Life Insurance exam

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Slippery floors, reckless driving, or providing false information are examples of

Hazards

How many days is the free-look period in most life insurance policies?

10 days

A temporary license in this state is valid for up to

180 dyas

Which of the following is NOT an indicator of a competent party?

Business profession

The reduction of premium option uses the dividend to reduce

Next year's premium

Which dividend option will increase the death benefit?

Paid-up additions

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?

Simplified Employee Pension (SEP)

Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs?

Term insurance

Insurance provides a means to

Transfer a loss

Which department or division of an insurance company is responsible for the selection, evaluation, and distortion of risks?

Underwriting

All other factors being equal, which of the following premium modes would result in the lowest overall premium?

Annual

In Credit Life Insurance, who is responsible for paying the policy premiums?

Borrower only

A new homebuyer wants to purchase a life insurance policy 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

Decreasing term

An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this?

Grace period

All of the following are true about the Social Security System EXCEPT

The system has been largely privatized

A life insurance policy qualifies 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?

7 years

There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age?

59 1/2

If the policy loan and the interest become greater than the total cash value of a life insurance policy, the policy will lapse. The policy owner must be given how many day's written notice of cancellation when this occurs?

30

Which of the following would not be eligible for coverage under key employee?

The owner of a shop

Gross premium for a life insurance policy is determined by adding which to components

Net premium and expenses

Cash Value guarantees in a whole life policy are called

Nonforfeiture values

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

Which of the following is required in order for a plan to be qualified?

The plan must be formally written and communicated to the employees

All of the following statements about mutual insurance companies are correct EXCEPT

Policy dividends issues by mutual companies are guaranteed and not table

What is the purpose of the Agent's Report in the application process?

To provide additional information about the applicant to the underwriters

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Being permanently disabled

Insurers CANNOT transact insurance in this state without a

Certificate of Authority

Which for the following losses would likely be covered under the accidental Death Rider?

Death caused by a head-on collision

Which type of authority is found in the agent's contract?

Express

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that he dies before all of the benefits are paid; the remaining amount will go to the contingent beneficiary.Which settlement option did J choose?

Fixed amount

When an agent changes address of their residence or office, the Insurance Department must be notified within

30 days

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?

Accumulation period

In credit Life Insurance, who is responsible for paying the policy premiums?

Borrower only

An agent is filling out an insurance application for a client. The applicant realizes she should have answered an earlier question differently. Which of the following methods should the agent use to make the change?

Cross out he incorrect information, write int he correct answer, and have the applicant initial the change

Which of the following is true regarding a joint life annuity?

The payments stop at he first death

Which of the following documents used in the underwriting process contains specific medical details about an applicant?

Attending Physician's Statment (APS)

Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suite for transitioning the business?

Buy-Sell Agreement

An employee dies having 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under Social Security?

Currently insured

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will

Continue to increase

According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT

IF an applicant is declined for an insurance policy, he or she has no right to know what was in the report

A policy matures and pays the face amount if the insured lives to a specified date. This best describes

An endowment policy

An annuity would normally be purchased by an individual who wants to

Provide income for retirement

Life insurance creates an immediate estate. Which of the following best explains this statement?

The face value of the policy is payable to the beneficiary upon the death of the insured

If an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answer to those questions?

Never; the insurer has waived its right to those answers by issuing the policy

Which of the following statements describes one of the reasons individuals purchase life insurance?

It creates an immediate estate

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

Which of the following could reduce the amount of the death benefit?

Failure to repay a policy loan?

What is the cost of coverage based on for group life insurance?

The average age and ration of men to women


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