Life insurance #1
From the following choices, select the one that best describes the concept of "concealment" -not communicating that which is material and the other party knows -not communicating that which is not material and the other party does not know -not communicating that with a party knows and ought to communicate -all of the above
Not communicating that which a party knows and ought to communicate
In life insurance policies, naming beneficiaries is an important part of the application process. Choose from below the best description of a contingent beneficiary: -One with the right to proceeds only if the primary and secondary beneficiary die in a common disaster -One with the first right to receive proceeds if there is no surviving primary beneficiary and the insured dies -One with the right to proceeds if the insured dies -all of the above are false
One with the first right to receive proceeds if there is no surviving primary beneficiary and the insured dies -primary -contingent, a.k.a. successor -Final, a.k.a. Tertiary
When the public purchases annuities, they are attempting to address the risk of.. -dying before the age reflected on mortality tables -out living the money they have saved for retirement -getting too old to qualify for life insurance -having to pay any taxes on their savings
Out living the money they have saved for retirement
In group life insurance, who is issued a certificate of insurance? -The participant -policyholder -beneficiary - Insurer
Participant
The class beneficiary designation which means that the beneficiaries if it divided among the surviving members of the class is: -class beneficiaries, equal shares -Perdiem -per stirpes -Per capita
Per capita
Which of these categories of insurance combines insurance protection together with cash accumulation? -convertible term insurance -permanent insurance contract -by cell insurance -mortgage protection insurance
Permanent insurance contracts
The incontestability clause of a life insurance policy: -says that if the insured dies after two years, misrepresentation, concealment or fraud may disallow the beneficiary from collecting -says that the insurer is protected from liability from misrepresentation, concealment or fraud of an agent -prevents the insurance voiding the policy after two years on the grounds of misrepresentation, concealment or fraud of the insured -says the Insurer can't contest paying the claim is the premium is not paid
Prevents the insure from avoiding the policy after two years on the grounds of misrepresentation, concealment or fraud of the insured
Under the California code of regulations, all of the following would be considered proof of the claim EXCEPT: -estimate for cost to repair vehicle -jewelry appraisal -public adjusters letter of representation -invoice for ambulance services
Public Adjuster's letter of representation
In regards to representations, which of the following is correct? -representations can only be in writing -representations are guaranteed to be true - representations are statements made to the best of one's knowledge -all of the above statements are true
Representations are statements made to the best of one's knowledge
A husband and wife have a disabled child who is financially dependent upon them. The death of one parent would not result in financial disaster for the disabled child, but the death of both parents would. Which policy should they purchase? -Second to die policy -juvenile policy -first to die policy -Family protection policy
Second to die policy
Charles received a large inheritance from his uncles estate. Because he can use the income, he buys an annuity with the full amount of his inheritance that will begin paying him monthly payment starting the following month. Charles has purchased a ________ annuity? -flexible premium deferred -annual premium deferred -single premium immediate -none of the above
Single premium immediate
Which of the following best describes a term insurance policy? -A living insured receives the funds -premiums, based on $1000 of insurance, or higher overall than other types of policies -A death benefit is not payable, but cash value is generated -The death benefit is payable but there is no cash value
The death benefit is payable but there is no cash value
John applies for a variable annuity and does not request that the premiums be immediately invested in a stock or bond portfolio. After the annuity is issued, John returns the annuity contract to the insurer within the free look period. What will John receive from the insurer? -The premiums paid in less a surrender charge -The account value of the annuity on the day it was canceled -entire premium -The account value of the annuity on the day it was delivered
The entire premium
Why is the delivery of a life insurance policy important? -The policy is not in effect until it is delivered -The grace period begins on the policy delivery date -commissions are not paid until the policy is delivered -free look. Begins on the policy delivery date
The free-look period begins on the policy delivery date
which life contract promises to pay the owner a guaranteed minimum income for as long as the individual lives? -an annuity certain -a life annuity -a survivorship policy -a whole lie policy
a life annuity
The tendency of a person who has greater than average exposure to loss to seek out insurance is called: -adverse selection -probability distribution -law of large numbers -Alatorre risk
adverse selection
Transferring ownership rights from the current owner to another person is known as: -reinstatement -assignment -subrogation -non-forfeiture
assignment
Index-linked life insurance plans have their benefit determined by an index which provides an indication of the effects of inflation on the purchasing power of the dollar. Which index is typically used to do this? -The consumer price index -actual wall tables -table of guaranteed values -The seventh district cost of funds index
consumer price index
Insurance policy written after 1988 that fails to meet the seven pay test is known as: -A modified endowment contract -single premium contract -an endowment policy -A modified life policy
A modified endowment contract
The best description of a hazard is/an; -cause of a loss -condition that may increase the chance that a loss may occur -uncertainty of a financial loss -pure risk
Condition that may increase the chance that a loss may occur
A type of receipt stating that coverage begins on the date of the application as long as the insurance improves the application is a: -temporary insurance agreement -binding receipt -binder -conditional receipt
Conditional receipt
And attempt by an agent to deter an insured from replacing an existing life insurance policy is called: -conservation -concealment -alienation -Replacement
Conservation
All of the following statements apply to the child coverage in a family policy, except -children are covered until reaching a specific age -coverage applies only to children born before the policy is issued -Child coverage is Term insurance -Child coverage is convertible to whole life coverage
Coverage applies only to children born before the policy is issued
Chuck Harris has earned a chartered life underwriter designation. From the selections below choose the one that the California insurance code would find acceptable in publishing his name: -Chuck Harris, insurance company -Harris insurance services -Chuck Harris, CLU and Company -all of the above are acceptable
Harris insurance services
When applying for health insurance which of the following on the application is not an acceptable question to ask? -what is your age -last time you saw your doctor - when were you born -How do you think your health is these days
How do you think your health is these days
After receiving your insurance license, if you change your address, you are to notify the commissioner: -within 10 days -within 60 days -within 90 days -immediately
Immediately
According to the California insurance code, an insurance policy must be: -in writing -approved by the insurance commissioner -negotiated between the agent and the insured -economically feasible for the insured
In writing
In financial planning, what is the human life value concept based on? -age -income -education -health
Income (amount of life insurance needed based on contribution)
What is one difference between group life and individual life underwriting? -only individual life insurance requires the naming of a beneficiary -individual life insurance requires the applicant to answer medical questions -Group life insurance usually requires a medical examination -only group life insurance gives a choice of payment plans
Individual life insurance requires the applicant to answer medical questions.
A written contract attempts to identify another party against a loss, damage, or liability arising from a contingent or unknown event. This describes: -A provision -incontestability -Insurance -in a legal contract in California
Insurance
Which settlement option allows only the death benefit earnings to be paid to the beneficiary? -fixed amount option -interest option -cash option -fixed period Option
Interest option
The term "consideration" applies to the issuance of an insurance policy. Choose the best description of this term from the choices below. -The amount of death benefit -The face amount of the policy one year from the date of issue -The time the underwriting department gives the application -none of the above
None of the above. Consideration is the premium or the future premiums that The insured pays to the insurance company
Equally sharing the death benefit among children can be done most effectively by: -class beneficiary designation -beneficiaries in succession -making a child specific designation -Contingent beneficiaries
A class beneficiary designation
At what age does a jumping juvenile policy increase the benefit from $1000 to $5000? -15 -16 -18 -21
21
Which provision will pay a portion of the death benefit prior to the insured death due to a serious illness? -disability income - accelerated death benefit -cost of living -waiver of premium
Accelerated death benefit
Policy riders frequently found in life insurance policies -waiver of premium -cost of living -accidental death and dismemberment -all of the above
All of the above
What occurs during the accumulation period of an annuity? -provides for a guarantee of a mutual fund gross -allows the annuity to build on a tax-free basis -allows the annuity to build on a tax deferred basis -payout to the benefits of the annuity
Allows the annuity to build on a tax deferred basis
All of the occurrences listed below are examples of an insurable event as defined by the California insurance code except: -being admitted to the hospital for delivery of a newborn -suffer as a financial loss in the state lottery -A guest is injured by a fall from the insurance deck -and insured is sued for unintentional slander of another person
An insured suffers a financial loss in the state lottery
"A contract whereby an individual deposits funds with a life insurance company, the individual deferred taxes on the build up of savings within the contract and the individual can choose to take money out in several ways upon retirement", what does this describe? -Life insurance -annuity -social Security -A bank certificate of deposit
Annuity
Senior citizens are given a 30 day right to return an insurance policy: -at age 65 -at age 60 or older -under individual or group plans -all of the above
At age 60 or older
The premium loan rider on a life insurance policy kicks in: -at the end of the grace period -at the premium due date -at the end of the elimination period -at the end of the incontestability period
At the end of the grace period
How many days does the California insurance code give an individual to return my life policy for a cancellation -between 10 and 30 days -not less than 30 nor more than 60 days - between 60 and 90 days - less than 10 days
Between 10 and 30 days
The period of time in which a housewife, who has survived the death of her husband, will not receive income benefits from Social Security is called: -qualification period -blackout period -elimination period -none of the above
Blackout period
Select from below the potential costs related with a persons death: -paying off a new car -medical payments -both of the above -none of the above
Both of the above
How can partners guarantee a market for their share of the business in the event of death? -split dollar insurance -Key person insurance -deferred compensation agreement -Buy sell agreement
Buy-sell agreements
From the following, select the type of life insurance which could be best used to protect your customers heirs from a mortgage obligation should your customer die -increasing term -decreasing term -level term insurance -none of the above
Decreasing term
What is the difference between deferred annuities and immediate annuities? - deferred annuities have no surrender charges -deferred annuities have longer accumulation periods -deferred annuities have longer liquidation periods -deferred annuities Cover more lives
Deferred annuity's have longer accumulation periods
The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy: -does not affect the policies cash value -increases the yearly dividends amount -decreases the length of time that premiums are payable -Increases the policies cash value
Does not affect the policies cash value
Insurable interest in a life insurance policy: -must exist throughout the entire life of the policy -never has to exist in order for a policy to be issued -does not need to exist at the time of loss only at the time the policy is written -must exist only at the time of a loss
Does not need to exist at the time of loss, only at the time the policy is written
All of the following are benefits of insurance EXCEPT it: -reduces the uncertainty created by many loss exposures -provides payment for the cost of covered losses -provides a source of investment funds -eliminates fraudulent losses
Eliminates fraudulent losses
A policy issued to a 32 year old that has a face amount of $100,000. When the insured reaches the age of 55, the policy has built up $100,000 of cash value. Choose from the selections below the type of policy this most likely describes: -A 20 pay life insurance policy -A life paid up at age 55 -A term to age 55 policy -an endowment at age 55 policy
Endowment at age 55 policy
In financial planning what is the needs approach concept based on? -age -Family needs -income -health
Family needs
According to the California insurance code, an insureds policy I must specify all of the following except: -The financial rating of the Insurer -property or life being insured -The policy period -The risks insured against
Financial rating of the Insurer
Of the following which best describes an annuity? -it has an obligation that is different to the insurance company for both the accumulation period And the liquidation period -since it can provide monthly income to an annuitant, it is said to create an immediate estate -it is generally paid out to the annuitant in a lump sum of cash value -since I can't provide monthly income to a beneficiary, it is said to create an immediate estate
It has an obligation that is different to the insurance company for both the accumulation and the liquidation period
A life insurance policy dividend is: -interest paid to the policy owner on the cash value in force on his permanent insurance policy -legally defined as a return of excess premium and not taxable -somewhat larger in a non-participating whole life policy then in a comparable participating policy -A stockholders return on his investment in the company
Legally defined as a return of excess premium and not taxable
According to the California insurance code, a binder is a valid insurance policy for the purpose of proving the insured has insurance coverage specified in the binder for all of the fallen classes of insurance EXCEPT: -Life - auto -marine -fire
Life A binder, used in property and casualty insurance, is a legal agreement issued by either an agent or an insurer to provide temporary evidence of insurance until a policy can be issued
According to the definition of in ideally insurable risk, which of the following is not a requirement? -loss exposure must be part of a similar group of exposures -loss must be measurable in monetary value -loss must be the result of a catastrophic event -loss must be accidental
Loss must be the result of a catastrophic event
Most life insurers belong to which of the following industry organizations? -medical information bureau -securities and exchange commission -National Association of insurance commissioners -all of the above
Medical Information Bureau
All of the following qualify as background information, as defined in section 1729.2 of the California insurance code, except: -misdemeanor charges filed, not resulting in a conviction -misdemeanor charges filed, not resulting in a conviction -A misdemeanor or felony conviction or any filing of felony criminal charges in a state or federal court -any admission, or a judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty -administrative action regarding a professional or occupational license
Misdemeanor charges filed, not resulting in a convection
The insurance term used for an insurer who has not complied with the requirements to obtain a certificate of authority from the California insurance commissioner is: -non-admitted -lloyds -Alien -domestic
Non-admitted
Why is having large number of a similar exposure units important to insurers? -The greater the number insured, the greater the amount of the premiums collected to help cover losses -A greater the number insured, the more premium is collected to offset fixed cost -The insurer increases its market share with every insured -The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
Which of the following is a correct statement about life insurance policy types? -universal life policies have a structured premium payment scheduled that must be followed during the entire contract -Group life insurance is offered only to employees who provide evidence of insurability -Limited payment whole life policies stay in effect only for as long as the premium is paid -The initial premium for term insurance is lower than the initial premium for whole life insurance
The initial premium for term insurance is lower than the initial premium for whole life insurance
Frequently, juvenile life policies contain a payor rider. this rider States that in the event the payer of the premiums is disabled or dies, and the juvenile has yet to reach a specific age: -The insurer will completely waive all future payments -The deceased parents estate will pay the premiums -The premiums will be paid by the insurance until the child reaches age 21 or 25 -The insurance firm will lend funds to make the premium payments
The premiums will be paid by the insurance company until the child reaches age 21 or 25
Why would a business use a key person life insurance policy? -to provide the key employees surviving family members with funds to live on after the death of the employee -to protect the company from the financial consequences of the death of a Vice President -to make it easier for the employee to qualify for a bank loan -to help the employee spouse supplement her Social Security benefits
To protect the companies on the financial consequences of the death of a vice president
A person owns a life annuity. He elects to receive his annuity payments monthly for the remainder of his life with "ten years certain". The annuity will make payments: -for a minimum of 120 months and a maximum of the remainder of his life -during the period certain after which the payments will be reduced, but they will continue for the rest of his life -for 120 months, if the insured lives that long -until his death, when his beneficiary begins receiving payments for 120 additional months
for a minimum of 120 months and a maximum of the remainder of his life.
Person whose life is the object of a life insurance policy is the: -policy owner -beneficiary -applicant -insured
insured
Which of the following is not a type of authority associated with the authority of agents? -implied -justified -Express or actual -apparent
justified
Choose the right statement: -annuities create an immediate estate -death occurring without a will is called a dying interstate -life insurance create immediate estate
life insurance creates an immediate estate
An example of a moral hazard in relation to a life insurance application would be: -A person suffering bouts of severe depression -an individual has an indifferent attitude about participating in activities that may be damaging to his health -someone who often drives her excessively high rate of speed -restating your health history to an insurance company
misstating your health history to an insurance company
For income tax purposes, premiums for personal life insurance are: -deductible to the extent that they exceed 7.5% of the adjusted gross income -excluded from the adjusted gross income - not deductible -tax deferred
not deductible
What type of life insurance policy gives the owner the right to share in the insurers profits in the form of a dividend? -participating policy -any modified endowment contract -endowment policy -whole life policy
participating policy
All of the following are used in determining life insurance rates, EXCEPT: -policy reserves -mortality expenses -Insurance company expenses -investment and interest return
policy reserves
• The insurance code definition of "insurance broker" is
someone paid to transact insurance on behalf of another person, but not on behalf of the insurer
which life insurance classification carries the highest premium -standard -substandard -preferred -endowed
substandard
In insurance terminology, "indemnity" means
to make whole