Life Insurance Exam
Wyatt owns a Universal Life policy with an annual minimum premium if $1,200 and an annual target premium of $1,500. For the last three years, Wyatt has paid the target premium. If he has a Waiver of Premium Rider and becomes disabled, how much will the rider pay for his policy? -$1,200 each year -$1,350 each year -$1,500 each year -The dollar amount Wyatt selected when he bought the Waiver of Premium Rider.
$1,500 each year
An insured owns a $10,000 Life policy with a Cash Value of $2,000 and a loan interest rate 5%. On January 1, the insured borrows $500 and pays one year's interest in advance. During the year, the insured does not repay any part of the loan. If the insured dies on December 31, what is the payment amount to the beneficiary? -$12,000 -$11,500 -$10,000 -$9,500
$9,500
When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy's initial -1 year period. -2 year period. -5 year period. -renewal period.
2 year period.
How many years must credit information be retained? -3 -5 -7 -10
7
Which statement about preexisting conditions is FALSE? -A person with preexisting conditions is uninsurable. -These are conditions which can be temporarily excluded. -These are conditions which would cause a person to seek medical treatment. -These are conditions which would cause a reasonable person to seek a doctor's care.
A person with preexisting conditions is uninsurable.
How do warranties differ from representations? -A warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge -A representation is guaranteed to be true, a warranty is believed to be true to the best of one's knowledge -A warranty is issued by the insurer, a representation is a statement provided by the applicant. -An incorrect representation automatically voids a contract, whereas an incorrect warranty must be proven.
A warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge
What is a prepaid application for insurance legally considered to be? -An invitation to make an offer -An offer -A counter-offer -An acceptance
An offer
Which is a Fixed Period Settlement option? -Life Only Annuity -Life Annuity with Period Certain -Refund Life Annuity -Annuity Certain
Annuity Certain
Which Life rider does not require additional premium? -Automatic Premium Loan -Waiver of Premium -Guaranteed Insurability -Multiple Indemnity
Automatic Premium Loan
Which life insurance policy rider could result in a death benefit less than the face amount of the policy? -Guaranteed Insurability Rider -Automatic Premium Loan Rider -Payor Benefit Rider -Cost of Living Rider
Automatic Premium Loan Rider
Under the misstatement of age provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application? -The application is considered fraudulent and no benefits are paid. -The proceeds of the policy must be determined by a probate court proceeding. -If the death is two years after the original policy purchase, complete benefits are paid. -Benefits are adjusted to an amount that the premium would have purchased at the correct age or gender.
Benefits are adjusted to an amount that the premium would have purchased at the correct age or gender.
Variable Whole Life guarantees all of the following EXCEPT -a Death Benefit. -a Premium. -Cash Value growth. -a Period of protection.
Cash Value growth.
Which of the following defines the term peril? -chance of loss -cause of loss -uncertainty of loss -risk of loss
Cause of loss
After receiving ten monthly benefit payments, an annuitant requests that the payout method be changed from Straight Life to Survivorship Life. How will the insurance company respond? -Lower the monthly payments made to the annuitant. -Raise the monthly payments to the annuitant. -Continue the monthly payments as promised originally. -Shorten the payment period to account for the increase in risk.
Continue the monthly payments as promised originally.
Which Life policy would have an increased premium after a given period of time? -Straight Life -20-Pay Life -Decreasing Term -Convertible Term
Convertible Term
Which of the following life policies allows the policy owner to obtain permanent coverage? -Renewable Term -Convertible Term -Decreasing Term -Level Term
Convertible Term
Which of the following is TRUE of the limited pay whole life policy? -Coverage ends when the policy is paid-up. -Coverage continues after the policy is paid-up. -Premium payments increase as the insured ages. -Premium payments are lower than continuous premium whole life.
Coverage continues after the policy is paid-up.
At age 50, Dan surrenders his Universal Life policy for cash. How will he be taxed? -Dan will not pay income tax on the withdrawal. -Dan will pay income tax and a 10% penalty on the amount of the withdrawal. -Dan is taxed as if the surrender is a policy loan. -Dan will be taxed on the amount that the cash value exceeds the premium payments.
Dan will be taxed on the amount that the cash value exceeds the premium payments.
Which statement about the Group Life conversion priviledge is TRUE? -Under COBRA, a departing employee may elect to remain a member of the Group Life plan for a limited period of time. -Death during the conversion period is covered even if the departing employee chooses not to convert. -The departing employee must individually pay the premium if he chooses to be covered during the conversion period. -If the departing employee chooses to convert, his only option is term insurance.
Death during the conversion period is covered even if the departing employee chooses not to convert.
Which type of life insurance is most appropriate for mortgage protection? -Whole Life -Increasing Term -Survivorship Life -Decreasing Term
Decreasing Term
Paul and John are equal partners in their business which is worth $500,000. They wish to assure that the business will continue in the event of the death of either partner. Which funding arrangement best suits their objective? -Each partner purchases a $250,000 policy on the other partner. -Each partner purchases a $500,000 policy on the other partner. -Each partner purchases a $250,000 policy on himself. -The company purchases a $500,000 policy on each partner.
Each partner purchases a $250,000 policy on the other partner.
Which statement about the benefits of Qualified Retirement plans is FALSE? -Employer contributions are tax deductible to the employing company. -Employees are not taxed on employer contributions until money flows out of the plan. -Employees must be fully vested after 5 years. -The funds in the plan grow on a tax-deferred basis.
Employees must be fully vested after 5 years.
The policy and the application constitute the complete agreement between the policyowner and the insurance company. This is known as the -Right to Examine. -Entire Contract Provision. -Utmost Good Faith Agreement. -Ownership Provision.
Entire Contract Provision.
Which Life policy provision defines who can change a policy after it has been issued? -Insuring clause -Consideration clause -Entire contract clause -Incontestable clause
Entire contract clause
Which Life policy provision states that statements made on the application are representations and not warranties? -Insuring clause -consideration clause -entire contract clause -Incontestable clause
Entire contract clause
Which Life policy provision states that the application is part of the contract? -Insuring clause -Consideration clause -Entire contract clause -Incontestable clause
Entire contract clause
A 35-year-old autoworker with a spouse and three children is laid off from work for a period expected to last from 6 to 12 months. During this period, the autoworker cannot pay premiums on the Whole Life policy he has owned since age 20. Which non-forfeiture option is most appropriate if he plans to reinstate his policy when he goes back to work? -Cash -Reduced Paid-Up -Extended Term -Reduction of Premium
Extended Term
Which is the automatic Non-forfeiture Option? -Cash -Reduced Paid-Up -Accumulate at Interest -Extended Term
Extended Term
A policy has lapsed due to nonpayment of premium. It can be reinstated under certain conditions. Which of the non-forfeiture options allow for reinstatement? -Cash and Extended Term -Reduced Paid-Up and Cash -Extended Term and Reduced Paid-Up -Cash, Extended Term and Reduced Paid-Up
Extended Term and Reduced Paid-Up
What does Premium mode refer to? -Premium average -Substandard or rated premium -Amount of premium payments -Frequency of premium payments
Frequency of premium payments
Which life policy offers permanent protection and a gradually increasing premium during the early years of the contract? -Modified Life -Joint Life -Graded Premium Whole Life -Credit Life
Graded Premium Whole Life
Which Life Coverage allows an employer to deduct premiums as ordinary business expenses? -Buy and Sell Agreements -Group Life -Key Employee Life -Joint Life when the business is the beneficiary
Group Life
If Adam is fully vested in his company's retirement plan, which statement applies? -He is no longer eligible to make contributions. -He is no longer eligible for employer matches to his contributions. -He is the 100% owner of his retirement account. -He can take early withdrawals without restriction or penalty.
He is the 100% owner of his retirement account.
At age 55, Janet's husband dies, and she chooses to take the death benefit of his life insurance policy in the form of a Life Annuity with 20 Years Certain. Which statement concerning her selection is TRUE? -Her payments will be composed of principal alone. -Her payments will not be taxed. -If Janet lives until age 76, her payments will continue. -This option will generate a higher monthly benefit than a Straight Life Annuity.
If Janet lives until age 76, her payments will continue.
A proposed insured submits an application for life insurance without premium payment, and the policy is delivered to the applicant. Which party made the offer? -Applicant -Producing agent -Policy owner -Insurance company
Insurance company
What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one? -No proof of insurability is required. -Insured original issue age is used. -No application is required. -Outstanding loans are cancelled.
Insured original issue age is used.
Which statement about Convertible Term Insurance is TRUE? -It is the only form of Term insurance that builds cash value. -It is the only form of Term insurance that pays dividends. -It is the most appropriate form of protection for a debt obligation. -It does not require the insured to prove insurability at conversion.
It does not require the insured to prove insurability at conversion.
An insured owns a Term to 65 contract. If he is still alive at age 65, what happens to the policy? -It expires. -It matures. -It lapses. -It renews.
It expires.
Why is the accidental death benefit referred to as a double indemnity? -It provides for both the actual death as well as other losses from the accident. -It provides twice the face value in the policy for death due to accident. -The beneficiaries have twice the amount of time to provide proof of loss. -The beneficiaries must provide proof of death due to multiple causes.
It provides twice the face value in the policy for death due to accident.
M and J are both insureds under a policy which will pay when the first of the two dies. Which type of policy do they have? -Variable Life policy -Joint Life policy -Modified Life policy -Survivorship Life policy
Joint Life policy
Which of the following underwriting sources acts as an information exchange by collecting general medical information about an individual's health history? -attending physician statement -consumer inspection report -Medical Information Bureau -producer's report
Medical Information Bureau
Which is a Life policy that builds cash value faster than a 7-Pay Whole Life contract? -Annuity Contract -Endowment Policy -Security Contract -Modified Endowment Contract
Modified Endowment Contract
Which regulation was established by the Federal Trade Commission and Federal Communications Commission to protect consumers? -National Do Not Call List -CAN-SPAM Act -Gramm-Leach-Bliley Act -Telemarketing Sales Rule
National Do Not Call LIst
If an annuitant is receiving income benefits from a Straight Life (Life Only) Annuity, what can the annuitant do if faced with a sudden need for cash to cover huge medical bills? -Surrender the annuity and withdraw the principal and earned interest -withdraw the principal -Terminatie the annuity and withdraw the cash value -No changes can be made
No changes can be made
What is Extended Term insurance? -Dividend Option -Non-forfeiture Option -Policy Rider -Policy Provision
Non-forfeiture Option
Which dividend option allows the insured to purchase more benefits and is calculated at the attained age? -Cash payment -One year term -Reduction of premium -Paid up additions
One year term
Which life insurance dividend option will shorten the premium payment period? -Cash option -One-year Term option -Paid-Up Life option -Reduced Paid-Up option
Paid-Up Life option
Which is the difference between participating and non-participating policies? -Participating policies pay dividends while non-participating policies do not. -Participating policies have lower premiums than non-participating policies. -Participating policy dividends are like stock dividends, non-participating dividends are not. -Participating policy owners do not share in the divisible surplus of a company, while non-participating policies do share in this surplus.
Participating policies pay dividends while non-participating policies do not.
To reinstate a lapsed whole life policy you must take all of the following actions EXCEPT -Pay a reinstatement fee -Pay all past due premiums -Pay interest on past due premiums -Prove insurability
Pay a reinstatement fee
The selection of which life insurance policy rider CANNOT result in an increase in the policy's death benefit? -Payor Benefit -Cost of Living -Guaranteed Insurability -Multiple indemnity
Payor Benefit
Which of the following is a characteristic of traditional whole life insurance? -flexible premium payments -Policy owner controls how the cash value is invested -Policy owner can receive total cash value at policy surrender without any tax consequences -Policy owner can borrow against cash value
Policy owner can borrow against cash value
Which of the following statements regarding federal taxation of individual life insurance premiums is correct? -Premiums paid on term life insurance are tax-deductible. -Premiums are tax-deductible if the death benefit is tax-free. -Premiums are not tax-deductible unless the policy has cash value. -Premiums are not tax-deductible and are paid with after-tax dollars.
Premiums are not tax-deductible and are paid with after-tax dollars.
Which statement is TRUE if a policy owner elects a non-forfeiture option under their life insurance policy? -The death benefit will decrease. -The coverage period will be shorter. -The type of coverage will change. -Premiums will no longer be required.
Premiums will no longer be required.
Which is a Non-forfeiture option? -a return of premiums paid -a 10-day Free Look -Reduced Paid-Up insurance -Paid-Up Additions
Reduced Paid-Up insurance
When a policy owner names a single beneficiary and reserves the right to change beneficiaries in the future, the designated beneficiary is ______. -Revocable and contingent -Irrevocable and contingent -Revocable and primary -Irrevocable and primary
Revocable and primary
How should a policy owner wishing to retain all rights of ownership name his beneficiary? -Collateral beneficiary -Revocable beneficiary -Contingent beneficiary -Irrevocable beneficiary
Revocable beneficiary
Ann is age 55 and is dying of cancer. She owns a $100,000 Term to 65 policy but requires $75,000 immediately to cover her hospice costs. What is an option to cover her expenses? -Borrow $75,000 from her company using the policy as collateral. -Utilize the Accelerated Death Benefit feature of the policy. -Purchase a Living Benefits rider. -Sell her policy to a Viatical Settlement company.
Sell her policy to a Viatical Settlement company.
An annuitant paid $500,000 for an annuity on September 1 and expects to receive lifetime benefit payments beginning October 1. What type of annuity was purchased? -Single Premium Immediate -Single Premium Deferred -Flexible Premium Immediate -Flexible Premium Deferred
Single Premium Immediate
A 75-year-old is the beneficiary of a $200,000 Variable Universal Life policy. Which Settlement Option is LEAST appropriate for this individual? -Straight Life Annuity -Fixed Period Annuity Certain -Fixed Amount Annuity Certain -Cash
Straight Life Annuity
David invests his life savings of $500,000 in an annuity. Which would provide David with the largest monthly benefit? -Straight Life Annuity -Refund Life Annuity -Joint and Survivor Life Annuity -Life Annuity with Period Certain
Straight Life Annuity
Which is an annuity that pays only as long as the annuitant is alive? -Straight Life Annuity -Refund Life Annuity -Joint Life Annuity -Life Annuity with Period Certain
Straight Life Annuity
Ted is the owner and the insured of a Universal Life policy in which he names his wife, Betty, as the sole, revocable beneficiary; no contingent beneficiaries are named even though the marriage produces two children. If Ted and Betty both die instantly in an auto accident, who receives the benefits? -Ted's estate -Betty's estate -the children pro rata -the children per stirpes
Ted's estate
Which of the following is TRUE in a key employee life insurance policy? -The corporation is the applicant and policy holder. The employee is the insured. -The corporation is the applicant and insured. The employee is the policy holder. -The corporation is the insured and the policy holder. The employee is the beneficiary. -The corporation is the beneficiary. The employee is the policy holder and the insured.
The corporation is the applicant and policy holder. The employee is the insured.
What happens if a Variable Universal Life policy is deemed by the IRS to be a Modified Endowment Contract (MEC)? -The policy will lose some of its tax benefits. -The policy will endow sooner. -The policy will no longer guarantee dividends. -The policy will not be taxed.
The policy will lose some of its tax benefits.
Which statement about Variable Whole Life is FALSE? -It provides a minimum guaranteed death benefit. -A securities license is required to sell it. -The premium and benefits are variable. -The cash values fluctuate in accordance with the investment performance of the separate account.
The premium and benefits are variable.
What are the tax consequences of a Key Employee Life insurance policy -The premiums are tax deductible, and the death benefit is not taxable. -The premiums are not tax deductible, and the death benefit is taxable. -The premiums are tax deductible, and the death benefit is taxable. -The premiums are not tax deductible, and the death benefit is not taxable.
The premiums are not tax deductible, and the death benefit is not taxable.
How does the per capita rule apply to proceeds from a life insurance policy? -The proceeds are divided equally among living primary beneficiaries. -The secondary beneficiary receives the proceeds if the primary beneficiary is no longer living. -The proceeds go to the policyholder's estate when no beneficiary is living. -The proceeds go to the descendants of the primary beneficiaries.
The proceeds are divided equally among living primary beneficiaries.
A producer accepted a life insurance application without the initial premium. Once the underwriting process was completed, the company issued the policy by mailing it to the producer. What is the producer's responsibility? -The producer may pay the premium on behalf of the insured so coverage can begin immediately. -Since the policy was issued, the producer can mail it to the insured without any further action. -The producer can request electronic payment from the insured and can mail the policy to the insured once the payment is received. -The producer should personally deliver the policy to collect the premium, explain the coverages, and obtain a signed statement of good health.
The producer should personally deliver the policy to collect the premium, explain the coverages, and obtain a signed statement of good health.
Which is NOT true concerning universal life insurance? -The insuring element is term insurance -Partial surrenders are available -The policy can pay the death benefit plus the cash value -The target premium option cannot be changed to the minimum premium option
The target premium option cannot be changed to the minimum premium option
What is a contract in which only one party makes any legally enforceable promises? -Aleatory contract -Unilateral contract -contract of adhesion -conditional contract
Unilateral contract
Which life insurance policy offers permanent insurance, interest sensitive growth of cash value, and flexible premium payment options? -Adjustable Life -Variable Whole Life -Universal Life -Interest Sensitive Whole Life
Universal Life
Which insurance product could NOT be used to fund an Individual Retirement Account (IRA)? -Equity Indexed Annuity -Mutual Fund -Variable Annuity -Variable Universal Life
Variable Universal Life
If you hold only a Life and Health license, you may NOT sell -Adjustable Life. -Variable Whole Life. -Universal Life. -Modified Life.
Variable Whole Life.
Which life insurance policy rider guarantees that no premium will be required if the policy owner is disabled for a specific time? -Living Benefits Rider -Waiver of Premium Rider -Cost of Living Rider -Guaranteed Insurability Rider
Waiver of Premium Rider
Business partners wanting to purchase an insurance policy on the lives of each of the other partners would choose -Split-Dollar Insurance. -Key-Employee Life Insurance. -a Cross-Purchase Plan. -an Entity Plan.
a Cross-Purchase Plan.
Which Qualified Retirement Plan can be established by a business corporation? -a Simplified Employee Pension IRA (SEP IRA) -an Individual Retirement Account (IRA) -a Tax Sheltered Annuity (TSA) -a Roth IRA
a Simplified Employee Pension IRA (SEP IRA)
If the original application for a Major Medical policy is NOT prepaid, what will the producing agent collect along with the initial premium at the policy delivery? -a new application -a Statement of Continued Good Health -an Attending Physician's Report -a 10-Day Free Look Waiver
a Statement of Continued Good Health
When you apply for a Major Medical policy with a prepaid application, you and your agent are working under the assumption that you will be considered a Preferred Risk. Your company, however, responds that you are a Standard Risk and requires additional premium. The company's response is legally considered to be -an invitation to make an offer. -an offer. -a counter-offer. -acceptance of an offer.
a counter-offer.
What should the policy owner of a Modified Life policy expect? -an increase in death benefit over time -cash value growth throughout the life of the policy -no cash value growth over the life of the policy -a future increase in premium
a future increase in premium
A false statement made intentionally on an application is - a consideration - a warranty - a misrepresentation - a concealment
a misrepresentation
What must be paid when an annuity owner age 60 surrenders an annuity for cash? -a tax -a 10% penalty -both a tax and a 10% penalty -neither a tax nor a 10% penalty
a tax
Which is an example of retaining risk? -accepting a deductible -paying premiums quarterly -taking a policy loan -renewing a Life policy
accepting a deductible
What is the period called in which an annuity owner pays the premium to the insurance company? -accumulation period -annuity period -liquidation period -coverage period
accumulation period
Group Life insurance reduces the impact of what feature? -small claims -large claims -adverse selection -coinsurance
adverse selection
All the following are elements of an uninsurable loss EXCEPT -affordable premiums can be charged. -types of losses that occur can be expected. -expected losses are measurable. -expected losses will be accidental.
affordable premiums can be charged.
Marcie paid $1,800 to the insurance company as her first year's premium for her Major Medical policy. When she is severely injured in an avalanche on a ski trip, the company paid out over $100,000 to cover her medical bills. The unequal exchange of values demonstrates that the insurance policy is which type of contract? -unilateral -conditional -aleatory -valued
aleatory
An insurer that has been granted a certificate of authority to conduct business in a particular state is referred to as -a mutual insurer. -an admitted insurer. -a domestic insurer. -a non-admitted insurer.
an admitted insurer
In which scenario will an Accelerated Death Benefit be denied? -an insured who has contracted a disease that will result in his death in -the near future -an insured with a permanent and total disability with the expectation that he will never be able to work again -an insured admitted to a nursing home with the expectation that he will never leave the nursing home -an insured injured to the extent that he will die within weeks
an insured with a permanent and total disability with the expectation that he will never be able to work again
Which of the following is an example of a premium payment mode? -annual premium payment -payment by check -automatic deduction of premium -$200 per policy year
annual premium payment
Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy? -the effective date -any exclusions -premium due dates -loan interest rates
any exclusions
When may a policyowner change a revocable beneficiary? -only when the insurance company renews the policy -only if the beneficiary dies -never -at any time
at any time
A health insurance policy that covers dependent children MUST provide coverage for newborns beginning -at the moment of birth. -14 days after birth. -31 days after birth. -on the date the insurance company is notified.
at the moment of birth
Which is a source of underwriting information? -National Association of Insurance Commissioners -Department of Labor -attending physicians' reports -credit counseling companies
attending physicians' reports
Who may bring a civil action in the appropriate United States district court against any person engaging in conduct constituting an offense under section 1033? -insurance commissioner -secretary of state -attorney general -governor
attorney general
Which method of handling risk represents an insured's attempt to refrain from risk? -avoidance -reduction -retention -transfer
avoidance
With few exceptions, funds withdrawn from a Qualified Retirement plan at age 65, will -be taxed as ordinary income. -be taxed as capital gains. -not be subjected to the income tax. -be treated as dividend income.
be taxed as ordinary income.
A life insurance application requires the signatures of all of the following EXCEPT the -proposed insured. -policy owner if different from the insured. -producing agent. -beneficiary.
beneficiary.
Which type of receipt makes the insurer liable for the risk from the date of application, regardless of the applicant's insurability? -binding receipt -conditional receipt -inspection receipt -temporary receipt
binding receipt
How is the money in an insurance company's general account usually invested? -common stocks -stock options -bonds, real estate and mortgages -mutual funds
bonds, real estate and mortgages
How is a premature withdrawal from a 401k retirement plan treated? -a 10% penalty only -a tax only -both a 10% penalty and a tax -neither a 10% penalty nor a tax
both a 10% penalty and a tax
What must be paid when a 40-year-old policy owner surrenders a Modified Endowment Contract for cash? -a tax only -a 10% penalty only -both a tax and a 10% penalty -neither a tax nor a 10% penalty
both a tax and a 10% penalty
All of the following are nonforfeiture options EXCEPT -cash surrender value. -extended term insurance. -reduced paid-up insurance. -cash dividend option.
cash dividend option.
Adjustable Life would not offer the policy owner flexibility in the -type of insurance. -cash value investment vehicle. -death benefit. -premium payable.
cash value investment vehicle.
Which of the following rights does an employee have when covered under a group life insurance policy? -change the beneficiary -receive the master policy -determine the amount of coverage -decline coverage in a noncontributory plan
change the beneficiary
In a level term life policy, what does the word "level" refer to? -mortality cost -cash value -death benefit -interest earned
death benefit
A producer who makes false statements about the financial condition of an insurer may be found guilty of -fraud. -unfair discrimination. -defamation. -twisting.
defamation
A company decides to purchase Key Employee Life Insurance for its vice president of operations. All of the following statements are correct EXCEPT the ________ -company is the policyowner. -company is the applicant. -employee names the beneficiary. -employee gives consent to be insured.
employee names the beneficiary.
How often do organizations need to check the Do Not Call Registry in order to stay in compliance? -every 31 days -every quarter -every 6 months -every year
every 31 days
The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as -limitation. -exclusion. -exception. -reduction.
exclusion.
Which event is NOT qualified for early withdrawal without an IRA penalty? -first-time home purchase -medical expenses -first-time auto purchase -education expenses
first-time auto purchase
Which of the following is exempted from the incontestability provision in insurance policies? -fraudulent misstatements -pre-existing conditions -change in health -changes in the insurance code
fraudulent misstatements
Which factor is NOT used when determining the face amount of a life insurance policy for personal use? -utility expenses -food and clothing -future sales -mortgage expenses
future sales
All the following are characteristics of a Whole Life Policy EXCEPT -guaranteed cash values. -fixed premiums. -guaranteed dividends. -fixed death benefits.
guaranteed dividends.
These are two approaches most often used in determining the amount of personal life insurance. The approach that focuses solely on income and is less detailed is known as -human life value. -the needs approach. -lost salary value. -the replacement approach.
human life value.
What type of term insurance is utilized when writing a Return of Premium rider on a Whole Life insurance policy? -level -decreasing -increasing -convertible
increasing
Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms? -conditions -policy title page -insuring clause -definitions
insuring clause
The accumulation period in an annuity is the period in which -the owner stops funding the account. -the annuitant receives monthly income. -the beneficiary can select a payout option. -interest is credited on a tax-deferred basis.
interest is credited on a tax-deferred basis.
Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies? -joint life annuity -life annuity -survivorship life annuity -temporary annuity
joint life annuity
What type of insurance should a company purchase if it wants to insure the life of its CEO? -key person insurance -BOE insurance -group life policy -industrial life insurance
key person insurance
When a Variable Universal Life policy is deemed a Modified Endowment Contract (MEC) by the IRS, the policy will -endow sooner. -lose some tax benefits. -not be taxed -begin to pay dividends
lose some tax benefits.
A consumer report used to determine eligibility for insurance may include all of the following EXCEPT -character. -reputation. -credit information. -medical underwriting exam.
medical underwriting exam.
What is it called when a life insurance policy pays a multiple of the coverage amount when certain types of accidents occur? -multiple benefit -multiple death rider -multiple indemnity -multiple pay
multiple indemnity
Which type of assignment occurs when a person transfers ownership of a life insurance policy to another person, such as a son when turning 18? -contractual -collateral -binding -permanent
permanent
What do Medical Expense policies use to reduce adverse selection? -coinsurance -deductibles -elimination periods -pre-existing conditions limitations
pre-existing conditions limitations
The aspect of a policy that allows a policyholder to select the timing of premium payments is known as -consideration. -reasonable expectation. -acceptance. -premium mode.
premium mode.
If the declared dividend equals or exceeds the premium, the payment may be suspended. This is an example of which dividend option? -paid up additions -accumulation of interest -one year term -reduction of premium
reduction of premium
Which method of handling risk is defined as the planned assumption of risk through self-insurance? -reduction -retention -sharing -transfer
retention
Which of the following is NOT recognized as consideration in an insurance contract? -premium payments -promises made by the company -the insured's statements on the application -services rendered by the producer
services rendered by the producer
What is a Conditional Receipt intended to do? -Outline the conditions of the 10 Day Free Look. -Speed up coverage. -Record the policy owner's receipt of the policy. -Outline the conditions required for the policy to remain in effect.
speed up coverage
What is the order in which beneficiaries receive proceeds from a life insurance policy? -classification of beneficiaries -line of beneficiaries -progression of beneficiaries -succession of beneficiaries
succession of beneficiaries
Which comparison of the Buyer's Guide and the Policy Summary is TRUE? -Both documents are general guides to buying life insurance. -Both documents are specific details concerning the subject policy -the Buyer's Guide is generic, and the Policy Summary is specific. -the Policy Summary is generic, and the Buyers Guide is specific.
the Buyer's Guide is generic, and the Policy Summary is specific.
when requesting a consumer report on an applicant, from whom must the insurer obtain consent? -the applicant -the proposed insured -the beneficiary -the agent
the applicant
A Whole Life policy can mature in all of the following ways EXCEPT -the insured's death at age 65. -the cash value equals the face amount. -the insured's attainment of age 100. -the insured's payment of all required premiums.
the insured's payment of all required premiums.
Who assumes the investment risk in a Variable Whole Life policy? -the insurance company -the insured -the beneficiary -the policy owner
the policy owner
All of the following are characteristics of variable whole life EXCEPT -the premium is level. -there is no guaranteed cash value. -there is no guaranteed minimum death benefit. -the producer must be licensed in both insurance and securities.
there is no guaranteed minimum death benefit.
How are term riders used? -to substitute the term of the coverage -to extend the effective dates of coverage -to purchase insurance on a family member of the originally insured -to purchase term insurance attached to supplement another life insurance policy
to purchase insurance on a family member of the originally insured
The National Do Not Call list pertains to what type of calls? -organizations with a current relationship to the consumer -unsolicited sales calls -calls solicited by the consumer -calls made on behalf of tax-exempt nonprofits
unsolicited sales calls
At retirement, an elderly couple own an annuity worth $300,000. They choose to be paid $3,000 each month under a Fixed Amount Annuity Certain. How long will they receive benefits? -until the principal and interest are exhausted -for the remainder of the husband's life -until both husband and wife are dead -until they receive $300,000
until the principal and interest are exhausted
When does insurable interest come into play in a life insurance policy? -when the applicant for the policy is not the insured -when a charity is named beneficiary of the policy -when a beneficiary is irrevocable -when the free look period ends
when the applicant for the policy is not the insured
When does a Term to 65 Life Insurance policy mature? -when the insured dies at any age -when the insured dies prior to age 65 -when the insured reaches age 65 -when the insured reaches age 100
when the insured dies prior to age 65
Non-forfeiture policies can be found in all -term insurance policies. -mutual policies. -whole life policies. -participating policies.
whole life policies.