Guaranteed Exam
To be valid, an insurance policy must have all of the following, EXCEPT:
Countersignature.
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy?
An Accidental Death Rider.
A loss resulting from which of the following would qualify for the accidental death rider coverage?
An automatic accident.
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.
In order for wild life of Havana to do business in this state it must apply for and obtain
A certificate of authority.
Insurance contracts are unilateral in nature. What does that mean?
Only one party makes a promise.
What dividend option can increase the death benefit?
Paid-up additions.
An annuity would normally be purchased by an individual who wants to
Provide income for retirement.
Cash Value guarantees in a whole life policy are called.
Nonforfeiture values.
Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is...
Taxed as ordinary income.
A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
Decreasing term.
An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive...
$70,000.
Which of the following would be likely to establish a SEP?
Smalls employers.
The manner and/or frequency that the policyowner pays the policy premium is called
Premium Mode.
An individual has a $200,000 convertible term life insurance policy. If he chooses, he can
Convert to a whole life policy for the same face amount without proof of insurability.
An adjustable life policy can assume the form of
Either term insurance or permanent insurance.
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?
Insurance application.
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the
Insuring clause.
If an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answers to those questions?
Never; the insurer has waived its right to answer those answers by issuing the policy.
Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?
Occupation.
In order to reinstate a life insurance policy the insured must do all of the following except
Pay next year's premium in advance.
Which of the following will NOT be included in the buyer's guide?
Specific information about the policy.
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the stockholders and issue nonparticipating policies.
Which of the following statements concerning the medical information bureau is correct?
The Medical Information Bureau assists underwriters in evaluating and classifying risks.
All of the following are true regarding survivorship life insurance policies, EXCEPT
The premium is based on the age of each insured.
If an applicant submits the initial premium with an application, which action constitutes acceptance.
The underwriters approve the application.
An aleatory contract is based on what kind of exchange?
Unequal exchange of values.
Which of the following policies can be describes as a flexible premium adjustable life policy?
Universal Life.
An insured's flexible premium is invested into a separate account. What type of insurance product did he purchase?
Variable Universal Life.
Because of an injury an insured has been unable to work for 7 months. When his life insurance premium came due, he was unable to pay, yet the policy remains in force. The policy includes
Waiver of premium rider.
An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?
Fair Credit Reporting Act.
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family Term.
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 of level term insurance?
It is temporary protection.
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.
Which of the following statements is CORRECT?
Solicitation of insurance may not be associated with the federal government.
S set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does S have?
Simplified Employee Pension (SEP).
How long is the grace period for an individual life insurance policy?
1 month (30 to 31 days).
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.
A distribution from an employer sponsored retirement plan or from an IRA is eligible for a tax-free rollover if it is reinvested in an IRA 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
Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before the insured.
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application
The application contains material misstatements.
All of the following are true of Group Life insurance EXCEPT
The insureds each own of their contracts; The employer is the beneficiary.
When an insured terminates membership in the insured group the insured can convert to...
Whole life without proof of insurability.
The renewable provision allows the policyowner the right to renew the coverage at the expiration date
Without evidence of insurability.
An employee dies having 6 quarters of coverage during the previous 13 quarter period. What status of coverage does the employee have under social security
Currently insured.
Which of the following losses would likely be covered under the Accidental Death rider?
Death caused by a head-on collision.
While completing a life insurance application the applicant realizes that she should have answered an earlier question differently. What should the agent do to make the necessary change?
Cross out the incorrect information, write in the correct answer, and have the applicant initial the change.
An illustration used in the sale of a life insurance policy must include a label stating
"Life insurance illustration"
If an individual willfully violates provisions of the fair credit reporting act what is the maximum civil penalty?
$2,500.
Where are premiums invested in a fixed annuity?
A general account.
A life insurance policy qualifies a modified endowment contract (MEC) if the amount of premium exceeds the amount that would have provided paid up insurance in how many years?
7 years.
The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called...
A collateral assignment.
Which of the following best describes a rebate?
A producer returning part of her commission to her client, as an inducement to buy.
What guarantees that the information explained in the insurance contract is true?
A warranty.
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?
Accumulation Period.
If a life insurance policy is purchased by someone who has no insurable interest in the insured, it is considered
A STOLI Policy.
The entire contract includes all of the following EXCEPT
A buyer's guide.
If an insured dies and it is discovered that the insured misstates his/her age or gender, the life insurance company will
Adjust the death benefit to what the premium would have purchased at the actual age or gender.
An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer?
Alien.
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
Fixed Amount.
An insured decides to surrender his whole life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?
The difference between the premiums paid and the cash value.
In credit life insurance, who is responsible for paying the policy premiums?
Borrower only.
In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT.
Cash surrender values.
Which of the following is true of the taxation of cash values in a business life insurance policy?
Cash values grow tax deferred.
All of the following are true of a nonqualified deferred compensation plan EXCEPT
Contributions are tax deductible.
In this state the owner gets a "free look" of a specified number of days from
Delivery of the policy.
Under which of the following conditions would life insurance proceeds be taxable by the federal government?
If there is a transfer for value.
Which of the following is NOT true regarding a deferred annuity?
Income payments begin within 1 year from the date of purchase.
what is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death?
Joint Life.
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select?
Joint and Survivor.
When comparing a joint life policy to two individual life policies of the same amount on the same insurance, which condition is true?
Joint life as a lower premium then the total of the two individual policies.
An annuitant pays the annuity premium on the 14th of each month. Which best describes the arrangement?
Level.
An insurance company that is owned by the policyholders is called a
Mutual Insurer.
The reduction of premium option uses the dividend to reduce
Next year's premium.
Which of the following is consideration on the part of the insurer?
Paying a claim.
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 premium payments due to death or disability. Which policy rider should their agent recommend?
Payor benefit.
Policies written on a third-party ownership basis are usually written to cover which of the following?
Policyowner's minor children or business associates.
Which of the following bears the investment risk in a variable life insurance policy?
Policyowner.
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?
Prior to performance of the test.
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have?
Revocable
The Family Term Rider incorporates
Spouse term and children's term.
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles
Standard Risk.
If an applicant's health is poorer than that of an average applicant, the policy may be issued.
Substandard.
All of the following are consideration in an insurance policy EXCEPT
The cash value in the policy.
All of the following are advantages of a qualified retirement plan EXCEPT
The income at retirement is tax free.
With adjustable life, the owner can change all of the following EXCEPT:
The insured.
Which of the following has the right to change a settlement option in a life insurance policy?
The policyowner at any time during the life of the insured.
Which of the following is true regarding regarding taxation of accelerated benefits paid under a life insurance policy?
They are received tax free.
Which of the following indicates the person upon whose life the annuity income amount is determined?
Annuitant.
The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. What is the insurance company's course of actions?
Deny any payment of death benefit.
When term insurance is added to the main policy to enhance the policy or provide benefit or coverage it is called a
Term Rider.
Which of the following policies would NOT offer a policy loan option?
Term life.
Which of the following statements regarding HIV testing is NOT true?
Test results must be sent to the the Department of Justice.
Who is the annuity owner?
The person who purchases the annuity.
An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?
Children's Term Rider.
A whole life policy is surrendered for a reduced paid up policy. the cash value in the new policy will
Continue to increase.
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. What policy provision allowed for this?
Grace period.
All of the following information needs to be included on an application for life insurance EXCEPT
Health insurance policies in force.
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
Immediately.
Who would be allowed catch-up contributions?
Individuals aged 50 or older.
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable Interest.
Which of the following is NOT a standard exclusion in life insurance policies
Disability.
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended Term.
What is the difference between straight life policy and a 20-pay whole life policy?
Premium payment period.
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal.
Which of the following is a provision found in life insurance policies?
Reinstatement.
What does the application of contract of adhesion mean?
Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.
The owner of a deferred annuity pays $100 in premium one month, and $130 the next month. Which of the following terms best describes this premium payment arrangement?
Flexible Premium.
If a license is revoked, the licensee will NOT be eligible for a new license
For 5 years.
Dividends received on participating life insurance policies are
Not taxable because they are a return of unused premiums.
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.
All of the following are true regarding the Federal Fair Credit Reporting Act except
Reports may be sent to anyone who requests one.
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be
Representation.
A whole life policy that will generally immediate cash value is a...
Single premium policy.
An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered
Delivered.
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Being permanently disabled.
Which of the following is NOT an indicator of a competent party?
Business profession.
An IRA contribution can be made from which of the following?
Cash.
Insurers CANNOT transact insurance in this state without a...
Certificate of Authority.