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Life Insurance 3 > Life Insurance 3 > Flashcards

Life Insurance 3 Flashcards

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1
Q

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

A

Adjustable Life

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2
Q

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

A

60

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3
Q

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

A

Limited pay policy

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4
Q

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

A

Annuity

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5
Q

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

A

Human life value approach

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6
Q

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

A

Stock insurer

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7
Q

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

A

Accumulate without interest

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8
Q

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

A

Accidental death

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9
Q

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

A

Defined contribution plan

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10
Q

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

A

Qualified retirement annuity

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11
Q

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

A

Annuities are intended to create an estate

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12
Q

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

A

Income period

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13
Q

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

A

Participating life insurance policy

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14
Q

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

A

Peril

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15
Q

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

A

The terms must be accepted or rejected in full

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16
Q

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

A

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

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17
Q

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

A

Life settlement

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18
Q

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

A

Accident

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19
Q

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

A

Incontestable clause

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20
Q

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

A

Mutual

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21
Q

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

A

Annuity

22
Q

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

A

Participating life insurance policy

23
Q

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

A

Collateral assignment

24
Q

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

A

Straight life

25
Q

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

A

Reduction of premium dividend option

26
Q

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

A

Peril

27
Q

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

A

Stock insurer

28
Q

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

A

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

29
Q

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

A

Equity indexed annuity

30
Q

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

A

Adjustable life

31
Q

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

A

Concealment

32
Q

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

A

60

33
Q

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

A

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

34
Q

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

A

Payor benefit

35
Q

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

A

The policy loan value with which the insured may borrow against

36
Q

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

A

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

37
Q

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

A

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

38
Q

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

A

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

39
Q

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

A

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

40
Q

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

A

Collateral assignment

41
Q

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

A

Universal life

42
Q

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

A

Period certain

43
Q

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

A

Fixed surrender value

44
Q

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

A

Adverse selection

45
Q

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

A

Universal life

46
Q

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

A

Have premiums that are averaged over the policy period

47
Q

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

A

Preferred

48
Q

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

A

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

49
Q

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

A

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

50
Q

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

A

Fraud

Life Insurance 3 (3 decks)

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