LIFE INSURANCE PRACTICE EXAM

Not subject to any taxes

A life insurance death benefit paid in a lump sum to a beneficiary is

Fixed-Period Installments

A life settlement option that pays out the death benefit is. Incrementally, in a specified amount until all of the proceeds are exhausted, is called

Joint Life

A whole life product that covers 2 lives and provides for payment or the death benefit on the death of the riser insurer is called

20-pay life

All other factors being equal, which of the following types of policies will accumulate cash value at the fastest rate.

Free look

An agent delivers a policy to an insured, and 9 days later the insured returns the policy and wants a complete refund. What provision covers this circumstance?

Equity Indexed Annuity

An annuity in which investment growth is dependent on the performance of an index such as the Standard and Poor's 500 is called a(n)

Provide the annuitant with an interest rate that is lesser of the guaranteed or current rate

An annuity is considered fixed when it does all of the following EXCEPT

Single premium immediate annuity

An annuity that is purchased with a lump-sum payment, and that begins income payments within one year is a

Insurer

An insurance agent represents the

Delivered

An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered

Nonadmitted

Any insurer who is NOT approved to do business in this state is considered

The coverage decrease but the premiums stay the samw

At age 25, an individual purchased a decreasing term policy. What happens to the coverage and the premiums as the insured gets older?

59 1/2

At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty

Bobs estate

Betty is the only beneficiary named on her husband Bob's policy which has a Common Disaster provision (within 90 days death benefit will go to primary estate) They are in a car wreck, and Bob dies instantly. Betty lives for 29 days. Who will receive the death benefit?

Underwriting process

Determine the company's risk regarding a proposed insured

Evidence of insurability is usually required

Each of the following is a typical characteristic of groups life insurance EXCEPT

Each party relies upon the truthfulness of the other

For an insurance contract, the principle of utmost good faith means

31 days

How long does an employee have to convert group policy coverage to an individual policy without evidence of insurability?

Adjusts the death benefit based on the premiums that were paid

If a misstatement of age is discovered during the processing of a life insurance claim what will the insurer do?

Either the cash value or the premiums paid, whichever is greater

If an annuitant dies during the accumulation period, what will the beneficiary receive?

The portion that exceeds the premiums paid IS taxable

If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered?

Grace Period

It's purpose in life insurance policies is to protect the policy owner against an inintentional lapse of the policy.

Alien Insurer

London Mutual Life is an insurer incorporated in England, and is transacting business in this state. London Muthal would be considered what type of insurer?

Not taxable

Money borrowed from the policy's cash value is

Representations

Statements in the application for insurance that are believed to be true to the best of the applicants knowledge are

Accumulation period

The "pay in" phase of the annuity is known as what period?

Medical Information on applicants for life and health insurance

The MIB is a nonprofit trade association that maintains

Assignment

The legal transfer of all or part of a policyowners rights, title or interest is called an (a)

Continuous Premium (straight) life

The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called.

Entire contract

The policy and a copy of the application, along with any riders and amendments, is called the

Payment method of the policy premium

The premium payment mode can be best described as the

Insurable Receipt

The reciept given to a life insurance applicant when the application is completed and the initial premium is received is called a(n)

Insurance

The transfer of a possible financial loss to another party refers to

Agents Report

This is the prtbirbthenapplication that provides information about an applicants dinadial condition and character, as well as the purpose of sale and how long the agent has known the applicant:

Insurable Interest Exists

To prevent people from profiting from a loss, insurers is the certain

Buy-Sell Agreement

Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the surviving partner to use the death benefit to purchase the deceased's business interests?

Certificate of Insurance

What do employees covered under a group contract receive?

Contestability

What does the payor benefit rider protect?

Substandard

What is the risk classification for those who are insurable, but have a higher than average risk?

Limited Payment

What type of permanent insurance allows the policy owner to pay for a policy in a specified period of time, and the policy owner does not have to make any more premium payments for the life of the policy?

Policy Exclusions

Which of the following allows an insurance company to deny coverage of the insurers eewth occurs in war?

All annuities (Variable, Deferreed & Equity Indexed)

Which of the following annuity products requires an agent to hold a securities license?

Annuitant

Which of the following indicates the person upon whose life the annuity income amount is determined?

Accumulation at Interest

Which of the following is NOT a nonforfeiture option in whole life policies?

403(b) Tax-Sheltered Annuity (TSAs)

Which of the following retirement plans is a special tax favored plan for NONPROFIT, charitable, educational or religious groups?

Joint and Survivor

Which of the following types of annuities would be best suited for a retired couple who are seeking income for as long as either lives?

Dividends are NOT taxable

Which statement is INCORRECT concerning policy dividends

Life income annuity

Which type of annuity settlement stops when the annuitant dies?

Adjustable life

Which type of policy allows the insured to change the amount of the dwah benefit, the amount of premium, or the type of coverage S their needs change?