LIFE INSURANCE EXAM QUESTIONS

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to rollover her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

The hearing for a cease and desist order must occur within how many days of the order date?

15

An insured gets a notice about converting group coverage to individual coverage 5 days before the end of the conversion period. In this situation, how long will the insured have to convert the policy?

15 days

For how long is the certificate of relicensing course completion valid?

180 calendar days

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

How many hours of continuing education must be completed in ethics?

3 (every 2 years)

An insolvent insurer is one who is unable to pay its obligations when they are due or has fewer assets than liabilities for a period of

3 years

How often must the Superintendent examine financial affairs of domestic insurers?

3 years

To avoid violating the state insurance code regarding unfair claims settlement practices, insurers must pay a claim within how many days of he final agreement to the settlement?

5 days

How many days after being licensed to place business transactions in Ohio must an insurer have an antifraud program in place?

90 days

When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by

A paramedic or examining physician at the insurers expense

Which of the following is not an allowable 1035 exchange?

A whole life insurance policy is exchanged for a term life policy

Which of the following produces evaluations of insurers' financial status often used by the departments of insurance?

AM Best

What documentation grants express authority to an agent?

Agent's contract with the principal

All of the following are required to qualify for a resident license EXCEPT

An applicant that is at least 21 years old

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer sponsored plan who has earned income

The LEAST expensive first year premium is found in which of the following policies?

Annually renewable term

Partners enter into a buy sell agreement. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan

All of the following statements are correct regarding credit life insurance EXCEPT

Benefits are paid to the borrower's beneficiary

All of the following are duties and responsibilities of producers at the time of application EXCEPT

Change any incorrect statement on the application by personally initialing next to the corrected statement

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

Common disaster clause

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called

Cost of living rider

Which of the following is true about credit life insurance?

Creditor is the policyowner

Which of the following is not typically excluded from life policies?

Death due to plane crash for a fare paying passenger

Which of the following types of insurance policies is most commonly used in credit life insurance?

Decreasing term

Who assumes control over an insurance company's funds and management if they become insolvent?

Department of insurance

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Distribution

Which of the following is true regarding taxation dividends in participating policies?

Dividends are not taxable

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will purchase

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

Fixed amount

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income

The automatic premium loan provision is activated at the end of the:

Grace period

What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?

Income tax on distributions and no penalty

An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have?

Industrial life

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

It is a life contingency option

Which of the following is true regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred

Which of the following best describes annually renewable term insurance?

It is level term insurance

Which of the following is true regarding the annuity period?

It may last for the lifetime of the annuitant

Which of the following statements about the reinstatement provision is true?

It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated

Which of the following would be the best option that would help the surviving spouse of the insured to put her children through daycare after the insured's death?

Life insurance proceeds

A person filed a report about an insurance fraud practice. The person could be sued for civil damages by which of the following?

No one

An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?

Pay the death benefit

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor benefit

All of the following are examples of risk retention EXCEPT

Premiums

All of the following are characteristics of group life insurance EXCEPT

Premiums are determined by the age, sex, and occupation of each individual certificate holder

A couple owns a life insurance policy with a children's term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required

Another name for a substandard risk classification is

Rated

An insured owns a term life policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describes this scenario?

Re-entry

Which of the following insurance options would be considered a risk sharing arrangement?

Reciprocal

Which type of insurance is based on mutual agreements among subscribers?

Reciprocal insurance

Statements made by an applicant for a life insurance policy which are true to the best of one's knowledge are referred to as:

Representations

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

Revocable beneficiary

Equity Indexed Annuities

Seek higher returns

All of the following are beneficiary designations EXCEPT

Specified

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

A viatical settlement is arranged between a viatical company and a

Terminally ill insured

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?

The annuitant will receive the higher of either the guaranteed minimum or the current rate

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

Which of the following statements about group life is correct?

The cost of coverage is based on the ratio of men to women

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

The insured will need a written consent of the insurer

All of the following statements are true regarding installments for a fixed amount EXCEPT

The payments will stop when the annuitant dies

All of the following statements are true regarding installments for a fixed amount EXCEPT:

The payments will stop when the annuitant dies

If an insured continually uses the automatic premium loan option to pay the policy premium,

The policy will terminate when the cash value is reduced to nothing

An applicant for insurance has been asked to take an HIV test, this is legal if

The test is only in conjunction with tests for other conditions

Which of the following is an example of a producer's judiciary duty?

The trust that a client places in the producer in regard to handling premiums

Which of the following is true about warranties

They are guaranteed to be true.

All of the following are true regarding the guaranteed insurability rider except

This rider is available to all insureds with no additional premiums

What is the purpose of a disclosure statement in life insurance policies?

To explain features and benefits of a proposed policy to the consumer

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral

Which of the following life insurance policies would be considered interest sensitive?

Universal life

In a survivorship policy, when does the insurer pay the death benefit?

Upon the LAST death

Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits?

Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued that original policy

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

an unfair trade practice

All of the following information about a customer must be used in determining annuity suitability EXCEPT

beneficiary's age

All of the following are personal uses of life insurance EXCEPT

buy sell agreement

For the purpose of insurance, risk is defined as

the uncertainty or chance of loss