Life Insurance 3

Question 1

A policy owner may change two policy features on what type of life insurance?
Modified whole life
Decreasing term life
Adjustable life
Whole life

Answer 1

Adjustable Life

Question 2

A rollover from a traditional IRA to another IRA MUST be done within _________ days to avoid tax consequences.
15
30
60
90

Answer 2

60

Question 3

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

Answer 3

Limited pay policy

Question 4

Fixed period settlement options are considered to be a form of an:
Cash value loan
Variable life policy
Annuity
Endowment

Answer 4

Annuity

Question 5

Which approach predicts a person’s earning potential and determines how much of that amount would be devoted to dependents?
Future value approach
Earnings approach
Needs approach
Human life value approach

Answer 5

Human life value approach

Question 6

A nonparticipating company is sometimes called an:
Alien insurer
Mutual insurer
Reinsurer
Stock insurer

Answer 6

Stock insurer

Question 7

All of these are valid policy dividend options for a life insurance policy EXCEPT:
Cash outlay to the policyowner
Accumulate without interest
Reduction in policy premium
Buy additional insurance coverage

Answer 7

Accumulate without interest

Question 8

All of these are common exclusions to a life insurance policy EXCEPT:
Accidental death
Military service
Aviation
Hazardous occupations

Answer 8

Accidental death

Question 9

An example of a tax-qualified retirement plan would be an:
Equity compensation plan
Defined contribution plan
Executive index plan
1035 exchange plan

Answer 9

Defined contribution plan

Question 10

Dana is an employee who deposits a percentage of her income into her individual annuity. Her company also contributes a percentage into a separate company pension plan. What kind of annuity is this considered?
Qualified retirement annuity
Key employee retirement annuity
Executive compensation plan
Keogh annuity plan

Answer 10

Qualified retirement annuity

Question 11

Which of these is NOT considered to be a purpose of an annuity?
Annuities are intended to create an estate
Annuities are intended to liquidate an estate
Annuities are intended for the tax-free growth of principal
Annuities are intended to distribute accumulated principal

Answer 11

Annuities are intended to create an estate

Question 12

Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract’s:
Surrender charge
Death benefit
Cash refund
Income period

Answer 12

Income period

Question 13

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
Nonparticipating life insurance policy
Participating life insurance policy
Divisible surplus life insurance policy
Straight life insurance policy

Answer 13

Participating life insurance policy

Question 14

What is known as the immediate specific event causing loss and giving rise to risk?
Peril
Hazard
Loss factor
Liability

Answer 14

Peril

Question 15

Under a contract of adhesion:
There is the potential of an unequal exchange of value
The insurer’s obligations are dependent upon certain acts of the insured individual
The terms must be accepted or rejected in full
Only one party makes any kind of enforceable promise

Answer 15

The terms must be accepted or rejected in full

Question 16

Which of the following is NOT considered to be an act of fraud?
Collecting a premium for insurance that is not provided
Collecting a charge for insurance that is less than the charge applicable to that insurance
Misappropriate or unreasonably withhold premiums or returned premiums
Willfully collecting a premium that exceeds the amount of the actual premium

Answer 16

Collecting a charge for insurance that is less than the charge applicable to the insurance

Question 17

Terminally-ill life insurance may sell their policy at a discount to a third party. This type of agreement is called a:
Annuitized settlement
Life settlement
Accelerated benefit
Nonforfeiture value

Answer 17

Life settlement

Question 18

The double indemnity provision in a life insurance policy pertains to an insured’s death caused by:
Sickness
Suicide
Accident
War

Answer 18

Accident

Question 19

Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake?
Reinstatement clause
Entire contract clause
Incontestable clause
Nonforfeiture clause

Answer 19

Incontestable clause

Question 20

A type of insurer that is owned by its policy owners is called:
Domestic
Mutual
Stock
In-house

Answer 20

Mutual

Question 21

Fixed period settlement options are considered to be a form of:
Cash value loan
Variable life policy
Annuity
Endowment

Answer 21

Annuity

Question 22

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
Nonpraticipating life insurance policy
Participating life insurance policy
Divisible surplus life insurance policy
Straight life insurance policy

Answer 22

Participating life insurance policy

Question 23

Ownership of a life insurance policy may be temporarily transferred with an:
Collateral assignment
Absolute assignment
Transferable assignment
Beneficiary assignment

Answer 23

Collateral assignment

Question 24

Which of these will have the highest monthly payout upon annuitization?
Life with period certain
Joint and survivor life
Straight life
Joint life

Answer 24

Straight life

Question 25

A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? Reduction of premium dividend option Extended term option Paid-up option Cash dividend option

Answer 25

Reduction of premium dividend option

Question 26

What is known as the immediate specific event causing a loss and giving rise to risk? Peril Hazard Loss factor Liability

Answer 26

Peril

Question 27

A nonparticipating company is sometimes called an? Alien insurer Mutual insurer Reinsurer Stock insurer

Answer 27

Stock insurer

Question 28

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 of the total premium paid The interest earned on the accumulated cash value Nothing

Answer 28

The greater of the accumulated cash value or the total premium paid

Question 29

Which of the following is an annuity that is linked to a market related index? Market-related annuity Equity indexed annuity Deferred risk annuity Fixed-amount annuity

Answer 29

Equity indexed annuity

Question 30

A policyowner may change two policy features on what type of life insurance? Modified whole life Decreasing term life Adjustable life Whole life

Answer 30

Adjustable life

Question 31

Intentional withholding of material facts that would affect an insurance policy’s validity is called? Estoppel Concealment Adhesion Misrepresentation

Answer 31

Concealment

Question 32

Within how many days must a traditional IRA be rolled over to another IRA in order to avoid tax consequences? 30 45 60 90

Answer 32

60

Question 33

A renewable term life insurance policy can be renewed At a predetermined date or age, regardless of the insured’s health Only if the insured provides evidence of insurability Anytime at the policy owners request Typically with no change in premium

Answer 33

At a predetermined date or age, regardless of the insured’s health

Question 34

Which type of rider will waive the premium on a child’s life insurance policy if the parent paying the premium dies? Waiver of premium Juvenile waiver Guaranteed insurability Payor benefit

Answer 34

Payor benefit

Question 35

A whole life insurance policy accumulates cash value that becomes: The policy loan value with which the insured may borrow against The death benefit The source of funding for administration fees A source of funding a term rider to the policy

Answer 35

The policy loan value with which the insured may borrow against

Question 36

Which of the following BEST describes a conditional insurance contract? A contract that requires certain conditions or acts by the insured individual A contract that has the potential for unequal exchange of consideration for both parties A contract where one party adheres to the terms of the contract A contract where only one party makes any kind of enforaceable contract

Answer 36

A contract that requires certain conditions or acts by the insured individual

Question 37

An example of misrepresentation is: Offering a premium rebate or a special advantage of any kind to a consumer as an inducement to purchase a contract of insurance Making a public statement that contains false or malicious information about an insurance company Charging a different rate for someone in the same actuary class Convincing a prospective insured to purchase a policy by exaggerating the benefits of the policy

Answer 37

Convincing a prospective insured to purchase a policy by exaggerating the benefits of the policy

Question 38

Which of the following statements regarding the Fair Credit Reporting Act is TRUE? An insurer does not need to notify the applicant if an application is denied An insurer does NOT need to discuss any credit history consistencies with the applicant An insurer does NOT need to inform the applicant about the scope of the investigation An insurer does NOT need to inform the applicant than an investigation is being conducted

Answer 38

An insurer does NOT need to discuss any credit inconsistencies with the applicant

Question 39

Twisting is Sharing commissions with other producers Replacing an insurance policy from one insurer to another based on misrepresentation Offering employment as an incentive to purchase insurance Making malicious public statements regarding an insurer’s financial condition

Answer 39

Replacing an insurance policy from one insurer to another based on misrepresentation

Question 40

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called an: Automatic premium loan Nonforfeiture option Collateral assignment Irrevocable assignment

Answer 40

Collateral assignment

Question 41

A partial surrender is allowed in which of the following life policies? Adjustable whole life Universal life Decreasing life Limited whole life

Answer 41

Universal life

Question 42

Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments? Period certain Straight life Installment refund Amount certain

Answer 42

Period certain

Question 43

All of these are characteristics of a universal life insurance policy EXCEPT: Flexible death benefit Fixed surrender value Flexible premiums Builds cash value

Answer 43

Fixed surrender value

Question 44

A non-contributory health insurance plan helps the insurer avoid: Adverse selection State compliance The underwriting process Tax deductions

Answer 44

Adverse selection

Question 45

A life insurance policy that is subject to contract interest rate is referred to as: Adjustable life Group life Term life Universal life

Answer 45

Universal life

Question 46

Level premium term life insurance policies Build cash value in a separate account Automatically convert permanent insurance at a predetermined date Automatically renew at predetermined dates Have premiums that are averaged over the policy period

Answer 46

Have premiums that are averaged over the policy period

Question 47

A person who is a nonsmoker, of average weight, and in excellent health would most likely be in which risk classification? Standard Substandard Acceptable Preferred

Answer 47

Preferred

Question 48

An individual most likely will have an insurable interest in insuring a person’s life if: An economic interest exists for the continuance of the insured’s life A financial interest exists at the time of the insured’s death There is any blood relationship with the insured A business relationship exists

Answer 48

An economic interest exists for the continuance of the insured’s life

Question 49

All of these statements concerning whole life insurance are fake EXCEPT: Policyowner can take out a policy loan up to the face amount When a whole life policy is surrendered, income taxes may be owed Coverage is normally temporary The death benefit is not affected by outstanding loans

Answer 49

When a whole life policy is surrendered, income taxes may be owed

Question 50

Andy the insured makes a deliberate lie to the insured in order to obtain a lower premium. This action is considered an act of: Subrogation Misrepresentation Malfeasance Fraud

Answer 50

Fraud