Insurance Exam Stimulator
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance.
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
A full death benefit
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 policy summary
Naming a trust as the beneficiary of a life insurance policy can accomplish all of the following for the policyowner EXCEPT
Allow the trustee to transfer the assets of the trust to their personal account.
The death protection component of Universal Life Insurance is always
Annually Renewable Term
What type of life insurance is most commonly used for group plans?
Annually renewable term
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common Disaster Clause
An insurance producer just sold an insurance policy to his sister. What kind of business is this?
Controlled
The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a
Convertible Term Policy.
Which of the following will NOT be an appropriate use of a deferred annuity?
Creating an estate
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)
Equity Indexed Annuity.
All of the following are true about the Insurance Frauds Prevention Act EXCEPT
Every insurer must file a fraud prevention plan within 150 days.
An agent selling variable annuities must be registered with
FINRA.
All agents, brokers, and reinsurance intermediaries have a/an
Fiduciary responsibility to their clients.
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
For 20 years or until death, whichever occurs first.
All other factors being equal, which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?
Human life value approach
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?
Immediately after receiving written proof of loss
What is the purpose of a free-look period in insurance policies?
It allows the insured to reject the policy with a full refund.
If a retirement plan or annuity is "qualified," this means
It is approved by the IRS.
An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments?
It is used to lower premiums.
The death benefit under the Universal Life Option B
It needs IRS approval.
Which of the following is true regarding a single life settlement option?
It provides income the beneficiary cannot outlive.
Twin 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?
Joint Life
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
Joint Life Policy
Variable Life insurance is based on what kind of premium?
Level fixed
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited-pay Life
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
Lower
When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would
Lower the insured's premium.
An insurance agent was born in 1973. He obtained his New York insurance license in 2008. When will the agent's license expire?
On the agent's birthday every odd-numbered year
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant.
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid-up option
An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?
Pay the death benefit
Which of the following individuals must have insurable interest in the insured?
Policyowner
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
Premium receipt.
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan
Federal Fair Credit Reporting Act
Regulates consumer reports
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal.
If an agent fails to obtain an applicant's signature on the application, the agent must
Return the application to the applicant for a signature.
Adverse selection is a concept best described as
Risks with higher probability of loss seeking insurance more often than other risks.
What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences?
Section 1035 Policy Exchange
A domestic insurer issuing variable contracts must establish one or more
Separate accounts.
Which of the following applicants would NOT qualify for a Keogh Plan?
Someone who works 400 hours per year
Which of the following types of risk will result in the highest premium?
Substandard risk
After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?
Surrender charge
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
What method is used to determine the taxable portion of each annuity payment?
The exclusion ratio
Which of the following would NOT fall into the category of costs associated with death?
The expense of a vacation for surviving family members
Which of the following are generally NOT considered when underwriting group insurance?
The insureds' medical history
Which entity determines the amount of accelerated death benefits that will be paid to an insured?
The insurer
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic.
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
All of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only.
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount with interest equals or exceeds the cash value.
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?
The producer
A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?
The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.
Which is generally true regarding insureds who have been classified as preferred risks?
Their premiums are lower.
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
For which of the following reasons can a temporary license be issued?
To service the existing business
What process do insurance companies use to determine whether or not a particular applicant is insurable?
Underwriting
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Variable
Which of the following types of policies will provide permanent protection?
Whole life