Life Insurance Q's

Premiums

All of the following are examples of Risk Retention EXCEPT

the insured's estate

A 40 year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarried and dies at age 61, leaving 2 grown-up children. Assuming he never changed his beneficiary, the policy proceeds will go to...

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

All of the following action can be described as twisting EXCEPT

Hazards

Events or conditions that increase the chances of an insured loss occurring are referred to as

Authorized

If an insurer meets the State's financial requirements and is approved to transact business in the same state, it is considered to be

Interest Only Option

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. What settlement option should the policyowner choose?

the surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges

a deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?

in the insured's premium will be waived until she is 21

a father owns a life insurance policy on his 15-year old daughter. The policy contains the optional Payor Benefit rider. if the father becomes disabled, what will happen to the life insurance premiums?

Require a premium increase each renewal

a man decided to purchase a $100,00 Annually Renewable Term Life policy to provide additional protection until his children finish college. He discovered that his policy ...

nonparticipating policy

a policy that does not pay dividends to policyowners is a

180 days

a temporary license in this state is valid for a maximum of

the spouse of a retiring insurance producer

a temporary producer license could be issued without examination to all of the following EXCEPT

Predicted needs of the family after the insured's death.

based on Human Life Value Approach, which of the following is NOT used to calculate an individual life value?

Policy Summary

what describes the specific information about a policy

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance

which of the following best describes the MIB

Not subject to income taxation by the Federal Government.

Death benefits payable to a beneficiary under a life insurance policy are generally

Guides describing company financial integrity

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

6 years

what is the least amount of time a life policy can allow for insured to take legal action against their insurer for a particular act?

The same face amount as in the whole life policy

Under an extended term nonforfeiture option, the policy cash value is converted to

Payor Benefit Rider

Which of the following riders would NOT cause the Death Benefit to increase?

the guarantee association

all of the following entities regulate variable life polices EXCEPT

the insured may choose to convert to term or permanent individual coverage

an employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

Speculative Risk

events in which a person has both the chance of winning or losing are classified as

90 days

if a licensee does not earn 24 hours of Continuing Education by his/her review date, his/her license will be suspended for up to how many days?

the date of medial exam

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

Signed waiver of premium

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

explaining to the client the advantages of permanent insurance over term and suggesting changing policies

all of the following actions can be described as twisting EXCEPT

At distribution, all amount received by the employee are tax free

all of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

The insurer will pay the full death benefit from the group policy to the beneficiary

an employee quits his job on May 15 and doesn't convert his Group Life Policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. which of the following statements best describes what will happen?

the insured will need a written consent of the insurer

an insured want to transfer his personal insurance policy to a friend. under what conditions would this be possible?

both the principal and interest will be liquidated over a selected period of time.

which of the following best describes fixed-period settlement options

Business Entity

which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer?

Policy Summary

which of the following documents delievered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

Notice Regarding Replacement

which of the following documents must be provided to the policyowner or applicant during policy replacement?

the designee of a producer that is called to active service with the Navy

which of the following individuals could qualify for a temporary insurance license?

Roth IRA

which type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distributions to start at age 70 1/2

12 months

within what time period after completing prelicensing education must an applicant file a certificate of education completion with the commissioner?

Cost of living Rider

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called

50% tax on the amount not distributed as required

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

Guaranteed Insurability Option

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Paid-Up Option

An insured had 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?

Pay the death benefit

An insured purchased a life policy in 2010 and died in 2017. the insurance company discovers at that time the insured had concealed information during the application process. What can they do?

the insured will need a written consent of the insurer

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

Reinstatement Provision

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

15 days

if a statement of policy information is not furnished to the applicant at the time of application, how soon must the form be delivered to the applicant

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

if an insured continually uses the automatic premium loan option to pay the policy premium ...

a producer's retirement

in this state, a temporary license may be issued for any of the following reasons EXCEPT

equal to the original policy for as long a period of time that cash value will purchase

when a life insurance policy is canceled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount ...

It is reduced to the amount of what the cash value would buy as a single premium

when a reduced-paid up nonforfeiture option is choose, what happens to the face amount of the policy?

Collect premium for in-force polices and explain coverages to clients that have existing polices written by her father

M, who is not licensed as an insurance agent, works part-time in her father's insurance agency. M may preform all of the following EXCEPT

A policy Summary

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

Creditor is the policyowner

Which of the following is TRUE about credit life insurance?

discriminating in benefits and coverage on the insured's habits and lifestyle

Which of the following will NOT be considered unfair discrimination by insurers?

dividend

which of the following terms is used to name the nontaxed return of unused premiums?

Pay the policy proceeds only if it would have issued the policy.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will ...

at distribution, all amount received by the employee are tax free

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

Private insurer may be authorized to transact insurance by state departments

Which of the following statements is an accurate comparison between private and government insurers?

Decreasing Term

Which of the following types of insurance polices is most commonly used in Credit Life insurance?

Whole Life

Which of the following types of insurance policies would perform the function of cash accumulation?

accumulated cash value

if an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate?

when an insurer's underwritter approves coverage

in forming an insurance contract, when does acceptance usually occur?

in the preceding 12 months

the commissioner may waive pre-licensing requirements or examinations for someone who has been a licensed insurance producer ...

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

what is the purpose of a conditional receipt?

Grace Period

what required provision protects against unintentional lapse of the policy

Its premium steadily decreases over time, in response to its growing cash value.

which of the following is NOT true regarding a Straight Life policy?

Cost comparison methods

which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to polices that are competitively priced?

Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

which of the following would be deducted from the death benefit paid to beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?

$3,000

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?

It provides income the beneficiary cannot outlive

Which of the following is true regarding a single life settlement option?

It may last for the lifetime of the annuitant.

Which of the following is true regarding the annuity period?

it may last for the lifetime of the annuitant

Which of the following is true regarding the annuity period?

Insureds cannot be randomly selected.

Which statement regarding insurable risks is NOT correct?

Current interest rate at the time of surrender

Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that that annuity owner will have to pay?

The interest is not taxable since it remains inside the insurance policy.

all of the following are TRUE statements regarding the accumulation at interest option EXCEPT

Consideration

when an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Both the principal and interest will be liquidated over a selected period of time.

which of the following best describes fixed-period settlement option?

AM Best

which of the following producer evaluations of insurers' financial status often used by state departments of insurance?

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

which of the following statements concerning buy-sell agreements is true?

90 days

Licensees who are currently licensed and have recently become residents of the state of Michigan may not have to complete any pre-licensing education. To qualify for this exemption, they must apply to become resident licensees within a few days of establishing a legal residence within how many days?

Change any incorrect statement on the application by personally initialing next to the corrected statement.

all of the following are duties and responsibilities of producers at the time of application EXCEPT

an individual not covered by an employer-sponsored plan who has earned income

who can make a fully deductible contribution to a traditional IRA?

current interest rates at the time of surrender

your client owns a Market Value Annuity, in order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. which of the following will determine the penlty that the annuity owner will have to pay

Survivor Protection

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

annuitization period

In an annuity, the accumulated money is converted into a stream of income during which time period?

the entire face value of the policy will be included in J's taxable estate

J transferred his life insurance policy to his son two years before his death. Which of the following is true?

Person B must consent to be insured in writing

Person A has an insurable interest in Person B and want to insure B's life. A will be the policy beneficiary. Which of the following is true?

Increasing Term

What type of insurance would be used for a Return of Premium rider?

When the insured reaches age 100

When would a 20-pay whole life policy endow?

Annuities payments

Which concept is associated with 'exclusion ratio"?

reduced paid-up

Which nonforfeiture option provides coverage for the longest period of time?

Attained Age

an employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his