Primerica exam practice

2.Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of (Choose from the following options)1. Rebating.2. Twisting.3. Defamation.4. Misrepresentation.

Twisting

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

.b)The interest is not taxable since it remains inside the insurance policy. The interest credited under this option is TAXABLE, whether or not the policyowner receives it.

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

Every expressed warranty made at or before the execution of a policy must be

Contained in and referred to in the policy or other document and signed by the insured. According to CIC 443, every express warranty made at or before the execution of a policy must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy.

An individual works for a manufacturing company. If he decides to fund a retirement plan for himself, for which of the following plans could he qualify?

an individual retirement account

16.What is the term for a sales campaign conducted through the mail?

Direct-response

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

To which of the following products does the Replacement Regulation apply?

Whole life insurance

All of the following statements are correct regarding credit life insurance EXCEPT

a)Benefits are paid to the borrower's beneficiary. In credit life insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

.b)The type of investment. Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection.

Social Security was created to provide all of the following benefits EXCEPT

unemployment income

Which of the following would be least likely to be considered a legitimate need that would be paid by insurance proceeds?

vacation travel expenses

Which of the following types of policies allows for a flexible premium and a variable investment component?

variable universal life insurance

Which of the following provisions requires an insurer to document all correspondence with an insured?

c)Errors and omissions Insurers are encouraged to document all conversations and correspondence that occurs with an insured, in the event that crucial errors and omissions should occur. The most common times for these errors are during the sales interview and policy delivery. It is essential to have proof of these interactions, in the events that an insured would sue the insurer.

#66. What is the other term for the cash payment settlement option?

c)Lump sum Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.

In the event of a loss, business overhead insurance will pay for

Rent

What is the penalty for IRA distributions that are below the required minimum for the year?

c)50% If there are no distributions at the required age, or if the distributions are not large enough, the penalty is 50% of the shortfall from the required annual amount.

An intentional or unintentional concealment entitles the affected party to which of the following?

Rescission of a contract

Which of the following statements is INCORRECT concerning an IRA?

d)Married individuals must contribute into one account for both spouses, up to a specified amount for each person. A married couple who file a joint tax return could contribute the maximum amount into 2 separate accounts, even if only one spouse had earned income; each account contributions cannot exceed a specified amount for individuals in any one year.

All of the following are the responsibilities of every long-term care insurer in California EXCEPT.

a)Provide enough business to solicit long-term care insurance. Long-term care insurers must maintain strict requirements. These include establishing marketing procedures to assure that comparison is fair and accurate and to assure that excessive insurance is not sold. In addition, insurers must semiannually submit to the Commissioner a list of all agents authorized to solicit for the sale of long-term care insurance.

The following are features of the Indexed Universal Life EXCEPT

c)Sale of this product requires a securities license. Indexed Universal Life policies have name of the same features as the Universal Life: flexible premiums, adjustable death benefits, and an investment component. However, the policy's cash value is dependent upon the performance of the equity index. Sale of the Indexed Universal Life products does not require a securities license.

What happens if a deferred annuity is surrendered before the annuitization period?

b)The owner will receive the surrender value of the annuity. If a deferred annuity is surrendered prior to annuitization, the surrender value of the annuity is guaranteed according to the nonforfeiture provision.

Which of the following is NOT a goal of risk retention?

b)To minimize the insured's level of liability in the event of loss Retention usually results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured.

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

c)$9,800

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 policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000, The face of the term policy would be the same as the face amount provided under the whole life policy.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

d)Equal to the original policy for as long as the cash values will purchase.

.Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updated at least

semiannually

The interest earned on policy dividends is

taxable

What required provision protects against unintentional lapse of the policy?

Grace period The grace period is the period of time after the premium due date that the policyowner has to pay the premium before the policy lapses (60 days in California). The purpose of the grace period provision is to protect the policyholder against an unintentional lapse of the policy.

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

.b)It is a life contingency option Under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.

A domestic insurer issuing variable contracts must establish one or more..

Separate accounts.

17.An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable?

Spouse

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

c)Cash value of the pland)Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount. If an annuitant dies before annuitization, the beneficiary will receive either the amount paid into the plan or the cash value of the plan, whichever is greater.

Which of the following departments is responsible for developing mortality and morbidity tables?

Actuarial

During a pre-selection interview, an agent is allowed to do all of the following EXCEPT

Ask questions that are not on the application but that are important for underwriting.

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.

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

a)Cash option The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.

An insurer received a claim on May 1st. On May 31th, the claim was approved in its entirety. By what date can the claimant expect the payment?

a)June 30th, Upon acceptance of the claim, insurers are required to provide payment within 30 days.

Which type of life insurance policy generates immediate cash value?

a)Single Premium Like other types of whole life policies, Single Premium Whole Life (SPWL) endows for the face amount of the policy if the insured lives until the age of 100. The distinguishing feature of a SPWL is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer.

When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?

a)They can convert their coverage to permanent life insurance without evidence of insurability. Family members may convert their term coverage to permanent insurance if requested within the time stated in the policy.

Which of the following statements regarding Business Overhead Expense policies is NOT true?

c)Benefits are usually limited to six months. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.