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life insurance practice exam
Terms in this set (50)
jason is the insured in a 100,000 10 year long renewable term policy. Soon after taking out the policy, he develops a serious heart condition. will he be able to renew his policy?
which policy has the lowest annual premium?
the primary purpose of an annuity is to
provide income for an individuals retirement
under what circumstance would an insurance applicant be asked to submit a signed statement of continued good health?
when the initial premium is not submitted with the application
when a firm establishes a contributory group term life insurance contract, what percentage test must be met for the participation?
a lapsed policy may usually be reinstated...
within 3 years after the policy lapses
all of the following statements are true to the 10 day free look provision in a life insurance policy
A. the 10 day free look period begins when the insured receives the contract
B. an insured who returns the policy within the 10-day free look period will receive a full refund of premiums paid
C. to get a refund, the policyholder must notify the insurer in writing
amanda's life insurance policy names her sister Joyce as irrevocable beneficiary of the policy proceeds. this means that
amanda can borrow against the policy's cash value but only with joyce permission.
The following statement concerning the Fair Credit Reporting Act is correct
it requires the that the applicant for insurance coverage will be informed if a consumer report is requested
The underwriting department of life insurance company acquires information on an applicant for life insurance coverage from all of the following sources...
A. an agents report
B. the life insurance application
C. the medical information bureau
to cover the contingency of a family breadwinner's death, all of the following would be appropriate applications for a decreasing term insurance policy..
A. to cover the families coverage
B. to cover families car insurance
C. to ensure the family's home improvement loan is covered
Pearl takes out a 100,000 permanent insurance policy on her life, naming her daughter, jaunita, as the beneficiary. Five years after the policy was issued, pearl dies an juanita submits a claim to the insurer for the death benefit. upon reviewing the claim, the insurer discovers the Pearl Had understated her age by 15 years on the original application. the insurer will..
calculate the face amount that the premiums paid would have been purchased at the correct age, and pay that (reduced amount)
Which of the following protects an insured against the unintentional lapse of his life insurance contract?
automatic premium loan
Under a group life insurance policy. an employer demonstrates her evidence of participation by producing
a certificate of insurance
Kevin takes out a loan from the cash value of his life policy, and subsequently dies. the insurance company will typically pay
the face amount minus interest and loan amount
which is the most likely outcome if an individual who engages in a hazardous occupation applies for a life insurance policy?
the policy will be issued but rated
A retired person purchases an annuity for 90,000. One month later, he starts to receive payments. based solely on these facts, what type of annuity does he have?
An agreement to purchase a deceased partner's share of business which is usually funded by life insurance best describes...
a buy and sell agreement
John owns a 100,000 whole life insurance policy with an additional 100,000 accidental death rider attached to it. While driving to work, John suffers a heart attack a dies instantly. His auto then runs off the road and crashes down an embankment. how much will his policy pay to the beneficiary?
Darren owns a 50,000 whole life policy. He wishes to discontinue paying premiums, but wants to continue having insurance protection for the remainder of his life. which of the following options should he select?
the reduced paid-up insurance non forfeiture option
In a universal life insurance policy, the two adjustments usually made to the cash value account are
cost of insurance protection is charged and current interest is credited.
Laura is 27 years old. She wants the opportunity for market-linked interest rates, plus she wants to be able to make additional premium contributions throughout the year. What would be be the best type of insurance policy for her?
Variable universal life
permanent insurance differs from term insurance with regard to
cash value accumulation
In an annuity, the period of time when benefits are being paid is known as
Mr. and Mrs. Burden receive annuity payments. After Mrs burden dies, Mrs. Burden continues to receive payments. this is an example of
a joint life and survivorship annuity
if Greg's policy on his own life has guaranteed insurability rider, it means he can purchases more insurance ...
on his own life at certain ages without proof of insurability
Accelerated death benefits
are intended for policy owners who are seriously ill and need early access to the face amount of the policy
Frank, age 39, owns a life insurance policy an names his wife as his only beneficiary. His wife dies 10 years later. Frank dies at age 61, leaving a 32 year old and 30 year old daughter, the proceeds will go to
Lon owns a 50,000 whole life policy. At age 47, Lon decides to cancel his policy and exercise the extended term option with the policy's cash value. He will receive a term policy with a face value of
The insurance clause found in a life insurance contract states
The promise that the insurer will pay a stated amount to a named beneficiary after receiving proof of the insured's death
The term used to indicate that a policy beneficiary cannot be change is
if a primary beneficiary predeceases an insured, the individuals to whom the proceeds are paid are referred to as
the waiver of premium provision in a life insurance policy applies
if the policy owner becomes disabled
the settlement option that provides for payments to be made in regular installments to a beneficiary until the principal and interest are exhausted best describes
The following statements regarding taxation of life insurance are correct.
A. dividends themselves are not taxable, but any interest paid on the dividends is taxable as received
B. a lump sum benefit recieved by a beneficiary upon death of the individual insured is not taxable as income
C. Upon surrender of a policy, the policy owner is taxed on the amount by which the cash value exceeds the sum of premiums paid
In order to reinstate a lapsed whole life insurance policy, all of the following may be required.
A. all back premiums must be paid
B. all policy loans must be repaid
C. The insured may have to provide proof of insurability
All of the following are examples of insurable interest
A. for own family on event of ones death
C. Business associates
In a policy insuring the life of a child, which allows premiums to be waived in the event of the death or disability of the person responsible for premium payments?
An insured died during the grace period of her life insurance policy and had not paid the required annual premium. the insurance company is obligated to pay which of the following to the beneficiary?
the face amount of the policy less the annual payment
Third-party ownership of a life insurance policy refers to a situation in which
the policy owner is someone other than the insured
Money taken out of a modified endowment contract (MEC)...
may be subject to unfavorable tax rules
Generally, premium paid on an individual life insurance policy are..
not tax deductible
A whole life policy face amount is..
payable to beneficiaries upon the insured's death
Under what type of life insurance policy will the death benefit vary, based on the performance of an underlying portfolio of securities?
A conversion privilege is an element of all group life contracts. An insured employee has how many days to convert to an individual plan once employment is terminated?
The cash value accumulation in life insurance policy...
can be used for loans or later as retirement income
The following statements regarding a renewable term life insurance policy is correct.
A. When a renewable term insurance policy is renewed, the statements on the application once again become contestable for a 2-year period.
B. Renewable premiums are based on the insured's age at the time of the original application
C. The cost of this type of term policy is lower due to a decrease in the chance of adverse selection.
The following statement regarding a revocable beneficiary is correct.
the policy owner may change the beneficiary without his knowledge or approval
Paul dies before his annuity has paid out an amount at least equal to the purchase price of the annuity, so Paul's beneficiary continues to receive annuity payments until that amount has been reached. This type of annuity is
a refund life annuity
The following are an agent's duties and responsibility at the time of the application.
A. to probe beyond the specific questions if he feels the applicant is misrepresenting or concealing information
B. to check to make sure that there are no unanswered questions on an application.
C. To explain the nature an type of any receipt is given to the application.
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