Guaranteed exam life insurance
Which of the following best describes industrial life insurance? A) $10,000 or more in coverage and premiums paid by mail B) $50,000 minimum coverage and premiums collected by agent C) $2,000 or less in coverage and premiums collected by agent D) $5,000 or less in coverage and premiums paid by mail
$2,000 or less in coverage and premiums collected by agent
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. Beneficiary will receive A) $30,000 B) $70,000 C) $100,000 (combination of the cash value and premiums paid) D) a survivor benefit determined by the insurance company
$70,000
How long is the grace period for an individual life insurance policy? A) 1 month B) 2 weeks C) 7 to 10 business days D) 3 months
1 month
In order for a business partner to be eligible for a Keogh plan, he/she must work full-time and own at least how much of the business? A) 33% B) 50% C) 10% D) 25%
10%
What is the tax penalty for withdrawing money from an annuity prior to age 59 1/2? A) 5% B) 10% C) 12% D) 20%
10%
The owner of a Life insurance policy has just completed a life settlement transaction. How many days does he have to rescind the contract? A) 10 days B) 15 days C) 21 days D) 30 days
15 days
How much training related to the business of life settlements must Life settlement brokers complete? A) 10 hours every year B) 3 hours every year C) 15 hours every 2 years D) 24 hours every 2 years
15 hours every 2 years
In any action to recover on an insurance policy, a court may award punitive damages if the court finds that the party seeking to recover on the insurance policy has been damaged by any violation of a producer. Punitive damages may not exceed A) 75% of the claim B) 100% of the claim C) 25% of the claim D) 50% of the claim
25% of the claim
There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age? A) 59 1/2 B) 55 1/2 C) 40 D) 65
59 1/2
A life insurance policy can be backdated to affect a lower premium for up to a maximum or how many months? A) 6 B) 12 C) 18 D) 3
6
A life insurance policy qualifies as a modified endowment contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? A) 3 years B) 5 years C) 7 years D) The life of the policy
7 years
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? A) a guaranteed insurability rider B) a covered peril rider C) an accidental death rider D) a double indemnity rider
An accidental death rider
Which of the following would NOT trigger the payment of accelerated death benefits? A) being permanently disabled B) terminal illness C) requiring an organ transplant for the insured to survive D) been permanently institutionalized
Being permanently disabled
Which of the following elements of an insurance contract requires payment of premium? A) competent parties B) offer and acceptance C) consideration D) legal purpose
Consideration
A whole life policy is surrendered for a reduced paid up policy. The cash value in the new policy will A) decrease over time B) reduce to the pre-surrender value C) continue to increase D) remain the same
Continue to increase
If an agent follows the rules and terms of his agent contract, he is exercising his A) Express authority B) apparent authority C) contractual authority D) implied authority
Express authority
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? A) reduced paid up B) extended term C) paid up additions D) cash surrender value
Extended term
A married couple wants to include their entire family in their whole life policy under one rider. Which of the following riders Will help them achieve that goal? A) Family term B) other-insured term C) inclusive term D) children's term
Family term
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan? A) immediately B) within 10 days C) within 30 days D) within 90 days
Immediately
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance? A) risk analysis B) the law of large numbers C) agents report D) Insurance application
Insurance application
Which of the following is true regarding pure life annuity settlement option? A) it guarantees that all proceeds Will be paid out B) the beneficiary will receive a refund of the principal C) it guarantees income for a specified period of time D) it provides the highest monthly benefit
It provides the highest monthly benefit
An annuitant pays the annuity premium on the 14th of each month. Which of the following Best describes this arrangement? A) Single B) level C) flexible D) lump sum
Level
The human life value approach to determining Life insurance needs is based upon which of the following ideas? A) replacement of assets B) specific needs for college education C) retirement needs D) loss of the breadwinners income
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? A) Paid-up additions B) Reduce the premium C) fixed amount D) reduced paid up
Paid-up additions
Variable insurance and variable annuities are regulated by A) SEC, FINRA, and Departments of Insurance B) departments of insurance only C) NAIC D) SEC and FINRA only
SEC, FINRA, and Departments of Insurance
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? A) HR-10 (Keogh) B) SIMPLE C) Simplified Employee Pension (SEP) D) 401(k)
Simplified Employee Pension (SEP)
The family term rider incorporates a) Key person whole life and dependents term b) Cost of living rider and family protection rider c) Spouse term and children's term d) Whole life and other-insured term
Spouse term and children's term
Life insurance can provide which of the following? A) Survivor protection B) protection against outliving ones assets C) creation of a future liability D) liquidation of one's estate
Survivor protection
Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is A) taxed as income on 50% of the excess B) assessed a fine of 10% of the excess C) taxed as ordinary income D) not taxed
Taxed as ordinary income
The license that allows a surviving spouse to enter into a contract to maintain the business of a producer who has died or is unable to perform his duties is called a A) public insurance producer license B) special broker license C) Business entity license D) temporary Insurance Producer license
Temporary insurance producer license
Variable life insurance is regulated by all of the following entities EXCEPT A) the department of insurance and/or Financial services B) the financial industry regulatory authority (FINRA) C) the US Department of treasury D) the securities and exchange commission (SEC)
The US Department of treasury
In life insurance, which of the following is NOT required to have an insurable interest in the insured? A) the beneficiary B) the policy owner C) the insured D) the applicant
The beneficiary
With adjustable life, the owner can change all of the following EXCEPT A) the premium B) the length of time the coverage will last C) the insured D) the death benefit
The insured
All of the following are true of credit life EXCEPT A) the creditor is the policy owner B) the insured names the beneficiary C) the death benefit cannot exceed the amount of the loan D) the premium payment is included in the loan payment
The insured names the beneficiary
If the annuitant dies before the annuity start date, which of the following is true? A) the interest Will not be tax deferred B) the interest is tax free if the beneficiary is a spouse C) the interest is non-taxable D) the interest is taxable
The interest is taxable
Who is the annuity owner? A) The person on whose life the annuity is written B) The insurer C) The person who purchases the annuity D) The person who receives the benefits
The person who purchases the annuity
All of the following are true of the survivorship life policy EXCEPT A) the death benefit is not paid until the last death B) the premium would be lower than in a joint life policy C) it can insure more than two lives D) the premium is based on the age of each insured
The premium is based on the age of each insured
Keogh (HR-10) plans are qualified plans for A) the self-employed B) Government employees C) postal workers D) public school teachers
The self-employed
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes A) Waiver of premium rider B) Guaranteed insurability benefits C) facility of payment clause D) nonforfeiture options
Waiver of premium rider
A graded premium life insurance policy is a modified form of A) level term B) deferred annuity C) universal life D) whole life
Whole life
The entire contract includes all of the following EXCEPT A) any riders or amendments B) a buyer's guide C) the life insurance policy D) a copy of the application
a buyer's guide
Where are premiums from fixed annuities invested? A) a general account B) A variable annuity C) a hedge fund D) a sperate account
a general account
According to the life insurance replacement regulations, which of the following would be an example of policy replacement? A) term insurance is changed to a whole life policy B) a lapsed policy is reinstated within a specific timeframe C) a policy is re-issued with a reduction in cash value D) a term policy expires, and the insured buys another term life policy
a policy is re-issued with a reduction in cash value
Each insurer that sells, solicits, or negotiates any form of limited line credit insurance must provide to each individual whose duties will include selling, soliciting, or negotiating limited line credit insurance A) a course of training that certifies each individual for an insurance solicitors license B) a program of instruction that may be approved by the commissioner C) a copy of the fair credit reporting act of 1991 and a program of instruction for it's use D) a copy of the department of insurance rate plan schedule
a program of instruction that may be approved by the commissioner
The commissioner may order that and insurer or its producer make restitution to any claimant who has suffered actual economic damage as a result of A) a slow claims processing unit for which such producer or insurer has responsibility B) failure by the insured to avoid a risk for which the insurer had no recourse C) inadequate levels of coverage written on an insured based on levels of risk to be covered D) a violation of any cease and desist order committed by the insurer or its producer
a violation of any cease and desist order committed by the insurer or its producer
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity? A) accumulation period B) premium building period C) annuity period D) loading period
accumulation period
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will A) File a complaint with the insurance department B) deny any coverage because of the misrepresentation C) calculate the back premiums for the proper age or gender and assess the insured that amount D) adjust the death benefit to what the premium would have purchased at the actual age or gender
adjust the death benefit to what the premium would have purchased at the actual age or gender
Which of the following premium modes would result in the lowest overall premium? A) quarterly B) semi-annual C) monthly D) annual
annual
In order to get a nonresident license in this state, a producer must A) apply and pay a fee to a nonresident state that reciprocates B) pass the nonresident state exam and satisfy their continuing education requirements C) Represent an agency located in this state D) surrender their license in their state of residence
apply and pay a fee to a nonresident state that reciprocates
Which of the following documents used in the underwriting process contains specific medical details about an applicant? A) Agent's report B) application C) attending physician's statement (APS) D) statement of good health
attending physician's statement (APS)
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? A) application to reduce premium option B) automatic premium loan option C) mode of premium option D) past due premium option
automatic premium loan option
In credit life insurance, who is responsible for paying the policy premiums? A) creditor only B) borrower only C) creditor and borrower equally D) creditor and borrower proportionally
borrower only
The Commissioner of Insurance performs all of the following duties EXCEPT A) conducts hearings and investigates the affairs of any person engaged in the business of insurance B) changes the laws to better ensure that the companies remain solvent and conduct business in compliance with all state laws C) regulates insurance companies, agents, brokers, and advisers D) examines the qualifications, financial status and conduct of insurers
changes the laws to better ensure that the companies remain solvent and conduct business in compliance with all state laws
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? A) Guaranteed insurability rider B) spouse term rider C) children's term rider D) payor rider
children's term rider
Which of the following is the distinguishing characteristic of the interest adjusted net cost method? A) comparing interest rates at a designated point in time B) buy an equity indexed life insurance C) keeping yearly premiums and dividends level D) considering the time value of money in comparing life insurance costs
considering the time value of money in comparing life insurance costs
Which of the following terms refers to the nontaxable portion of each annuity benefit payment? A) tax base B) interest C) principal D) cost base
cost base
A new home buyer wants to purchase a life insurance policy you 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 A) level term B) decreasing term C) increasing term D) flexible term
decreasing term
An adjustable life policy can assume the form of A) only term Insurance B) only permanent insurance C) either term insurance or permanent insurance D) neither term insurance nor permanent insurance
either term insurance or permanent insurance
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? A) interest only B) joint and survivor C) fixed amount D) fixed period
fixed amount
Which of the following is a correct statement about annuities? A) variable annuities place the funds into the company's general account B) fixed annuities have the annuitant assume the risks of investment C) fixed annuities do not provide protection against inflation D) variable annuities provide minimum guaranteed rate of interest
fixed annuities do not provide protection against inflation
A jumping juvenile policy is unique in that the death benefit automatically A) doubles at a predetermined age B) pays out to the insured C) increases at a predetermined age D) decreases at a predetermined age
increases at a predetermined age
Which portion of a nonqualified annuity payment is taxable? A) both principal and interest B) the entire payment C) interest earned on principle D) actual payment amount
interest earned on principle
All of the following are requirements of policy forms that are issued for delivery in the state EXCEPT A) it contains a table of contents or an alphabetical subject index B) the style or arrangement of the policy gives no undue prominence to any riders or endorsements C) the text achieves a minimum fletch scale readability score of 50 D) it is printed, except for the tables, in not less than 12-point type
it is printed, except for the tables, in not less than 12-point type
Which of the following is NOT true of the agent's implied authority? A) it is incidental to express authority B) it is given to an agent by the insurance company that is not specifically communicated C) it is specifically stated in the contract D) it is assumed by the agent in order to transact the business of insurance
it is specifically stated in the contract
Which of the following is TRUE of level term insurance? A) the policy endows at age 100 B) the policy offers nonforfeiture values C) it is temporary protection D) the premium will increase or decrease based on current interest rates
it is temporary protection
When comparing a Joint life policy to two individual life policies of the same amount on the same insureds, which condition is true? A) joint life has a premium that is identical to the sum of the two individual policies B) the joint life premium can only be paid monthly C) joint life has a higher premium than the total of the two individual policies D) joint life has a lower premium than the total of the two individual policies
joint life has a lower premium than the total of the two individual policies
A college student will graduate next year. His studies have limited his ability to work, so he has borrowed funds to pay for his education. He would like to start a permanent life insurance program that would cover his debt and still be affordable during the period he is establishing his earning potential. An appropriate policy would be A) current assumption whole life B) level term to age 65 C) single premium whole life D) modified whole life
modified whole life
cash value guarantees in a whole life policy are called A) nonforfeiture values B) living benefits C) cash loans D) dividends
nonforfeiture values
A stock insurer is defined as an insurer A) that invests at least 20% of its premium income in the stock market B) who pays dividends to its policyowners C) owned by its stockholders D) owned by its policyowners
owned by its stockholders
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT A) pay the death benefit to the estate of the insured B) provide deferred compensation retirement benefit if the insured key person survives to retirement C) fund the expense of finding a suitable replacement following the death of an employee D) fund the cost of training a current employee to perform the duties of a deceased employee
pay the death benefit to the estate of the insured
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 we're unable to continue making the premium payment do to death or disability. Which policy rider should their agent recommend? A) payor benefit B) guaranteed insurability C) automatic premium loan D) waiver of premium
payor benefit
Annuities certain limit the amount paid by the annuity to a certain fixed A) amount only B) period with a certain fixed amount C) period or fixed amount D) period only
period or fixed amount
Who can request changes in premium payments, face value, loans, and policy loans? A) producer B) policyowner C) beneficiary D) contingent beneficiary
policyowner
An annuity would normally be purchased by an individual who wants to A) provide a death benefit to the surviving family B) earn a higher rate of interest C) create an estate D) provide income for retirement
provide income for retirement
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT A) marriage B) purchase of a new home C) approximately every 3 years between the ages of 25 and 40 D) birth of a child
purchase of a new home
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising? A) sharing B) retention C) transfer only D) avoidance
retention
A whole life policy that will generate immediate cash value is a A) limited-pay policy B) single premium policy C) continuous premium policy D) variable life policy
single premium policy
Which of the following would be likely to establish a SEP? A) military personnel B) the elderly C) low-income individuals and families D) small employers
small employers
Wagering on a sporting event is known as what type of risk? A) calculated B) simple C) pure D) speculative
speculative
When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called? A) insuring agreement B) insurability clause C) statement of good health D) statement of insurability
statement of good health
Which of the following actions does NOT constitute false advertising? A) using names that disguise the true nature of a policy B) stating that dividends are not guaranteed C) misrepresenting the terms of a policy D) representing an insurance policy as a share of stock
stating that dividends are not guaranteed
If an applicant's health is poorer than that of an average applicant, the policy may be issued A) standard B) ordinary C) preferred D) substandard
substandard
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application? A) The insurer has already paid out the expected amount of benefits for the year B) the application contains a correction C) the application contains material misstatements D) the insured died too soon after applying for the policy
the application contains material misstatements
Who does the spendthrift clause in a life insurance policy protect? A) the policyowner B) the creditors C) the beneficiary D) the insured
the beneficiary
All of the following are true about key-person insurance EXCEPT A) the employee must give written consent by signing the application B) the business is the beneficiary C) the death benefit is taxable to the business D) the business is the applicant and owner
the death benefit is taxable to the business
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? A) the difference between the premiums paid and the cash value B) nothing C) the amount equal to the premiums paid D) the entire cash value amount
the difference between the premiums paid and the cash value
All of the following are true about Group Life insurance EXCEPT A) evidence of insurability is usually not required B) the employee is the insured C) the employer is the beneficiary D) it is usually written as annual renewable term insurance
the employer is the beneficiary
Life insurance creates an immediate estate. Which of the following best explains this statement? A) The death benefit will always be paid to the estate of the insured B) the face value of the policy is payable to the beneficiary upon the death of the insured C) the policy has cash values and nonforfeiture values D) the policy generates immediate cash value
the face value of the policy is payable to the beneficiary upon the death of the insured
If an annuity has a guaranteed minimum interest rate, this means A) the interest rate will not fluctuate B) there is no interest rate C) the interest rate will never drop below the guaranteed minimum D) the interest rate will never rise above the guaranteed minimum
the interest rate will never drop below the guaranteed minimum
Which of the following is true regarding a joint life annuity? A) the payments go to a beneficiary upon the last death B) the payments go to the surviving annuitant after the first death C) the payments stop at the first death D) the payments stop at the last death
the payments stop at the first death
Which of the following is required in order for a plan to be qualified? A) The plan must be for the exclusive benefit of the employer B) the plan's contribution formula is allowed to discriminate in favor of officers of the company C) the plan must be formally written and communicated to the employees D) the plan must not be permanent
the plan must be formally written and communicated to the employees
All of the following are general requirements of a qualified plan EXCEPT A) the plan must have a vesting requirement B) the plans benefit cannot discriminate in favor of the "prohibited group" C) the plan must be temporary D) the plan must be approved by the IRS
the plan must be temporary
All of the following are true of the Survivorship Life policy EXCEPT A) The premium would be lower that in a joint life policy B) it can insure more than 2 lives C) the premium is based on the age of each insured D) the death benefit is not paid until the last death
the premium is based on the age of each insured
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed? A) The insured died before the primary beneficiary B) the primary beneficiary died before the insured C) the deaths occurred at the same time D) the estate of the primary beneficiary and the contingent beneficiary split benefits equally
the primary beneficiary died before the insured
When a settlement option is chosen at death, how are the monthly income payments taxed? A) the principal portion is generally income tax free while the interest portion Is taxed as ordinary income B) the portion of the payment that represents the terminal reserve is income taxable C) the total monthly amount is tax free since it derived from death benefits D) the entire amount is taxable since the benefit was not taken in a lump sum
the principal portion is generally income tax free while the interest portion Is taxed as ordinary income
All of the following are true regarding the waiver of cost of insurance rider EXCEPT A) the rider cannot waive the cost of premiums that accumulate cash value B) the rider expires when the insured reaches age 60 C) the rider waives Insurance costs in the event the insured becomes disabled D) the rider is only applicable to universal life policies
the rider expires when the insured reaches age 60
What is the purpose of the surrender charge in a deferred annuity? A) to compensate the company for loss of investment value B) to punish the annuitant for breach of contract C) to prevent the over funding of the annuity D) to provide additional revenue for the insurance company
to compensate the company for loss of investment value
What is the purpose of the Agent's Report in the application process? A) to provide additional information about the applicant to the underwriters B) To explain policy features and benefits to the applicant C) to provide medical information about the applicant to the underwriters D) to give disclosure to the applicant
to provide additional information about the applicant to the underwriters
Which of the following policies can be described as a flexible premium adjustable life policy? A) term life B) credit life C) universal life D) whole life
universal life
When an insured terminates membership in the insured group, the insured can convert to A) whole life without proof of insurability B) whole life with proof of insurability C) term without proof of insurability D) term with proof of insurability
whole life without proof of insurability
