Alabama Life Insurance
The Alabama Life and Disability Insurance Guaranty Association covers the contractual obligations of an insolvent life and disability insurer, but its aggregate liability for cash values shall not exceed
$100,000
in noncontributory group insurance plans, what percentage of eligible employees must be covered by the plan?
100%
In general, advertising would include each of the following EXCEPT:
Communication of administrative matters
which statement is correct?
Concealment is the withholding of information that should have been provided to an insurer
insurance companies are rated by each of the following rating agencies EXCEPT:
Dow Jones
The State's Nonforfeiture Law is supported by?
Nonforfeiture clause
In order to keep life insurance from being a speculative investment, what condition must exist between the subject of the policy and the applicant of the policy?
Nothing. Anyone can insure the life of anyone else
the insurance policy is a unilateral promise to pay. This means what?
The company promises to pay claims. That promise is legally enforceable.
An Annuity Disclosure Document must outline all of the following except
applicant-specific personal information including SSN & DOB
Interest sensitive whole life is also called
current assumption whole life
legally, who does an insurance agent (producer) represent?
only the company
Vanessa's policy on her life names her three brothers as beneficiaries to share equally in the proceeds. If any of the brothers predeceases Vanessa, that brother's share will be passed on to his children. Vanessa's beneficiary designation is known as
per stripes
which of the following statements is true
policy dividends cannot be guaranteed
Which policy will have immediate cash?
single premium
a 20-pay life policy would indicate what?
the premiums are paid for 20 years
A policy owner decides to pay life insurance premiums quarterly instead of annually. Select the correct statement.
the total outlay of annual premium dollars will be increased
the purpose for social security is
to help working Americans with financial problems brought on by retirement, death and disability
Alabama law regulates life insurance benefits with respect to minors. What statement is FALSE?
18-year olds may receive a limit of $3000 in life benefits in any one year
You can withdraw money from an annuity without penalty(assuming no surrender penalty) beginning at what age?
59.5 years of age
A life insurance company may pay a death claim for less than the face amount of a policy under which of the following conditions?
All of the above
all of the following are requirements to receive an Alabama insurance producer license EXCEPT:
An applicant must have a diploma from an approved college or university
Harvey has a life insurance policy with a guaranteed insurability rider. Which of the following events would enable Harvey to purchase additional insurance under this rider?
Any of the above
The assignment provision permits the policyholder to transfer or assign some or all of his/her rights to another party. A partial assignment is called what?
Collateral assignment
The Incontestable Clause has what effect on coverage?
Misstatements on the application will not negate coverage if a loss occurs following the incontestable period
Which risk classification would require payment of the most premium?
Rated
Six months ago Pedro fell down a flight of stairs at home, resulting in complete paralysis, from which he is not expected to recover. Forty-nine year old Pedro will probably be able to collect disability benefits from
Social Security
if you decided to start withdrawing money at the end of the Accumulation Period, your choices are each of the following EXCEPT:
Tax-free stream of payments at 75%
A payor rider protects against death or disability of the policy owner when the insured is a minor. Once the minor reached a specified age, what typically happens?
The insured is offered the opportunity to make premium payments
According to the Alabama Insurance regulations, all of the following are included as advertisements except:
a birthday card sent to a policyholder by his or her agent
which of the following describes a multiple employer trust (MET)?
a legal entity that small employers may join to become eligible for group insurance
which statement regarding insurance producer license appointments is TRUE?
a licensed insurance producer must be licensed and appointed by the insurer to act as the insurers agent
who must meet alabamas requirements to earn 24 hours of continuing education hours every two years?
a producer who only sells property and casualty insurance
Whole Life is a combination of death benefit and what additional feature?
accumulating cash values
Which of the following factors determines the amount of each payment under the fixed period settlement option?
all of the above
the disability income rider of a life insurance policy normally
all of the above
to sell a variable life insurance policy, an insurance producer must
all of the above
which of the following is a tax advantage of a qualified retirement plan?
all of the above
Which of the following could be the beneficiary of a life insurance policy?
all of the above are correct
When a policy owner permanently turns over all rights in a policy to an assignee it is called
an absolute assignment
A rider to a whole life policy that pays part or all of the death benefit to a terminally ill insured before his or her death is called
an accelerated benefit option
when a policy is written so that no one may change the beneficiary, the policy has
an irrevocable beneficiary
The Entire Contract Provision stipulates each of the following except
any verbal changes made by the agent are permissible if in writing
with the "reduce premium" dividend option, dividends will be used to
apply to the next premium due
Sherwood has no valid will but has named his estate as the beneficiary of his life insurance policy. As a result, he can expect that the policy proceeds
are distributed according to state law
why might a policy holder want to assign their policy to another party?
as collateral support for a loan
which of the following riders could decrease the amount of the policy death benefit if utilized?
automatic premium loan rider
Joe, whose life insurance policy has a waiver of premium rider, becomes disabled for two years, during which time the company pays over $1,500 in premiums. Joe recovers and now must
begin paying the premiums again as they become due
Should an insured die while a policy is in its grace period, the amount of past-due premium is
deducted from the face amount of the policy before payment is made to the beneficiary
a straight life annuity pays a periodic income
during the annuitants lifetime with no refund upon death
Factors commonly used by health insurers to classify risk include all of the following except
education
the authority of an insurance producer included in the agreement between the producer and the company is known as
expressed authority
which life insurance nonforfeiture option provides the same amount of death protection as the original policy, but decreases the time coverage will remain in effect?
extended term
which of the following is the settlement option of a life policy that provides periodic payments of a specified amount as long as the proceeds plus interest last?
fixed amount option
a company chartered in alabama would be considered what type of insurance company in ohio?
foreign
a company domiciled in another state that has received permission from the insurance commissioner to do business in this state is called a/an
foreign admitted company
which of the following is not correct concerning group life insurance?
group life insurance is mostly in the form of whole life insurance
in a traditional whole life policy, cash value
grows on a tax-deferred basis
under which of the following circumstances will the payor rider waive premiums and allow a life insurance policy to remain in force?
if the policy owner dies or becomes disabled prior to the insured reaching either age 21 or 25
the fundamental insurance concept that an insured should not profit from a loss but should be restored in whole or in part to the approximate financial condition occupied before the loss is known as the principle of
indemnity
the life and health insurance marketing system utilizing non-employee agents that represent just one insurance company and are aoften paid an allowance to cover office expenses and staffing is the
independent agency system
the fixed period (fixed time) option provides that the principal amount
is never decreased
The type of premium for term life insurance that remains the same throughout the policy period is
level premium
a term policy in which the protection remains constant for the term of the policy is
level term
the waiver of premium rider suspends premium payments without penalty for what situations?
long term disability
Offering to give a prospect anything of value not specified in the contract to persuade the prospect to purchase the insurance is: A) rebating. B) twisting. C) allowed. D) encouraged.
rebating
Dividend options are defined as ways in which the policy owner can:
receives dividends paid on any stock held
your license may be refused, suspended or revoked for any of the following actions except
receiving too many unwarranted consumer complaints
When an insurer cedes part of an insured's coverage to another insurance company, retaining only part of the risk for itself, the insurer is engaging in
reinsurance
mortality figures are usually developed by the analysis of statistics
relating to the deaths of millions of individuals over extended periods of time
the insurance company that issues a new life policy to an insured to replace an existing policy is called the
replacing insurer
The process of underwriting primarily involves what two key steps?
risk selection and pricing
for a company to escape claim payment due to false information on the application, the statements must be what?
simply untrue
Paid-up Additions act as default if the Policyholder doesn't indicate an option. Paid-Up Additions are
single payment premiums which purchase additional amounts of insurance which add to the face amount
an individual otherwise qualified except for having taken and passed the examination can be issued a temporary insurance producer license, which is valid for a maximum period of
six months
the kind of life insurance that acquires no cash value is
term life
this rider can be attached to a permanent life insurance policy to add more coverage for a limited time
term rider
under a disability income rider of a life insurance policy, the benefit amount paid to an insured is based on which of the following?
the face amount of the policy
the current rate of interest paid to the cash value account of a universal life policy consists of
the guaranteed interest rate or the current interest whichever is higher
who is the chief executive officer of the alabama department of insurance?
the insurance commissioner
in the life insurance agency relationship, what party is the principal?
the insurance company
an employee covered by the employers Group Life plan is terminated. The employer fails to inform the departing employee about the plans conversion option. When the former employee is killed bungee jumping a week later
the insurance company must pay the full benefits of the policy
all of the following provisions of an adjustable life policy may be adjusted to meet the policyholders changing needs except:
the insured
Oliver has a life insurance policy with a $50,000 death benefit. At his death, there is a $5000 policy loan outstanding. Which of the following statement is CORRECT?
the insurer will subtract the amount of the loan and pay $45,000 to the beneficiary.
a parent who purchases a policy on the life of a minor child and wishes to retain complete control of the policy until the child reaches age 18 may do so by means of
the ownership clause
the "entire contract" law in Alabama says
the policy and the application (or a summary of the application) consults the entire contract
if the premium is not paid during the grace period of a Term Policy, what will occur?
the policy will lapse
a level term policy is one where
the premium and the protection remain constant for the term of the policy
which statement is true concerning Renewable Term insurance?
the premium will increase at renewal
according to the alabama insurance regulations, when using an illustration in the sale of a life insurance policy, an insurance producer may legally do which of the following?
use an illustration which has "non-guaranteed" elements
what are "nonforfeiture values"?
when a policy owner stops paying premiums on a limited pay policy, he or she is entitled to receive its face amount in cash
a whole life policy pays the face amount
when the insured dies or reaches age 100
someone who is a preferred risk
will likely pay a lower premium than someone who is not
Most life insurance policies
will pay the face amount if the insured is killed while a a passenger of a regularly scheduled commercial airliner
if a proposed insured dies before the policy is issued but while in possession of a conditional receipt, the company
will pay the policy proceeds only if it would have issued the policy to the proposed insured had he or she been living
the income period when a surviving spouse does not qualify for social security survivor or retirement benefits is called the
blackout period
If Todd has been named the irrevocable beneficiary of a life insurance policy, he
cannot be replaced as beneficiary without his consent
what term describes a situation where a policy owner transfers a portion of his or her rights in an insurance policy to another party in order to secure a debt to that party?
collateral assignment
the provision that protects the rights of the contingent beneficiary if the insured and the primary beneficiary die as the result of one accident is the
common disaster provision
The employee of Ace Trucking Company must each pay a portion of the premium for their group insurance. This means they are members of a
contributory group plan