Life Insurance Practice Exam

An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do? a) Join during the open enrollment period b) Provide medical records to the insurer c) Sign a statement of continued good health d) Nothing; proof of insurability is never required in group polices

a) Join during the open enrollment period If one applies for coverage after the open enrollment period, proof of insurability may be required in order to avoid adverse selection.

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? a) The balance of the loan will be taken out of the death benefit.

a) The balance of the loan will be taken out of the death benefit.

When a producer ceases to maintain residency in this state, within how many days must the producer return the license to the Commissioner? a) 7 days b) 10 days c) 30 days d) 90 days

b) 10 days Any licensed individual who no longer maintains residency in this state must return the insurance license to the Commissioner either by personal delivery or by mail within 10 days.

All of the following statement are true regarding group insurance EXCEPT a) Small groups such as labor unions are eligible for group insurance b) Participants in the policy each receive a policy c) The group sponsor is the policyholder d) Participants is a group insurance plan are issued certificates of insurance

b) Participants in the policy each receive a policy Participants receive a certificate of insurance, but the sponsor, not the participants, is in control of the policy.

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a) Universal Life b) Whole life c) Decreasing Term d) Variable Life

c) Decreasing Term A decreasing term policy's face amount decreases as the amount of debt is reduced.

The automatic premium loan provision is activated at the end of the... a) Elimination period b) Policy period c) Grace period d) Free-look period

c) Grace period Provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force.

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

c) Insuring clause The insuring clause states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party to be covered by the policy and names of the beneficiary who will receive the policy proceeds in the event of the insured's death. If not beneficiary is named, the policy proceeds will be paid to the insured's estate.

During partial withdrawal from a universal life policy, which portion will be taxed? a) Principal b) Loan c) Interest d) Cash value

c) Interest During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? a) Second-to-die b) Family Income Policy c) Joint Life Policy d) Survivorship Life Policy

c) Joint Life Policy Joint life policies cover the lives of two insured, rates are blended. Upon the death of the first insured, the policy ends.

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

c) Life income The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary's death.

Which of the following information about the 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 Part 1 - General Information of the application includes the general questions about the applicant, including name, age, address, birth date, gender, income, marital status, and occupation. The applicant's medical background is addressed in Part 2 - Medical Information.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? a) Unfair claim practice b) Rebating c) Misrepresentation d) Concealment

c) Misrepresentation Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

Which Universal Life option has a gradually increasing cash value and a level death benefit? a) Term Insurance b) Option B c) Option A d) Juvenile life

c) Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

When must insurable interest exist in a life insurance policy? a) At the time of policy delivery b) When there is a change of the beneficiary c) At the time of loss d) At the time of application

d) At the time of application In life insurance, insurable interest must exist at the time of application.

Which component increases in the increasing term insurance? a) Cash value b) Interest on the proceeds c) Premium d) Death benefit

d) Death benefit Increasing term features level annual premiums and a death benefit that increases each year over the duration of the policy term.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a) Term to specified age b) Ordinary life policy c) Limited pay whole life d) Level-term

d) Level-term A 20-year term policy is written to provide a level death benefit for 20 years.

In the event of the death, disablement of a licensee, or other specific events, the Commissioner may issue temporary license to another person to continue their business of insurance. A temporary license is issued for a period not to exceed... a) 12 months b) 90 days c) 6 months d) 9 months

c) 6 months The Commissioner may also renew the temp license once for "good cause".

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) Warranty b) Premium receipt c) Statement of good health d) Backdated receipt

b) Premium receipt When collecting the initial premium, the agent should issue the applicant a premium receipt.

Which of the following includes information regarding a person's credit, character, reputation, and habits? a) Insurability report b) Agent's report c) Consumer report d) Consumer history

c) Consumer report Consumer reports include written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? a) The same as the original policy minus the cash value b) Equal to the original policy for as long as the cash values will purchase c) In lesser amounts for the remaining policy term of age 100 d) Equal to the cash value surrendered from the policy

b) Equal to the original policy for as long as the cash values will purchase With this option, the cash value is used as a single premium to purchase the same face amount as the original policy for a long as a period of time as the cash will buy at the insured's current age.

The ownership provision entities the policy owner to do all of the following EXCEPT a) Assign the policy. b) Designate a beneficiary. c) Set premium rates. d) Receive a policy loan.

c) Set premium rates. The insurer sets premium rates based upon underwriting considerations.

Which of the following would provide an underwriter with information concerning an applicant's health history? a) A medical examination b) The agent's report c) The inspection report d) The Medical Information Bureau

d) The Medical Information Bureau An agent's report and inspection report provide personal information. Medical exams provide information on current health. Only the MIB will provide information about the applicant's medical history.

The commissioner has just issued an order regarding a recent hearing. How many days does the producer who was subject to hearing to appeal to commissioner's action? a) 20 days b) 30 days c) 10 days d) 15 days

b) 30 days Within 30 days after the conclusion of a hearing, the commissioner must issue an order on the hearing. Within 30 days of the order, a person has a right to appeal the Commissioner's action or inaction only in regard to an order on the outcome of a hearing or an order refusing a hearing.

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

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

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

b) Reduced paid-up The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the amount is reduced to what the cash would buy.

The insured had his wife named 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) Face amount of the policy b) The insured's age at death c) The beneficiary's life expectancy d) Projected interest rates

b) 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.

Which nonforfeiture option has the highest amount of insurance protection? a) Decreasing Term b) Reduced Paid-up c) Extended Term d) Conversion

c) Extended Term The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.

Insurance is the transfer of... a) Hazard b) Peril c) Risk d) Loss

c) Risk Insurance is the transfer of financial responsibility associated with a potential of a loss (risk) to an insurance company.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a) Slandering b) Defamation c) Undercutting d) Twisting

b) Defamation Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

An insurance company assures its new policy holders that their premium cost will not increase for a period of at least 5 years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? a) Unfair discrimination b) Errors and omissions c) Fraud d) Defamation

c) Fraud

In Modified Life policies, what happens to the premium? a) It always remains level b) It is higher during the first policy years c) It varies at the beginning, but levels out by the end of the third year d) It is level at the beginning and increases after the first few years

d) It is level at the beginning and increases after the first few years Modified Life Polices charge lower premiums (similar to term rates) during the first few policy years, usually the first 3 to 5 years, and then higher level premiums for the remainder of the insured's life. The higher subsequent premiums are typically higher than straight life premiums would be for the same age and amount of coverage.

Which of the following is TRUE about the 10-day-free-look period in a life insurance policy? a) It is optional on all life insurance policies b) It begins when the policy is delivered c) It begins when the application is signed d) It applies only to term life insurance policies

b) It begins when the policy is delivered The 10-day-free-look provision is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid.

Which of the following is TRUE regarding the accumulation period of an annuity? a) It is limited to 10 years b) It is a period during which the payments into the annuity grow tax deferred c) It is also referred to as the annuity period d) It is a period of time during which the beneficiary receives income

b) It is a period during which the payments into the annuity grow tax deferred The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.

What is the purpose of a conditional receipt? a) It is only given to applicants who fully prepay the premium b) It is intended to provide coverage on a date prior to the policy issue c) It guarantees that a policy will be issued in the amount applied for d) It serves as proof that the applicant has been determined insurable

b) It is intended to provide coverage on a date prior to the policy issue Coverage commences on the date of the application or of the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

According to the Oklahoma rules regulating the advertisement of life insurance, advertisement does NOT include which of the following? a) Published advertisement is a local newspaper b) Material prepared by the insurer for training new agents c) Descriptive literature utilized by an agent in the sales process d) Prepared leaflet given to a prospective client

b) Material prepared by the insurer for training new agents Material utilized for in-house training does not constitute an advertisement as defined in Title 365:10-3

Which of the following describes what the annuity period is? a) The period of time from the effective date of the contract to the date of its termination b) The period of time from the accumulated money is converted into income payments c) The period of time from the accumulation period to the annuitization period d) The annuity period is the time during which money is accumulated in an annuity

b) The period of time from the accumulated money is converted into income payments The annuity period is the same time during which accumulated money is converted into an income stream.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a) The insurer may deny coverage because of the information missing on the application b) The policy will be interpreted as if the insurer waived its right to have an answer on the application c) The policy will be interpreted as if it did not have an answer to the question d) The policy will be void

b) The policy will be interpreted as if the insurer waived its right to have an answer on the application Any unanswered questions need to be answered before the policy Is issued. If the policy is issued with questions left unanswered, the contract will be interpreted as insurer waived its rights to have an answer for the question, and will not be able to deny coverage later because of unanswered questions.

The paid-up addition option uses the dividend a) To accumulate additional savings for retirement b) To purchase a smaller amount of the same type of insurance as the original policy c) To purchase a one-year term insurance in the amount of the cash value d) To reduce the next year's premium

b) To purchase a smaller amount of the same type of insurance as the original policy The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy.

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? a) $0 b) $100,000 c) $200,000 d) $100,000 plus the total of paid premiums

c) $200,000 The beneficiary would most likely receive twice the face amount value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a) A required disclosure b) A legal representation of the Association c) An unfair trade practice d) A misrepresentation

c) An unfair trade practice It is unfair trade practice to make any statement that an insurer's polices are guaranteed by the existence of the Insurance Guaranty Association. Though it is illegal to advertise, the statement is still true and would not be considered a misrepresentation.

The term "fixed" in fixed annuity refers to all the following EXCPET a) Equal annuity payments b) Amount and length of payments c) Death benefit d) Guaranteed rate of interest

c) Death benefit A fixed annuity is fixed in the sense that provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.

Which of the following is NOT an example of insurable interest? a) Employer in employee b) Child in parent c) Debtor in creditor d) Business partners in each other

c) Debtor in creditor The three recognized areas in which insurable interest exists are as follows: a policy owner insuring his or her own life, the life of a family member (relative or spouse), or the life of a business partner, key employee, or someone who has a financial obligation to them. A debtor does not have an insurable interest in the creditor.

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy? a) Enhanced whole life b) Minimum deposit whole life c) Graded premium whole life d) Indeterminate premium whole life

c) Graded premium whole life Premiums charged for a graded premium whole life policy are lower during the preliminary period and then increase each year until leveling off after the preliminary period. The premium rates are actually equivalent to a standard whole life policy.

Which of the following licenses is NOT compensated directly related to the amount of insurance sold? a) Insurance producer b) Insurance broker c) Insurance consultant d) Insurance agent

c) Insurance consultant Insurance consultants advise others about their insurance needs and coverages. Consultants are compensated by the people they advise, not by agents or insurers. Their compensation is not directly related to the amount of insurance sold, but based upon their advice and recommendations.

An insured states her age is 40 on the application. When she dies, the insurer discovers that she was actually only 37 at the time of application. What will the insurance company do? a) Pay an increased death benefit b) Pay nothing since there was a material misrepresentation on the application c) Pay the death benefit in the amount that the premium is at the correct age would have purchased d) Pay a decreased death benefit

c) Pay the death benefit in the amount that the premium is at the correct age would have purchased If the applicant has misstated his or her age on the application, the insurer, in the event of a claim, is allowed to adjust the benefits to an amount that the premium at the correct age would have otherwise purchased. If the insured had overstated his/her age, the insurer will pay the full death benefit and refund the excess premiums paid.

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a) The Guaranty Association b) Consumer Privacy Act c) The Fair Credit Reporting Act d) Unfair Trade Practices Law

c) The Fair Credit Reporting Act The purpose of the Fair Credit Reporting Act is to protect consumers against the circulation of inaccurate or obsolete information and to insure that consumer reporting agencies are fair and equitable in their treatment of consumers.

All of the following entities regulate variable life polices EXCPET a) The SEC b) The Insurance Department c) The Guaranty Association d) Federal Government

c) The Guaranty Association Variable life insurance is regulated by both state and federal government, as well as the Insurance Department, and the SEC.

An insurer is on the verge of bankruptcy and can no longer pay the claims to its insured. Which of the following entities will make sure that the insureds receive their money? a) Federal Insurer's Reserve b) Commissioner's Fund c) The Oklahoma Life and Health Insurance Guaranty Association d) NAIC

c) The Oklahoma Life and Health Insurance Guaranty Association The Oklahoma Life and Health Insurance Guaranty Association protects policy-owners, insureds, and beneficiaries from financial losses caused by insurers who become insolvent or otherwise unable to perform their contractual obligations.

All the following are true about variable products EXCEPT a) The cash value is not guaranteed b) Policy owners bear the investment risk c) The premiums are invested in the insurer's general account d) The minimum death benefit is guaranteed

c) The premiums are invested in the insurer's general account Insurers selling variable products invest their customer's monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return, customers must bear the investment risk.

Which of the following best defines target premium in a universal life policy? a) The minimum amount to make sure the policy is annually renewable b) The corridor of insurance c) The recommended amount to keep the policy in force throughout its lifetime d) The maximum amount the policy owner may pay on a policy

c) The recommended amount to keep the policy in force throughout its lifetime The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

Each insurer must maintain at its principal office a complete file containing every printed, published or prepared advertisement of its policies for a period of at least... a) 2 years b) 3 years c) 5 years d) 4 years

d) 4 years Each insurer must maintain files for 4 years as specified in Title 365:10-3

The term "illustration" in a life insurance policy refers to a) A depiction of policy benefits and guarantees b) Pictures accompanying a policy c) Charts and graphs d) A presentation of non-guaranteed elements of a policy.

d) A presentation of non-guaranteed elements of a policy. The term "illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of individual or group life insurance over a period of years.

What is a material misrepresentation? a) Any misstatement made by an applicant for insurance b) Any misstatement by the producer c) Concealment d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.

An agent who is a resident of another state may obtain an Oklahoma nonresident license without taking a licensing examination provided a) The agent is currently licensed in the state of domicile. b) The agent obtained that license by passing a test suitable to the Oklahoma Department. c) The state where the agent lives affords the same privilege to residents of Oklahoma. d) All of these requirements are met.

d) All of these requirements are met. A nonresident can be licensed as an insurance agent in the Oklahoma licensing requirements are met, as long as the agents home state gives Oklahoma residents the same privilege (reciprocity). The applicant must hold a license in good standing in his or her resident state.

What type of policy allows the insurance company to cancel a policy at any time? a) Renewable b) Guaranteed renewable c) Non-cancelable d) Cancelable

d) Cancelable A cancelable policy may be canceled at any time with proper written notice from the insurer and a refund of any unearned premium. (The insurer must continue to honor any claims submitted before the cancellation date.)

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 Any changes to information on an application must be initialed by the applicant.

Which of the following is NOT typically excluded from life policies? a) Self-inflicted death b) Death that occurs while a person is committing a felony c) Death due to war or military service d) Death due to plane crash for a fare-paying passenger

d) Death due to plane crash for a fare-paying passenger Generally, policies do not exclude conditions in which an insured is a fare-paying passenger on a commercial airline.

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCPET a) Tax delinquencies b) Late payments c) Failure to pay off a loan d) Disputes regarding consumer report infomration

d) Disputes regarding consumer report information As defined by the Act, negative information regarding a customer's late payments, insolvency or any other form of default. Customer disputes are not considered negative information, and, in fact, must be included in consumer reports.

All of the following are exempt from the licensing requirements EXCEPT a) Employee of insurance company handling the incoming calls b) Employee in charge of enrolling individuals in a group plan c) Human Resource Benefit Personnel d) Employee of insurance company involved in effectuation of the insurance contract

d) Employee of insurance company involved in effectuation of the insurance contract An employee of an insurance company that effectuates an insurance contract would need to hold a valid insurance agent license as specified in O.S. 1424

Which of the following would NOT constitute doing the business of insurance in the state? a) Investing claims b) Holding an insurance license c) Delivering insurance contacts d) Examining insurer records

d) Examining insurer records Doing insurance business the state involves, but is not limited to, making, proposing, or delivering insurance contracts, managing insurance records, processing insurance claims, and processing an insurance license.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? a) Consumer Privacy Act b) Conditional receipt c) Disclosure rule d) Fair Credit Reporting Act

d) Fair Credit Reporting Act The Fair Credit Reporting Act governs what information can be collected and how the information can be used.

Jay applied for a life insurance policy on Jan. 10th. The policy was issued on Jan. 31st. Jay's agent was vacationing at the time the policy was issued, so Jay did not receive the policy until Feb. 18th. Jay decides that he does not want the policy. When would Jay need to return the policy to the insurer in order to receive a full refund of premium. a) The time varies from one policy to another b) It was already to late when Jay received the policy because the 10 day free-look period c) Anytime, because the agent did not deliver the policy promptly d) Feb. 28th, or 10 days after the time the policy is delivered

d) Feb. 28th, or 10 days after the time the policy is delivered The 10-day-free-look period begins when the policy is delivered

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called a) Waiver of cost of insurance b) Accelerated benefits c) Cost of living d) Guaranteed insurability

d) Guaranteed insurability Guaranteed insurability is a rider that is included at the time of application (or can be added at a later date) which allows the insured to increase the amount of insurance without proving evidence of insurability.

The purpose of the Life Insurance Guaranty Association is to a) Encourage Life insurers to write substandard business b) Allow agents to continue to solicit insurance, even if the company they represent is financially impaired. c) Protect the reputation of the Insurance Department if they issue a Certificate of Authority to a company that becomes insolvent d) Help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company

d) Help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company All admitted insurers must be a member of the Insurance Guaranty Association as a condition of their license. The insurance Guaranty Association is in existence to protect policy owners and beneficiaries against losses caused by the insolvency of an insurance company.

What do Individuals use to transfer their risk of loss to a larger group? a) Insurable interest b) Exposer c) Indemnity d) Insurance

d) Insurance Insurance is the mechanism whereby insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other Individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

Why is an equity indexed annuity considered to be fixed annuity? a) It has modest investment potential. b) It has a fixed rate of return. c) It is not tied to an index like the S&P 500. d) It has a guaranteed minimum interest rate.

d) It has a guaranteed minimum interest rate. While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a) It is increased when extra premiums are paid b) It deceases over the term of the policy c) It remains the same as the original policy, regardless of any differences in value d) It is reduced to the amount of what the cash value would buy as a single premium

d) It is reduced to the amount of what the cash value would buy as a single premium In a reduced paid-up policy, the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence the name. The new policy accumulates in cash value until its maturity or the insured's death.

The commissioner may examine any company or person engaged in the insurance business as often as it is deemed appropriate, but is required to examine each foreign insurer at least a) Once a year b) Every 2 years c) Once every 3 years d) Once every 5 years

d) Once every 5 years The commissioner may examine any company or person engaged in the insurance business as often as it is deemed appropriate, but is required to examine each insurer at least once every 5 years as specified by the Insurance code.

Which of the following riders would NOT cause the Death Benefit to increase? a) Guaranteed Insurability Rider b) Cost of Living Rider c) Accidental Death Rider d) Payor Benefit Rider

d) Payor Benefit Rider Payor Benefit Rider does not increase the Death Benefit; It only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policy-owner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.

All of the following are the types of term insurance depending on how the face amount changes during the policy term EXCEPT a) Decreasing b) Level c) Increasing d) Renewable

d) Renewable There are three basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term. Level. increasing, and decreasing. Regardless of the type of term insurance purchased, the premium is often level throughout the term of the policy. Only the amount of the death benefit may fluctuate.

Methods used to pay the death benefits to a beneficiary upon the insured's death are called a) Designation options b) Beneficiary provisions c) Death benefit options d) Settlement options

d) Settlement options Settlement options are methods used to pay death benefits to a beneficiary upon the insured's death.

Which of the following is NOT true regarding the annuitant? a) The annuitant's life expectancy is taken into consideration for the annuity b) The annuitant receives the annuity benefits c) The annuitant must be a natural person d) The annuitant cannot be the same person as the annuity owner

d) The annuitant cannot be the same person as the annuity owner While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitants life expectancy is taken into consideration, the annuitant must be a natural person.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? a) The insured must provide evidence of insurability to renew the policy b) The insured may renew the policy for another 10 years at the same premium rate c) The insured may renew the policy for another 10 years at the same premium rate d) The insured may renew the policy for another 10 years, but at a higher premium rate

d) The insured may renew the policy for another 10 years, but at a higher premium rate Polices that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.

What is the advantage of reinstating a policy instead of applying for a new one? a) Proof of insurability is not required b) The face amount can be increased c) The cash values have gained interest while the policy was lapsed d) The original age is used for premium determination

d) The original age is used for premium determination The reinstatement provision allows the policy owner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policy owner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.

All of the following are categories of a limited insurance license EXCEPT a) Credit Life Insurance b) Travel Insurance c) Crop Insurance d) Variable life Insurance

d) Variable life Insurance Variable life Insurance requires an agent's license; all the other the other categories can be solicited by a limited insurance representative.

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize? a) Estate liquidation b) Nonpayment of premium c) Change of beneficiary d) Viatical settlement

d) Viatical settlement A viatical statement allows an insured with a life-threatening condition to sell the existing policy in order to receive benefits when they are most needed. Viators typically receive a percentage of the policy's face value from the person who purchases the policy.