Life Insurance Flashcards
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Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?
Primary beneficiary’s estate
Contingent beneficiary
Insured’s estate
Children of the insured
Contingent Beneficiary
Proceeds from a life insurance policy are protected from the beneficiaries creditors by which clause?
Protection clause
Creditor clause
Spendthrift trust clause
Beneficiary trust clause
Spendthrift trust clause
What does the word “level” in Level Term describe?
The period of coverage
The face amount
The premium payments
The cash value
The face amount
Which of these would be the BEST example of a limited pay life insurance policy?
Whole life policy that pays out its cash value over a 20 year period
Whole life policy with premiums paid up after 20 years
Term life policy that returns cash value after 20 years
Term life policy with premiums paid after 20 years
Whole life policy with premiums paid up after 20 years
A securities license is required for a life insurance producer to sell:
Modified life insurance
Modified Endowment Contracts
Variable Life Insurance
Universal life insurance
Variable Life Insurance
What is the primary feature of a viatical settlement?
No interest on policy loans
Reduced death prepayment
Longer contestable period
Lower premiums
Reduced death benefit prepayment
Under a non-qualified annuity, interest is taxed after the:
Deposits have been made
Death of the annuitant
Distribution of payments
Exclusion ratio has been calculated
Exclusion ratio has been calculated
A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a?
Waiver of premium rider
Payor rider
Automatic premium loan rider
Juvenile waiver rider
Payor Rider
An endorsement found in an insurance plan which modifies the provisions of the policy is called a:
Attachment
Add-on
Rider
Supplement
Rider
Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?
Accelerated lifetime benefit
Guaranteed lifetime withdrawal benefit
Right of income rider
Guaranteed minimum accumulation benefit
Guaranteed lifetime withdrawal benefit
Which of these annuities require premium payments that vary from year to year?
Flexible premium immediate annuity
Flexible premium deferred annuity
Fixed premium deferred annuity
Fixed premium immediate annuity
Flexible premium deferred annuity
What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
Policy Summary
Buyer’s guide
Entire Contract
Entire Policy
Entire Contract
Which of these is a method of determine the level of funds required for ongoing support in the event of the breadwinner’s death?
Financial loss value
Human Life Value
Assessment Value
Replacement value
Human Life Value
A life insurance policy that has premiums fully paid up within a stated time period is called:
Stated payment insurance
Limited universal insurance
Stated modified insurance
Limited payment insurance
Limited payment insurance
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST:
Remit all past due premiums within the grace period
Provide evidence of insurability to the insurer
Resubmit a new life insurance application
Provide a valid reason for the lapse
Provide evidence of insurability to the insurer
Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?
Joint life with period certain
Life annuity with survivorship
Survivorship annuity
Temporary annuity certain
Temporary Annuity Certain
An alien insurer
Must be organized under Idaho insurance laws
In an insurer operating in the U.S. but headquartered outside the U.S.
Writes insurance on risks located only outside of Idaho
Is a company that was formed under the laws of another state
Is an insurer operating in the U.S. but headquartered outside of the U.S.
Which of the following is NOT a federal requirement of a qualified plan?
Must benefit a broad cross-section of employees
Employees must be able to make unlimited contributions
Vesting schedule must be defined
Employer establishes the plan
Employees must be able to make unlimited contributions
A whole life policy option where extended term insurance is selected is called an?
Dividend option
Settlement option
No forfeiture option
Interest only option
Nonforfeiture option
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy?
Interest only
Reduced paid-up insurance
Extended term insurance
Cash surrender
Interest only
How does life insurance create an immediate estate?
Cash value may be borrowed upon at any time
Nonforfeiture options are immediately available
The insured’s estate receives the death benefit
After the first premium is paid, the face amount may be available to the beneficiary
After the premium is paid, the face amount may be available to the beneficiary
A _____________ company is owned by its shareholders.
Stock
Which of the following pertains to the analysis of an applicant’s personal information and determining whether insurance should be issued or declined?
Adverse calculation
Underwriting
Risk classification
Actuarial Determination
Underwriting
Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
Nonforfeiture clause
Common disaster clause
Spendthrift clause
Accident Indemnity Clause
Common disaster clause
In what part of an insurance policy are policy benefits found:
Declarations
Entire contract
Waivers
Conditions
Declarations
Which of the following policies does NOT build cash value?
Term
Straight Life
Endowment
Variable Life
Term
Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because:
The MEC has tax deductible premiums
The MEC is considered an illegal product
The MEC tends to be an investment vehicle
The MEC does not accumulate cash value
The MEC tends to be an investment vehicle
How often must the Director examine each domestic insurance company?
Every year
Every 2 years
Every 3 years
Every 5 years
Every 5 years
If a producer diverts funds from an insurer, he/she may be found guilty of
Malfeasance
Fraud
Subrogation
Misappropriation
Fraud
What will the beneficiary receive if an annuitant dies during the accumulation period?
The greater of the accumulated cash value or the total premium paid
The lesser of the accumulated cash value or the total premium paid
The interest earned on the accumulated cash value
Nothing
The greater of the accumulated cash value or the total premium paid
When a decreasing term policy is purchased, it contains a decreasing death benefit and:
Increasing premiums
Level premiums
Decreasing premiums
Variable premiums
Decreasing premiums
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a?
Automatic premium loan
Nonforfeiture option
Collateral assignment
Irrevocable assignment
Collateral assignment
An interest-sensitive life insurance policyowner may be able to withdraw the policy’s cash value interest free. The provision that allows this is:
Partial surrender
Subrogation
Automatic premium loan
Accelerated death benefit
Partial surrender
When does a life insurance policy typically become effective?
When the policy is issued
When initial premium is collected and policy is issued
When the application is completed and signed
When the completed application is signed and initial premium is collected
When initial premium is collected and policy is issued
What kind of life insurance policy covers two or more people with the death benefit payable upon the last person’s death?
Dual life insurance
Joint life insurance
Last survivor life insurance
Shared Life Insurance
Last Survivor life insurance
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
Net death benefit will be reduced if the loan is not repaid
No interest will be charged on the loan balance
Term life policies are the only type of insurance that allows policy loans
A loan can be taken out for up to the face amount of the policy
Net death benefit will be reduced if the loan is not repaid
An insurance producer is BEST defined as:
A person appointed by more than one insurance company to issue policies
A person who has a contract with an insurance company to represent it
A person who places insurance with nonadmitted companies
An employee of an insurance company who has the authority to underwrite insurance
A person who has a contract with an insurance company to represent it
What types of life insurance are normally used for key employee indemnification:
Term, whole, and universal life insurance
Increasing term insurance
Joint, credit, and group life insurance
Adjustable, permanent, and limited pay life insurance
Term, whole, and universal life insurance
Which of these riders will pay a death benefit if the insured’s spouse dies?
Guaranteed insurability rider
Family term insurance rider
Family whole insurance rider
Payor benefit rider
Family term insurance rider
Andy the insured had made a deliberate lie to the insured in order to obtain a lower premium. This action is considered an act of:
Subrogation
Misrepresentation
Malfeasance
Fraud
Fraud
An
An insured individual and the policy’s beneficiary die from the same accident. The common disaster provision states the insurer will continue as:
The insured outlived the beneficiary
The beneficiary outlived the insured
No beneficiary was never named
The insured and beneficiary died at the same time
The insured outlived the beneficiary
An unauthorized insurer may place insurance business in Idaho through an:
Nonresident agent
Unauthorized agent
Limited lines agent
Surplus lines agent
Surplus lines agent
Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?
Standard risk
Preferred risk
Unacceptable risk
Substandard risk
Substandard risk
____________ life insurance is designed to pay the balance of a loan if the insured dies before the loan has been repaid.
Accelerated
Universal
Settlement
Credit
Credit
All of the following are examples of a Business Continuation Plan EXCEPT:
Key person insurance
Cross purchase agreement
Stock redemption Plan
Deferred Compensation
Deferred Compensation
Dorian exercised a nonforfeiture option by using his life policy’s cash value to purchase an extended term insurance option. When the term insurance expires:
He has the option of resuming the original policy and paying the same premium
The coverage can be extended with a lump sum payment
All remaining cash values are paid to the producer
The protection ends
The protection ends
A producer must notify the Director within __________ days of a felony conviction:
30
45
60
90
30
Tia the producer is recommending to a prospect that an existing life insurance policy be replaced with a new one from her insurer. If this transaction moves forward, which of the following does NOT need to be provided to the prospect at or before the policy is delivered?
Notice regarding replacement
Replacing insurer’s financial statements
Buyers guide
Policy summary
Replacing insurer’s financial statements
Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this called?
Estate conservation
Liquidity maintenance
Survivor fund
Human value protection
Estate conservation
A partial surrender is allowed in which of the following life policies?
Adjustable whole life
Universal life
Decreasing term life
Limited whole life
Universal life
The typical free-look period for life insurance policies sold in Idaho is ____ days?
7
10
15
20
20 days
In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered:
Voidable
Conditional
Aleatory
Unilateral
Unilateral
What is known as the immediate specific event causing loss and giving rise to risk?
Peril
Hazard
Loss factor
Liability
Peril
A life insurance policy that is subject to a contract interest rate is referred to as:
Adjustable life
Group life
Term life
Universal life
Universal life
Which type of annuity stops all payments upon the death of the annuitant?
Life annuity
Period certain annuity
Cash refund annuity
Joint and survivor annuity
Life annuity
Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy?
Keep replacement records on file for at least 10 years
Notify the existing insurer of the proposed replacement
Submit to the replacing insurer a list of the policies to be replaced
Offer the insured a 60 day free-look period
Submit to the replacing insurer a list of the policies to be replaced
All of the following are examples of pure risk EXCEPT:
Losing money at a casino
Injured while playing football
Falling at a casino and breaking a hip
Jewelry stolen during a home robbery
Losing money at a casino
Pat owns a 20 pay life policy with a paid up dividend option. Which of the following statements is true?
The policy may be paid up early by using accumulated cash values
The policy may be paid up early by using policy dividends
The policy’s premiums will increase after 20 years
The policy’s cash values steadily decrease after 20 years
The policy may be paid up early by using policy dividends
Joe has a life insurance policy that has a face amount of 300,000. After a number of years, the policy’s cash value accumulates to 50,000 and the face amount becomes 350,000. What kind of policy is this?
Increasing term life policy
Nonparticipating policy
Modified whole life policy
Universal life policy
Universal life policy
According to Idaho law, group life insurance conversion privileges must NOT:
Allow a new policy to be issued
Allow a time period to convert group life coverage to an individual life policy
Allow a rate increase
Require evidence of insurability
Require evidence of insurability a
A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called an:
Adjustable policy
Limited pay policy
Level term policy
Variable universal policy
Limited pay policy
What is the primary reason for buying an annuity?
Provide tax free income
Provide a risky, yet high return investment
Provide an instant estate
Provide future economic security
Provide future economic security
All of the following activities require an insurance producer’s license EXCEPT:
Underwriting
Negotiating
Selling
Soliciting
Underwriting
All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPT:
AGENT’S REPORT
Medical information bureau
Inspection reports
National Association of Insurance Underwriter
National Association of Insurance Underwriters
Life insurance policies will normally pay for losses arising from:
Commercial avaiation
War
Suicide
Hazardous jobs
Commercial avaiation
A ROTH IRA owner must be at least what age in order to make tax-free withdrawals?
59.5 and owned account for min of 10 years
59.5 and owned account for min of 5 years
70.5 and owned account for a min of 10 years
70.5 and owned account for a min of 5 years
59.5 and owned account for min of 5 years
Which of the following is considered to be an alternative to a life settlement?
Accelerated death benefit rider
Waiver of premium rider
Extended term option
Decreasing term insurance
Accelerated death benefit rider
Donald is the primary insured of a life insurance policy and adds a children’s term rider. What is the advantage of adding this rider?
Can be converted to permanent coverage without evidence of insurability
Coverage can be different for each child
Premiums on this rider are not required until the limiting age is reached
Increases the policies overall cash value
Can be converted to permanent coverage without evidence of insurability
A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called:
Mutual insurer
Reinsurer
Reciprocal insurer
Participating insurer
Reinsurer
The taxable portion of each annuity payment is calculated using what method?
Exclusion ratio
Taxable ratio
Cost basis
Tax basis
Exclusion ratio
