IL Life Insurance exam 2022

41 Which of the following is NOT an essêntial element of an insurance contract? A Counteroffer B Consideration C Agreement D Legal purpose

A Counteroffer

39 In life insurance policies, cash value increases A Grow tax deferred B Are income taxable immediately. C Are taxed annually. D Are only taxed when the owner reaches age 65

A Grow tax deferred

1. Fixed annuities provide all of the following EXCEPT A. Hedge against inflation. B. Equal monthly payments for life. C. Minimum guaranteed rate of interest. D. Future income payments.

A Hedge against inflation.

19. Which of the following is TRUE regarding the annuity period? A It may last for the lifetime of the annuitant. B During this period of time the annuity payments grow interest tax deferred C It is also referred to as the accumulation period D It is the period of time during which the annuitant makes premium payments into the annuity

A It may last for the lifetime of the annuitant.

31 Which of the following statements about the reinstatement provision is true? A It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated B It permits reinstatement within 10 years after a policy has lapsed C It provides for reinstatement of a policy regardless of the insured's health. D It guarantees the reinstatement of a policy that has been surrendered for cash

A It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? Policy Summary -Illustrations -Buyer's Guide -Insurance Index

A Policy Summary

24 A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A Proof of insurability is not required. B Medical exam C Her parents' federal income tax receipts D Medical exam and parents' medical history

A Proof of insurability is not required.

38 Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? A They are tax free to terminally ill insured. B They are always taxable to chronically ill insured C They are always taxed. D There is a 10% penalty for early distribution of the death benefit.

A They are tax free to terminally ill insured.

61 All of the following benefits are available under Social Security EXCEPT A Welfare benefits. B Old-age and retirement benefits C Disability benefits. D Death benefits

A Welfare benefits.

14. When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. Equal to the original policy for as long as the cash values will purchase B. In lesser amounts for the remaining policy term of age 100 C. Equal to the cash value surrendered from the policy D. The same as the original policy minus the cash value

A. Equal to the original policy for as long as the cash values will purchase

4. An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance he can afford at the time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options

A. Guaranteed insurability option

9. The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A. Reduction of premium B. Paid-up addition C. Accumulation at interest D. Cash option

A. Reduction of premium

if a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? A. the balance of the loan will be taken out of the death benefitB. the policy beneficiary receives the full death benefitC. the policy beneficiary takes over the loan paymentsD. the policy is rendered null and void

A. the balance of the loan will be taken out of the death benefit

49 An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A Adhesion B Consideration C Good faith D Representation

B Consideration

44 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 A Nonforfeiture option. B Guaranteed insurability rider. C Paid-up additions option. D Cost of living provision.

B Guaranteed insurability rider.

50 An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE? A The application will be voided B The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy. C The premium would be returned to the insured's estate because the policy was not issued D The death claim will be rejected

B The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.

29 In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? A The customer has no knowledge of this action B The customer's associates, friends, and neighbors provide the report's data C They provide additional information from an outside source about a particular risk. D They provide information about a customer's character and reputation

B The customer's associates, friends, and neighbors provide the report's data

16. Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? A The key employee is the owner and the employer is the beneficiary. B The employer is the owner and beneficiary C The employer is the owner and the key employee is the beneficiary. D The key employee is the owner and beneficiary.

B The employer is the owner and beneficiary

21 Who bears all of the investment risk in a fixed annuity? A The annuitant B The insurance company C The owner D The beneficiary

B The insurance company

17 Which is generally true regarding insureds who have been classified as preferred risks? A They keep a higher percentage of any interest earned on their policies B Their premiums are lower. C They can borrow higher amounts off of their policies D They can decide when to pay their monthly premiums

B Their premiums are lower.

35 In a survivorship life policy, when does the insurer pay the death benefit? A If the insured survives to age 100 B Upon the last death C Upon the first death D Half at the first death, and half at the second death

B Upon the last death

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a A.Whole Life Policy. B. Convertible Term Policy. C. Renewable Term Policy. D. Decreasing Term Policy.

B. Convertible Term Policy.

7. Which of the following would help prevent a universal life policy from lapsing? A. Corridor of insurance B. Target premium C. Face amount D. Adjustable premium

B. Target premium

34 All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT A Funds accumulate on a tax-deferred basis. B Employee and employer contributions are not counted as income to the employee for income tax purposes. C At distribution, all amounts received by the employee are tax free D Employer contributions are tax deductible as ordinary business expense

C At distribution, all amounts received by the employee are tax free

36Life income joint and survivor settlement option guarantees A Payout of the entire death benefit. B Equal payments to all recipients C Income for 2 or more recipients until they die. D Payment of interest on death proceeds

C Income for 2 or more recipients until they die.

33 Which of the following statements is TRUE concerning the Accidental Death Rider? A This rider is only available to insureds over the age of 65. B It is only available in group insurance C It will pay double or triple the face amount. D It is also known as a triple indemnity rider.

C It will pay double or triple the face amount.

58 The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called A Fixed amount. B Joint life C Joint and survivor. D Fixed period

C Joint and survivor.

56 Which two terms are associated directly with the premium? A Term or permanent B Renewable or convertible C Level or flexible D Fixed or variable

C Level or flexible

43 Children's riders attached to whole life policies are usually issued as what type of insurance? A Adjustable life B Whole life C Term D Variable life

C Term

54 An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? A The insurer will pay the death benefit minus one month's premium B The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one C The insurer will pay the full death benefit from the group policy to the beneficiary. D The insurer will pay a reduced death benefit to the beneficiary

C The insurer will pay the full death benefit from the group policy to the beneficiary.

13. Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A. The policy covers only the natural children of the insured B. Each child covered must show evidence of insurability C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age D. It is permanent insurance.

C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

18 What is the waiting period on a Waiver of Premium rider in life insurance policies? A 30 days B 3 months C 5 months D 6 months

D 6 months

22 The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? A Adhesion B Personal C Unilateral D Conditional

D Conditional

52 An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) A Variable Annuity. B Flexible Annuity. C Immediate Annuity. D Equity Indexed Annuity.

D Equity Indexed Annuity.

37 If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT A Draw a line through the first answer, record the correct answer, and have the applicant initial the change B Note on the application the reason for the change C Destroy the application and complete a new one D Erase the incorrect answer and record the correct answer.

D Erase the incorrect answer and record the correct answer.

23 Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid A Until the policyowner reaches age 65. B For at least 20 years. C Until the policyowner's age 100, when the policy matures. D For 20 years or until death, whichever occurs first

D For 20 years or until death, whichever occurs first

53 Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? A Entire contract clause B Beneficiary clause C Consideration clause D Insuring clause

D Insuring clause

32 During partial withdrawal from a universal life policy, which portion will be taxed? A Cash value B Principal C Loan D Interest

D Interest

45 Which of the following best describes annually renewable term insurance? A It requires proof of insurability at each renewal. B Neither the premium nor the death benefit is affected by the insured's age. C It provides an annually increasing death benefit. D It is level term insurance.

D It is level term insurance.

60In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? A It will likely be the average premium issued to standard risks B The applicant's habits and health do not affect the premiums. C It will likely be lower because the applicant is a preferred risk. D It will likely be higher because the applicant is a substandard risk.

D It will likely be higher because the applicant is a substandard risk.

48 The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A The owner's estate will receive the money paid into the annuity. B The insurance company will retain the cash value and pay back the premiums to the owner's estate C The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary D The beneficiary will receive the greater of the money paid into the annuity or the cash value

D The beneficiary will receive the greater of the money paid into the annuity or the cash value

8. Methods used to pay the death benefits to a beneficiary upon the insured's death are called A. Designation options. B. Beneficiary provisions C. Death benefit options. D. Settlement options

D. Settlement options

42 The president of a manufacturing company has offered one of the company's officers a special individual annuityholan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is A A nonqualified annuity plan B An executive annuity plan. C Subject to government standards D Illegal.

A A nonqualified annuity plan

62 If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's A Ancestry. B Credit history. C Habits. D Prior insurance.

A Ancestry.

20Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A Ordinary Life B Joint Life C Decreasing Term D Whole Life

B Joint Life

46 Another name for a substandard risk classification is A Elevated. B Rated C Controlled D Declined

B Rated

47 Which type of retirement account does not require the owner to start taking distributions at age 72? A Traditional IRA B Roth IRA C Nonqualified IRA D Standard IRA

B Roth IRA

57 A domestic insurer issuing variable contracts must establish one or more A General accounts. B Separate accounts. C Liability accounts. D Annuity accounts.

B Separate accounts

26 Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? A Amount of interest B Size of each installment C Predetermined length of time stated in the contract D Length of income period

B Size of each installment

30 An insured owns a $50,000 whole life policy. AT age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? A $20.000 B $25.000 C $50,000 D The face amount will be determined by the insurer.

C $50,000

59 An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? A SO B $200 C $9,800 D $10.000

C $9,800

51 In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A 1 B 3 C 5 D 10

C 5

28 Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be A Based on the issue age of the insured B Discounted C Adjusted to the insured's age at the time of renewal. D Determined by the health of the insured

C Adjusted to the insured's age at the time of renewal.

25 Which of the following statements concerning buy-sell agreements is true? A Benefits received are considered income taxable B Buy-sell agreements pay in the event of a medical emergency. C Buy-sell agreements are normally funded with a life insurance policy. D Premiums paid are deductible as a business expense

C Buy-sell agreements are normally funded with a life insurance policy.

11. A Straight Life policy has what type of premium? A. A decreasing annual premium for the life of the insured B. A variable annual premium for the life of the insured C. A level annual premium for the life of the insured D. An increasing annual premium for the life of the insured

C. A level annual premium for the life of the insured

5. Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? A. Conditional B. Personal C. Adhesion D. Unilateral

C. Adhesion

12. What type of insurance would be used for a Return of Premium rider? A. Decreasing Term B. Annually Renewable Term C. Increasing Term D. Level Term

C. Increasing Term

10. Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives? A. Agent's Report B. General Information C. Medical Information D. Inspection Report

C. Medical Information

40 Which of the following determines the cash value of a variable life policy? A The company's general account B The policy's guarantees C The premium mode D The performance of the policy portfolio

D The performance of the policy portfolio

27 What is the purpose of a fixed-period settlement option? A To settle the insurance company's liability B To provide a guaranteed income for life C To provide a guaranteed amount of money each month D To provide a guaranteed income for a certain amount of time

D To provide a guaranteed income for a certain amount of time

55 If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than A Upon issuance of the policy. B Within 30 days after the first premium payment was collected C Prior to filling out an application for insurance D With the policy.

D With the policy.

4. Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? A. A notice regarding replacement B. A privacy notice C. A buyer's guide D. A policy summary

D. A policy summary

15. Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A. Spouse rider B. Children's rider C. Additional insured rider D. Family term rider

D. Family term rider