Life only insurance for ExamFX
Within how many days of requesting an investigative report must an insurer notify the consumer in writing that the report will be obtained?
3 days
What is the maximum penalty for purposeful noncompliance with the Fair credit reporting act?
$2500
If $100,000 of life insurance were used in a settlement option, which paid $13,000 annually for 10 years, what would be the annual taxable amount?
$3,000
An insured purchased a variable life insurance policy for $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000, the full face value
All of the following entities regulate variable life policies except A.) The guaranty association B.) Federal Government C.) The SEC D.) The insurance department
A.) The guaranty department
All of the following are nonforfeiture options EXCEPT A.) Reduced paid up B.) Interest Only C.) Cash surrender D.) Extended Term
B. Interest only
Which of the following choices is not included in the General Info section of the application for life insurance A.) Occupation B.) Marital STatus C.) Medical Background D.) Gender
C.)Medical Background. That's included in the medical report.
All of the following are available under the social security program except A.) Old age and retirement benefits B.) Disability benefits C.) Death benefits D.) Welfare benefits
D. Welfare benefits. Social Security is an entitlement program not a welfare program.
What 2 parts make up a life insurance application?
General info and medical info
What are the 3 basic types of coverage?
Level, Increasing and Decreasing
What are the 2 types of life insurance?
Term and Whole
Who is an annuitant?
The person whose life expectancy the annuity is written and who receives the benefits from the annuity
If an insurer issued a policy based on the application that had unanswered questions, what would be assumed?
The policy will be interpreted as if the insured waved its right to answer that question.
When would a 20-pay whole life policy endow?
When the insured reaches age 100
Income payments from a deferred annuity begin sometime after when?
Year 1 from the date of purchase.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
cash option
What are the 3 nonforfeiture options?
cash surrender, reduced paid-up insurance, extended term insurance
If an insured skips a payment on a universal life policy, the missing payment may be what?
deducted from the policy's cash value. The policy will not lapse.
what rider, when attached to a permanent life policy, provides an amount of life insurance on every family member?
family term rider (also known as other- insured rider)
What is an eligibility requirement for social security disability income?
have attained fully insured status (by working and paying taxes)
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
paid up additions
Insured's consideration is what?
the payment of premium and truthful statements on the application
What are the 3 major exclusions?
Aviation, hazardous occupation or hobby, act of war and military service
Under the extended term nonforfeiture option, the policy cash value is converted to ?
the same face amount as the former permanent policy
Consideration is part of a contract. Conditions are policy structure.
True
When does acceptance occur?
When the insurer/underwriter approves
The FREE Look Period starts when?
When the policy owner receives the policy, not when the insurer issues the policy
What does APL stand for?
Automatic Premium Loans (prevents an accidental lapse in premium and applies it to the cash value) protects the policy holder. It is a loan.
A key person insurance policy can pay for which of the following?
costs of training a replacement
When an insured makes truthful statements on the application and pays the premium, it is known as?
consideration
What are the 4 classifications of annuities?
1. ) Premium payment method: Single vs periodic. 2.) When income payments begin: immediate vs deferred 3.) How premiums are invested: fixed vs variable. 4.) Disposing of proceeds: pure life annuity certain, or life refund annuity.
Annuity suitability is based on what?
1.) financial situation 2.) tax status 3.) investment objectives
What percentage of a company's employees must take part in a non contributory group life plan?
100%
The incontestability clause is in effect for how long?
2 years. (does not apply to nonpayment of premiums, or misstatements of age, gender or identity)
What provides generic info on various types of policies?
A buyers guide
Because annuities are based on the life expectancy of an annuitant, the annuitant must be?
A natural person, regardless of who owns the policy
An immediate annuity is purchased with a what?
A single premium
Which rider allows an insured to purchase additional coverage without evidence of insurability?
Guaranteed insurability rider
What are the 4 elements of an insurance contract?
Agreement, Consideration, Competent parties, Legal Purpose
What is an unequal exchange of values?
Aleatory
The least expensive first year premium is found in which policy?
Annually renewable term
Annuities protect who?
Annuitants against outliving their money
What is the earliest a policy can go into effect?
As early as the date of the app, if the premium is paid
When would a whole life insurance policy mature?
At death or age 100
The full premium was paid, policy issued 2 weeks later. When is it effective?
At the application date
When must insurable interest exist in life insurance?
At the time of application
What is a feature of a variable annuity?
Benefit payment amounts are not guaranteed
All of the following are true regarding a decreasing term policy EXCEPT A.) The contract pays only in the event of death during the term and there is no cash value B.) The face amount steadily declines throughout the duration of the contract C.) The payable premium amount steadily declines throughout the duration of the contract D.) The death benefit is $0 at the end of the contract
C.) The payable premium amount steadily declines throughout the duration of the contract
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
Conditional
The proposed insured makes the premium payment on a new insurance policy. if the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. What type of contract is this?
Conditional
When both parties to a contract perform certain duties and follow rules of conduct it is called what?
Conditional
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. What part of the contract violation of the contract is this?
Consideration
The higher the risk, the higher the premium.
Regarding life insurance quotes.
During the accumulation period, what happens?
Funds are paid into the annuity.
During the annuity period, what happens?
Funds are paid out of the annuity.
When would life insurance benefits be tax free?
If paid as a lump sum to the beneficiary
Life income joint and survivor benefits guarantee what?
Income for 2 or more recipients until they die
What kind of policy would be issued for a return of premium rider?
Increasing term
An insurer receives a report regarding a potential insured. What type of report is this?
Inspection Report
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint lIfe
Whole life insurance provides?
Lifetime permanent protection and accumulates value
The Federal Credit Reporting Agency Act does what?
Regulates consumer reports
If someone doesn't pay their premium are they covered?
No premium, no coverage
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Will she need to provide for proof of insurability?
No. Proof of Insurability is not required.
What is the actual name of the social security program?
Old age and disability Insurance
What are the 3 basic forms of whole life?
Ordinary, limited payment and single premium
Premium amounts and surrender values will be included in a what?
Policy Summary
What is the purpose of the buyers guide?
Provides generic info about the life insurance and allows for comparisons of cost of different policies.
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all the premiums paid. What rider is attached?
Return of premium
The policy owner of an adjustable life policy wants to increase the death benefit. What does he/she need to do?
Show proof of insurability
Consideration
Something of value that each party gives to each other (binding force in any contract)
Who is the life insurance company field underwriter?
The agent or producer
What does a conditional receipt mean?
The applicant may be covered as early as the date of the application
What is the key source underwriters use for info about the applicant?
The application
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. 5 days later the applicant had to submit to a medical exam. If the policy is issued, what would the effective date be?
The date of the medical exam, because it came last.
"level" in level term insurance refers to?
The death benefit, which does not change
In group insurance who receives the master contract?
The employer
Term policies provide what?
The greatest amount of coverage for the lowest premium
What constitutes the entire contract?
The insurance policy, with a copy of the application, and any riders and amendments
The MIB provides who with info concerning an applicants health history?
The underwriter
What happens when insurance companies request an investigative consumer report?
They must notify the applicant in writing
Why should the producer personally deliver the policy?
To ensure the client understands all aspects of the contract.
The paid-up option uses the dividend for?
To purchase a smaller amount of the same type of insurance as the original policy.
What are some examples of qualified retirement plans?
Traditional IRA, Roth IRA, simple, SEP and 401k
Annuities provide income for a specific period of time or for life and pay until the death of the annuitant
True
A partial surrender is allowed in which of the following life policies?
Universal life (also known as interest sensitive whole life)
What is the earliest a policy can go into effect?
When the application is signed and a check is given to the agent.
The main difference between immediate and deferred annuities is?
When the income payments begin
What are the two phases of annuities?
accumulation period and the annuitization period
Insurers cannot refuse coverage on the basis of?
adverse info on an MIB report
A universal policy has 2 components. What are they?
an Insurance component and a cash account
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
fixed period
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a ?
guaranteed insurability rider
If the policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a?
guaranteed insurability rider
What is the benefit of choosing extended term as a non forfeiture option?
it has the highest amount of insurance protection
What best describes annually renewable term insurance?
it is a level term insurance
which two terms are associated directly with the variable
level or flexible
straight life is also known as what?
life-income
Insurance is the transfer of what?
loss
The premium of a survivorship life policy compared to that of a joint life policy would be ?
lower
Regarding the free-look provision, the insurance company
must allow the policy owner to return the policy for a full refund
Under the Fair Reporting Credit Act, individuals rejected for insurance due to information contained in the consumer report:
must be informed of the source report
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
one year term option
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
paid up option
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
the amount paid into the plan or the cash value of the plan, whichever is greater
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
the beneficiary will only receive payments of the interest earned on the death benefits
In insurance, an offer is usually made when?
the offer is usually made by the applicant in in the form of the application. So the offer is made when the application is handed in.
Insurers consideration is what?
the promise to pay for losses
A spouse term rider is usually level term insurance
true
Accumulation at interest option is taxable since it remains in the policy
true
In variable contracts, the policy owner bears the investment risk (assets in a separate account)
true
Irrevocable beneficiaries to Insurance policies can only be changed with the beneficiaries approval
true
Joint life = 1st to die; survivorship life = 2nd to die (last survivor)
true
Shorter life expectancy = higher benefit; longer life expectancy = lower benefit for annuities
true
The beneficiary must have insurable interest in the insured.
true
what is a distinction between variable whole life and variable universal life?
variable whole life has a guaranteed death benefit
If a policy includes a 10 day buyers guide, the guide can be delivered no later than?
with the policy. if it is not, then it has to be delivered before accepting the premium.
