Life Insurance Exam Practice
An adjustable life policy can assume the form of
Either term insurance or permeant insurance
all of the following are ways to handle risk EXECPT
Elimination
ten years ago, an insured purchased a life insurance policy designed to pay his family $500 a month for 20 years. Last month, he was killed in an auto accident. The insurance company told his widow that she would receive $500 a month for the 10 remaining years on the policy. The insured had purchased what kind of a policy?
Family Income Policy
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a
Representation
Life insurance can provide which of the following
Survivor Protection
Which dividend option will increase the death benefit
Paid-up additions
which of the following is INCORRECT concerning Modified Endowment Contracts (MECs)
An MEC must always pass the 7 day test
This state provided for a temporary license for all of the following EXCEPT
An agents retirement
Which type of authority is found in the agents contract
Express
If a retirement plan or annuity is "qualified", this means
It satisfies IRS requirements for favorable tax treatment
the frequency and the amount of the premium are known as what
Level Premium
the frequency and the amount of the premium payment are known as what
premium mode
all of the following are true of annually renewable term insurance except
proof of insurability must be provided at each renewal
which type of insurer uses a formal sharing agreement
reciprocal insurers
if an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will
adjust the death benefit to what the premium would have purchased at the actual age or gender
which of the following is considered a field underwriter
an agent
Under what circumstances will the contingent beneficiary receive the death benefit
if the primary beneficiary dies before the insured
cash value guarantees in a whole life policy are called
Nonforfeiture Values
Insurers CANNOT transact insurance in this state without a
Certificate of authority
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended Term
what is the name of the tax that is levied by the federal government on the right to transfer property at the time of the death?
Federal Estate Tax
A stock insurer is defined as an insurer
Owned by its stockholders
According to agency law, the agent always represents the
insurance company
in a life insurance application, all the following signatures will be required except
the home office underwriter
Some deferred annuities include an adjustment that subjects the owner of the annuity to share in all loss or gain due to premature liquidation of bonds. This feature is found in
A market value adjusted annuity
which of the following is NOT personal use of life insurance
An individual buys cash value insurance to fund his children college education
the reduction of premium option uses the dividend to reduce
Next years premium
Which of the following is NOT true regarding life insurance in qualified plans?
Qualified plans must provide a life insurance benefit
In making annuity recommendation to a consumer the producer must have reasonable ground to believe that the annuity
is suitable
which of the following statements describes one of the reasons individuals purchase life insurance?
it creates an immediate estate
which of the following is true about the social security program
it is mandatory for most workers to pay FICA taxes
Which of the following statements if TRUE regarding an Agents Report during the policy application process
it provides the agents personal observations concerning the proposed insured
which of the following are characteristics of term life insurance
temporary protection, renewability, no cash value
All of the following are true about key-person insurance except
the death benefit is taxable to the business
which department or division of an insurance company is responsible for the selection, evaluation, and distribution of risks
underwriting
an insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling is the insurer using?
Reduction
which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insureds death was caused by an accident as defined In the policy
an accidental death rider
In Credit Life Insurance, who is responsible for paying the policy premiums
Borrower only
Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business
Buy-Sell agreement
Which of the following is true of the taxation of cash value in a business life insurance policy
cash values grow tax deferred
a whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
continue to increase
Which of the following could reduce the amount of the death benefit
failure to repay a policy loan
The two main categories of policy loan interest rates are
fixed and variable
How long is the grace period for an individual life insurance policy
1 month
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
Joint Life
what risk classification is representative of the majority of people in a certain age group with similar lifestyles
Standard
Life insurance creates an immediate estate. Which of the following best explains this statement
The face value of the policy is payable to the beneficiary upon the death of the insured
Which of the following is true regarding the surrender charge in a market value adjusted annuity
if the current rate at the time of surrender is the same as the contract rate, there is not adjustment
Gross premium for a life insurance policy is determined by adding which two components
Net premium and expenses
Answers to questions in an insurance application are called representations and, as such, they are
Believe to be true to the best of the applicants knowledge
A jumping juvenile policy is unique in that the death benefit automatically
Increased at a predetermined age
which of the following documents used in the underwriting process contains specific medical details about an applicant
Attending Physicians Statement (APS)
An insured falls down a flight of stairs and sustains a neck injury that renders him severely disabled. The insured owns a Whole Life policy. Is it possible for the policy to include a Waiver of Const of Insurance rider, and if so, what insurance costs would be waived?
No; it is not possible for this waiver to be included in a whole life policy
all of the following are true of credit life EXECPT
the insured names the beneficiary
all of the following are general requirements of a qualified plan EXECPT
the plan must be temporary
all of the following are true about social security system EXECPT
the system has been largely privatized
what is the purpose of the agents report in the application process
to provide additional information about the applicant to the underwriters
which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs
Term insurance
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have
Revocable
S set up an individual retirement account that her employer is now contributing to. Her employers contributions are not included in her gross income. What kid of retirement plan does S have?
Simplified Employee Pension (SEP)
How many days is the free-look period in most life insurance polices
10 days
In a noncontributory group policy
100% of eligible employees must participate
All of the following requirements for an individual to be licensed EXECPt
Provide a financial statement
An annuity would normally be purchased by an individual who wants to
Provide income for retirement