Life Insurance Exam

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

3,000 (difference between premiums paid)

Which of the following is not allowable 1035 exchange?

A whole life insurance policy is exchanged for aa term insurance policy

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

Which of the following statement concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

Concealment

Which of the following charges a fee to advise people regarding the advantages and disadvantages, insurable risks, benefits, coverage, or provisions of any insurance policy that could be issued in the state?

Consultant

Which of the following is not an example of a valid insurable interest.

Debtor in the life of the creditor

The insurance fraud division of the department of Insurance is supplied with information given by the

FBI

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?

Guaranteed surrender value

What insurance concept is associated with the names Weiss and Fitch?

Guides describing company financial integrity

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

Which of the following best describes annually renewable term insurance?

It is a level term insurance

Which of the following is true regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred.

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?

Joint Life

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

Joint life annuity

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is that?

Limited-pay life

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?

Monthly premium waiver and monthly income

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility?

Promptly forwarding premiums to the insurance company

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband names as the?

Revocable beneficiary

All of the following are true of key person insurance except

The pan is funded by permanent insurance only

If an insured continually uses the automatic premium loan option to pay the policy premium,

The policy will terminate when the cash value is reduced to nothing.

For what reason may a life insurance producer backdate a life insurance policy?

To avoid an increase in premium rate for the insured

When an individual purchases insurance, what risk management technique is her or she practicing?

Transfer

Which type of insurance policy allows the policy owner to pay more or less than the planned premium?

Universal life