Review Questions

What kind of life insurance policy covers two or more people with the death benefit payable up on the last person's death

Last survivor life insurance

The authority granted to a licensed producer is provided via the

Law of agency

Insurance companies determine risk exposure by which of the following Insurable interest Insurance exchange Population table data Large number and risk pooling

Law of large numbers and risk pooling

Which contract element is insurable interest a component of

Legal purpose

Which of these is not considered to be a common life insurance nonforfeiture option

Life income annuity

A limited payment whole life policy provides

Lifetime protection

A permanent life insurance policy where the policy owner pays premiums for a specified number of years is called a

Limited pay policy

The examples are examples of pure risk except Losing money at the casino injured while playing football Falling at a casino and breaking a hip Jewelry stolen during a Home robbery

Losing money while at the casino

Joanne has a $100,000 whole life policy within accumulated $25,000 of cash value she would like to borrow 15,000 against the cash value which of the following statements is true

Net death benefit will be reduced if the loan is not repaid

A provision in a whole life policy that allows a policy owner to terminate the policy in return for a reduced paid up policy of the same type is called Bay

Nonforfeiture provision

A provision that allows a policy owner to withdraw policies cash value interest free is a

Partial surrender

What is the immediate specific event causing loss and giving rise to risk Peril Hazard Loss factor Liability

Peril

What is an insurance policies Grace period

Period of time after the premium is due but the policy remains in force

Variable life insurance and universal life insurance are very similar which of these features are held exclusively by variable life insurance

Policy owner has the right to select the investment which will provide the greatest return

Which of these describes the results of a modified endowment contract that failed to meet the seven pay test

Predeath distributions are typically taxable

Under modified endowment contract what are the likely tax consequences

Predeath distributions will become taxable

The fair credit and reporting acts main purpose it to assist in the underwriting of insurance policies Protecting church from an applicants misrepresentation Protect consumers with guidelines regarding credit reporting and distribution Assist in an insurer and determining an applicants credit worthiness

Protect consumers with guidelines regarding credit reporting and distribution

Decreasing term life insurance is often used to

Provide coverage for a home mortgage

Policy owner my exes exercise which of these dividend options that uses dividends to pay all or part of the next premium do

Reduction of premium dividend option

Curl is an active duty service man who was recently killed in an accident while Homan leave which military service exclusion Claus would pay upon his death

Results

A life insurance policy owner does not have the right to

Revoking absolute assignment

Which of the following are the premium payments for a universal life policy not used for

Separate account investments

The statements which best describes the pay the relationship between the premiums of a whole life policy and the premium payment period is

Shorter the payment period. The higher the premium

In an insurance contract the applicants consideration is the

Statements made in the application and the premium

What does the word level and level town describes

The Face amount

Chrissa purchases a 10 year level term life insurance policy that has a death benefit of $200,000 which of these statements is true

The face I'm out in premium auto remains same over the 10 year period

The insured individual in the policy beneficiary died from the same accident the common disaster provision states that the insurer will continue as if

The insured outlived the beneficiary

If an insured dies during the grace period with no premiums paid

The policy would be payable minus the premium amount

the do not call registry offers exemptions for called placed from all of the following except charities political organizations insurance sales calls surverys

insurance sales calls

ambiguities in an insurance policy are always resolved in favor of the insured producer insurer underwriter

insured

Insurers predict the increase of individual risk Law of large numbers US census Average mortality incidents experience

law of large number

what kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus nonparticipating life insurance policy participating LI policy divisible surplus LI policy straight LI policy

participating

the cause of a loss is referred to as hazard adversity peril risk

peril

The principle of a most good faith the insured will answer questions on the application to the best of their knowledge and pay the required premium well then sure will deal fairly with the insured and it's underwriting issurance of the policy promises made legal reserve

promises made

What is considered to be the primary reason for buying life insurance? provide death benefits provide money for retirement provide living benefits provide money for college

provide death benefits

what Are an applicant statements concerning occupation hobbies and personal health history regarded as warranty guarantee representation collateral

representation

And insurance claims settlement practices are regulated by SEC NACA NAIC state insurance department

state insurance department

a _______ company is owned by its shareholders

stock

a nonparticipating company is sometimes called a alien insurer mutual insurer reinsurer stock insurer

stock insurer

under a contract of adhesions, there is potential for an unequal exchange of value the insurer's obligations are dependent upon certain acts of the insured individual the terms must be accepted or reject in full only one party make any kind of enforceable promise

terms must be accepted or rejected in full

Insurance represents the process of risk selection avoidance transference assumption

transference

What is implied authority defined as

Authority that is not specifically given to an agent in the agency contract but that an agent can reasonably assume to carry out his or her duties

Rob purchases a standard whole life policy with a $500,000 bet death benefit when he was 830 his insurance agent told him the policy would be paid up if he reached the age 100 the present cash value of the policy equals $250,000 Rob recently died at age 60 the death benefit would be

$500,000

Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken? 1000 3000 5000 7000

5000

Which of the following best describes a conditional insurance contract

A contract that requires certain conditions are asked by the insured individual

Policy feature makes a universal life policy different from my whole life policy

A flexible premium schedule

A modified endowment contract is best described as

A life insurance contract which accumulates cash value is higher than the IRS will allow

Hey single premium cash value policy can be described as

A policy that is paid up after only one payment

A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called -self derived plan -multiple employer plan -blanket plan -self funded plan

A self funded plan

Which of the following is considered to be an alternative to a life settlement

Accelerated death benefit rider

A renewable term life insurance policy can be renewed

Add a predetermined date or age regardless of the insurance health

A policy owner may change to policy features on what type of life insurance

Adjustable life

What is the purpose for having an accelerated death benefit on a life insurance policy

Allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

According to life insurance contract law insurable interest exist

At the time of application

You're a group life policy their insurer will issue and individual _____________ to the policy owner for delivery to each person insured

Certificate

All of the following are elements of an insurance policy except

Claim forms

A provision that allows a policy owner to temporary give up ownership rights to secure a loan is called

Collateral assignment

Ownership of a life insurance policy may be temporary transferred with

Collateral assignment

In an insurance contract the element that shows each party is giving something of value is called

Consideration

Which type of clause describes the following statement we have issued the policy in consideration of the representation in your application and payment on the first term premium

Consideration clause

It's not an element of a valid contract

Counter signature

Happens to coverage under a children's term rider when that child reaches a certain specified age

Coverage is eliminated

In what part of an insurance policy or policy benefits found

Declaration

The least expensive option to pay off a 30 year mortgage balance would be

Decreasing term life

Example of risk sharing would be Adding more security to a high-risk building Choosing not to invest in the stock market Doctors pulling their money to cover malpractice exposure Buying an insurance policy to cover potential liabilities

Doctors pulling their money to cover malpractice exposure

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?

Endowment policy

Level premium permanent insurance accumulates Arif reserve that will eventually

Equal the face value of the policy

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contract side to ace did you laded stock index what kind of policy is this

Equity index whole life

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called

Errors and omissions

Which of these writers will pay the death benefit if the insurance spouse dies

Family term insurance rider

All of these are characteristics of a universal life insurance policy except

Fix surrender value

What is a corridor in relation to a universal life insurance policy

Gap between the total death benefit in the policies cash value

A business will typically use which type of life insurance to cover their employees

Group policy

I life insurance rider that allows an individual to purchase insurance as they grow older regardless of insurability is called

Guaranteed insurability rider

The automatic premium loan provision authorizes ensure to withdraw from the policies cash value the amount of

Has to premiums that have not been paid by the end of the grace period

Julia has a $100,000.30 year mortgage on her new home what type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30 year.

Increasing tournament shirt

The conversion privilege under a group life plan allows an employee to convert a

Individual plan a bond employment termination

All of the following are characteristics of a group life insurance plan except

Individual underwriting

Which of the following is present when an applicant stands to lose value adventure dies

Insurable interest

Which of these is not considered to be a nonforfeiture option in a whole life insurance policy

Interest only

A life insurance policy written on one contract for two people in which it is payable upon the first death is called

Joint

Bob and Tom starts a business center each partner contributes an important element to the success of the business they decide to take life insurance policies out on each other and name each other as beneficiaries eventually they retire and dissolve the business Bob dies 12 months later the policies continue in force with no change both partners are still married at the time of Bob's death in the situation who will receive Bob's policy proceeds

Tom

In an insurance contract the insurer is the only party legally obligated to perform because of this an insurance contract is considered

Unilateral

A life insurance policy that contains a guaranteed interest rate with a chance to earn a rate that is higher than the guaranteed rate is called

Universal life

A life insurance policy that contains a guaranteed interest-rate with a chance to earn a higher rate than the guaranteed rate is called

Universal life

Joe has a life insurance policy that has a face amount of $300,000 after a number of years the policies cash value accumulates to 50,000 in the face amount becomes 350,000 what kind of policy is this

Universal life policy

Which type of policy combines the flexibility of a universal life policy with investment choices

Variable universal life policy

Type of life insurance offers flexible premiums are flexible death benefit and a choice of how the cash will be invested

Variable universal policy

Sean Mike and Dave are brothers who have a $100,000 first to die joint life policy covering all three of their lives if my dad's first the policy proceeds

Will no longer provide insurance coverage

A renewable term life insurance policy allows the policy owner the right to renew the policy

Without producing proof of insurability

People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called risk rentention preexisting conditions law of large numbers adverse selection

adverse selection

The term which describes the fact that both parties of a contract may not receive the same value is referred to as

aleatory

According to the life insurance contract law, insurable interest exists

at the time of application

An individual who removes the risk of losing money in the stock market by never purchasing stock is said to be engaging in Risk reduction Risk transference Risk avoidance Risk retention

avoidance

Insurable interest does NOT occur in which of the following relationships? sister and brother parent and children business partners business owner and client

business owner and customer

A waiver of premium rider allows an insured to waive premium payments if the insured is

completely and permanently disabled

Fraternal Benefit Society has each of the following characteristics EXCEPT -incorporated -without capital stock -exist for profit -exist for benefits of its members

exist for profit

When the principal gives the agent authority in writing, it's referred to as express implied apparent imposed

express

Do the following is considered to be an event or condition that increases the probability of an insured's loss risk hazard indemnity peril

hazard