Life Insurance Exam
An insurance producer must pay return premiums due to an insured within MAXIMUM of how many days after receiving them?
15
A 30 year old prospective insured is considering the purchase of a life insurance policy. If all of the following policies have the same amount, which would require the largest annual premium?
20 pay life
An insured, age 30, wants to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of the following statements would be the producer's most appropriate response?
20- pay life will accumulate cash value faster
At each license renewal, how many hours of continuing education MUST consist of ethics?
3
Insurance producers must notify the Director of Insurance of a change of home address within a MAXIMUM of how many days?
30
J, a 30 year old proposed insured, plans to retire at age 60 and wants to purchase life insurance that offers level premiums and life long protection. If J also wants the policy to be paid up when J retires. J should buy:
30 pay life
IRA withdrawals are generally subject to a tax penalty if they are made before the insured reaches what minimum age?
59 ½
Which of the following items is required by the Life Insurance and Annuity Replacement Rule?
A notice regarding replacement of life insurance and annuity
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? A- Return the application to the applicant for completion B- Issue a policy anyway since the application has been submitted C- Ask the producer who solicited the policy to complete and resign the application D- Fill in the blanks to the best of the insurer's knowledge
A- Return the application to the applicant for completion
Upon policy delivery, the consumer may be required to obtain any of the following EXCEPT: A- Signed waiver of premium. B- Statement of good health. C- Payment of premium. D- Delivery receipt.
A- Signed waiver of premium.
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant A- With the policy. B- Upon issuance of the policy. C- Within 30 days after the first premium payment was collected. D- Prior to filling out an application for insurance.
A- With the policy.
If an insured purchases an Annuity from which income is received, the insured is the: A. Annuitant B. Beneficiary C. Payee
A. Annuitant
An agent receives an unsolicited call from a prospective client who wants to purchase a large single premium life policy. When advised about early withdrawal penalties, the client does not seem concerned and is evasive when the agent inquires about the source of the funds. In this situation, the agent should take which of the following actions? A. Contact the insurance company compliance officer to report a red flag concerning possible money laundering B. Contact FINRA to report a red flag concerning possible money laundering C. Do nothing, this is the underwriters job.
A. Contact the insurance company compliance officer to report a red flag concerning possible money laundering
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? A. Conversion privilege B. New policy privilege C. Cobra Insurance
A. Conversion privilege
An application for life insurance must be informed of their rights under the Fair Credit reporting Act at which of the following times? A. When the producer completes the insured's application B. When the client receives their policy C. When the client makes their first payment
A. When the producer completes the insured's application
. If a forty five year old individual bought an annuity to provide income for life beginning at age sixty five, the insured did NOT buy: A. an immediate annuity B. a deferred annuity C. a variable annuity
A. an immediate annuity
An application for a life insurance policy that is submitted with the initial premium is legally considered to be: A. an offer B. a dividend C. a conditional receipt
A. an offer
. Which of the following provisions could double the face amount of insurance if an insured's death occurred as the result of an unintended and unforeseen event?
Accidental death & dismemberment (AD&D) provision
Which of the following features of a life policy is used to restrict coverage?
An exclusion
The premium mode that results in the lowest premium outlay is:
Annually
A company or any person violating any of the provisions of Section 151, payment or acceptance of rebates, shall be guilty of a Class:
B misdemeanor
An insurance contract must contain all of the following to be considered legally binding EXCEPT: A- Competent parties. B- Beneficiary's consent. C- Offer and acceptance. D- Consideration.
B- Beneficiary's consent.
Which of the following is a risk classification used by underwriters for life insurance? A- Excellent B- Standard C- Poor D- Normal
B- Standard
Which if the following would qualify as a competent party in an insurance contract? A- The applicant is under the influence of a mind-impairing medication at the time of application. B- The applicant has a prior felony conviction. C- The applicant is intoxicated at the time of application. D- The applicant is a 12-year-old student.
B- The applicant has a prior felony conviction.
. Which of the following contracts is purchased with a lump sum and pays a guaranteed income? A. An Indexed Universal Life Policy B. A Single Premium Annuity C. A Guaranteed Universal Policy
B. A Single Premium
R's life insurance policy lapsed because R did not pay the premium after 60 days. In order to put the policy back in force R should take which of the following actions? A. Complete a new application B. Complete an application for reinstatement and submit all back premiums due C. Submit all back premiums due
B. Complete an application for reinstatement and submit all back premiums due
An insurer's underwriter uses medical information obtained on an applicant to determine: A. The client's sex B. The client's risk classification C. Medical info is not used by underwriters
B. The client's risk classification
Which of the following types of policies offers the owner investment in money-market funds, long term bonds or equities? A. Index Life B. Variable Life C. Fixed Life
B. Variable Life
An insurance company accepts an application containing several unanswered questions and issues the policy. In this situation, the company must: A. retract the application and ask the client to fill out a new one B. honor the policy as issued C. contact the client to let them know that they made a mistake and deny the insurance must honor the policy as issued
B. honor the policy as issued
The USA Patriot Act was signed into law in response to: A. The Vietnam War B. the 9/11 Attack C. Desert Storm
B. the 9/11 Attack
The term "illustration" in a life insurance policy refers to A- Pictures accompanying a policy. B- Charts and graphs. C- A presentation of nonguaranteed elements of a policy. D- A depiction of policy benefits and guarantees.
C- A presentation of nonguaranteed elements of a policy.
In insurance, an offer is usually made when: A- The agent hands the policy to the policyholder. B- An agent explains a policy to a potential applicant. C- An applicant submits an application to the insurer. D- The insurer approves the application and receives the initial premium.
C- An applicant submits an application to the insurer.
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices have been provided, the report may contain all of the following information EXCEPT the applicant's: A- Habits. B- Prior insurance. C- Ancestry. D- Credit history.
C- Ancestry.
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A- As of the first of the month after the policy issue B- As of the policy issue date C- As of the application date D- As of the policy delivery date
C- As of the application date
Which of the following information about an applicant is NOT included in the General Information section of the application for insurance? A- Occupation B- Marital status C- Medical background D- Gender
C- Medical background
Another name for substandard risk classification is ? A- Declined. B- Elevated. C- Rated. D- Controlled.
C- Rated.
Which of the following best details the underwriting process for life insurance? A- Issuance of policies B- Reporting and rejection of risks C- Selection, classification, and rating of risks D- Solicitation, negotiation and sale of policies
C- Selection, classification, and rating of risks
Under the Internal Revenue Code, a portion of the employer paid premiums of group Term Life insurance is taxable for an employee whose coverage exceeds: A. $10,000 B. $25,000 C. $50,000 D. $100,000
C. $50,000
. In order for a company to make a contributory group life insurance plan available to its employees, what minimum percentage of the eligible employees must participate in the plan? A. 25% B. 50% C. 75%
C. 75%
Which of the following parts of a life policy is guaranteed to be CORRECT: A. survivor benefits B. an interest rate on a IUL C. A Warranty
C. A Warranty
34. Which of the following items binds the insurer to coverage as of the date of the application or medical examination, whichever is later, provided that the proposed insured is determined to be an acceptable risk? A. Free Look Period B. This does not exist C. A conditional Receipt
C. A conditional Receipt
Which of the following statements is CORRECT regarding Variable Whole Life insurance? A. There is no such thing B. It requires only an insurance license C. It requires and insurance and securities license.
C. It requires and insurance and securities license.
Which of the following provisions of a life insurance policy will pay a stated amount to an insured if the insured is blinded in an accident? A. Accidental death and dismemberment clause B. This is not a payable incident C. The Accidental death and dismemberment clause
C. The Accidental death and dismemberment clause
Elite Construction Company wants to take out an insurance policy on its president to offset the cost of replacing the president if the president should die prematurely. The type of policy the company should buy is called: A. Owner's Policy B. Payor Policy C.Key Employee Policy
C.Key Employee Policy
All of the following are duties and responsibilities of producers at the time of application EXCEPT: A- Explain the nature and type of any receipt the producer is giving to the applicant. B- Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. C- Check to make sure that there are no unanswered questions on the application. D- Change any incorrect statement on the application by personally initialing next to the corrected statement.
D- Change any incorrect statement on the application by personally initialing next to the corrected statement.
When would a misrepresentation on an insurance application be considered fraud? A- Never: statements by the applicant are only representations. B- When the application is incomplete C- Any misrepresentation is considered fraud. D- If it is intentional and material
D- If it is intentional and material
A life insurance policy has a legal purpose if both of which elements exist? A- Underwriting and reciprocity B- Offer and counteroffer C- Policyowners and named beneficiaries D- Insurable interest and consent
D- Insurable interest and consent
Stranger originated life insurance are in direct opposition to the principle of A- Law of large numbers. B- Good faith. C- Indemnity. D- Insurable interest.
D- Insurable interest.
What describes the specific information about a policy? A- Illustrations B- Buyer's guide C- Producer's report D- Policy summary
D- Policy summary
Which following will be included in a policy summary? A- Copies of illustrations and application B- Comparisons with similar policies C- Primary and secondary beneficiary designations D- Premium amounts and surrender values
D- Premium amounts and surrender values
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a A- Statement of good health. B- Backdated receipt. C- Warranty. D- Premium receipt.
D- Premium receipt.
In comparison to consumer reports, which of the following describes the unique characteristics of investigative consumer reports? A- They provide additional information from an outside source about a particular risk. B- They provide information about a customer's character and reputation. C- The customer has no knowledge of this action. D- The customer's associates, friends, and neighbors provide the report's data.
D- The customer's associates, friends, and neighbors provide the report's data.
An individual applied for an insurance policy and paid the premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued what would be the policy's effective date? A- The date of policy delivery B- The date of issue C- The date of application D- The date of medical exam
D- The date of medical exam
Which of following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A- Concealment B- Indemnity C- Representation D- Warranty
D- Warranty
If an insured commits suicide when a Suicide Clause is in effect, an insurance company will take which of the following actions with a beneficiary's claim?
Deny the claim and return the premiums paid
Which of the following sections of a life insurance contract states that the application is part of the contract?
Entire contract provision
An adjustable life policyowner may take all of the following actions without providing proof of insurability, EXCEPT:
Increase the face amount
Which of the following statements is CORRECT about a policy loan against a life insurance contract?
Interest on a loan which is not paid when due is added to the total debt
Which of the following statements about a Settlement Option provision in a life insurance policy is correct?
It describes various methods of distributing Death benefits to beneficiaries
On May 8, a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approved the application on May 14 and issued the policy on May 15. The producer delivered the policy on May 26 and collected the first premium. The coverage became effective on:
May 26
Which of the following policy features permits an insured to pay premiums MORE than once every year?
Mode of premium provision
A policy that is overfunded. According to IRS tables, is classified as which of the following types of policies?
Modified endowment contract
An insurance company MUST take which of the following actions when one of its producers replaces an existing policy?
Notify the existing insurance company about the proposed replacement within 3 working days after receiving the application for the new policy
An insured must take which of the following actions to continue a Renewable Term policy?
Pay the renewable premium
. In a life insurance contract, the consideration given by the applicant in exchange for the promises of the insurance company consists of the insured's statement in the application and which of the following items?
Payment of the initial premium
Which of the following would be considered misrepresentation by an insurance producer?
Stating that dividends are guaranteed
The accelerated death benefit in a life insurance contract can be accessed by which of the following methods?
Submitting for access 75% of the contract's death benefit upon diagnosis of a cancerous tumor
In the event of the death of a licensee, a temporary license may be issued to which of the following persons?
Surviving spouse
Which of the following policies insures two individuals and is designed to pay a benefit at the second death?
Survivorship life
Insurance producer license fees are deposited into which of the following accounts?
The Insurance Producer Administration Fund
In a third party ownership arrangement, which of the following individuals is a party to that contract?
The applicant
Under a unilateral life insurance policy, which of the following parties makes the legally enforceable promises?
The insurance company
Which of the following statements is CORRECT about the disclosure requirements for insurance policies and application?
The name of the soliciting insurance producer must appear on the application
Which of the following persons has the right to change the beneficiary designation on a life insurance policy?
The policyowner
Which of the following statements is CORRECT about a Whole Life policy?
The policyowner may borrow against the cash value of the policy
Which of the following statements regarding a nonresident license producer is CORRECT?
The producer must hold a similar license in the state of residence
If an insured dies during the Contestable period of a life insurance policy, the insurance company will NOT pay the policy proceeds in which of the following situations?
There was a material misrepresentation in the application
Which of the following statements is CORRECT about statements a proposed insured makes on a life insurance application?
They are representations and deemed true to the best of the applicant's knowledge
S & W are business partners. Each takes out $100,00 life insurance policy on the other, naming himself as primary beneficiary. S & W eventually dissolve their business and 2 months after S dies. Although S was married at the time of death the primary beneficiary is still W. However, an insurable interest no longer exists. The proceeds from S's life insurance policy will go to:
W
The Life Insurance & Annuity Replacement Rule applies to which of the following types of insurance?
Whole life
A beneficiary who must consent to a change in the beneficiary designation in a life insurance policy is referred to as:
an irrevocable beneficiary
It is fair to discriminate in the amount of benefits for life and health policies:
between individuals of different classes
All of the following insurance tasks require a producer license EXCEPT:
collecting policy premiums
An annuity that allows an individual to choose the annual premium payment amount is:
flexible premium
One of the basic concepts of insurance underwriting is that a life insurance policyowner must be the insured, a blood relative of the insured or someone who would suffer an economic loss if the insured died. This concept is known as:
insurable interest
A person being examined by the Director of Insurance shall provide the Director with free access to:
insurance business records
A basic life insurance illustration of non-guaranteed elements must be accompanied by a statement indicating all of the following EXCEPT the:
insurance company's financial rating may change
The Director of Insurance may revoke, suspend or refuse to issue a producer license for failing to pay all of the following EXCEPT:
license renewal fees
An accelerated Death benefit of a life insurance policy is also known as:
living benefit
The Illinois life insurance advertising prohibits the use of advertisements that:
make incomplete comparisons of other insurance company's policies
. A client should know that the indexed annuity differs from the fixed annuity in that the indexed annuity:
may receive credited interest based on the fluctuations of the linked index
M understates her age in an application for a life insurance policy. At M's death the company will MOST likely:
pay an amount based on what M's premium payments would have purchased if M had given her true age
Dividends paid on a life insurance policy are:
projected but not guaranteed
The primary purpose of including a Suicide provision in a life insurance policy is to: A. There is not such thing as a suicide provision B. decrease the suicide count in each state C. protect the insurer against purchase of a policy in contemplation of suicide
protect the insurer against purchase of a policy in contemplation of suicide
All of the following constitute unfair methods of competition under Illinois law EXCEPT:
providing false records to a state insurance examiner
Guaranteed insurability provision is best described as a:
provision that allows the issuance of additional coverage
All of the following options are examples of Nonforfeiture options EXCEPT:
renewability
The Director of Insurance is empowered to:
revoke or suspend the license of an insurance producer for conducting business illegally
When an employer provides noncontributory group Term Life insurance, which of the following statements is CORRECT:
the employer pays the entire cost of the plan
The applicant's signature is required on a life insurance application for which of the following reasons:
to represent that the statements on the application are true to the best of the applicant's knowledge