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Life Insurance Exam 01 > Life Insurance Exam 01 > Flashcards

Life Insurance Exam 01 Flashcards

1
Q

A person involved in a Viatical settlements; would use what life provision to allow for transfer for this transaction?

A

Absolute Assignment.

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2
Q

Renewable term insurance can be best described as:

A

A level death benefit with an increase in premium.

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3
Q

The guaranteed insurability option provides the ability to:

A

Purchase additional insurance regardless of insurability.

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4
Q

An individual witha low income and high insurance needs should buy what?

A

Term insurance.

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5
Q

An insured bought a $150,000, non participating whole life policy many years ago. He is now 100 years old. He has never borrowed from the policy’s cash value and made all payments when due. Policy’s cash value is what?

A

$150,000

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6
Q

Common life insurance policy riders include all of the following except:

A

Extended Term.

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7
Q

Term insurance is typically characterized by what?

A

Low premiums and no cash value

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8
Q

The payor rider on a juvenille life policy provides that if the payor dies or becomes disabled before the insured juvenille reaches the age specified on the policy, what occurs?

A

Insurer will make the payments until the insured juvenille reaches a specified age.

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9
Q

What is the purpose of “key person” life insurance?

A

To cover decreased business earnings due to death of a key employee.

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10
Q

A person may be coveredunder social security benefits,if they have earned six creditsout of the last 13 quarters. Thisperson would be considered

A

Currently insured.

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11
Q

Accidental death riders is alsoknown as what?

A

Double indemnity

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12
Q

Which provision will pay aportion of the death benefitprior to the insured’s death dueto a serious illness?

A

An irrevocable beneficiary has a vested right thatneither the policy owner nor his creditors can impairwithout the beneficiary’s consent

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13
Q

An applicant has purchased a$500,000 home. His monthlymortgage payment is $1,500per month for 30-yearmortgage. In order to protecthis family from paying themortgage upon his death,which of the policy listedbelow would have the lowestpremium?

A

Decreasing term.

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14
Q

An applicant has purchased a$500,000 home. He is currentlypaying $1,500 per month for his30-year mortgage. In order toprotect his beneficiary frompaying the mortgage upon hisdeath, which of the followingwould pay an amount equal tothe outstanding balance of themortgage?

A

Mortgage redemption.

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15
Q

All of the following statementsabout contingent beneficiariesare true except:

A

The contingent beneficiary shares death proceedsequally with the primary beneficiary

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16
Q

The insured is totally andpermanently disabled. Theinsured’s policy continues inforce without the payment of apremium because the policycontains what?

A

Waiver of premium.

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17
Q

An annuity that may be used tohelp fund retirement in a fewyears maintains a “separateaccount”. The owner purchases”accumulation units”. This iscalled a type of annuity.

A

Variable annuity

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18
Q

The Employee RetirementIncome Security Act of 1974(ERISA) mandates requiringplan sponsor to provideparticipants with what?

A

Plan descriptions & benefit statements

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19
Q

All of the following statementsabout the election of a lifeinsurance policy’s settlementoptions are true EXCEPT:

A

If not settlement option is chosen, the proceeds areautomatically paid to the policy owner’s estate.

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20
Q

Which flexible policy can offera guarantee of mortality andexpenses, but not interest?

A

Universal life.

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21
Q

A $50,000 whole life policywith a cash value of $10,000has been in force for 11 years.The policy owner is unable tocontinue premium payments. Ifthey select the reduced paid-up non-forfeiture option thisoption would provide:

A

The cash value is used to up purchase a $20,000paid-up policy.

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22
Q

Which of the following is a truestatement regarding the socialsecurity (OASDHI) program?

A

The program provides only a minimum floor ofincome. Individuals are expected to supplement thiswith their own personal programs.

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23
Q

A man has been diligent ininvesting money for hisretirement. His total paymentsinto a tax deferred annuity are$100,000. He is now ready totake it out, and the insurancecompany that issued theannuity guarantees an annualpayment for $8,000 fo theremainder of his life. Hisexpected payout over hislifetime is $200,000. How muchof each year’s annuity paymentis taxable?

A

$4,000.

24
Q

If the proposed insured diesbefore the policy is issued, yetthey received a conditionreceipt, the company will orwill not do what?

A

Will pay policy proceeds, if the insured would havebeen accepted and policy would have been issuedwhether the insured had lived or not.

25
Q

All of the following statementsabout survivorship lifeinsurance are true, EXCEPT:

A

The policy face amount is paid out only upon thedeath of the first insured to die.

26
Q

If a dependent child coveredby a group life plan is notattending full-time schooling,coverage under the plan may continue

A

20.

27
Q

Making the insured “whole”again after a loss, is bestdefined by the following:

A

Principle of Indemnity

28
Q

What age is considered anelder in California?

A

65

29
Q

Policy provision, which comesinto effect when insured andprimary beneficiary die insimultaneous accident with noevidence who died first, isknown as what?

A

Common disaster clause

30
Q

When the death benefit is paidas a lump sum, the benefits are:

A

Non-taxable.

31
Q

The adjustments that an insurermakes in a cash value accountin a universal life policy eachtime a payment is madeincludes all of the following EXCEPT:

A

Subtract the policy surrender charges.

32
Q

Which of the following is acorrect statement about lifeinsurance policy types?

A

The initial premium for term insurance is lower thanthe initial premium for whole life insurance.

33
Q

Which of the followingsupports the MedicalInformation Bureau?

A

Both Life & Health Insurance Companies.

34
Q

Cost of living rider on a policywill provide what?

A

Face amount of the contract will increase accordingto the changes to the CPI, for an additionalpremium.

35
Q

Under ERISA, there is fiduciaryresponsbility between:

A

Plan sponsor and employees.

36
Q

All of the following are trueabout life insurance policiesand federal income taxationEXCEPT:

A

Annuity death benefits are totally exempt fromtaxation.

37
Q

Identify the statement that istrue about contributory grouplife insurance:

A

The employee will contribute to the premium payments.

38
Q

From the descriptions below,which one best identifies aterm policy?

A

Each year the premium increases as the insuredgrows older. After several years the coverage andpremiums end simultaneously. There is no cashvalue.

39
Q

All of the following are reasonfor an individual to purchaseordinary life insurance EXCEPT

A

To have funds that can supplement Social Securityat retirement.

40
Q

When life income, joint life, lifeincome period certain or liferefund, is selected as asettlement option, which of thefollowing answers describesthe amount the insurer will pay:

A

The insurer can not determine how much, will bepaid to a beneficiary or annuitant.

41
Q

In the life insurance planningprocess, the “blackout period”is considered what?

A

Period of time when a surviving spouse does notreceive any Social Security benefits.

42
Q

From the choices below, whichparty has the right to borrowfrom the policies cash value?

A

The policy owner.

43
Q

All of the following statementsapply to a “Family IncomePolicy” EXCEPT:

A

It affords a minimal amount of coverage on eachfamily member.

44
Q

A person purchased a$1,000,000 whole life policy atage 24. She added a rider tothe policy that allows her topurchase additional amounts oflife insurance without evidenceof insurability at age 30, 33, 36,39, and 42. Which rider didyour client buy?

A

A Guaranteed insurability rider.

45
Q

Which policy options are “Paid-up additions”?

A

Dividend options.

46
Q

Which of the followingprovisions are used to allow alife insurance policy to use as adefense against a death claimsubmitted within the first twoyears of the policy purchase.

A

Entire contract provision

47
Q

When does an agent have theauthority to change policy provisions?

A

An agent never has the right to change any part ofthe policy.

48
Q

When the policy owner wantsto change the beneficiary, whohas to sign on an irrevocablebeneficiary?

A

The insured and irrevocable beneficiary agreeing together.

49
Q

When converting a term policyto a whole life policy at theinsured’s attained age, the cashvalue of the policy at age 65would best described in whichof the following answers:

A

Cash values will be lower than if ordinary life hadbeen purchased at original age.

50
Q

A “Family Maintenance Policy”is a combination of which ofthe following policies?

A

Level term rider on whole life insurance policy.

51
Q

All of the following are usedfor substandard risk EXCEPT

A

A preferred rating based on a persons age, health,habits, and occupation.

52
Q

What is the purpose ofsettlement options?

A

Provides methods for distributing policy proceeds.

53
Q

The insured’s death was as aresult of suicide during thesuicide restricition period, howmuch will the insurer pay?

A

Pay an amount equal to the total premium up to point of suicide.

54
Q

In group “life” plans, adependent child attending aneducational institution full timemay be covered until whatage?

A

Age 24.

55
Q

What three major categoriesdo life underwriters use tobase life insurance premiums?

A

Mortality, Interest, and Expenses.

56
Q

The person whose life is theobject of a life insurance policyis:

A

Insured.

57
Q

A Life annuity with a 10 yearperiod will pay:

A

Guaranteed 120 months and Income for Life.

Life Insurance Exam 01 (2 decks)

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