Primerica 3
Lost retention is an effective risk management technique when all of the following conditions exist, except: a. The probability of loss unknown b. The losses are highly predictable c. The insured chooses to assume the losses involved d. The worst possible loss is not serious
a. The probability of loss is unknown to
When a family policy covers children all of the following are true, except: a. The coverage is term insurance for a fixed amount b. Evidence of insurability is required if coverage for children is permanent insurance c. There is no additional charge for covering new additions to the family d. All children living with the family are covered even if born or adopted after the policy is issued
b. Evidence of insurability is required of coverage for children is permanent insurance
Which party has the rights in a life insurance policy only after the death of the insured? a. The policy owner b. The beneficiary c. The applicant d. The insured
b. The beneficiary
Which of the following statements about policy dividends is true? a. Dividends can be guaranteed b. The insured usually selects the dividend option at the time of policy purchase c. Dividends are only issue with non-participating policies d. All dividends are taxable
b. The insured usually selects the dividend option at the time of policy purchase
All of the following statements about survivorship life insurance are true, except: a. The policy face amounts are usually more than $1,000,000 b. The policy face amount is paid out only upon the death of the first insured to die c. It offers premiums that are quite low compared to what is charged on separate policies d. It is particularly well suited to meet the needs of estate taxes
b. The policy face amount is paid out only upon the death of the first insured to die
All of the following are true statements concerning the treatment of federal income tax on life insurance, except: a. Premiums paid for individual life insurance policies are not tax deductible b. Employers can deduct as a business expense the cost of insurance premiums paid to benefit employees c. Annuity death benefit proceeds are exempt from all taxation d. Death benefits are generally exempt from Federal Income taxation
c. Annuity death benefit proceeds are exempt from all taxation
Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made they add a premium paid and: a. Current interest b. A general expense charge c. Current interest; adjusted for mortality and a general expense charge d. Mortality and general expense charges
c. Current interest; adjusted for mortality and a general expense charge
Identify the penalty for each violation for a person engaging in an unfair method of competition: a. No more than $5,000 per agent b. No more than $10,000 total no matter how many violations or type of violation c. No more than $5,000 for each act, or no more than $10,000 for each act if the act is judged to be willful d. $5,000 for each violation up to a total of $10,000
c. No more than $5,000 for each act, or no more than $10,000 for each act of the act is judged to be willful
The insured, age 65, owns a $100,000 non-participating whole life policy. The policy is paid up as of today. When would the cash value reach $100,000? a. Today b. Age 85 c. Never d. Age 100
d. Age 100
What would be the Insurance Commissioner's most likely course of action if an application for an insurance license had a previous application for a professional license denied for cars by any licensing authority within five years of the date of the filing? a. Deny the application probably after a hearing b. As long as it was not insurance related, the application will be granted c. Approved early after a review by a panel of insurance professionals d. Deny the application without a hearing
d. Deny the application without a hearing
The purchase of an insurance policy may not provide all of the following for the insured. Select the most complete answer: a. The replacement of a large possible loss for a small certain 10 s b. A reduction of uncertainty c. Reduction in the worry/greater peace of mind d. Elimination of the risk
d. Elimination of the risk
What would a person be guilty of who refuses to submit books and records to the Commissioner? a. Misrepresentation b. Contempt of court c. Felony d. Misdemeanor
d. Misdemeanor
Listed below are descriptions of four types of policies? Which is the term policy? a. The policy premium increases after three years and then it remains the same until the policy is paid up at age 65 b. The policy has a face amount of $100,000. The policyholder pays premiums annually. At the end of the 10 years the cash value is $25,000 c. The policy premiums must be paid for 20 years. Afterwards, the policy continues with no additional premiums paid. The policy has non-forfeiture values d. The policy has a face amount of $100,000. Every five years, the premium paid increases. After ten years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value
d. The policy has a face amount of $100,000. Every five years, the premium paid increases. After ten years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value
In order to deal with the financial consequences of the death of a senior sales manager, a corporation could purchase: a. Group life insurance b. Key person insurance c. Business overhead expense insurance d. Ordinary life insurance
B. Key person insurance
An insured bought $150,000 non-participating whole life policy many years ago. He is 100 years old today. He has never borrowed from the policies cash value and has faithfully made all payments when due. The policies cash value is: a. $150,000 b. $100,000 c. $0 d. $50,000
a. $150,000
Renewable term insurance can best be described as: a. A level death benefit with a raising premium b. A decreasing death benefit with a level premium c. A level death benefit with a decreasing premium d. An increasing death benefit with a level premium
a. A level death benefit with a raising premium
Renewable term insurance can be best described as: a. A level death benefit with an increase in premium b. A level death benefit with a decrease in premium c. A decreasing death benefit with a level premium d. An increasing death benefit with a level premium
a. A level death benefit with an increase in premium
The policy provisions which comes into effect when the insured and primary beneficiary die in a simultaneous (common) accident with no evidence as to who die first is: a. Common disaster provision b. Simultaneous death provision c. Joint life provision d. Joint and second to die provision
a. Common disaster provision
A failure to communicate information which a party to an insurance contract knows and should communicate, is called an act of: a. Concealment b. Intimidation c. Warranty d. Coercion
a. Concealment
The main master policy owner of a group insurance contract is the: a. Employee b. Employee members c. Plan administrators d. Agent
a. Employee
Which of the following is not one of the common personal uses of life insurance? a. Funding a buy/sell agreement b. Helping to fund a person's retirement c. Creating emergency funds to avoid the need to liquidate assets d. Creation of an immediate estate
a. Funding a buy/sell agreement
If an insurer is not able to meet financial obligations when due, the insurer would be considered: a. Insolvent b. Unauthorized c. Impaired d. Non-admitted
a. Insolvent
Usually in order to join a group insurance plan without proving insurability and employee must: a. Join the plan during enrollment period b. Join the plan while eligible but after the enrollment period c. Join the plan during the probationary period d. Join the plan during the elimination period
a. Join the plan during the enrollment period
Which of the following is considered ordinary life insurance? a. Mortgage insurance b. Continuous premium whole life c. Group insurance d. 30-year decreasing term insurance
a. Mortgage insurance
Which type of life insurance policy and gives the policy owner the right to share in the insurer's surplus? a. Participating b. Non-participating c. Level term d. Decreasing term
a. Participating
Unless it is merely a statement of an expectation or a belief; a representation as to the future is consider which of the following? a. Promise b. Provision c. Liability d. Description
a. Promise
The movie company concerned about their financial losses in case of the illness of one of their actors would purchase: a. Surgery insurance b. Worker's compensation c. Miscellaneous insurance d. Credit insurance
a. Surety insurance
The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy: a. The insurer will make the payments until the insured juvenile reaches the specified age b. The insurer will lend money to keep the policy in force c. The insured's estate will make the premium payments d. The insurer will make all the policy payments
a. The insurer will make the payments until the insured juvenile reaches the specified age
Regarding life insurance coverage for a company, the one responsible for obtaining the coverage; maintain the policy and paying the premium is: a. The master policy holder b. The individuals who make up the group c. The insurer that provided the group coverage d. The agent who obtained the group coverage
a. The master policy holder
Which of the following is true regarding participation in the group plan? a. Minimum participation of 15 years is required for a contributory group health plan b. A non-contributory group health plan must involve all members c. A contributory group health plan must involve all members d. A minimum of 79% of all members is required for a non-contributory group health plan
b. A non-contributory group health plan must involve all members
Which provisions will pay a portion of the death benefit prior to the insured's death due to serious illness? a. Waiver of premium b. Accelerated death benefit c. Cost of living d. Disability income
b. Accelerated death benefit
In insurance terms of representation can be considered: a. An absolute fact b. An implied warranty c. An express warranty d. None of the above
b. An implied warranty
How do rights of an air revocable beneficiary differ from those of a revocable beneficiary? a. An irrevocable beneficiary may be changed by the policy owner without the beneficiary's consent b. An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent c. A revocable beneficiary can become the policy owner at any time by paying the premiums d. An irrevocable beneficiary has the right to name a contingent beneficiary for the policy
b. And irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiaries consent
Under the 10-day right to return, the policy will pay proceeds: a. If premium is not paid b. If the policy is not returned but premium is paid c. If the policy is returned but premium is paid d. None of the above
b. If the policy is not returned but premium is paid
Which of the following describes an insurer who has enough financial resources I need to provide for all its liabilities and for all reinsurance of all outstanding risks? a. Guaranteed b. Insolvent c. Solvent d. Non-participating
b. Insolvent
RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates May leave the name BLG Insurance Corporation in it's advertisements by clearly stating the relationship between the two businesses in any of the following ways, except: a. RW and Associates who represents BLG Insurance Corporation b. RW and Associates underwriting for BLG Insurance Corporation c. RW and Associates placing business through BLG Insurance Corporation d. RW and Associates using the services of BLG Insurance Corporation
b. RW and Associates underwriting for BLG Insurance Corporation
What does the Insurance Commissioner have the right to do if an agent lacks authority from an insured named or a binder for coverage? a. Fine the insurance company for non-compliance b. Suspend or revoke the license of the agent c. Authorize the agent with a certificate of convenience d. Request a certificate of authority be issued immediately
b. Suspend or revoke the license of the agent
With a licensed agent submits a renewal application with applicable fee on or before the expiration date: a. The agent will be to operate if a receipt for payment is returned proper to the license expiration date b. The agent will be able to operate for up to 60 days after the specified expiration date c. The agent will be able to operate if the agent goes in person to the insurance department to receive a temporary extension of the license d. The agent will be able to continue to operate after a30 day extension to operate without receipt requested and approved
b. The agent will be able to operate for up to 60 days after the specified expiration date
A person spends $10,000 in a single premium annuity, and another $10,000 in a certificate of deposit (CD). Both pay 10% interest annually the person is in a 31% income tax bracket. For 40 years this person does not touch this annuity and reinvests all income from the CD at 10%. Which of the following statements is true? a. The CD would be worth several hundred thousand more because there is no commission paid on a CD b. The annuity would be worth several hundred thousand more because of the tax deferral of the earnings c. The CD would be worth several hundred thousand more because of tax deferral d. They would be worth approximately the same amount after the payment of the tax deferred income taxes
b. The annuity would be worth several hundred thousand more because of the tax deferral of the earnings
All do the following statements about contingent beneficiaries are true, except: a. They receive remaining payment to be made under a settlement agreement upon the primary beneficiary's death b. The contingent beneficiary shares the death proceeds equally with the primary beneficiary c. They receive the death proceeds of the primary beneficiary is deceased at the time of the insured's death d. More than one contingent beneficiary may be named
b. The contingent beneficiary shares the death proceeds equally with the primary beneficiary
According to the CA Insurance Code, an insured's policy must specify all of the following, except: a. The risks paired against b. The financial rating of the insurer c. The property or life being insured d. The policy period
b. The financial rating of the insurer
In group insurance the Certificates Of Insurance are issued to: a. The group sponsor b. The group members c. The employer d. The plan administrator
b. The group members
The department responsible for evaluation selection and distribution of risk is: a. The marketing and sales department b. The underwriting department c. The claims department d. The actuarial department
b. The underwriting department
All of the following statements about the election of a life insurance policy's settlement options are true, except: a. The election is made by the policy owner at the time the application is submitted b. When no settlement option is chosen, the proceeds are automatically paid to the policy owner's estate c. The policy owner can change the settlement option after it has been chosen d. The election may be made by the beneficiary of no settlement option is in force at the time of death of the insured
b. When no settlement option is chosen, the proceeds are automatically paid to the policy owner's estate
Which of the following is a hazard? a. A large number of similar exposure units b. A peril c. A condition that might increase the likelihood of a loss occurring d. A speculative risk
c. A condition that might increase the likelihood of a loss occurring
Which of the following is not ordinary life insurance? a. A life paid up to 65 policy b. A 30 year decreasing term policy c. A group life insurance policy d. A 20-year endowment policy
c. A group life insurance policy
In the event of an accidental death the principal some and a disability policy will be paid: a. Over the course of a set period b. On a sliding schedule c. In one lump sum d. As a monthly indemnity
c. In one lump sum
An individual license is considered terminated: a. When transferred to another person b. When transferred to another license c. On the death of the licensee d. When transferred to a beneficiary
c. On the death of a licensee
People commonly purchase an annuity to protect against the risk of: a. Dying before their home mortgage is paid off b. Becoming uninsurable c. Outliving their financial resources d. Dying too soon
c. Outliving their financial resources
In life insurance, the loss of a key family member is considered a: a. Body loss b. Personnel loss c. Personal loss d. Human loss
c. Personal
What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered? a. A hearing by the Insurance Commissioner to determine the severity of the misrepresentation, and to determine an appropriate course of action b. None, of the policy has been in force for over 12 months c. Rescission of the policy d. Heading by a court of law to determine an appropriate course of action an insurer may take
c. Rescission of the policy
The common disaster provision is designed to protect the interests of which of the following? a. The primary beneficiary b. The insurer and insured c. The contingent or second beneficiary d. None of the above
c. The contingent or second beneficiary
After a light insurance policy has been in effect for two years what keeps it from being rescinded by the insurer? a. The grace period provision b. The right to return provision c. The incontestability clause d. The reinstatement clause
c. The incontestability clause
Which of the following is a correct statement about the life insurance policy types? a. Limited payment whole life policies stay in effect only as long as the premium is paid b. Groupon life insurance policies are offered only to employees who provide proof of insurability c. The initial premium for term insurance is lower than the initial premium for whole life insurance d. Universal life insurance has a structured premium payment schedule that must be followed for the entire contract period
c. The initial premium for term insurance is lower than the initial premium for whole life insurance
Which of the following is a true statement regarding the Social Security (OASDHI) program? a. The program fully funded b. Except for a few exemptions, it is a voluntary program c. The program provides a minimum floor of income and is meant to supplement a retirees own personal program d. The actuarial value of each person's contribution is equal to the actual value of each person's benefit
c. The program provides a minimum floor of income and is meant to supplement a retirees own personal program
How much continuing education is a new agent who is both life and fire & casualty license is required to complete? a. 25 hours per year for each license b. 15 hours per year for either license c. 25 hours per year for either license d. 15 hours per year for each license
cuz 25 hours per year for either license
When are parties to a contract required to communicate information solely based on personal judgment for a matter in question? a. Only when asked b. Only when the policy terms require it c. Only when relevant d. Never
d . Never
And insured bought a $150,000 non-participating whole life policy many years ago. She is 100 years old today. She has never borrowed from the policy, and has made all premium payments when due. The policy cash value is: a. $0 b. $750 c. $100,000 d. $150,000
d. $150,000
Joe receives a large bonus at work and decides to purchase an annuity with it. His monthly income payments from the annuity will begin the following month. Which of the following has Joe purchased? a. A single premium deferred annuity b. An individual retirement annuity c. A tax sheltered annuity d. A single premium immediate annuity
d. A single premium immediate annuity
Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information? a. Unfair Practices Act b. Medical Information Act c. COBRA d. Fair Credit Reporting Act
d. Fair Credit Reporting Act
What must insurer do who accepts an application from an agent who is not specifically appointed by the insurer and then issued a policy from the application? a. The agent must become an employee of that company within 30 days or re-submit the application b. Add the agent's name on the company's list of approved agents c. Send the agent an employee approval notice within 30 days of the policy issuance d. Forward to the Insurance Commissioner a Notice of Appointment within the 14 days of receipt of application
d. Forward to the Insurance Commissioner a Notice of Appointment within 14 days of receipt of application
Which of the following is true about life insurance beneficiary designations? a. The primary and secondary beneficiary share proceeds equally b. If the primary beneficiary dies before the insured, the benefits are paid to the estate of the insured even if there is a contingent beneficiary c. When the insured dies the death benefit is paid to the secondary beneficiary even if there is a primary beneficiary d. If there is no surviving beneficiary, the death benefit is paid to the insureds estate
d. If there is no surviving beneficiary, the death benefit is paid to the insureds estate
The guaranteed insurability option provides the ability to: a. Waive premium payments in the event of disability b. Access a portion of the death benefit in the event of serious illness c. Double the amount of the death benefit in the event of accidental death d. Purchase additional insurance regardless of insurability
d. Purchase additional insurance regardless of insurability
Which type of insurance guarantees the right to renew the policy each year regardless of health but I have an increased premium? a. Convertible term b. Level term c. Decreasing term d. Renewable term
d. Renewable term
An intentional concealment entitles the injured party to which course of action? a. None, due to the fact that the concealment was unintentional b. $250 fine to be paid to the injured party c. Possible imprisonment to the party who concealed the information d. Rescission of the contract
d. Rescission of the contract
An individual with a low income and high insurance needs should buy: a. Whole life insurance b. Universal life insurance c. Endowment insurance d. Term insurance
d. Term insurance
Why is having a large number of similar exposure units important to insurers? a. The greater the number insured, the more premium is collected to offset fixed costs b. The insurer increases its market share with every insured c. The greater the number insured, the greater the amount of premiums collected to help cover losses d. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
d. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
What is the purpose of "key person" insurance? a. To provide health insurance benefits to key employees b. To give a key employee the ability to purchase the business c. To give retirement benefits to key employees d. To cover decreased business earnings due to the death of a key employee
d. To cover decreased business earnings due to the death of a key employee
The policy owner, age 50, has been paying the premiums on his whole life policy for 15 year. He needs the equivalent of 1/3 of the cash value of his policy over the next two years. He wants to continue to have the policy protection, and can afford to pay the premiums. Which of the following would appear to be his best course of action? a. Look elsewhere. The insurer is not obligated to make cash value available to the policy owners unless the policy matures. If they did, most policies would lapse b. Look elsewhere. Whole life policies do not develop a cash value c. Surrender the policy and take the cash value. He can take the other 2/3 and purchase another policy d. Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force
d. Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force