life insurance test
the insurer may suspect that a moral hazard exists if the policyholder
is not honest about his health on an applicant fpr insurance
which of the following applies to the 10-day-free-look privilege
it permits the insured to return the policy for a full refund of premiums paid
which of the following statements about the reinstatement provisions is true?
it requires the policy-owner to pay all overdue premiums with interest before the policy is reinstated
which of the following is NOT true regarding the accumulation period of an annuity?
it would not occur in a deferred annuity
a set of legal or regulatory conditions that affect an insurer's ability ti collect premiums commensurate with the level of risk incurred would be considered an
legal hazard
which operating division of an insurers is responsible for advertising, promoting, and distributing the insurer's products to the public?
marketing and sales
which of the following statements best describes the effect the accelerated benefit provision would have on the benefits paid to the beneficiary?
it will decrease the benefits paid to the beneficiary
what is the other term for the cash payment settlement option?
lump sum
any insurer who engages in the insurance business and violates the code with respect to insurance replacement shall on the first violation
be fined a sum of $10,000
any insurance agent who engages in the insurance business and violates the code with respect to insurance replacement shall on the first violation
be fined a sum of 5,000
all of the following are requirements of eligibility for social security disability income benefits EXCEPT
being age 65
which of the following statements regarding business overhead expense policies is NOT true
benefits are usually limited to 6 months
a policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called
business overhead expense
which of the following is the closest term to an authorized insurer?
admitted
factual statements about the insured or the risk in an insurance policy are considered
express warranty
which of the following life insurance policies allows a policy-owner to take out a loan from the policys cash value?
variable universal life
in forming an insurance contract, when does the acceptance usually occur?
when an insurers underwriter approves coverage
what limits the amount that a policyowner may borrow from a whole life insurance policy?
cash value
which of the following must an insurer obtain in order to transact insurance within a given state?
certificate of authority
which of the following is NOT a type of information that needs to be gathered in order to determine that value of someones life when using the needs approach
estimated longevity
the key factor of representation that allows the injured party to rescind the contract is
if the representation is false in a material point
based on human life value approach which of the following is NOT used to calculate an individuals life value?
predicated needs of the family after the insureds deatb
to achieve the profitable distribution of exposures
preferred risks and poor risks are balanced, with average risk in the middle
which of the following is the most common way to transfer risk
purchase insurance
the price of insurance for each exposure unit is known as
rate
which of the following insurance options would be considered a risk sharing arrangement
reciprocal
which type of beneficiary is changeable at any point
revocable
the premiums paid by the employer in a business life insurance policy are
tax deductible by the employer
written binders provide insurance before the policy is actually issued. the time period between the issuance of the binder and the policy's effective date is called
temporary term
if the annuitant dies during the accumulation period, who will receive the annuity benefits?
the beneficiary
when a life insurance policy was issued, the policy-owner designated a primary and contingent beneficiary. several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. which of the following would receive the death benefit?
the insureds contingent beneficiary
all of the following are true of an annuity owner EXCEPT
the owner pays the premiums on the annuity
what happens if a deferred annuity is surrendered before the annuitization period?
the owner will receive the surrender value of the annuity
under an extended term nonforfeiture option, the policy cash value is converted to
the same face amount as in the whole life policy
which of the following statements regarding policy dividends is true?
they are a refund of unearned premiums
when the breadwinner that is the insured by a family policy dies, what rights are provided to other family members that are covered under the policy ?
they can convert their coverage to permanent life insurance with evidence of insurability
which of the following insurance arrangements will be appropriate for a parent buying life insurance on a child where the parent is the policy-owner?
third-party ownership
which of the following statements regarding the taxation of modified endowment contracts is FALSE
withdrawals are not taxable
what is the waiting period on a waiver of premium rider in life insurance policies?
6 months
an investor buys a life policy on an elderly person in order to sell it for a life settlement. this is an example of
a stoli policy
an applicant buys a non qualified annuity, but dies before the starting date. for which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable
spouse
what is the minimum free-look period for newly issued life insurance policies in this state?
10 days
the code defines the term "transact" as all of the following except
analyzing contract insurance
an insurer wants to begin underwriting procedures for an applicant. what source will it consult for the majority of its underwriting information?
application
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
the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
credit life
which of the following is not fundable by annuities
death benefits
if an insured changes his payment plan from monthly to annually what happens to the total premium?
decreases
what is the term for sales campaign conduct through the mail?
direct-response
which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?
guaranteed lifetime withdrawal
a return of premium term life policy is written as what type of coverage?
increasing
insurance is the transfer of
risk
the title page of the policy provides a summary of the benefits and coverages provided by the policy. All of the following information is included in the title page EXCPET
the insureds beneficiaries
what would be an advantage to naming a contingent or (secondary) beneficiary in a life insurance policy?
it determines who receives policy benefits if the primary beneficiary is deceased
which of the following terms is used to name the non-taxed return of unused premiums?
dividend
during the grace period, the policy owner can
pay a late premium without penalty
another name for a substandard risk classification is
rated
in the event of a loss, business overhead insurance will pay for
rent
an intentional or unintentional concealment entitles the affected party to which of the following?
rescission of a contract
the annuity owner dies while the annuity is still in the accumulation stage. which of the following is TRUE?
the beneficiary will receive the greater of the money paid into the annuity or the cash value
which of the following protects consumers against the circulation of inaccurate or obsolete personal l or financial information?
the fair credit reporting act
an insured and his spouse own a home. when the insured dies the insurer pays the remaining balance on his home loan. which type of life insurance provision/rider does this describe?
mortgage redemption
in case of a loss, the indemnity provision in insurance policies
restores an insured person to the same financial state as before the loss
if an agent wishes to sell variable life policies what license must the agent obtain?
securities
events in which a person has both the chance of winning or losing are classified as
speculative risk
stranger originated life insurance(stoli) policies are in direct opposition to the principle of
insurable interest
a contract which one party undertakes to indemnify another against loss is called
insurance
in general terms, IRA contributions are
Tax deductible
the agents authority to transact insurance business for an insurer is effective ?
as of the date that the notice of appointment is signed
the proposed insured makes the premium payment on a new insurance policy. if the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. this is an example of what kind of contract?
conditional?
an insured has the right to return the new insurance policy for a full refund during the
free-look period
if a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes
guaranteed insurability rider
the dividend option in which the policy uses dividend to purchase a term policy for one year is referred to as the
one-year term option
upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. what does this mean?
the beneficiary will only receive payments of the interest earned on the death benefit
which of the following is an example of liquidity in a life insurance contract?
the cash value available to the policy owner
which of the following would NOT fall into the category of costs associated with death?
the expense of a vacation for surviving family members
which of the following is true if the policy owner exercises his/her right to surrender his/her life insurance policy for its current cash value? assume that policy owner and insured are the same person.
the insured is no longer covered under the surrendered policy
the waiver of cost of insurance rider is found in what type of insurance?
universal life
an applicant for insurance is requesting more information from her agent about a claim that is currently being settled. within what time period must the agent respond?
15 days
which of the following must be disclosed in all advertisements and policies of term life insurance for individuals 55 years of age or older?
insurance monetary value index
which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery?
insureds who are 60 years of age or older
when a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?
the insurance company's general account
which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds death?
a minor son of the insured
which of the following is NOT allowed in credit life insurance?
creditor requiring that a debtor buys insurance from a certain insurer
in which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contact with the insurer
direct response system
what type of premium do both universal life and variable universal life policies have?
flexible
an insurer may discriminate against a person through underwriting if that person has
a physical handicap that could result in an actuarially predictable loss
which of the following documents delivered to the policy-owner includes information about the premium amounts, cash values, surrender values and death benefits for specific policy years?
a policy summary
which of the following best describes the policy non renewal
discontinuance of an insurance policy by the insured on the policy anniversary date
if an annuitant dies before annuitization occurs, what will the beneficiary receive?
either the amount paid into the plan or the cash value of the pan, whichever is the greater amount
when the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
equal to the original policy for as long as the cash values will purchase
all of the following actions by a person could be described as risk avoidance EXCEPT
investing in the stock market
which of the following is NOT considered personally identifiable information?
government records
if an agent unwittingly gives a client incorrect information what professional insurance would pay for the losses or defend the agent against any resulting lawsuit?
errors and omissions
any insurance agent who commits a repeated violation of the insurance code with respect to insurance replacement will be liable for
an administrative penalty of no less than 5,000 and no more than 50,000
all of the following are examples of third-party ownership of a life insurance policy EXCEPT
an insured borrows money from the bank and makes collateral assignment of a part of the death benefit to secure to the loan
an insured owns a $50,000 whole life policy. at age 47, the insured decides to cancel his policy and exercise the extended term option for the polciys cash value, which is currently $20,000. what would be the face amount of the new term policy?
$50,000
for variable products, underlying assets must be kept in
a separate account
which of the following would NOT be considered a form of direct response marketing
a sign in an insurers office
the policy-owner 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 for their children when they reach a certain age. which settlement option should the policy-owner choose?
interest only option
which of the following is TRUE regarding the insurance amount in a credit life policy?
the creditor can only insure the debtor for the amount owed
all of the following are true about variable products EXCEPT
The premiums are invested in the insurers general account
if an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
it is only taxable if the cash value exceeds the amount paid for the premiums
peril is most easily defined as
the cause of loss insured against