Life Insurance Test Pt. 4

How long must a producer maintain customer record for an insurance transaction?

2 years

Which type of policy can group term life insurance normally be converted to?

An individual permanent life insurance policy

An individual who purchases a modified life insurance policy expects

An improvement in future income

Which of the following is considered to be an example of unfair restraint of competition?

Coercion

How may an insurance company classify an accidental death benefit on a life policy?

As an optional policy rider

In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

Automatic premium loan

The main purpose of an annuity is to

Create a stream of income

Which of the following disability buy-sell agreements is best suited for business with a limited number of partners?

Cross-purchase agreement

If a life insurance applicant is shown future premiums are to be paid out of non-guaranteed values, the illustration used in the sales presentation MUST

Disclose that premium payments may need to be resumed depending on actual results

Which statement concerning an adjustable life insurance policy is FALSE?

Evidence of insurability is required when there is a change in premium

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?

Give notice, explain, and allow opting out

Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?

Incontestable Clause

When premiums are determined, one factor would be the expenses of the

Insurer

In what way are insurance policies aid to be aleatory?

Involves the potential for the unequal exchange of value

When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?

Irrevocable beneficiary

What must be disclosed when a producer advertises a life insurance policy?

Name of the actual Insurer

A producer's failure to provide title and true nature of a policy upon solicitation is an example of

Misrepresentation

Which of these is NOT an Unfair Claims Settlement Practice?

Offering to settle a claim by arbitration

All of the statements correctly describe an aleatory contract EXCEPT

Only one party makes any kind of legally enforceable offer

Which statement regarding an adjustable life insurance policy is NOT true?

Policy loans are not permitted

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premium payments are waived in the event the premium payor dies or becomes disabled

How are level policies able to provide level premiums?

Premiums are averaged over the term of the policy

The automatic premium loan provision can be accurately described as

Provision that provides a policy loan to pay any premiums by the end of the grace period

The automatic premium loan provision can be accurately described as a

Provision that provides a policy loan to pay any premiums by the end of the grace period

Which of the following types of risk is insurable?

Pure

What type of risk involves the potential for loss with no possibility for gain

Pure Risk

During an annuity's liquidation phase, the annuitant normally

Receives benefit payments at regular intervals

A life insurance policy's waiver of premium rider has the ability to

Relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled

Which of the following would most likely purchase an immediate annuity?

Retiree having a lump sum to invest

What kind of arrangement gives the policyowner the right to change the beneficiary?

Revocable designation

What happens to the cash value of a market value adjusted annuity if it's surrendered prior to the end of the stated guarantee period?

Subject to market value adjustment

Which of these annuity contract features is meant to discourage withdrawals and exchanges?

Surrender Charges

A hold-harmless clause is an example of risk

Tansfer

The interest paid during an annuity's payout period is considered

Taxable as ordinary income

When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

Ten year term insurance for a person aged 55

Which statement regarding the joint and survivor life insurance settlement option is NOT true?

The amount of each installment is larger than the single life income

A business becoming incorporated is an example of risk ____

Transfer

Which reinsurance contract between two insurers involves an automatic sharing of the risk assumed?

Treaty reinsurance

Which of the following statements about universal life insurance is NOT true?

Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

How long does protection normally extend to under a limited pay whole life policy?

Until age 100