LIfe Insurance
A primary insurer is the insurer that
transfers its loss exposure to another insurer in a reinsurance transaction.
A rider that waives all monthly deductions from a UL policy's cash value but credits nothing to the cash value if the insured becomes totally disabled is called a:
waiver of monthly deductions rider
All the following statements about life insurance settlement options are correct EXCEPT:
All settlement options include a life contingency.
Bob bought a $100,000 ten-year level term insurance policy on March 1, 2012. What will happen if he dies on April 1, 2022?
Bob's beneficiary will not get any benefits.
Variable life and variable universal life insurance are similar in all of the following ways EXCEPT:
Both require fixed, set premiums.
All the following statements about "other insured" term riders on a life insurance policy are correct EXCEPT:
Only spouses or partners can be covered under this rider.
All the following statements regarding reinsurance are correct EXCEPT:
Claims are paid to the policyowner separately by each insurer participating in the reinsurance agreement.
Which of the following statements best describes how employer-paid premiums for a nondiscriminatory group life insurance plan are treated for tax purposes?
Employers can deduct premiums paid on a group life insurance plan.
Which of the following statements about coverage provided by the California Insurance Guarantee Association is correct?
It does not cover benefits of a covered contract that were not guaranteed by the issuing insurer.
If an employer sets up a profit-sharing plan, which statement is correct?
It must establish individual accounts for each participant.
If Rick withdraws funds from his universal life insurance policy, what will be the immediate effect on the policy's death benefit?
It will be reduced by the amount of the withdrawal.
Jake and seven of his friends are self-employed in different fields. They want to form a group so that they can buy group life insurance. Which of the following most accurately describes their best option?
Jake and his friends would be eligible to purchase a group life policy if they find at least two more people to join their group.
Jason, age 27, earns $125,000 a year working for a small computer company that does not have a qualified retirement plan. If Jason sets up and contributes to a traditional IRA this year, which of the following statements is correct?
Jason can deduct the full amount that he contributes to his traditional IRA.
All the following statements about ordinary (straight) whole life insurance are correct EXCEPT:
The death benefit increases during the early policy years and then levels off.
All the following statements regarding an insured executive bonus plan are correct EXCEPT:
The employer is required to pay all of the premiums for the policy.
Replacement occurs if a life insurance policy is purchased and, in conjunction, any of the following happen EXCEPT:
The existing policy's beneficiary designation is changed.
If a permanent life insurance policy lapses and the owner does NOT select a nonforfeiture option, the insurer will automatically:
apply the extended term insurance option
To qualify for accelerated benefits from a life insurance policy on a tax-free basis, an insured must meet all of the following qualifications, EXCEPT:
approved by the insurance company as meeting its definition of terminally ill
In an absolute assignment, what term is used to describe the new policyowner?
assignee
An endowment policy matures (endows) when its cash value equals its face amount, which may be:
at almost any age
Jerry owns a life insurance policy with premiums payable directly to the insurer's home office. However, for the past five years Jerry has sent his payments to his agent, who then forwards them to the insurer. The insurer had accepted this arrangement but then tries to cancel Jerry's policy when it learns he had died while the premium was being forwarded by the agent. The insurer will probably not be able to cancel the policy in this case because of which of the following legal principles?
estoppel
Variable life insurance policies offer all of the following EXCEPT:
flexible premium payments
The process of determining life insurance needs by discounting a person's future net earnings into a single sum that represents the person's economic value is called the:
human life value approach
Which of the following distribute a sum of money regularly, starting very shortly after they are bought?
immediate annuities
Alexis, age 62, just bought a variable deferred annuity. Unless Alexis indicates otherwise, where will her premium deposit be invested during the contract's free-look period?
in the contract's money market or fixed account
A policyowner can access the cash value of many life insurance policies through withdrawals, loans, or policy surrender. Which of the following terms describes the ability to easily convert life insurance into cash?
liquidity
Harry and Connie each want to buy life insurance that will provide a guaranteed death benefit whenever they die, will generate a guaranteed cash value they can access while living, and even return excess premiums to them. Which of the following would best fit this couple's needs?
participating whole life insurance
The primary reason for using third-party ownership in personal life insurance for estate planning purposes is to:
remove the life insurance proceeds from the insured's estate and thus reduce the value of the taxable estate
In-person delivery of a whole life insurance policy gives the producer the opportunity to do all of the following, EXCEPT:
review coverage to determine if the policyowner wants to increase the policy's face amount
Which type of life insurance company pays taxable dividends to its stockholders?
stock company
Who normally pays for medical exams or lab tests that insurance companies request during the life insurance underwriting process?
the insurance company
With respect to the field of insurance, who are the two parties bound by the law of agency?
the insurance company and the producer
Which of the following best describes income payments under the period certain-only annuity settlement option?
the longer the payout period, the smaller the amount of each monthly payment
Besides select policy anniversary dates, a life insurance guaranteed insurability rider usually permits special alternative option dates that typically include all the following, EXCEPT:
the policyowner's loss of a job
When paying death benefits, life insurance companies must consider all of the following, EXCEPT:
the relationship between the insured and beneficiary
In the purchase of a life insurance contract, the applicant's consideration consists of:
the signed application and the first premium