Life Insurance Exam Simulation Missed Questions

a) Policyholders of any contract of insurance delivered in Mississippi. The Commissioner may examine and investigate the affairs of every person in the insurance business in Mississippi to determine whether the person has been engaged in unfair methods of competition or deceptive acts or practices.

The Commissioner of Insurance may examine books and records of any of the following EXCEPT a) Policyholders of any contract of insurance delivered in Mississippi. b) Persons involved with the formation of an insurance company in Mississippi. c) General agents and managing agents authorized to transact insurance in the state. d) Foreign insurance companies.

c) 5 years.

The Commissioner will examine financial records of every authorized insurer as often as deemed necessary, but at least every a) Year. b) 2 years. c) 5 years. d) 7 years.

b) The amount of the distribution is reduced by the amount of a 20% withholding tax.

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a) The amount distributed is subject to ordinary income tax b) The amount of the distribution is reduced by the amount of a 20% withholding tax. c) No taxes are due since the plan participant is over age 59 1/2 d) there is a 10% early withdrawal penalty

b) Joint life

A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy? a) Joint limited annuity b) Joint life c) Joint and survivor d) Life with period certain

d) Separate accounts. Any domestic insurer issuing variable contracts must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account.

A domestic insurer issuing variable contracts must establish one or more a) Liability accounts. b) Annuity accounts. c) General accounts. d) Separate accounts.

a) Immediate

What type of annuity can be purchased with a single premium and provides benefit payments immediately? a) Immediate b) Single premium c) Deferred d) Fixed

c) Insuring clause

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) Beneficiary clause b) Consideration clause c) Insuring clause d) Entire contract clause

b) The purpose of the group was to purchase life insurance. In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? a) The group has not been established for long enough. b) The purpose of the group was to purchase life insurance. c) Their profession poses too high of a risk for the insurer. d) There are not enough people in the group to qualify for group life insurance.

d) Cost of Living Rider The Cost of Living rider annually adjusts the policy's face value in accordance with the national rate of inflation or deflation. This rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value of the policy constant over time.

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? a) Value Adjustment Rider b )Return of Premium Rider c) Inflation Rider d) Cost of Living Rider

d) Automatic premium loan This provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

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? a) Waiver of premium b) Incontestability period c) Assignment d) Automatic premium loan

a) Revocable beneficiary.

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 a) Revocable beneficiary. b) Secondary beneficiary. c) Contingent beneficiary. d) Irrevocable beneficiary.

a) Guaranteed surrender value

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a) Guaranteed surrender value b) No payments c) Annuity dividends d) Full premium refund without any charges

c) 30 days A person may petition the Commissioner for a hearing within 30 days of receiving a cease and desist order.

After receiving a cease and desist order, how long does a person have to request a hearing? a) 10 days b) 15 days c) 30 days d) 45 days

d) The interest is not taxable since it remains inside the insurance policy.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a) The annual dividend is retained by the company. b) The interest is credited at a rate specified by the policy. c) The policyholder has the right to withdraw the accumulations at any time. d) The interest is not taxable since it remains inside the insurance policy.

b) The interest is not taxable since it remains inside the insurance policy.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a) The policyholder has the right to withdraw the accumulations at any time. b) The interest is not taxable since it remains inside the insurance policy. c) The annual dividend is retained by the company. d) The interest is credited at a rate specified by the policy.

c) Sharing commissions Sharing commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices.

All of the following are considered unfair trade practices in the business of insurance EXCEPT a) Rebating. b) Defamation. c) Sharing commissions d) Boycott.

b) Fixed-period installments. Fixed-period installments is a settlement option, and not one of the dividend options.

All of the following are dividend options EXCEPT a) Paid-up additions. b) Fixed-period installments. c) Accumulated at interest d) Reduction of premium.

b) The plan must provide an offset for social security benefits. Plans must meet the general requirements established by IRS.

All of the following are general requirements of a qualified plan EXCEPT a) The plan must be permanent, written and legally binding b) The plan must provide an offset for social security benefits. c) The plan must be communicated to all employees. d) The plan must be for the exclusive benefits of the employees and their beneficiaries. Plans must meet the general requirements established by IRS.

c) Being age 65. The term fully insured refers to someone who has earned 40 quarters of coverage (the equivalent of 10 years of work), and is therefore entitled to receive Social Security retirement, Medicare, and survivor benefits. The waiting, or elimination period for Social Security disability benefits is 5 months.

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT a) Fully insured status. b) Waiting period of 5 months. c) Being age 65. d) Inability to perform any gainful work.

a) The plan in funded by permanent insurance only

All of the following are true of key person insurance EXCEPT: a) the plan is funded by permanent insurance only b) there is not limitation on the number of key employees plans in force at any one time c) the employer is the owner, payor, and beneficiary of the policy d) The key employee is the insured

d) Coverage ends and the policy cannot be reinstated.

What happens when a policy is surrendered for its cash value? a) Coverage ends but the policy can be reinstated at any time. b) The policy can be reinstated by paying back all policy loans and premiums. c) The policy can be converted to term coverage. d) Coverage ends and the policy cannot be reinstated.

d) This rider is available to all insureds with no additional premium. The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.

All of the following are true regarding the guaranteed insurability rider EXCEPT a) The insured may purchase additional coverage at the attained age. b) The insured may purchase additional insurance up to the amount specified in the base policy. c) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. d) This rider is available to all insureds with no additional premium.

a) The Guaranty Association.

All of the following entities regulate variable life policies EXCEPT a) The Guaranty Association. b) Federal government. c) The SEC. d) The Insurance Department.

d) Dividend amounts are guaranteed in the policy.

All of the following statements concerning dividends are true EXCEPT a) Lower insurance company costs generate higher dividends. b) They stem from favorable underwriting experience. c) Favorable investment results generate higher dividends. d) Dividend amounts are guaranteed in the policy.

b) MEWAs are groups of at least 3 employers.

All of the following statements describe a MEWA EXCEPT a) MEWAs can be self-insured. b) MEWAs are groups of at least 3 employers. c) MEWAs can be sponsored by insurance companies. d) MEWA employers retain full responsibility for any unpaid claims.

c) Simplified Employee Pension plan. A Simplified Employee Pension (SEP) is an employer sponsored IRA. Contributions to the plan are not included in the employee's taxable income for the year, to the extent that they do not exceed the maximums allowed. Distributions from a SEP are taxable as ordinary income when received at retirement.

An IRA purchased by a small employer to cover employees is known as a a) Defined contribution plan. b) 403(b) plan. c) Simplified Employee Pension plan. d) 401(k) plan.

c) Rebating.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of a) Twisting. b) Controlled business. c) Rebating. d) Coercion.

d) has at least 50 members

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT a) Has a constitution and by-laws b) holds annual meetings c) Is contributory d) has at least 50 members

a) The insured may choose to convert to term or permanent individual coverage. When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a) The insured may choose to convert to term or permanent individual coverage. b) The insured would not need to prove insurability for a conversion policy. c) The insured may convert coverage to an individual policy within 31 days. d) The premium for individual coverage will be based upon the insured's attained age.

d) $10,000, no tax consequence

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from 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? a) $8,000, no tax consequences b) $8,000, tax on growth only c) $10,000, tax on growth only d) $10,000 no tax consequences

d) The insurer will pay the full death benefit from the group policy to the beneficiary. The employee usually has a period of 31 days after terminating from the group in order to exercise the conversion option. During this time, the employee is still covered under the original group policy.

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? a) The insurer will pay a reduced death benefit to the beneficiary. b) The insurer will pay the death benefit minus one month's premium. c) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. d) The insurer will pay the full death benefit from the group policy to the beneficiary.

d) Profit sharing plan

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? a) 401(k) plan b) Tax-sheltered account plan c) HR 10 plan d) Profit sharing plan

a) Payments for 15 years With any period certain, death of the annuitant within the stated period will provide payments to the beneficiary only for the remainder of the period certain.

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a) Payments for 15 years b) Payments for 20 years c) Payments for life d) Nothing

d) Universal life Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a) Adjustable life b) Term life c) Limited pay d) Universal life

c) Aleatory

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a) Adhesion b) Conditional c) Aleatory d) Good health

b) Consideration.

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called a) Acceptance. b) Consideration. c) Conditions. d) Utmost good faith.

b) $1,000 A person may be subject to a civil fine not to exceed $1,000 per violation of licensing laws.

What is the maximum fine for attempting to obtain a license through fraud or misrepresentation? a) $500 b) $1,000 c) $5,000 d) $10,000

d) If the primary beneficiary predeceased the insured The daughter, as contingent beneficiary, would need to outlive the insured and primary beneficiary.

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? a) When the insured dies, the primary and contingent beneficiaries share death benefits equally. b) With the primary beneficiary's written consent c) If the insured died from accidental means d) If the primary beneficiary predeceased the insured

b) Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a) Adhesion b) Consideration c) Good faith d) Representation

d) Conditions. Conditions are part of the policy structure. Consideration is an essential part of a contract.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a) Consideration. b) Legal purpose. c) Offer and acceptance. d) Conditions.

b) $2,500

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a) Revocation of license b) $2,500 c) $1,000 d) $100 per violation

a) Statement of Good Health Because time lapses between the time of application and the policy delivery date, there is a chance that the person's health could have changed enough during that time to warrant changes to the policy. Because of this, a Statement of Good Health must be signed in order to confirm that no major changes of health have occurred during that window of time.

Eddie submitted an application for life insurance without paying the premium. The application was approved, and now the agent is delivering the policy. What should the agent have Eddie sign? a) Statement of Good Health b) Statement declaring that he understands all riders c) Nothing. Eddie only needed to sign the application. d) Confirmation of Delivery

c) 180 days.

Following the death of a licensed agent, the executor or administrator of the deceased agent's estate, or the next of kin could obtain a temporary insurance license, without testing, issued for a period of a) 150 days. b) 6 months. c) 180 days. d) 120 days.

a) Solicit new business. A temporary license allows the licensee to maintain and service existing business and to receive commissions on existing business, but does not allow the license to solicit new business.

Following the death of her husband, an insurance agent, Mary obtained a temporary insurance license. This license will allow Mary to do all of the following, except a) Solicit new business. b) Receive commissions on existing business. c) Maintain existing business. d) Conclude existing business.

b) 100% participation of members is required in noncontributory plans

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is correct? a) Premiums are determined by age, occupation, and individual underwriting. b) 100% participation of members is required in noncontributory plans c) Each member covered receives a policy d) Coverage cannot be converted when an individual leaves the group

a) It is approved by the IRS

If a retirement plan or annuity is "qualified," this means a) It is approved by the IRS b) It has a penalty for early withdrawal. c) It accepts after-tax contributions. d) It is noncancellable.

b) 3 years.

If an insurance company has their Certificate of Authority revoked for failure to pay a judgment within 90 days, after paying the judgment, they will be barred from doing business in Mississippi for a period of a) 2 years. b) 3 years. c) 90 days. d) 1 year.

c) The insurer

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? a) The examiner b) The applicant c) The insurer d) The cost of the examination will be waived.

b) The customer's associates, friends, and neighbors provide the report's data.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a) The customer has no knowledge of this action. b) The customer's associates, friends, and neighbors provide the report's data. c) They provide additional information from an outside source about a particular risk. d) They provide information about a customer's character and reputation.

b) Adjusted to the insured's age at the time of renewal. If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be a) Discounted. b) Adjusted to the insured's age at the time of renewal. c) Determined by the health of the insured. d) Based on the issue age of the insured.

b) Misdemeanor Anyone who sells insurance policies or contracts without the appropriate license is deemed guilty of a misdemeanor and, upon conviction, subject to a fine of between $200 and $500, or imprisonment for between 1 and 2 years, or both a fine and imprisonment.

Selling insurance policies without an appropriate license in this state is considered a a) Class A violation. b) Misdemeanor. c) Felony. d) Fraud.

d) Gradually increases each year by the amount that the cash value increases. Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.

The death benefit under the Universal Life Option B a) Decreases by the amount that the cash value increases. b) Increases for the first few years of the policy, and then levels off. c) Remains level. d) Gradually increases each year by the amount that the cash value increases.

d) The insured's age at death. The insured's age at death will not be considered, but the longer the life expectancy of the recipient, the lower the payments will be.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT a) The beneficiary's life expectancy. b) Projected interest rates. c) Face amount of the policy. d) The insured's age at death.

d) 24 hours every two years. It is the responsibility of each licensed agent to certify that they have completed 24 hours of post-educational requirements every 2 years.

The minimum continuing education requirement for life insurance agents is a) 30 hours every two years. b) 24 hours per year. c) 15 hours per year. d) 24 hours every two years.

b) 6 credits.

The minimum number of credits required for partially insured status for Social Security disability benefits is a) 4 credits. b) 6 credits. c) 10 credits. d) 40 credits.

d) The policy contains sufficient cash value to cover the cost of insurance. In Universal Life Insurance, the policyowner may skip a premium payment without lapsing the policy as long as the policy contains sufficient cash value at the time to cover the cost of insurance for that premium period.

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as a) The previous premium payments were high enough to create an excess of premium. b) The policyowner cannot skip premiums without the policy lapsing. c) The next month's premium is sufficient to cover both the current premium amount and the skipped amount. d) The policy contains sufficient cash value to cover the cost of insurance.

a) Certificate of Authority A Certificate of Authority is required in order to transact insurance.

To legally transact insurance in this state, an insurer must obtain which of the following? a) Certificate of Authority b) Power of Attorney c) Business entity license d) Certificate of Insurance

c) SEC registration. Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.

To sell variable life insurance policies, an agent must receive all of the following EXCEPT a) A securities license. b) A life insurance license. c) SEC registration. d) FINRA registration.

b) Only for the life of the annuitant.

Under a pure life annuity, an income is payable by the company a) For as long as either the annuitant or a named beneficiary is alive. b) Only for the life of the annuitant. c) Until the principal and interest are exhausted. d) For a guaranteed period of time, whether or not the annuitant survives to the end of that period.

a) The same face amount as in the whole life policy.

Under an extended term nonforfeiture option, the policy cash value is converted to a) The same face amount as in the whole life policy. b) The face amount equal to the cash value. c) A lower face amount than the whole life policy. d) A higher face amount than the whole life policy.

d) Corporate bond.

Upon assuming office, the Commissioner must post a(n) a) Litigation bond. b) Administrator bond. c) Performance bond. d) Corporate bond.

c) Level fixed Variable Whole Life insurance is a level fixed premium investment-based product.

Variable Whole Life insurance is based on what type of premium? a) Flexible b) Graded c) Level fixed d) Increasing

b) Increasing Term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

What type of insurance would be used for a Return of Premium rider? a) Annually Renewable Term b) Increasing Term c) Level Term d) Decreasing Term

b) Flexible

What type of premium do both Universal Life and Variable Universal Life policies have? a) Increasing b) Flexible c) Level fixed d) Decreasing

a) Consideration Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) Consideration b) Legal purpose c) Contract of adhesion d) Acceptance

d) Conditional. The contract is formed on the basis that certain conditions are met.

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is a) Aleatory b) Personal c) Unilateral d) Conditional.

d) When the worker reaches age 65 and has earned the required amount of work credits.

When do full Social Security retirement benefits begin? a) When the worker reaches 65. b) When the worker reaches 59 1/2. c) When the worker has earned the required credits. d) When the worker reaches age 65 and has earned the required amount of work credits.

c) Discrimination.

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered a) Controlled business. b) Adverse selection. c) Discrimination. d) Twisting.

d) Life income with period certain The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a) Joint and survivor b) Single life c) Fixed-amount d) Life income with period certain

b) Reduced paid-up

Which nonforfeiture option provides coverage for the longest period of time? a) Accumulated at interest b) Reduced paid-up c) Extended term d) Paid-up option

d) Domestic A company is domestic when doing business within the state in which it is incorporated.

Which of the following best describes an insurance company that has been formed under the laws of this state? a) Sovereign b) Local c) Admitted d) Domestic

c) Both the principal and interest will be liquidated over a selected period of time.

Which of the following best describes fixed-period settlement option? a) The death benefit must be paid out in a lump sum within a certain time period. b) Income is guaranteed for the life of the beneficiary. c) Both the principal and interest will be liquidated over a selected period of time. d) Only the principal amount will be paid out within a specified period of time.

c) Size of each installment

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a) Length of income period b) Amount of interest c) Size of each installment d) Predetermined length of time stated in the contract

d) Owner's Rights Policyowners can learn about their ownership rights by referring to the policy.

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a) The Entire Contract Provision b) The Consideration Clause c) Assignment Rights d) Owner's Rights

c) Cash value growth

Which of the following features of the Indexed Whole Life policy is NOT fixed? a) Death benefit b) Policy period c) Cash value growth d) Premium

b) The employees receive individual policies.

Which of the following is INCORRECT concerning a noncontributory group plan? a) The employer pays 100% of the premiums. b) The employees receive individual policies. c) They help to reduce adverse selection against the insurer. d) They require 100% employee participation.

d) Level term

Which of the following is NOT a type of whole life insurance? a) Single premium b) Straight life c) Limited payment d) Level term

b) The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.

Which of the following is NOT the consideration in a policy? a) The promise to pay covered losses b) The application given to a prospective insured c) Something of value exchanged between parties d) The premium amount paid at the time of application

a) Income payments begin within 1 year from the date of purchase Deferred annuity benefit payments begin sometime after one year after the contract was purchased. The rest of the statements are true regarding deferred annuities.

Which of the following is NOT true regarding a deferred annuity? a) Income payments begin within 1 year from the date of purchase. b) It is used to accumulate funds for retirement. c) It can be purchased with a single lump sum. d) The annuity grows tax deferred.

a) the seller must be terminally ill

Which of the following is not true of life settlements? a) the seller must be terminally ill b) they could not be used for a key person coverage c) they could be sold for an amount greater than the current cash value d) they involve insurance policies with large face amounts

c) Application The application is the basic source of information an insurer uses in the risk selection process.

Which of the following is the basic source of information used by the company in the risk selection process? a) Warranty b) Consumer report c) Application d) Agent's report

d) Life income

Which of the following settlement options in life insurance is known as straight life? a) Single life b) Life with period certain c) Fixed amount d) Life income

d) A debtor has an insurable interest in the life of a lender. A lender has an insurable interest in the life of a debtor, but only to the extent of the debt. The debtor does not have an insurable interest in the life of the lender.

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a) Business partners have an insurable interest in each other. b) A married person has an insurable interest in their spouse. c) An individual has an insurable interest in their own life. d) A debtor has an insurable interest in the life of a lender.

d) The policyowner is entitled to policy loans. Whole life policies offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans.

Which of the following statements is correct regarding a whole life policy? a) Cash values are not guaranteed. b) The policy premium is based on the attained age. c) The death benefit may increase or decrease during the policy period. d) The policyowner is entitled to policy loans.

b) Universal life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) Straight whole life b) Universal life c) Variable whole life d) Decreasing term

a) Universal life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) Universal life b) Variable whole life c) Decreasing term d) Straight whole life

b) Single Premium Like other types of whole life policies, Single Premium Whole Life (SPWL) endows for the face amount of the policy if the insured lives until the age of 100. The distinguishing feature of a SPWL is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer.

Which type of life insurance policy generates immediate cash value? a) Continuous Premium b) Single Premium c) Level Term d) Decreasing Term

b) An individual not covered by an employer-sponsored plan who has earned income Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level.

Who can make a fully deductible contribution to a traditional IRA? a) A person whose contributions are funded by a return on investment b) An individual not covered by an employer-sponsored plan who has earned income c) Anybody; all IRA contributions are fully deductible regardless of income level d) Someone making contributions to an educational IRA

c) Straight life.

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend a) Installment refund. b) Joint and survivor. c) Straight life. d) Life income with period certain.