may be requested, if that is the case.

When an applicant completes the questions on the application and submits at least one month's premium they have:

made an offer-to-buy

All fraternal insurance organizations operate as:

non-profit businesses.

Many mutual companies can show dividend histories for over 100 years, therefore they can:

only show recent dividend history without any future commitment

The unique characteristic that allows life insurance to be assigned or sold is that it is not a:

personal contract

Besides acknowledging payment of the initial premium, the purpose of a conditional receipt is to:

provide insurance coverage at an earlier date than that of policy delivery.

The common disaster provision, in a beneficiary designation:

provides the sequence of beneficiaries

Which of the following policies accumulates cash value at the fastest rate?

10-pay life policy

A life insurance policy is considered incontestable after it has been in force for a period of:

2 years.

Jose, is the wealthy owner and insured under a $500,000 life policy. He is killed skydiving. He had paid total premiums of $25,000. How much of the death benefit will be estate taxable?

500,000

Bill Drake purchased a $10,000 life insurance policy in 1993 and paid premiums for several years. Although the policy had lapsed before he died in January 2004, a $10,000 death benefit was paid. Mr. Drake's policy was most likely which of the following?

A $10,000 Whole Life policy.

Which of the following policies will pay the face amount of the policy to the owner after 20 years?

A 20 Year Endowment

Which of the following is true about an individual IRA?

A married couple making under the IRS maximum may have a pension and an IRA for each.

Which of the following statements best describes a traditional IRA (Individual Retirement Account)?

A traditional IRA allows an individual to save money for retirement with pre-tax income.

Which of the below is not a requirement for the adjusted grace period for Florida life contract holders over 64 years of age?

A written notice from the agent warning of the impending lapse

What group of individuals in an insurance company is responsible for determining life insurance premium rates?

Actuaries

Which of the below is not an element of the whole life contract?

Adjustable face

Statements made on the insurance application generally do not provide which of the following?

An outline of the benefits provided

Which of the following statements regarding the tax treatment of cash values is true?

As long as the policy is not surrendered, the cash values accumulate tax-free.

In determining Social Security retirement benefits which of the following statement is not correct?

Average monthly wages (AMW) is the most recent index used.

The death benefits paid to a named beneficiary are:

always free of any federal income tax if taken as a lump sum

Which of the following is correct about life insurance benefits?

Benefits designated for a named beneficiary cannot be touched by the insured's creditors.

The following statement regarding a life insurance contract is true?

Cash values are the same as nonforfeiture values.

Which of the below has not been considered an insurance industry top ethical concern?

Commission payment methodology

Which of the following statements about a whole life policy is true?

It furnishes permanent protection in the sense that it does not have to be renewed or converted.

Which of the below is not a Variable Universal Life (VUL) characteristic?

It generally has the capacity to be stable during inflation periods.

Which of the following applies to a fraternal life association?

It is organized under special legislation.

Which of the below is not a universal life characteristic?

It offers a variety of investment choices.

A foreign insurer is a company that is:

Licensed to conduct business in a state other than the one in which it is incorporated.

Which of the below is not a characteristic of a mutual insurance company?

Makes a profit for Stockholders

Which of the following is considered to be misrepresentation?

Making a statement which is not entirely true about the terms of a policy

Which of the below is NOT considered a basic type of hazard?

Mental Hazard

Which of the following is not an objective of the NAIC?

Minimize federal taxes

Which of the following is not considered transacting insurance business?

Negotiating an agency contract with an insurance company

A policyowner has allowed a policy to lapse and the insurance company converts the policy to the extended term option. If they were all in the original policy, which of the following provisions will be maintained during the extended term period?

None of these answers are correct

If an application for life insurance is submitted to an insurance company with no premium payment, coverage under the policy begins at which of the following times, if any?

None of these answers are correct.

Owners of insurance contracts are legally bound to:

None of these answers are correct.

Which of the below is not a desirable insurance sale attribute?

Not taking time to discuss an insurance prospect's preconceived opinion regarding his or her requirements

When rating a morale hazard the insurer will probably apply a:

Permanent Flat Extra Premium

Which of the practices below would NOT be considered unethical?

Pointing out the market hazards involved in variable life cash value accumulation

In the Settlement Option known as Life Income Option:

The beneficiary receives a guaranteed income no matter how long he/she lives.

Which of the following is true about a universal life contract?

The face value may be adjusted to fit the insured's current needs.

With insurance contracts there is a possibility for either of the parties to lose. Which of the following describes this feature of insurance contracts?

The insurance contract is an Aleatory contract.

Billy has borrowed money to purchase new paving equipment. The lender wants assurance of payment in the event of Billy's death. Billy provides a notarized statement that his beneficiary (his Mother) will pay the due balance of his loan. This statement will be in the policy folder.

The lender does not have a binding assignment

Which of the following is not an element of insurable risks?

The loss must be catastrophic

Which of the following is not true about Traditional Variable Life insurance?

The policyowner may increase contributions at his discretion.

Which of the following statements is not correct concerning Variable Life contracts?

The premiums vary according to the productivity of the separate accounts.

To what does the statement "Spreading the income loss created by an individual's death among many persons so the cost for each individual is small." refer?

The principle of pooling

With three partners in a business, how many life insurance policies would be required to insure an entity buy-sell plan?

Three

When an insured policy owner makes a transfer-for-value (sells the policy) without addressing the matter of insurable interest, the exchange is called a:

Viatical settlement

A life insurance policy that continues to provide protection after the premium period has ended is called:

a limited pay life policy.

Funds may be removed from a variable universal life policy's cash value through:

cash withdrawal or a loan.

In an insurance contract, the consideration given by the applicant in exchange for the insurers promise to pay benefits is:

the application and the initial premium

If the cash value account of a flexible premium universal life policy reaches zero, the policy-owner must make a premium payment or:

the policy lapses.

A level term policy is one on which:

the premium and the face value remain constant for the term of the policy.

When do policyowners usually use the collateral assignment?

when they want to borrow money outside the policy

If a proposed insured (a standard risk) dies before the policy is issued but while in possession of a conditional receipt, the company:

will pay the policy proceeds if it would have issued the policy as a standard risk to the proposed insured had he or she continued to live.