Guaranteed 2

All of the following are true of credit life EXCEPT

The insured names the beneficiary

If an annuity has a guaranteed minimum interest rate, this means

The interest rate will never drop below the guaranteed minimum

All of the following are true regarding the waiver of cost of insurance rider EXCEPT

The rider expires when the insured reaches age 60

When an insured terminated membership in the insured group, the insured can convert to

Whole life without proof of insurability

Which of the following insurance principles states that ambiguities in a policy will always be constructed in favor of the insured?

adhesion

What is the difference between a straight life policy and a 20-pay whole life policy?

Premium payment period

What is the tax penalty for withdrawing money from an annuity prior to age 59 1/2?

10%

How much notice must the Commissioner give a producer before an examination is conducted?

15 days

Which of the following indicates the person upon whose life the annuity income amount is determined?

Annuitant

J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan?

Qualified

Which of the following will not be included in the buyers guide?

Specific information about the policy

Who does the spendthrift clause in a life insurance policy protect?

beneficiary

Which of the following is NOT a standard exclusion in life insurance policies?

disability

Where are premiums from fixed annuities invested?

general account

Annuities certain limit the amount paid by the annuity to a certain fixed

period or fixed amount

If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?

When the policy is delivered

Restoring an insured financially after a claim is known as

Indemnity

An insurer appoints a producer as its agent in January 2nd. by what date must the insurer file a notice of appointment?

January 17

The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?

Loss of the breadwinners income

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?

Paid-up additions

An adjustable life policy can assume the form of

Either term insurance or permanent insurance

In a deferred annuity, the difference between the accumulation value and the surrender value is the

Surrender charge

Which of the following statements concerning the Medical Information Bureau is correct?

The Medical Information Bureau assists underwriters in evaluating and classifying risks.

What is the exclusion ratio used to determine?

The annuity benefit to be excluded from taxes

Which of the following is permissible reason for an insurance company to contest payment of a claim based on statements in the application ?

The application contains material misstatements

What is the main reason to purchasing an industrial life policy?

To cover funeral expenses

To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is the concept called?

Exposure

Which type of authority is found in the agent's contract?

Express

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

Because of the imposed blackout period, the surviving spouse will not receive social security benefits until

He or she qualifies for retirement benefits

If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?

Inform the insurance company

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

Interest only

All of the following statements are true regarding an Ordinary (straight) life policy EXCEPT

It does not have a guaranteed death benefit

Which of the following is true regarding pure life annuity settlement option?

It provides the highest monthly benefit

An Equity Indexed Annuity will grow based upon

Performance of a recognized index

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?

Accumulation period

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?

3 days

What kind of penalty will be imposed on qualified distributions paid out before age 59 1/2?

50%

*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to

6 months

Which of the following is correct statement about annuities?

Fixed annuities do not provide protection against inflation

Which of the following terms refers to the nontaxable portion of each annuity benefit payment?

Cost base

When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as

Estate conservation

Which of the following is the distinguishing characteristic of the interest-adjusted net cost method?

Considering the time value of money in comparing life insurance costs

Which of the following statements is true regarding SIMPLE plans?

Contributions and earnings are tax-deferred until funds are withdrawn.

What does the Guaranty Association guard against?

Insurer insolvency

Which of the following would be considered a peril?

fire

If a retirement plan or annuity is "qualified", this means

it satisfies IRS requirements for favorable tax treatment

All of the following are true of annually renewable term insurance EXCEPT

proof of insurability must be provided at each renewal

Which statement best describes agreement as it relates to insurance contracts?

One party accepts the exact terms of the other party's offer

A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?

Payor benefit

Which of the following best describes life annuity with period certain option?

(d) It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary

Which of the following is an example of a physical hazard?

diabetes

If an agent follows the rules and terms of his agent contract, he is exercising his

express authority

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

Insurance provides a means to

transfer loss

If the annuitant dies before the annuity start date, which of the following is true?

The interest is taxable

When a settlement option is chosen at death, how are the monthly income payments taxed?

The principal portion is generally income tax-free while the interest portion is taxed as ordinary income

What is the purpose of the surrender charge in a deferred annuity?

To compensate the company for loss of investment value

Refusing to pay claims without conducting a reasonable investigation based upon all available information is an example of

Unfair traid

What type of an interest rate is guaranteed in universal life policies?

contract interest rate

Which of the following is NOT a component of an insurance policy premium?

number of beneficiaries

Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?

occupation

Which of the following would NOT be eligible for coverage under key person?

owner of a shop

Key person insurance can provide protection for all the following economic losses to a business EXCEPT

pay the death benefit to the estate of the insured

The guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT

purchase of a new home

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is

taxed as ordinary income

During a replacement, the existing insurer must send a letter to the insured, informing them of their right to receive information about the existing policy within

60 days

Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value

Automatic Premium Loan Option

In a life insurance application, all of the following signatures will be required EXCEPT

Home office underwriter

Which of the following riders provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years?

Living Needs Rider

An insurance company that is owned by the policyholders is called a

Mutual insurer

Which of the following governs the nontaxable exchange of certain life insurance policies and annuities?

Replacement rule

A Fraternal Benefit Society

nonprofit benevolent organizations that provide insurance to its members

Which of the following is NOT a characteristic of variable insurance and annuities?

Benefits are determined solely based on the policy premium

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out

While completing a life insurance application the applicant realizes that she should not have answered an earlier question differently. What should the agent do to make the necessary change?

Cross out