Life Insurance Exam Practice

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An adjustable life policy can assume the form of

Either term insurance or permeant insurance

all of the following are ways to handle risk EXECPT

Elimination

ten years ago, an insured purchased a life insurance policy designed to pay his family $500 a month for 20 years. Last month, he was killed in an auto accident. The insurance company told his widow that she would receive $500 a month for the 10 remaining years on the policy. The insured had purchased what kind of a policy?

Family Income Policy

An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a

Representation

Life insurance can provide which of the following

Survivor Protection

Which dividend option will increase the death benefit

Paid-up additions

which of the following is INCORRECT concerning Modified Endowment Contracts (MECs)

An MEC must always pass the 7 day test

This state provided for a temporary license for all of the following EXCEPT

An agents retirement

Which type of authority is found in the agents contract

Express

If a retirement plan or annuity is "qualified", this means

It satisfies IRS requirements for favorable tax treatment

the frequency and the amount of the premium are known as what

Level Premium

the frequency and the amount of the premium payment are known as what

premium mode

all of the following are true of annually renewable term insurance except

proof of insurability must be provided at each renewal

which type of insurer uses a formal sharing agreement

reciprocal insurers

if an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will

adjust the death benefit to what the premium would have purchased at the actual age or gender

which of the following is considered a field underwriter

an agent

Under what circumstances will the contingent beneficiary receive the death benefit

if the primary beneficiary dies before the insured

cash value guarantees in a whole life policy are called

Nonforfeiture Values

Insurers CANNOT transact insurance in this state without a

Certificate of authority

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended Term

what is the name of the tax that is levied by the federal government on the right to transfer property at the time of the death?

Federal Estate Tax

A stock insurer is defined as an insurer

Owned by its stockholders

According to agency law, the agent always represents the

insurance company

in a life insurance application, all the following signatures will be required except

the home office underwriter

Some deferred annuities include an adjustment that subjects the owner of the annuity to share in all loss or gain due to premature liquidation of bonds. This feature is found in

A market value adjusted annuity

which of the following is NOT personal use of life insurance

An individual buys cash value insurance to fund his children college education

the reduction of premium option uses the dividend to reduce

Next years premium

Which of the following is NOT true regarding life insurance in qualified plans?

Qualified plans must provide a life insurance benefit

In making annuity recommendation to a consumer the producer must have reasonable ground to believe that the annuity

is suitable

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

it creates an immediate estate

which of the following is true about the social security program

it is mandatory for most workers to pay FICA taxes

Which of the following statements if TRUE regarding an Agents Report during the policy application process

it provides the agents personal observations concerning the proposed insured

which of the following are characteristics of term life insurance

temporary protection, renewability, no cash value

All of the following are true about key-person insurance except

the death benefit is taxable to the business

which department or division of an insurance company is responsible for the selection, evaluation, and distribution of risks

underwriting

an insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling is the insurer using?

Reduction

which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insureds death was caused by an accident as defined In the policy

an accidental death rider

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

Borrower only

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 suited for transitioning the business

Buy-Sell agreement

Which of the following is true of the taxation of cash value in a business life insurance policy

cash values grow tax deferred

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

continue to increase

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

failure to repay a policy loan

The two main categories of policy loan interest rates are

fixed and variable

How long is the grace period for an individual life insurance policy

1 month

what is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death

Joint Life

what risk classification is representative of the majority of people in a certain age group with similar lifestyles

Standard

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

Which of the following is true regarding the surrender charge in a market value adjusted annuity

if the current rate at the time of surrender is the same as the contract rate, there is not adjustment

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

Net premium and expenses

Answers to questions in an insurance application are called representations and, as such, they are

Believe to be true to the best of the applicants knowledge

A jumping juvenile policy is unique in that the death benefit automatically

Increased at a predetermined age

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

Attending Physicians Statement (APS)

An insured falls down a flight of stairs and sustains a neck injury that renders him severely disabled. The insured owns a Whole Life policy. Is it possible for the policy to include a Waiver of Const of Insurance rider, and if so, what insurance costs would be waived?

No; it is not possible for this waiver to be included in a whole life policy

all of the following are true of credit life EXECPT

the insured names the beneficiary

all of the following are general requirements of a qualified plan EXECPT

the plan must be temporary

all of the following are true about social security system EXECPT

the system has been largely privatized

what is the purpose of the agents report in the application process

to provide additional information about the applicant to the underwriters

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

Term insurance

An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have

Revocable

S set up an individual retirement account that her employer is now contributing to. Her employers contributions are not included in her gross income. What kid of retirement plan does S have?

Simplified Employee Pension (SEP)

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

10 days

In a noncontributory group policy

100% of eligible employees must participate

All of the following requirements for an individual to be licensed EXECPt

Provide a financial statement

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

Provide income for retirement


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