Testing 05.2024
What is a foreign insurer?
An insurer with a home office in another state
Which concept is associated with "exclusion ratio"?
Annuity payments
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT
Applicant's past income.
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
Only written statements can be considered fraud
Traditional IRA contributions are tax deductible based on which of the following?
Owner's income
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment
All of the following statements about equity index annuities are correct except
The annuitant receives a fixed amount of return
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but are taxable upon distribution.
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
Which of the following life insurance policies would be considered interest sensitive?
Universal Life
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
Which of the following can surrender a deferred annuity contract?
Only the annuity owner
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 would NOT be a violation of state insurance regulations?
Agent C uses her license to write only business other than controlled.
An insurance contract must contain all of the following to be considered legally binding EXCEPT
Beneficiary's consent
Which of the following is NOT true regarding an annuity certain?
Benefits stop at the annuitant's death.
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
Charge a higher premium
Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?
Cost comparison methods
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
Cost of Living Rider
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
Cost of Living Rider
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
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death benefit
What method is used to determine the taxable portion of each annuity payment?
Exclusion ratio
An agent selling variable annuities must be registered with
FINRA
Which policy component decreases in decreasing term insurance?
Face amount
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider
An insured has a modified endowment contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?
He will have to pay a penalty if he is younger than 59 1/2
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
Which of the following is correct regarding credit life insurance?
It insures the life of a debtor
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred.
Which of the following is usually true of a participating life insurance policy?
It pays dividends to policyowners
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Joint Life
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
In a single employer plan, what is the name of the policy issued to the employer
Master contract
Which of the following best describes gross annual premium?
Net premium plus expenses
Who might receive dividends from a mutual insurer?
Policyholders
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not tax deductible as a business expense.
The federal fair credit reporting act
Regulates consumer reports
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allow this?
Reinstatement provision
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?
Standard risk is representative of the majority of people.
Your client is planning to retire. She has accumulated 100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend
Straight life
The annuitant 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 is an example of liquidity in a life insurance contract?
The cash value available to the policyowner
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?
The interest will continue to accumulate tax deferred.
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of the annuity.
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct except
The policy is owned by the company
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?
Withdrawn amounts are taxed on a last in, first out basis.
Which of the following types of agent authority is also called perceived authority
apparent
Which of the following is the basic source of information used by the company in the risk selection process
application
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
beneficiary
All of the following information about the applicant is identified in the general information section of life insurance application EXCEPT
education
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
false advertising
The automatic premium loan provision is activated at the end of the
grace period
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
greatest
Fixed annuities provide all of the following EXCEPT
hedge against inflation
Which of the following premium modes would result in the highest annual cost for an insurance policy?
monthly
All of the following types of distributions are considered exceptions to the early distribution rule and, therefore are not subject to the penalty tax EXCEPT
participant's debt
Installing deadbolt locks on the doors of a home is an example of which method of handling risk?
reduction
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
variable
The main difference between immediate and deferred annuities is
when the income payments begin
Which of the following types of policies will provide permanent protection?
whole life