Life Insurance Exam

Which of the following imposes a requirement that the insurer must keep all medical information confidential and protect the applicants policy? A. consumer reports B. medical information bureau C. HIPPA D. consumer investigative reports

HIPPA

Tiffany leaves her car unlocked when she goes shopping. She figures her car and the contents are insured so there is no reason to worry. Which type of hazard is this an example of? A. Physical B. Morale C. Careless D. Moral

Morale

Sometimes an individual or business has an exceptionally large or specialized risk that no authorized insurer can or will cover. In this case they mall call A. Surplus lines insurance company B. an admitted insurance company C. an indepedant agent D. a fraternal insurance company

Surplus lines insurance company

Which of the following individuals represent only one insurance company? A. an independent agent B. a general agent C. a captive agent D. a managing general agent

a captive agent

Which of the following terms describes a legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration? A. an offer B. an acceptance C. a contract D. a consideration

a contract

The fair credit reporting act requires which of the following to be issued to all applicants for life or health insurance? A. a notice to the applicant B. a financial disclosure statement C. free credit check D. all of these must be issued to applicants

a notice to the applicant

Which of the following terms describes something that is used to add benefits to a life insurance policy and customize the coverage to an insured's particular needs? A. life insurance addition B. a rider C. a premium D. a contract

a rider

All of the following statements about a stock insurance company are true except: A. a stock company sells stock to stockholders B. a stock company is a participating company C. a stock company is a nonparticipating company D. a stock company has shareholders

a stock company is a participating company

Which of the following insurance riders allow insureds who are terminally ill to obtain benefits from insurance policies prior to their death? A. accelerated benefits rider B. payor rider C. disability income rider D. waiver of premium rider

accelerated benefits rider

The ABC insurance company is incorporated in Mexico. While doing business in Texas, it is A. domestic insurer B. foreign insurer C. alien insurer D. export insurer

alien insurer

the assets left behind after an individual's death is known as A. liquidity B. an estate C. debt D. financial obligations

an estate

a general report in regard to the applicant's finances, health, character, work, hobbies, and other habits is usually completed by interviewing friends and associates is known as A. consumer report B. An investigative consumer report C. an attending physician's report D. a medical information bureau report

an investigative consumer report

Carl accepts the initial premium when he sells an insurance policy and he sends this to the insurance company along with the application. Which authority represents what others believe his power is by actions taken? A. express authority B. implied authority C. apparent authority D. agent authority

apparent authority

When the owner of a life insurance policy is not the insured, there are three parties to the contract. Which of the following is not a party to this type of contract? A. insured B. applicant C. beneficiary D. insurer

beneficiary

The preretirement period, one of the distinct income needs periods, is also known as the A. blackout period B. family dependency period C. cash needs period D. business needs approach

blackout period

In a buy-sell agreement, the life insurance policy is written on the A. business B. person who will buy the business in the event that the owner dies C. business owner's life D. family of the business owner

business owner's life

The amount of money paid by an accidental death and dismemberment rider if the insured is disabled in an accident is referred to as the A. principal sum B. principle sum C. capital sum D. capitol sum

capital sum

the failure to disclose known facts is A. material misrepresentation B. waiver C. concealment D. fraud

concealment

Under which of the following receipts is coverage effective as of the date of the application as long as the applicant is found to be insurable under the company's standard underwriting rules? A. conditional receipt B. binding receipt C. standard receipt D. acceptance receipt

conditional receipt

Which of the following is used to determine a consumer's eligibility for personal credit, insurance, or employment? A. consumer reports B. medical information bureau C. HIPPA D. consumer investigative reports

consumer reports

Ashley has a policy she must pay premiums on until she is 100 years old or until she dies. Ashley has A. continuous premium whole life policy B. limited-pay policy C. single premium policy D. modified premium policy

continuous premium whole life policy

Christy has a term policy that will allow her to switch over to a whole life policy at any time during the first half of the term without providing evidence of insurability. What type of policy is this? A. level term insurance B. renewable term insurance C. convertible term insurance D. reentry term insurance

convertible term insurance

Which rider lets insureds buy additional coverage without proof of insurability in order to keep pace with inflation? A. guaranteed insurability B. accidental death and disability rider C. cost of living D. payor rider

cost of living

In which type of term policy does the annual premium remain level throughout the policy while the death benefit decreases? A. increasing term B. level term C. decreasing term D. convertible term

decreasing term

Which of the following describes an employer that agrees to pay an employee a stated amount of income beginning at retirement rather than paying them the money now? A. deferred compensation plan B. executive bonus plan C. buy sell agreement D. key person coverage

deferred compensation plan

Which of the following types of advertising does not involve an agent and is conducted through the mail, by advertisements in newspapers and magazines, on tv and radio or through the internet? A. Direct writing B. Captive agency system C. Direct response D. cold calling

direct response

Kumar has a life insurance policy with a rider that will pay him $1,000 per month if he is totally and permanently disabled. Which type of rider does he have? A. waiver of premium rider B. accidental death and disability rider C. disability income rider D. payor rider

disability income rider

All of the following about policy dividends are true EXCEPT A. the insurer can send a check to the policyowner in the amount of the dividend B. the dividend can be applied against the next premium due, reducing its amount C. dividends can be guaranteed to be paid every year D. a dividend can be left with the insurer in a savings account to earn interest

dividends can be guaranteed to be paid every year

All of the following are examples of buy-sell agreements EXCEPT A. cross-purchase plan B. entity plan C. stock redemption plan D. executive bonus plan

executive bonus plan

Which of the following statements about flexible policies is NOT correct? A. flexible policies are temporary insurance B. policy owners can change their premium or death benefit with an adjustable life insurance policy C. a universal life insurance policy is cash-value driven rather than premium-driven D. policy owners cannot know in advance what their flexible policies' values will be

flexible policies are temporary insurance

An Insurance company incorporated in Wisconsin and conducting business in Wisconsin is known as a domestic company. What kind of company are they considered if they do business in Minnesota? A. Alien B. Domestic C. Foreign D. Nonadmitted

foreign

Which of the following is a guarantee that at specified ages, dates, or events, the insured may buy additional insurance without a medical exam? A. guaranteed insurability B. return of premium C. accidental death D. waiver of premium

guaranteed insurability

Which of the following is NOT flexible in a universal life policy? A. premium amounts B. premium schedule C. guaranteed interest rate D. death benefits

guaranteed interest rate

Which of the following is not included in the general form of the insurance application? A. type of policy and face amount being applied for B. height and weight C. occupation and business address D. beneficiary

height and weight

Which of the following states the purpose of life insurance is to replace the economic value of an individual? A. the needs approach B. human life value principle C. the income needs principle D. the business needs approach

human life value principle

Which of the following types of insurance has premiums that are due weekly and are collected in person by producers who go door to door? A. term life insurance B. industrial life insurance C. permanent life insurance D. home service life insurance

industrial life insurance

What is a contract or device for transferring risk from a person, business, or organization to an insurance company? A. insurance B. law of large numbers C. adhesion D. agency

insurance

Which settlement option pays only the earnings on the death benefit to a beneficiary? A. life income B. fixed amount C. fixed period D. interest only

interest only

Jim has selected to receive only the interest from his mother's life insurance policy. When jim dies, his children will receive the lump-sum benefit in addition to the benefit from his life insurance policy. Jim has selected the A. interest-only option B. fixed-period option C. fixed-amount option D. life-income option

interest-only option

Walter is the beneficiary of his mother's life insurance policy. He wants to make sure the proceeds will last not only as long as he lives but also as long as his wife is alive. Walter should select the A. straight life income option B. refund annuity option C. life income certain option D. joint and survivorship life income option

joint and survivorship life income option

Which of the following specialized policies insures two people and pays its benefits when the first one dies? A. joint life policy B. survivorship policy C. juvenile policy D. family policy

joint life policy

Of all the life income options, which settlement option has the largest payment? A. life with period certain B. life only C. life with refund certain D. joint-and-survivor life

life only

Heath has chosen to receive the payout from his wife's life insurance policy in such a way that he will have an income for the remainder of his life, regardless of how long he lives. Heath has selected A. interest-only option B. fixed-period option C. fixed-amount option D. life-income option

life-income option

Zelda agrees to pay premiums on her policy every year for 20 years. After that, she will no longer have to pay premiums, but her insurance protection will continue until she dies. Zelda has A. whole life policy B. limited-pay policy C. single premium policy D. modified premium policy

limited-pay policy

Which whole life policy allows for a lifetime of premiums to be paid in a shorter period of time such as 10 or 20 years? A. continuous premium whole life B. limited-pay whole life C. single premium whole life D. modified premium whole life

limited-pay whole life

Which of the following terms refers to how easily an asset can be turned into cash without loss of value? A. liquidity B. estate conservation C. estate creation D. hard assets

liquidity

Which of the following riders allows for an advance of the death benefit if the insured is confined to a nursing home or cannot perform the activities of daily living? A. guaranteed insurability rider B. accidental death or dismemberment rider C. return of premium rider D. long-term care rider

long-term care rider

Which of the following factors is NOT prohibited from use in order to classify a risk? A. race B. religion C. martial status D. place of residence

martial status

Which of the following is a non-profit insurance trade association that maintains underwriting information on applicants from hundreds of insurers? A. HIPPA B. consumer reports C. medical information bureau D. investigative consumer reports

medical information bureau

All of the following statements regarding variable life insurance are true EXCEPT A. variable life's cash values will go up and down based on performance of the separate account B. variable universal life does not have a guaranteed minimum death benefit C. agents who sell variable life must be licensed to sell insurance by the state and also registered as securities representatives D. most variable life insurance policies offer a guarantee of a minimum of return

most variable life insurance policies offer a guarantee of a minimum of return

Which of the following premiums is the mortality element minus the interest element? A. loaded premium B. gross premium C. net premium D. fixed premium

net premium

All of the following statements regarding the life only settlement options are correct EXCEPT A. payments are guaranteed to continue for as long as the beneficiary lives B. payments continue even if the beneficiary dies shortly after payments begin C. life expectancy is a factor used in calculating the size of payment D. life income payments are smaller for younger beneficiaries

payments continue even if the beneficiary dies shortly after payments begin

Paul has a life insurance policy on his son for which he pays all the premiums. A rider to this policy states that if Paul becomes permanently and totally disabled, the premiums will be paid until his son reaches age 21, at which point his son will take over the premium payments. Which type of rider does he have? A. waiver of premium B. accidental death and disability rider C. disability income rider D. payor rider

payor rider

If a fire causes damage to a building, the fire is A. Hazard B. Peril C. Risk D. Exposure

peril

Whole life insurance is often referred to as A. permanent insurance B. level insurance C. term insurance D. less expensive insurance

permanent insurance

Living and death benefits, level premiums, and lifetime coverage are characteristics of which of the following classes of insurance? A. term life insurance B. industrial life insurance C. permanent life insurance D. home service life insurance

permanent life insurance

All of the following statements about term insurance are correct EXCEPT A. term coverage lasts only for the term of the policy B. term insurance provides only a death benefit C. premiums are higher than other types of life insurance policies D. no death benefit is payable if the insured dies after the term expires

premiums are higher than other types of life insurance policies

Agency is a relationship in which one person is authorized to represent and act for another person or a corporation. In insurance, the insurance agent acts on behalf of the A. principal B. insured C. claimant D. adjuster

principal

The amount of money paid by an accidental death benefit rider if the insured dies in an accident is referred to as the A. principal sum B. principle sum C. capital sum D. capitol sum

principal sum

Which of the following factors does NOT have an effect of the insurance premium rates? A. mortality and morbitiy B. interest rates C. producer certifaction D. expenses

producer certification

A part of the application that requires the agent to provide information regarding the proposed insured, such as habits, character, and relationship with the insured is known as a A. binding receipt B. conditional receipt C. producer's report D. confidentiality report

producer's report

Wearing a seatbelt is an example of which method of managing risk? A. Retain B. Avoid C. Reduce D. Transfer

reduce

Thomas has chosen to receive the settlement from his wife's $100,000 life insurance policy according to the life income option. Under the option he chooses, he will receive an income for his life and his daughter will receive payments if he dies before receiving $100,000 in income. Thomas has selected a A. straight life income option B. refund annuity option C. life income certain option D. joint and survivorship life income option

refund annuity option

Which of the following is NOT required to be able to sell variable policies? A. state insurance producer license B. registration with the FINRA C. registration with the NAIC D. a passing score on the appropriate securities exam

registration with the NAIC

Insurance companies often purchase insurance to cover their own exposure to loss. This is called A. self-insurance B. loss control insurance C. surplus lines insurance D. reinsurance

reinsurance

Pam owns a 1-year term policy. At the end of the year she may purchase another identical policy without showing proof of insurability. Pam's policy is A. convertible term B. renewable term C. increasing term D. decreasing term

renewable term

Jill is filling out an insurance application with information that she believes to be true. The information that she is providing is considered a A. representation B. misrepresentation C. material misrepresentation D. warranty

representation

a type of insurance owned by the federal government that is not typically available from other private insurers' is called A. residual market insurance B. surplus lines insurance C. private insurance D. government funded insurance

residual market insurance

since he lives in a good neighborhood and across the street from a fire station, Jess decides to cancel his fire insurance policy. This is an example of which risk management method? A. Retention B. Avoidance C. Transfer D. Control

retention

All of the following are names of distinct income need periods EXCEPT A. family dependency B. preretirement C. retirement D. social security

social security

A risk that bears the same health, habits, and occupational characteristic as the persons on whoss the mortality table was based upon is known as A. standard risk B. preferred risk C. substandard risk D. declined risk

standard risk

Which of the following is an above average risk of loss and unfavorable to an insurance company? A. standard B. preferred C. substandard D. declined

substandard

which of the following classes of life insurance has a death benefit only, increasing premiums temporary coverage and expires at the end of the term? A. variable life insurance B. term life insurance C. permanent life insurance D. Home service life insurance

term life insurance

which of the following types of insurance is designed to provide life insurance protection for only a limited time? A. whole life insurance B. variable term insurance C. term life insurance D. universal life insurance

term life insurance

Which of the following represents a pure risk? A. a poker game B. gambling in the stock market C. investing in a new business D. the chance your house may burn down

the chance your house may burn down

Which of the following statements about paid-up additions is TRUE? A. the dividends are used to purchase additional insurance protection B. the additional protection is almost always restricted to term insurance C. the single premium for the added coverage will be based on the insured's original age D. the operating expenses of putting this coverage in force are higher than original policy expenses

the dividends are used to purchase additional insurance protection

What do insurance companies use to help protect how many losses will occur in a group or class of individuals? A. the law of large numbers B. standard and Poor's insurance rating service C. Risk retention groups D. Adverse selection

the law of large numbers

All of the following statements about completing the insurance application are true EXCEPT A. any change to the application must be initialed by the applicant B. the application form must be signed by both the applicant, proposed insured (if not the applicant) and producer/agent C. the producers report must be signed by both the applicant, proposed insured (if not the applicant) and producer/agent D. collecting the first premium with the application is the quickest way to get coverage in force.

the producers report must be signed by both the applicant, proposed insured (if not the applicant) and producer/agent

Which of the following is NOT a personal use of life insurance? A. estate creation B. cash accumulation C. mortgage payoff D. third party ownership

third party ownership

Which of the following products cannot be used to fund an IRA? A. Life insurance B. Bank accounts C. mutual funds D. flexible premium annuities

Life insurance

All of the following individuals meet eligibility requirements for setting up an IRA EXCEPT A. Jan is 55 and works full time at a restaurant earning wages in tips B. Sal is 21 and just started a full time commissioned position as a sales rep C. Michelle works 10 hours a week a a books store and is paid hourly D. Mitch is unemployed but does receive rental income of $2,000 a month

Mitch is unemployed but does receive rental income of $2,000 a month

For group insurance policies, the covered individual receives proof of coverage in the form of A. an insurance policy B. an insurance contract C. a certificate of policy D. a certificate of insurance

a certificate of insurance

Curtis knows that when he retires after age 65, he will receive 80% of his salary as a pension. This is an example of A. a defined-benefit plan B. a defined-contribution plan C. a profit-sharing plan D. a money purchase plan

a defined-benefit plan

An annuity that guarantees a minimum rate of return is A. an immediate annuity B. a deferred annuity C. a variable annuity D. a fixed annuity

a fixed annuity

Delbert is self-employed and sets up a retirement plan for himself. Delbert most likely sets up A. a SIMPLE plan B. a Keogh plan C. a 403b plan D. a 401k plan

a keogh plan

In group insurance, the sponsoring group is issued A. a master policy B. a certificate of insurance C. a certificate of authority D. a policyholder policy

a master policy

Jimmy's Print Shop and Bryan's Botique join together to form a trust to provide insurance to their employees. This type of group is called A. an employee group B. a multiple employer trust C. a taft-hartley trust D. a labor group

a multiple employer trust

Kathleen is hired to work at a restaurant. She is not eligible to join the group insurance plan for 30 days. This is an example of A. an introductory period B. a weeding-out period C. a probationary period D. an eligibility period

a probationary period

Devon purchases an annuity that will pay a monthly income for the remainder of his life and then stop making payments. Devon has purchased A. a fixed annuity B. a straight-life annuity C. a variable annuity D. a temporary annuity certain

a straight-life annuity

The baker's union and the butcher's union worked together to form a trust to provide insurance to their employees. This type of group is sponsored by A. an employee group B. a multiple employer trust C. a taft-hartley trust D. a labor group

a taft-hartley trust

Carmen owns a business with 200 employees that provides a retirement plan whereby the business makes contributions on the employee's behalf. Carmen's plan is most likely A. 401k B. a keogh plan C. a 403b plan D. an SEP

an SEP

States require companies to have a license to sell insurance in the state. The license is called A. certificate of authority B. reinsurance license C. Producers license D. an admittance license

certificate of authority

Which clause identifies the fact that the policyowner must pay something of value for the insurer's promise to pay benefits? A. consideration clause B. insuring clause C. entire contract clause D. payment clause

consideration clause

General electricians offers insurance to its employees. About 80% of its eligible employees are currently covered under the plan. This plan is A. contributory B. non contributory C. inclusive D. noninclusive

contributory

Which type of annuity is most likely to provide death benefits if the insured dies during the accumulation period? A. fixed annuity B. variable annuity C. deferred annuity D. Immediate annuity

deferred annuity

For tax purposes, which of the following are considered to be a return of a portion of the premium paid for by the policy? A. dividends B. death benefits C. cash value D. policy loan

dividends

All of the following group insurance eligibility requirements are true EXCEPT A. employers can determine which classes of employees will be eligible for the plan B. employers can choose which individuals will be covered and which will not be covered C. the 2 most common classifications for employees are full time versus part time and years of service D. probationary periods usually range from 1 to 6 months

employers can choose which individuals will be covered and which will not be covered

Which clause identifies the components of the contract? A. consideration clause B. insuring clause C. entire contract clause D. payment clause

entire contract clause

Michelle purchases an annuity that offers a guaranteed minimum interest rate and a guarantee against loss of principal if the contract is held to term. However, if the S&P 500 moves upward, Michelle's annuity might end up accruing more than the guaranteed minimum interest rate. Michelle has purchased A. an equity-indexed annuity B. a market value-adjusted annuity C. a market value-indexed annuity D. an equity-adjusted annuity

equity-indexed annuity

The amount of annuity payout option or a life insurance settlement option that is taxable gain is determined by using the A. exclusion ratio B. investment in the contract ratio C. cost basis ratio D. expected return ratio

exclusion ratio

Which of the following types of annuities is guaranteed against the loss and not tied directly to the stock market? A. fixed B. variable C. market value adjusted D.equity-indexed annuity

fixed

the death benefit of a whole policy is A. variable B. decreasing C. increasing D. fixed and level

fixed and level

Carmen has selected to receive $10,000 per month until the principal and interest on her husband's life insurance policy have been paid out. Carmen has selected A. interest-only option B. fixed-period option C. fixed-amount option D. life-income option

fixed-amount option

Emily has chosen to receive the payout from her husband's life insurance policy so that she will receive an income for the next 15 years. At the end of that time, the entire proceeds from the policy will have been paid out. Emily has selected A. interest-only option B. fixed-period option C. fixed-amount option D. life-income option

fixed-period option

Which clause contains the basic promise of the life insurance company to pay a specified sun of money to a beneficiary upon the death of the insured? A. consideration clause B. insuring clause C. policy loan clause D. payment clause

insuring clause

Which of the following characteristics about group credit life insurance is NOT correct? A. the lender is the beneficiary B. it is more expensive than individual credit life insurance C. if debt is paid, the policy is canceled D. coverage can be included as part of the loan transaction

it is more expensive than individual credit life insurance

The penalties assessed against MEC's primarily affect A. the cost basis of the policy B. money put into the policy C. money taken out of the policy D. the death benefits of the policy

money taken out of the policy

Suzanne regularly leaves her side door unlocked when she leaves for work. One afternoon a thief entered her apt and stole all of her jewelry. What type of hazard is this an example of? A. physical B. moral C. morale D. the neighborhood

morale

As a general rule, for federal tax purposes A. neither life insurance nor annuity premiums is tax deductible B. life insurance premiums are tax deductible but annuity premiums are not C. annuity premiums are tax deductible but life insurance premiums are not D. both life insurance and annuity premiums are tax deductible

neither life insurance nor annuity premiums is tax deductible

If the employer pays the entire group insurance premium for 100% of its employees, the plan is A. contributory B. noncontributory C. inclusive D. noninclusive

noncontributory

cash surrender, reduced paid up insurance, and extended term insurance are all examples of A. nonforfeiture options B. divided options C. paid up additions D. paid up insurance

nonforfeiture options

In life insurance contracts, when must insurable interest exist? A. only at the time the policy is purchased B. at the time the policy is purchased and at the time the loss occurs C. only at the time the loss occurs D. it does not need to exist in life insurance contracts

only at the time the policy is purchased

Billy is receiving the proceeds of a life insurance policy as an income stream over a period of several years. What part of the money will be subject to tax? A. none of it; it is life insurance proceeds B. all of it; it is being paid out in an income stream C. only the part that represents income earned on the original death benefit D. only the part that represents the original death benefit and not income earned on the original death benefit

only the part that represents income earned on the original death benefit

Which of the following requirements of all employer-sponsored qualified retirement plans states that plans must benefit all regular employees, not just a select few? A. participation B. non-discrimination C. vesting D. fiduciary duty

participation

A risk that represents a chance of experiencing a loss that is below average and therefore favorable to the company is a A. standard risk B. preferred risk C. substandard risk D. declined risk

preferred risk

Which of the following withdrawals from an IRA would be subject to a 10% penalty? A. payment of higher education expenses B. $10,000 downpayment of first home C. premature withdrawal at age 55 in order to pay off a credit card D. payment of health insurance premiums while unemployed

premature withdrawal at age 55 in order to pay off a credit card

Which of the following riders is increasing term insurance that always equals the total premiums paid during the time the policy is in effect? A. guaranteed insurability B. return of premium C. accidental death D. waiver of premium

return of premium

The section of the application that includes information regarding the proposed insured's physical condition, medical history, and alcohol and drug use is known as A. first part-general information B. second part- health information C. the entire application D. attending physician's statement

second part- health information

If the named beneficiaries cannot be found, under the facility of payment provision the insurer may A. select a beneficiary B. retain the proceeds C. pay a mortgage company directly D. pay proceeds directly to a minor

select a beneficiary

What is the name of a test that is done on the life insurance policy to see if premiums exceed those needed to fully pay up a death benefit with seven level annual payments? A. accumulation test B. annuitization test C. endowment test D. seven-pay test

seven-pay test

Liz purchases an immediate annuity. The annuity contract must be A. fixed annuity B. variable annuity C. deferred annuity D. single premium annuity

single premium annuity

Group insurance generally does not require A. stringent medical underwriting B. a short application form C. a minimum level of participation among eligible insureds D. a master policyowner to hold the policy

stringent medical underwriting

Fixed period and fixed amount are types of A. life annuities B. temporary annuities C. life-period certain annuities D. joint life annuities

temporary annuities

Which of the following is NOT a factor in determining the amount the beneficiary will receive each time a payment is made under the fixed period option? A. the age of the beneficiary B. the principal amount C. the interest earned on the principal D. the length of time payments is to be made

the age of the beneficiary

For an accidental death benefit rider to be payable the insured must die (due to injury from accident) within how many days of the accident? A. 30 B. 60 C. 90 D. 180

90

All of the following statements regarding fraud and false statements are correct EXCEPT A. a person who commits fraud is subject to a fine B. a person who commits fraud is subject to imprisonment for up to 10 years C. a person who commits fraud is subject to both a fine and imprisonment for up to 10 years D. a person who commits fraud is subject to imprisonment for up to 25 years

a person who commits fraud is subject to imprisonment for up to 25 years

The process of evaluating a risk to determine if the risk is one that the insurance company wishes to insure is also known as the A. underwriting process B. application process C. decision making process D. insurance process

underwriting process

Which of the following is not 1 of the 4 elements in a legal contract? A. offer B. acceptance C. legal purpose D. unilateral

unilateral

Which of the following is waiver of all future premiums in the event of total and permanent disability? A. guaranteed insurability B. return of premium C. accidental death D. waiver of premium

waiver of premium

Alberta is concerned that if she became totally and permanently disabled, she would not be able to pay her life insurance premiums and the policy will lapse. Which type of rider should she consider to protect against this possibility? A. waiver of premium rider B. accidental death benefit rider C. disability income rider D. payor rider

waiver of premium rider

A guarantee that something is true is a A. representation B. misrepresentation C. material misrepresentation D. warranty

warranty

Which type of insurance requires a level premium and provides lifelong protection? A. whole life insurance B. variable life insurance C. term life insurance D. universal life insurance

whole life insurance

If a group insurance policy is contributory, what % of employees must participate? A. 50% B. 75% C. 90% D. 100%

75%

An individual choose to receive money from their annuity during the accumulation period. What is the penalty tax that must be paid in addition to regular taxes due on the taxable amount received? A. 3% B. 5% C. 6% D. 10%

10%

Premature distribution from a qualified plan or IRA can result in the amount being taxed as income plus a penalty tax of A. 5% B. 10% C. 15% D. 25%

10%

the incontestability provision is usually in effect A. 1 year B. 2 years C. 3 years D. 4 years

2 years

For accelerated death benefits to receive the same tax treatment as regular death benefits the insured must be certified to have an illness or physical condition that can reasonably be expected to result in death within A. 9 months B. 12 months C. 24 months D. 36 months

24 months

A typical enrollment period is how many days after the probationary period? A. 30 B. 31 C. 45 D. 60

31

At what age can people begin making catch-up contributions to their individual retirement plans? A. 50 B. 55 C. 60 D. 65

50

Kim is required to take a $2,000 minimum annual distribution from her IRA. She fails to comply and only takes a $1,000 distribution. Because of this failure, Kim will be subject to A. 10% penalty tax B. 25% penalty tax C. a 500$ fine D. a 50% penalty tax

50% penatly tax

At what age is an individual no longer subject to early withdrawal penalties under an IRA? A. 55 B. 55 1/2 C. 59 D. 59 1/2

59 1/2

a rollover from one IRA to another or from a qualified plan to an IRA must be accomplished within how many days if the owner is to avoid an income tax liability on the amount rolled over? A. 10 B. 30 C. 60 D. 90

60

During the underwriting process, medical exams and testing are paid for by the A. insurer B. agent/producer C. underwriter D. applicant

insurer

Ginny is a revocable primary beneficiary on her mother's life insurance policy. Which of the following statements is TRUE? A. Ginny can probably assign her rights in the policy as collateral on a loan B. Ginny will receive benefits before any other beneficiary upon her mother's death C. Ginny will receive benefits only if another beneficiary has died before her mother dies D. Ginny's mother may not change the beneficiary without Ginny's permission

Ginny will receive benefits before any other beneficiary upon her mother's death

When Tom dies, Rosemary receives the death benefit. If Rosemary had died before Tom, George would have received the benefit. Which of the following statements is TRUE? A. Rosemary is the primary beneficiary, and George is the contingent beneficiary B. Tom is the primary beneficiary, and Rosemary is the contingent beneficiary C. Rosemary is the contingent beneficiary, and George is the primary beneficiary D. George is the contingent beneficiary, and Rosemary is the tertiary beneficiary

Rosemary is the primary beneficiary, and George is the contingent beneficiary

Steve is the beneficiary on his wife's life insurance policy. When they divorce, his wife cannot remove him as beneficiary on the policy without his written permission because A. most states require the beneficiary's written consent B. Steve is a revocable beneficiary C. Steve is an assigned beneficiary D. Steve is an irrevocable beneficiary

Steve is an irrevocable beneficiary

Tracey is paying money into an annuity she hopes will support her in her retirement years. Her contract currently is in which of the following periods? A. accumulation period B. nonforfeiture period C. payout period D. annuity period

accumulation period

Which of the following would not qualify as a 1035 exchange? A. a cash value life insurance policy to another cash value life insurance policy B. A life insurance policy to a an annuity contract C. an annuity contract to a life insurance policy D. an annuity contract to another annuity contract

an annuity contract to a life insurance policy

Under which annuity do the benefit payments begin within 12 months of the purchase? A. an immediate annuity B. a deferred annuity C. a retirement annuity D. an accumulated annuity

an immediate annuity

All of the following are correct regarding group insurance EXCEPT A. the employer is the policyowner B. a group cannot be formed only for the purposes of purchasing insurance C. an individual policy will be provided to all members of the group D. the employer cannot discriminate when determining eligibility to its members

an individual policy will be provided to all members of the group

A tax favored retirement savings plan that people can set up themselves through a bank, securities firm, or insurance company is known as A. an individual retirement account (IRA) B. a savings account C. a term insurance policy D. a whole life policy

an individual retirement account

All of the following statements about annuities benefits vs. life insurance benefits are correct EXCEPT A. annuities can be used to liquidate as estate B. annuities protect against living too long C. annuities protect against dying too soon D. annuities use a lump sum of accumulated money to guarantee income payments while living

annuities protect against dying too soon

The period during which the person receives the annuity benefits is called the A. accumulation period B. annuitization period C. payout period D. putting in period

annuitization period

Which of the following factors is NOT used to determine annuity premiums? A. annuniant's retirement date B. assumed interest rate C. income account and payment guarantee D. applicant's tax

annuniant's retirement date

All of the following are factors in determining a life annuity payout amount EXCEPT A. annuitants age B. beneficiary's age C. annuitants gender D. payment guarantee

beneficiary's age

annuities exist to A. accumulate a sum of money B. distribute a lifetime income C. both accumulate a sum of money and distribute a lifetime income D. neither accumulate a sum of money and distribute a lifetime income

both accumulate a sum of money and distribute a lifetime income

Which of the following is not a type of annuity product? A. fixed B. variable C. retirement D. equity-indexed

retirement

Fixed annuities are supporters by insurers A. personal accounts B. separate accounts C. general account D. high risk investment accounts

general account

All of the following statements regarding tax treatment of group life insurance are true EXCEPT A. group life insurance premiums paid by the employer are not tax-deductible as a business expense B. if a group plan is contributory, the portion paid by the employee is not tax-deductible C. premiums for any additional coverage above $50,000 are taxable income to an employee D. premiums for the first $50,000 of coverage is not taxable to the employee

group life insurance premiums paid by the employer are not tax-deductible as a business expens

All of the following statements regarding taxation of annuities are correct EXCEPT A. annuity premiums are not taxable, unless the annuity is held in a qualified retirement plan B. interest earning credited to annuities are not taxable as long as they stay in the policy C. if death occurs during the accumulation period, proceeds paid in a lump sum to the beneficiary are never taxable D. gain in an annuity or life insurance contract is taxable when a policy is surrendered

if death occurs during the accumulation period, proceeds paid in a lump sum to the beneficiary are never taxable

Under which of the following life annuity payout options do the payments stop when the first of two annuitants die and not continue on the the survivor? A. joint life B. joint life and survivor C. life only D. life with period certain

joint life

Albert has purchased an annuity that will pay him a monthly income for the rest of his life. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. What annuity payout option did Albert select? A. straight-life annuity B. life annuity with period certain C. life with refund annuity D. temporary annuity

life with refund annuity

All of the following statements regarding tax treatment of individual life insurance policies are correct EXCEPT A. policy loans are not taxable B. premiums are tax deductible C. cash value is not taxable as long as it stays in the policy D. when a life insurance policy is surrendered for its cash value, only the gain is taxable

premiums are tax deductible

None of the following premiums are tax deductible for a business EXCEPT A. premiums paid for an executive bonus plan B. key person life insurance policy premiums C. premiums paid in a buy sell agreement D. premiums paid for life insurance that ends up reimbursing the company

premiums paid for an executive bonus plan

Which of the following employee sponsored retirement plans does not require the employer to make a funding contribution every year? A. pension plans B. profit-sharing plans C. defined contribution plans D. defined benefit plans

profit-sharing plans

All of the following statements regarding the conversion privilege are true EXCEPT A. the conversion must be done within 31 days from the date coverage is lost B. the converted policy must be permanent insurance, not term C. the converted policy must provide the same coverage amount as the individual had under the group policy D. proof of insurability is required

proof of insurability is required

Which of the following organizations would be eligible for a 403(B) arrangement? A. police department B. public school system C. any small business D. any corporation

public school system

All of the following statements about profit sharing plans are correct EXCEPT A. employers are not required to make a funding contribution every year B. the amount of annual contribution is set by employee C. the maximum amount that an employer may contribute is limited to 25% of the company's payroll for all employees D. plan contributions are dependent on the company making a profit

the amount of annual contribution is set by employee

Which of the following individuals is not required to sign the application form? A. the insured B. the producer/agent C. the applicant D. the beneficiary

the beneficiary

Which of the following is not a factor in determining the amount the beneficiary will receive each time a payment made is under the fixed amount? A. the specified amount of each payment B. the principal amount C. the interest earned on the principal D. the capital amount

the capital amount

Carl purchased a life insurance policy when he was 44. The insurer accidentally recorded his age as 42. When the accident is discovered in a review of the files 5 years later A. the policy will be canceled because of misrepresentation B. the policy will not change because the incontestable period will have passed C. the coverage will be reduced because the premium is lower than it should have been D. the coverage will be raised because the premium is higher than it should have been

the coverage will be reduced because the premium is lower than it should have been

Adam is eligible for coverage on July 1. He enrolls on July 15. He does not need to show evidence of insurability because he enrolled within A. the probationary period B. the enrollment period C. the selection period D. the waiting period

the enrollment period

Which of the following statements about reduced paid-up insurance option is NOT true? A. the new policy will build cash values for the policyowner B. No further premiums need to be paid on the reduced policy - it is paid up C. the new protection is for the same amount as the original policy D. a full share of expense loading is usually not included in the premium on the reduced coverage because the costs of setting up the coverage are greatly reduced

the new protection is for the same amount as the original policy

Gianna starts work at a new job on March 1. She is not eligible for insurance coverage until July 1. The period between start date and her eligibility date is A. the probationary period B. the eligibility period C. the selection period D. the waiting period

the probationary period

Which of the following is allowed when policy proceeds are being paid through a spendthrift clause? A. the proceeds are paid directly to the beneficiary in monthly installments B. the proceeds may be transferred directly to the creditor by a beneficiary C. the proceeds may be commuted by the beneficiary to receive the present value of future payments in a lump sum D. the beneficiary may borrow against the strength of the proceeds

the proceeds are paid directly to the beneficiary in monthly installments

John leaves his $300,000 estate to his 3 children to split equally according to a per capita distribution. One of his children dies before John does. Upon John's death, which of the following statements is TRUE? A. the proceeds are split 3 ways between the remaining children and John's estate B. the proceeds are split 2 ways between the remaining children only C. the proceeds are split 3 ways between the remaining children and the beneficiary of the deceased child's estate D. the proceeds are split 4 ways between the remaining children, John's estate, and the deceased child's estate

the proceeds are split 2 ways between the remaining children only

John leaves his $300,000 estate to his 3 children to split equally according to a per stirpes distribution. One of his children dies before John does. Upon John's death, which of the following is TRUE? A. the proceeds are split 3 ways between the remaining children and John's estate B. the proceeds are split 2 ways between the remaining children only C. the proceeds are split 3 ways between the remaining children and the beneficiary of the deceased child's estate D. the proceeds are split 4 ways between the remaining children, John's estate, and the deceased child's estate

the proceeds are split 3 ways between the remaining children and John's estate

An insured and the primary beneficiary died in a car accident. Which of the following states that the primary beneficiary died first unless there is no evidence to the contrary? A. the facility of payment provision B. the uniform simultaneous Death Act C. the common disaster provision D. the spendthrift provision

the uniform simultaneous Death Act

Which of the following types of annuities are regulated as securities? A. fixed annuities B. flexible annuities C. variable annuities D. structured annuities

variable annuities

All of the following statements regarding a MEC are true EXCEPT A. withdrawals are taxed on a last-in-first-out basis B. withdrawals are taxed on a first-in-first-out basis C. policy loans and dividends are taxed the same as withdrawals D. once a policy is an MEC, it will always be an MEC

withdrawals are taxed on a first-in-first-out basis