Primerica
Which of the following examples of underwriting practices in life insurance would constitute unfair discrimination?
an insurer charges a higher premium rate for different individuals of the same class and life expectancy
With a traditional whole life policy, the death benefit
remains constant over time
A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is
universal life, option B
The Medical Information Bureau (MIB) is
A source of medical information to alert insurers to adverse medical history
The Incontestable Clause in a life insurance policy states that the
Company has a limited time to challenge statements on the application
A contingent beneficiary designation in a life insurance policy is a person who will receive benefits if the
Insured dies and there is no surviving primary beneficiary.
Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance?
Medical history
Which of the following has the greatest effect on the basic premium calculation for a proposed insured when applying for life insurance?
Mortality factor
Which of the following is true regarding a joint life policy?
Premium is based on the average age of the insureds.
The insured pays $1,200 annually for her life insurance premium. This year, she has accumulated $175 worth of dividends, which she applies to her next premium, thus reducing it to $1,025. What dividend option has the insured chosen?
Reduction of premium
In insurance contracts, a warranty is a
Statement that must be true
One of the distinct characteristics of an insurance policy is that it is an aleatory contract, which means that
There is an exchange of unequal amount or value
What type of life insurance is most commonly used for group plans?
annually renewable term
A substandard risk compared to a standard risk would pay
a higher premium
An insurance company that is formed under the laws of another state is known as what type of insurer?
Foreign
When describing the situations that might cause a loss to occur, a morale hazard
Arises through an individual's carelessness or irresponsible
An insured has purchased a $100,000 Continuous Premium Whole Life policy. After a period of years, the cash value of the policy has grown to $42,000. If the insured dies at this time, the beneficiary will receive
$100,000
A spouse receives $5,000 a month until the principal and interest on her husband's life insurance policy have been paid out. Which settlement option did this beneficiary choose?
Fixed amount
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material
. Which of the following is true regarding term insurance?
If the insured dies after the end of the term, there is no death benefit to the beneficiary
Which of the following statements about the Grace Period is INCORRECT?
If the insured dies during the grace period, no death benefit is payable
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurability.
Life insurance death benefits can be used to fund funeral and other expenses that could be otherwise difficult to fund with a loss of the insured's income. Which term is most closely associated with this?
Survivor Protection
What happens to the death benefit if a portion has been paid due to the Accelerated Living Benefit rider?
The benefit will be reduced by the amount paid plus interest lost by the insurer.
Which method of dealing with risk is applied when a person purchases insurance?
Transfer
Risk in insurance terminology refers to
Uncertainty of financial loss
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as
Utmost good faith
If an applicant for insurance submits the application and pays the premium at the same time, the insurer must give which of the following to the applicant?
conditional receipt
The approach to determining the amount of personal life insurance that an applicant needs that considers such factors as the costs associated with death, costs of educating children, and costs of housing is called the
needs approach
An insured submits the full premium along with a completed application for life insurance. Once the policy is issued, when does the coverage begin?
on the date of the application
An insurance policy that only requires a payment of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called
single premium whole life
An insurance contract must contain all of the following elements to be considered legally binding EXCEPT
Beneficiary's Consent
An individual owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding this change?
the death benefit can be increased when the policy has developed
An insured bought an Annually Renewable Term-to-45 policy. Which of the following statements is NOT true about her policy?
the policy is guaranteed to be renewable each year with proof of insurability
Terrance, age 42, purchased a 20-pay Whole Life insurance policy in preparation for his retirement. Which of the following statements is TRUE regarding his policy?
coverage will continue to age 100 but premium stop at age 62
Emma was an employee at XYZ Software. All XYZ employees were covered by a $20,000 group life insurance plan. Seventeen days after Emma terminated her employment at XYZ, she was killed in an auto accident. She never exercised her conversion privilege. Which of the following is true?
The death benefit from the XYZ group plan would be paid to Emma's named beneficiary.
Which statement regarding the premium payment mode is CORRECT?
policy rates are based on the assumption that premiums will be paid annually at the beginning of the year
Which of the following is true about the mandatory free-look period in a life insurance policy?
It begins when the policy is delivered
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT
Pay next year's premium in advance
If no receipt is issued at the time of application, a statement of good health is usually required at the time of
Policy delivery
Which of the following is a characteristic of a revocable beneficiary designation?
Policy owner can change beneficiary designation anytime without consent of beneficiary
All of the following statements are true about the agent's relationship with the insurer EXCEPT
A large number of similar risks is needed to accurately predict losses.
All of following are true regarding the guaranteed insurability rider except
A. It allows the insured to purchase additional amounts of insurance without proving insurability at specified events. B. It is available automatically, for no extra premium. C. The insured may purchase additional coverage at the attained age. D. It usually expires at the insured's age 40. Answer B
Which statement regarding insurable interest in INCORRECT?
A. The proposed insured must give his or her consent before a policy is issued if the applicant has an insurable interest. B. Insurable interest exists when the applicant is also the proposed insured. C. The applicant must be in a position of loss if the insured dies. D. Insurable interest must exist at time of death of the insured. Answer D.
All the following may have an insurable interest in the insured EXCEPT
A. The spouse. B. Insured's children. C. The employer. D. Insured's close friend Answer: D.
All of the following statements are true about the agent's relationship with the insurer EXCEPT
An agent represents the insured, not the insurer.
Due to the fact that Variable Life policies are considered to be securities since they are invested in stocks, a producer must be registered with FINRA and have which of the following to sell them?
Both a state life producer license and a securities license
Which of the following statements is true of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out.
All of the following are examples of risk retention EXCEPT
Premiums
Four business partners each agree to own life insurance on each other in the amount of his or her share of the value of the business in the event that a partner should prematurely die. This describes which method of a buy-sell agreement?
cross purchase
An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have?
variable
Sally's life insurance company sends her a check each year. What type of policy does she have and with what type of company?
A participating policy with a mutual insurance company
All of the following are true of key person insurance EXCEPT
A. The employer is the owner, payor and beneficiary of the policy. B. The key employee is the insured. C. The plan is funded by permanent insurance only. D. There is no limitation on the number of key employee plans in force at any one time. Answer: C
When the insured purchased a new home he wanted to purchase a life insurance policy that would protect his family against losing the home should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
decreasing term
Which of the following is an example of an agent's fiduciary responsibilities?
Promptly forwarding premiums to the insurer
In an insurance contract, consideration refers to
Exchange of something of value by both parties
The nonforfeiture option that allows a policy-owner to keep the original face amount but reduce the length of time the coverage remains in effect is the
Extended Term Option.
Which of the following terms refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another?
Assignment
When a death claim is submitted, the insurer discovered that the insured understated her age on the application for a life policy. What action will the insurer take?
Pay a reduced death benefit based on the insured's actual age
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes
Waiver of premium rider
