Life insurance exam practice

A life insurance policy qualifies as 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

What are the continuing education requirements for agents who market long-term care insurance policies?

8 hours of long-term care specific education included in the regular CE requirements

Where are premiums from fixed annuities invested?

A general account A fixed annuity is characterized by a general account into which the purchase payments (premiums) are invested

Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value

Automatic Premium Loan Option

Which of the following is NOT a characteristic of variable insurance and annuities

Benefits are determined solely based on the policy premium

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out

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

Extended term

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT

It does not have a guaranteed death benefit

What does an annuity protect the annuitant against?

Living longer than expected

In contrasting stock insurers with mutual insurers, which statement is true

Stock insurers are owned by the shareholders and issue nonparticipating policies

All of the following are true of credit life EXCEPT

The insured names the beneficiary

According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

The primary beneficiary died before the insured

Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is

larger

An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement

level

Which of the following is TRUE of level term insurance?

It is temporary protection

When an insurer tries to discourage a policyholder from replacing an existing policy, this is called

conservation effort

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select

Joint and survivor

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

The average age and the ratio of men to women

An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?

The difference between the premiums paid and the cash value

What is the purpose of key-person insurance?

To minimize the risk of financial loss caused by the death of a key employee

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority.

In life insurance, which of the following is NOT required to have an insurable interest in the insured?

beneficiary

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

continue to increase

An annuity owner receives the same guaranteed payment every month. What type of annuity is it?

fixed

A representation in an insurance contract qualifies as a(n)

implied warranty

A person has a history of DUIs. To his insurer, this presents what type of hazard?

morale

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 risk is the insured using

reduction

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

standard

An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed

twisting

An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive

$70,000

A policyholder returns the policy to the insurer a week after it is delivered. How much of the premium will be returned to the applicant

100%

For an insurance contract, the principle of utmost good faith means

3. Each party relies upon the truthfulness of the other.