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Health & Life Insurance > Health & Life > Flashcards

Health & Life Flashcards

1
Q

Who has the right to change a revocable beneficiary?

a. Beneficiary
b. Agent
c. Insurance agency
d. Policyowner

A

Policyowner

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2
Q

Which statement about a whole life policy is true?

a. Beneficiary may be changed only with the consent of the premium payor
b. Death benefit can usually be adjusted
c. Cash value may be borrowed against
d. Premiums are flexible

A

Cash value may be borrowed against

A feature of whole-life policies is that the policy owner may borrow against the cash value.

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3
Q

Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?

a. The applicant chose an annual premium mode
b. The applicant is suspected of making a material misrepresentation
c. The initial premium was submitted with the application
d. The initial premium was NOT submitted with the application

A

The initial premium was NOT submitted with the application.

On delivery of a policy, a signed document of good health is typically requested if the application was submitted without the initial premium

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4
Q

When an employee is terminated, which statement about a group term life conversion is true?

a. Employee must convert group term life coverage into an individual term life policy
b. Employee must provide evidence of insurability for conversion
c. Policy proceeds will be paid if the employee dies during the conversion period
d. Policy proceeds will NOT be paid if the employee dies during the conversion period

A

Policy proceeds will be paid if the employee dies during the conversion period

An individual must apply for individual permanent coverage within 31 days after the date of group coverage termination and is covered under the group policy during the conversion period.

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5
Q

S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?

a. No benefits are payable under the Master contract
b. Full benefits are payable under the Master contract
c. Full benefits are payable under the converted policy
d. Benefits less required premium are payable under the converted policy

A

Full benefits are payable under the Master contract

An individual is covered under the group policy during the conversion period

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6
Q

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

a. After the Contestable period
b. When the policy proceeds are paid
c. At the time of application
d. When the insured dies

A

At the time of application

With life insurance, insurable interest must exist only at the policy inception

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7
Q

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of

a. adherence
b. assimilation
c. aleatory
d. adhesion

A

adhesion

A contract of adhesion is a contract offered intact to one party by another under circumstances requiring the second party to accept or reject the contract in total without having the opportunity to bargain over the wording. Insurance policies are contracts of adhesion and are construed strictly against the party writing them (i.e., the insurer)

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8
Q

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

a. Modified Whole Life
b. 20-Pay Life
c. Decreasing Term
d. Endowment

A

Decreasing Term

The Automatic Premium Loan provision can be incorporated into all of these policies EXCEPT decreasing term

Automatic Premium Loan provision: authorizes the insurer to automatically pay any premium in default at the end of the grace period and charge the amount so paid against the life insurance policy as a policy loan

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9
Q

Company XYZ offers a group Term Life insurance plan to its employees. What does each employee covered under this plan receive?

a. Master policy
b. Receipt of coverage
c. Individual policy
d. Certificate of insurance

A

Certificate of Insurance

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10
Q

A life insurance policy that ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

a. Accelerated Benefits
b. Waiver of Premium
c. Cost of Living
d. Return of Premium

A

Waiver of Premium

The Waiver of Premium is a rider on a life insurance policy that guarantees that the premium will be paid if the insured is disabled for a specified period of time.

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11
Q

An incomplete life insurance application submitted to an insurer will resume in which of these actions?

a. Application will be returned to the writing agent
b. Application will be approved with restrictions
c. Application will be pending unit a MIB report is sent to the insurer
d. Application will be automatically declined

A

Application will be returned to the writing agent

if the company discovers a mistake or incompletion, it usually returns the application to the producer.

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12
Q

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

a. Insurer
b. Beneficiary
c. Reinsurer
d. Insured

A

Insured

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13
Q

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

a. Cash Refund
b. Installment Refund
c. Straight Life annuity
d. Life Annuity with Period Certain

A

Straight Life annuity

Straight Life annuity is based only on life expectancy, but it creates a risk that the annuitant may die early and forfeit much of the value of the annuity to the insurance company

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14
Q

Dividends paid from a life insurance policy are

a. guaranteed
b. taxable
c. issued by the insurer
d. issued by the Department of Insurance

A

Issued by the insurer

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15
Q

A whole life insurance policy owner does not wish to continue making premium payments. Which of the following enables the policy owner to sell the policy for more than its cash value?

a. Cash surrender
b. Life settlement contract
c. Buy-sell arrangement
d. 1031 Exchange

A

Life settlement contract

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16
Q

A retirement plan that sets aside part of the company’s net income for distributions to qualified employees is called a

a. rollover plan
b. 403(b) plan
c. profit-sharing plan
d. salary reduction plan

A

Profit sharing plan

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17
Q

A sole proprietor may use this plan ONLY if the employees of this business are included.

a. SEP Plan
b. Keogh Pension Plan
c. Individual Retirement Account (IRA)
d. SIMPLE Plan

A

Keogh Pension Plan

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18
Q

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer’s obligation in the event N was killed while flying as a student pilot?

a. Misrepresentation
b. Exclusion
c. Collateral assignment
d. Concealment

A

Exclusion

Exclusions are specified hazards listed in a policy for which benefits will not be paid

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19
Q

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

a. Request will be accepted only if in writing by the insured
b. Change will be made only if premiums are paid current
c. Change will be made immediately
d. Request of the change will be refused

A

Request of the change will be refused

An irrevocable designation may not be changed without the consent of the beneficiary.

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20
Q

What does a 401(k) plan generally provide its participants?

a. Tax-free distributions
b. Salary-deferral distributions
c. Salary-deferral contributions
d. A defined retirement benefit

A

Salary-deferral contributions

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21
Q

Credit life insurance is typically issued with which of the following types of coverage?

a. Annual Renewable Term
b. Decreasing Term
c. Individual Whole Life
d. Group Term

A

Decreasing Term

with the term matched to the length of the loan period

22
Q

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

a. 30 Pay Life
b. Term to Age 70
c. Universal Life
d. Adjustable Life

A

30 Pay Life

23
Q

How long does an individual have to “rollover” funds from an IRA or qualified plan?

a. 60 days
b. 90 days
c. 120 days
d. No limit

A

60 days

24
Q

At what point does an informal agreement become a binding contract?

a. When one party makes an invitation and the other makes an offer
b. When an offer is made by one party and the other party rejects the offer and makes a counteroffer
c. When one party makes an offer and the other party accepts that offer
d. When consideration is provided by one of the parties to the contract

A

When consideration is provided by one of the parties to the contract

Consideration must be given in order to make a contact legally binding

25
Q

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

A

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

26
Q

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that the coverage begins immediately if the application is approved. What kind of receipt was used?

a. binding
b. Initial Premium
c. Conditional
d. Contingent

A

Conditional

A conditional receipt indicated that certain conditions must be met in order for the insurance coverage to go into effect

26
Q

All of the following statements about traditional individual retirement accounts are false EXCEPT

a. 10% penalty is applied to withdrawals after age 59 1/2
b. Withdrawals are normally tax-free to the recipient
c. 10% penalty is applied to withdrawals before age 59 1/2
d. Contributions are not tax deductible

A

10% penalty is applied to withdrawals before age 59 1/2

Because an IRA is a qualified plan, it has the same rules for early withdrawal

27
Q

In regards to representations or warranties, which of these statements is true?

a. Warranties are statements considered to be true to the best of the applicant’s belief
b. If material to the risk, false representations will void a policy
c. Representations are statements guaranteed to be true in every respect
d. If material to the risk, false representations will NOT void a policy

A

If material to risk, false representations will void a policy

28
Q

A policy of adhesion can only be modified by whom?

a. The agent
b. The applicant
c. The primary beneficiary
d. The insurance company

A

The insurance company

A policy of adhesion is best described as a policy which only the insurance company can modify

29
Q

A(n) [BLANK] beneficiary may be changed by the policy owner WITHOUT the consent of the beneficiary

a. Revocable
b. Irrevocable
c. Tertiary
d. Replaceable

A

Revocable

30
Q

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

a. Straight life accumulates faster than Limited-pay life
b. 20-Pay Life accumulates cash value faster than Straight Life
c. Cash value accumulation of both 20-Pay Life and Straight Life depends on the insurer’s financial rating
d. 20-Pay Life and Straight Life accumulate cash value at the same rate

A

20-Pay Life accumulates cash value faster than Straight Life

31
Q

What action can a policy owner take if an application for a bank loan requires collateral?

a. Utilize accelerated benefits provision
b. Borrow against policy cash value and use as a down payment
c. Assign policy ownership to the bank
d. Name bank as beneficiary

A

Assign policy ownership to the bank

31
Q

Why is an applicant’s signature required on a life insurance application?

a. To attest that the statements on the application are warranties
b. To attest that the statements on the application are accurate to the best of the applicant’s knowledge
c. To give Power of Attorney to the producer if needed
d. To attest that all statements on the application are guaranteed to be true

A

To attest that the statements on the application are accurate to the best of the applicant’s knowledge

32
Q

All of the following statements are true regarding a policy’s Grace period, EXCEPT:

a. Past due premiums are waived
b. Policy loans may still be made
c. Full coverage continues
d. Grace period terms are stated in the policy

A

Past due premiums are waived

33
Q

Who has the option to renew a Renewable Term policy?

a. Agency
b. Agent
c. Insured
d. Beneficiary

A

Insured

34
Q

A non-contributory plan requires [BLANK] participation of all eligible employees

a. 25%
b. 50%
c. 75%
d. 100%

A

100%

35
Q

On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?

A

January 26

Coverage became effective on the date the policy was delivered and the first premium was collected

36
Q

What type of life insurance gives the greatest amount of coverage for a limited period of time?

a. Term life
b. Graded Premium Whole life
c. Whole life
d. Endowment policy

A

Term Life

Term insurance would provide the greatest amount of protection for a limited period of time

37
Q

The entity whose sole purpose is sharing medical data among its member companies is called the

a. National Association of Insurance Commissioners (NAIC)
b. Medical Information Bureau (MIB)
c. State government
d. State Underwriting Association

A

Medical Information Bureau (MIB)

38
Q

Which of the following statements is CORRECT about accelerated death benefits?

a. The full face amount is available as an accelerated benefit
b. Those on Social Security disability automatically qualify for this benefit
c. This provision is usually provided with an increase in premium
d. Must have a terminal illness to qualify

A

Must have a terminal illness to qualify

Accelerated death benefits provide for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury

39
Q

All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT

a. Income derived from the TSA is received income tax-free
b. TSA’s are available to public school employees
c. Contributions to the TSA are tax-deductible
d. Interest earned by TSA is tax deferred

A

Income derived from the TSA is received income tax-free

Upon retirement, payments received by employees from the accumulated savings in tax-sheltered annuities are treated as ordinary income.

40
Q

K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse live. Which type of annuity did K purchase?

a. Single Premium Deferred Annuity with Period Certain
b. Flexible Premium with Survivor Annuity
c. Flexible Premium with Period Certain
d. Single Premium Immediate Joint with Survivor Annuity

A

Single Premium Immediate Joint with Survivor Annuity

This annuity was purchased with one payment and begins immediately. It also covers K and her spouse for the rest of their lives.

41
Q

All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:

a. Cash value has a minimum rate of accumulation
b. If the gain on the index goes beyond the policy’s minimum rate of return, the cash value will mirror that of the index
c. The premiums can be lowered or raised, based on investment performance
d. Tied to an equity index such as the S&P 500

A

The premiums can be lowered or raised, based on investment performance

Equity Indexed Life Insurance is permanent life insurance that allows policyholders to tie accumulation values to a stock market index.

41
Q

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

a. Primary beneficiary’s estate
b. Primary beneficiary’s next of kin
c. Insured’s estate
d. Insured’s contingent beneficiary

A

Insured’s contingent beneficiary

42
Q

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

a. Return of premiums paid
b. Cash value plus interest
c. $20,000 death benefit
d. Face amount plus interest

A

$20,000 death benefit

If the insured dies before the endowments maturity, the policy’s face value - also known as the “death benefit” - is paid in a limp sum to any beneficiaries.

43
Q

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

a. Collect premium from M’s estate
b. Deny the claim
c. Pay face amount minus the past due premium
d. Subtract past due premium from cash value

A

Pay face amount minus the past due premium

-because death occurred within the grace period

43
Q

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

a. Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company
b. Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company
c. Complete the application and review the information with the customer prior to obtaining the customer’s signature, then send the application off to the insurance company
d. Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company

A

Complete the application and review the information with the customer prior to obtaining the customer’s signature, then send the application off to the insurance company

44
Q

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

a. 10% tax penalty for early withdrawal
b. Capital gains tax
c. Ordinary income tax and a 10% tax penalty for early withdrawal
d. Ordinary income tax

A

Ordinary income tax and a 10% tax penalty for early withdrawal

45
Q

A Life insurance policyowner would like to take out a policy loan against the cash value in his Whole Life policy. The interest rate applied to this loan may vary over time. This is referred to as a(n) [BLANK] rate loan.

a. Fluctuating
b. Fixed
c. Variable
d. Increasing

A

Variable

46
Q

Which of these would be considered a Limited-Pay Life policy?

a. 10-year Renewable and Convertible Term
b. Life Paid-Up at Age 70
c. Straight Whole Life
d. Renewable Term to Age 100

A

Life Paid-Up at Age 70

Health & Life Insurance (1 decks)

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