Rhode Island insurance exam

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

family maintenance policy

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

family maintenance policy

Taking receipt of premiums and holding them for the insurance company is an example of

fiduciary responsibility

the purpose of the _______ period clause is to avoid an unintentional lapse of a life insurance policy

grace

industrial insurance sold by home service or debit insurance companies

home service insurers

In regards to representations or warranties, which of these statements is TRUE?

if material to the risk, false representation will void a policy

a long-term care rider in a life insurance policy pays a daily benefit. in the event of which of the following?

inability of the insured to perform more than 2 activities of daily life (ADL's)

when must insurable interests exist for a life insurance contract to be valid

inception of the contract

a life insurance policy would be considered contract without?

insurable interest

when 3rd party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insurable interest in the proposed insured

Quarterly premium payments increase the annual cost of insurance because

interest to the insurer is decreased while the administrative costs are increased

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

level term

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

life income

a whole life insurance policy owner doesn't wish to continue making premium payments. which of the following enables the policy owner to sell the policy for more than its cash value

life settlement contract

which of these factors do not play a role in underwriting of a life insurance policy

martial status

Which of these life products is NOT considered interest-sensitive?

modified whole life

organized and incorporated under state law. but they have no stockholders. instead, the policyholders own the company. owners get paid a share of the companies profits through dividends. participating or par companies bc policy owners do not participate in paid dividends

mutual insurer companies

process of a stock company being converted into a mutual company

mutualization

which of these is not considered to be an element of an insurance contract

negotiating

in a life insurance policy which provision states who may select policy options designate and name a beneficiary and be the recipient of any financial benefits from the policy

owner rights

which statement is true in regards to a policy loan

past due interest on a policy loan is added to total debt

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

pay face amount minus the past due premium

which of the following provisions guarantees that premiums will be waived if a juvenile life policy owner becomes disabled

payor clause

which best describes a warranty

statement guaranteed to be true

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0 because T is still alive

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

which of the following types of term life policies most likely contains a renewability feature

10 year convertible term

J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

20 pay life

which of the following type of policies pays a benefit if the insured goes blind

AD&D

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

what is the purpose of a policy summary

It highlights the critical parts of the policy issued

On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?

Jan 26

an association formed to underwrite and issue insurance like coverage on certain items and areas that might otherwise be uninsurable

Lloyds of London

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be

converted to an individual permanent policy at an individual rate

which of the following statements about noncontributing employee group life insurance is false

a minimum # of employees is required to participate

which statement is true regarding a variable whole life policy

a minimum guaranteed death benefit is provided

a policyowner may generate taxable income from which of the following dividend options

accumilation of interest

a cost of living rider gives the insured

additional death benefits

which is correct regarding the tax treatment of a lump sum payment paid to a life insurance policy primary beneficiary

all proceeds are income tax free in the year they are received

Which premium schedule results in the lowest cost to the policyowner?

annual

group life insurance policies are generally written as

annually renewable term

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

An incomplete life insurance application submitted to an insurer will result in which of these actions?

application will be returned to the writing agent

what action can a policy owner take if an application for a bank loan requires lateral

assign policy ownership to the bank

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

at the time of application

the automatic premium loan provision is designed to

avoid a policy lapse

all of the following (bilateral unilateral aleatory adhesion) are considered to be typical characteristics describing the nature of an insurance contract except

bilateral

the insurance company transferring the risk

ceding company

Which rider provides coverage for a child under a parent's life insurance policy?

child term rider

which of the following consists of an offer, acceptance, and consideration?

contract

what type of group insurance plan involves employees sharing cost

contributing plan

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

daughter

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

decreasing term

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

decreasing term

process of a mutual company being converted into a stock company

demutualization

what is the purpose of the USA patriot act

detect and deter terrorism

a variable insurance policy

doesn't guarantee a return on investment accounts

Under a trustee group life policy, who would be eligible for a certificate of coverage?

employee

P owns a $25,000 life policy that pays the face amount to him if he lives to age 70. or to his beneficiary if he dies before age 70. what kind of policy does P own

endowment at age 70

which of these statements in incorrect regarding the federal income tax treatment of life insurance

entire cash surrender value is taxable

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

equity index insurance

which of the following is an important underwriting principle of group life insurance

everyone must be covered in the group

a(n) ____ contained in a life insurance policy states that the policy will not cover certain risks

exclusion

in a life insurance policy, which features states that the policy will not cover certain risks

exclusion

Term insurance has which of the following characteristics?

expires at the end of the policy period

which non forfeiture options offers the highest death benefit

extend term

on a life insurance policy who is qualified to change the beneficiary designation

policy owner

which is true concerning a variable universal life policy

policy owner controls where the investment will go and selects the amount of the premium payment

When an employee is terminated, which statement about a group term life conversion is true?

policy proceeds will be paid if the employees dies during the conversion period

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

policy was returned within the free look period, premium will be fully refunded

a policy owner is able to choose the frequency of premium payments through what policy feature

premium mode

All of these are considered sources of underwriting information about an applicant EXCEPT

rating services

Which of these Nonforfeiture Options continue a build-up of cash value?

reduced paid up

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

reinstatement

which of these provisions require proof of insurability after a policy has labled

reinstatement

are a specialized branch of the insurance industry that insurers other insurance company's risk. *is an arrangement by which an insurance company transfers or sells a portion of the risk to a reinsurance company

reinsurers

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called

representations

a(n) ____ beneficiary may be changed by the policy owner without the consent of the beneficiary

revocable

which factors are taken into consideration when an insurance company determines the premium rate for a whole life policy on an applicant

risk classification

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

set up meeting with applicant to answer the questions

organized and incorporated under state law owned by stockholders who get a paid share of the company's profit through dividends. also referred to as a nonparticipating or non-par bc policy holder do not participate in paid dividends

stock insurance company

K is shopping for a permanent life insurance policy that will offer her the most protection per $. of annual premium. which of these policies best fits her needs?

straight life

a(n) _____ rider may be used to include coverage for children under their parents life insurance policy

term

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

the gross premium is higher on a monthly payment mode as compared to being paid annually

a policy of adhesion can only be modified by whom

the insurance company

under a graded premium whole life policy

the premium increases each year during the early years of the contract and remains the same after that time

a level premium indicates

the premium is fixed for the entire duration of the contract

the advantage of reinstating an original life policy is

the premiums are based on a younger age

the common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which is true?

this clause provides the payment of proceeds to the insured estate

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

the role of insurance is to

transfer the risk of financial loss from an individual or business to an insurance company

in an insurance contract the insurer is the only party who makes a legally enforceable promise what kind of contract is this

unilateral

life and health insurance policies are

unilateral contracts

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

A(n) ________ life policy combines investment choices with a form of term coverage

variable universal

if a 10 year term life policy contains a renewability in provision, the policy will renew

w/o evidence of insurability

a life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached

waiver of premium

The part of a life insurance policy guaranteed to be true is called a(n)

warranty

which is considered a statement that is assured to be true in every respect

warranty

a $20,000 life insurance policy applications is completed, however the producer does not collect the initial premium. at what point does the coverage go into effect

when the applicant receives the policy and pays the initial premium