Life And Annuities Specific

Question 1

The policy owner wants to make sure that upon his death the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Answer 1

Interest only option

With this option. The insurance company retains the policy proceeds and pays the interest on the proceeds to the beneficiary at regular intervals

Question 2

Equity indexes annuities

Answer 2

Seek higher returns

Equity indexes annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns.

Question 3

According to the entire contract provision, what document must be part of the insurance policy?

Answer 3

Copy of the original application

Insurance contract must contain this

Question 4

All of the following benefits are available under social security EXCEPT

Answer 4

Welfare benefits

Social security is an entitlement program not a welfare program

Question 5

Which of the following policies would be classified as traditional level premium contract?

Answer 5

Straight life

Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured

Question 6

What describes the specific information about a policy?

Answer 6

Policy summary

This describes the features and elements of the specific policy for which a person is applying

Question 7

When is the earliest a policy may go into effect?

Answer 7

When the application is signed and a check is given to the agent

The policy can be effective as early as the date of the application if the premium is submitted with the application and the policy is issued as applied for

Question 8

In which of the following examples would a contract between an insurer and prospective insured be legal?

Answer 8

The applicant has a prior felony conviction

It is legal for a person convicted of a felony to buy an insurance contract

Question 9

Two attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

Answer 9

HR-10 (Keogh Plan)

These plans are specifically for self-employed and their employees

Question 10

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about

Answer 10

Whether an insurance interest exists between the individuals

An insurance interest must exist at the time the policy is issued. Some relationships are automatically presumed to qualify as an insurance interest- spouses, parents, children, and certain business relationships

Question 11

Under which fit he following circumstances would an insurer pay accelerated benefits?

Answer 11

An insured is diagnosed with cancer and needs help paying for their medical treatment

Question 12

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Answer 12

Third party ownership

Contracts owned by Someone other than the insured are known as theirs-party ownership.

Question 13

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

Answer 13

3days

Question 14

Which rider, when attached to a permanent life insurance policy, provides an amount of Insurance on every family member?

Answer 14

Family term rider

Question 15

Life income joint and survivor settlement option guarantees

Answer 15

Income for 2 or more recipients until they die

Question 16

All of the following are true of key person insurance EXCEPT

Answer 16

The plan is funded by permanent insurance only

Key person coverage may be funded by any type of life insurance

Question 17

Which for he following statements regarding the taxation of modified endowment contracts is FALSE?

Answer 17

Withdrawal are not taxable

Any distributions from MEC’s are taxable, including withdrawals and policy loans. All of the other statements are true.

Question 18

All other factors being equal, the least expensive first year premium is found in

Answer 18

Annually renewable term

It’s the purest form of insurance, the premium increases as the age increases.

Question 19

The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

Answer 19

The death benefit can be increased by providing evidence of insurability

Question 20

A man purchased a 90,000$ annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is that?

Answer 20

Immediate

Immediate annuity, distribution starts within 1 year of purchase

Question 21

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a return of all of the premiums paid. Which rider is attached to the policy?

Answer 21

Return of premium

Question 22

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner?

Answer 22

Cash surrender

Once the cash surrender value is paid, the contract is over

Question 23

Which policy component decreases in decreasing term insurance?

Answer 23

Face amount

Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term.

Question 24

The ice insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Answer 24

Incontestability clause

In an insurer wishes to contest any statements on an application, they must do so within the first two years.

Question 25

An insured purchased a life insurance policy. The agent told him that depending upon the company’s investments and expense factors. The cash values could change from those shown in the policy at issue time. The policy is a/an

Answer 25

Interest-sensitive whole life

Because the cash values are generated by investments, interest rates will affect the amount of the cash value.

Question 26

Which of the following determines, the cash value of a variable life policy?

Answer 26

The performance of the policy portfolio

The cash value of a variable life policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer

Question 27

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

Answer 27

The balance of the loan will be taken out of the death benefit

Question 28

Which of the following statements is TRUE concerning irrevocable beneficiaries?

Answer 28

They can be changed only with the written consent of that beneficiary

Question 29

Which of the following is an eligibility requirement for all social security disability income benefits?

Answer 29

Have attained fully insured status