Life Insurance Exam #4
Restoring an insured to the same condition as before a loss is an example of the principle of
Indemnity.
Which of the following is an example of the insured's consideration?
A paid premium.
A unilateral contract is one in which
only one party (the insurer) makes any kind of legally enforceable promise.
Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's
Implied authority.
Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this called?
Estate conservation.
Who is eligible for retirement benefits under Social Security?
Fully insured workers.
What prevents a life insurance policy from being rescinded by the insurer after being in force for two years?
Incontestability clause.
Which of the following signatures is not required on an individual insurance application?
Insurer.
insurance premium is determined by each of the following factors EXCEPT
Liquidity.
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
Payor benefit.
Which of these is considered to be a document that describes the critical segments of a life Insurance policy?
Policy summary.
All of the following are considered appropriate uses of life insurance for business purposes EXCEPT
Protecting the business by covering entry level employees with life insurance.
After a policy has lapsed, which provision allows the insured to continue coverage?
Reinstatement provision.
Which of the following are the premium payments for a Universal life policy NOT used for?
Separate account investments.
An insurer's claim settlement practices are regulated by the
State insurance departments.
Premiums are best described as
The amount an insured pays per unit of coverage.
What is considered to be the definition of disability, according to Social Security?
Unable to engage in any substantial gainful activity.
Legal purpose is a term used in contract law meaning
there must be legal reasons for entering into the contract.
Within how many days must a rollover be completed in order to avoid being taxed as current income?
60 days.
Which policy feature makes a universal life policy different from a whole life policy?
A flexible premium schedule.
Which of the following is considered to be an alternative to a life settlement?
Accelerated death benefit rider.
A non-contributory health insurance plan helps the insurer avoid
Adverse selection.
People with higher loss exposure have the tendency to purchase insurance more than those at average risk. This is called?
Adverse selection.
What does the Group Life underwriting risk selection process may help protect insurance companies from?
Adverse selection.
The deeds and actions of a producer indicate what kind of authority?
Apparent.
The period in which there are no Social Security benefits for the surviving spouse is called the
Blackout period.
The coverage, conditions, and limitations in the master policy of a group contract can be found in which document?
Certificate of coverage and benefits.
When a mutual insurer becomes a stock company, the process is called
Demutualization.
According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination?
Denial of a claim based on reckless behavior.
What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)?
Disclosure and reporting.
Which of the following is NOT a risk classification that an underwriter would use?
Dividend risk.
What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date?
Grace period.
Which of these is considered a major tax advantage of life insurance?
Income tax is typically not owed on proceeds paid directly to a beneficiary.
Who does a life settlement broker represent?
Individual wanting to sell their life policy to a third party.
Who are the parties to the master contract in a group life insurance policy?
Insurer and employer.
Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?
Interest only.
Which of these will have the highest monthly payout upon annuitization?
Joint and survivor life.
The importance of a representation is demonstrated in what rule?
Materiality of concealment.
Which of the following describes a contributory group insurance plan?
Part of the premium is paid by the employee.
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of
Past due premiums that have not been paid by the end of the end of the grace period.
All of the following circumstances must be met for loss retention to be an effective risk management technique, EXCEPT?
Probability of loss is unknown.
Which of the following is NOT considered to be a definition of the term "loss"?
Probability that an event will occur.
What is considered to be the primary reason for buying life insurance?
Provide death benefits.
How are survivorship life insurance policies helpful in estate planning?
Provide funds to help pay taxes.
Which of these statements correctly describes risk?
Pure risk is the only insurable risk.
Which type of multiple protection policy pays on the death of the last person?
Survivorship life policy.
Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?
Temporary annuity certain.
Which of the following is NOT considered a definition of risk?
The cause of a loss.
An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if
The insured outlived the beneficiary.
Who assumes the investment risk with a fixed annuity contract?
The insurer.
Which of the following is NOT an element of an insurable risk?
The loss must be catastrophic.
An annuitant would like to determine the current value of her annuity. To do this, she multiplies the number of "accumulation units" she owns times the unit value of the "separate account". What kind of annuity BEST matches this description?
Variable annuity.
A policy owner can receive an immediate payment before the insured dies by using a(n)
Viatical settlement.
Life insurance creates an immediate estate. This phase means:
When the insured dies, a death benefit is paid.
A single premium cash value policy can be described as
a policy that is paid up after only one payment.
Before an insurer is allowed to test an individual for HIV, what must be completed?
consent form.
Which of the following refers to a condition that may increase the chance of a loss?
hazard.
The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority?
implied authority.
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST
provide evidence of insurability to the insurer.