Life - Test Flashcards
What does “level” refer to in level term insurance
A. face amount
B. premium
C. cash value
D. interest rate
Face amount
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
A. nonforfeiture option
B. nontaxable exchange
C. settlement option
D. rollover
settlement option
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
A. contract of adhesion
B. legal purpose
C. consideration
D. acceptance
consideration
All of the following information about a customer must be used in determining annuity suitability EXCEPT
A. Financial experience
B. Tax status
C. Beneficiary’s Age
D. Annual income
Beneficiary’s age
What kind of policy allows withdrawals or partial surrenders
A. 20-pay life
B. Term life
C. Universal life
D. Variable whole life
Universal life
Which two terms are associated directly with the premium?
A. Renewable or convertible
B. Term or permanent
C. Fixed or variable
D. Level or flexible
Level or flexible
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT
A. Destroy the application and complete a new one
B. Erase the incorrect answer and record the correct answer
C. Note on the application the reason for the change
D. Draw a line through the first answer, record the correct answer, and have the applicant initial the change.
Erase the incorrect answer and record the correct answer
An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do?
A. Nothing; proof of insurability is never required in group policies
B. Sign a statement of continued good health
C. Join during the open enrollment period
D. Provide medical records to the insurer
Join during the open enrollment period
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consume report
A. Must be informed of the source of the report
B. Must be advised that a copy of the report is available to anyone who requests it
C. Are entitled to obtain a copy of the report from the party who ordered it
D. May sue the reporting agency in order to get inaccurate data corrected
Must be informed of the source of the report
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
A. Life planning
B. Juvenile protection provision
C. Survivor protection
D. Survivorship Insurance
Survivor protection
If the owner of a whole life policy who is also the insured does at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
A. A death benefit equal to the cash value of the policy
B. The face amount minus the premiums that would have been collected until the insured reached the age of 100
C. A full death benefit
D. 50% of the death benefit
A full death benefit
Which of the following is NOT a type of whole life insurance
A. Straight life
B. Limited life
C. Single premium
D. Level term
Level term
In increasing and decreasing term policies, which policy component fluctuates during the policy term?
A. Premium
B. Death benefit
C. Cash value
D. Nonforfeiture values
Death benefit
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
A. the policyowner can specify the way proceeds are split in the policy
B. The proceeds will be split evenly between the two beneficiaries
C. Life insurance policies may have only one beneficiary
D. the way proceeds are split between beneficiaries is decided by which type of policy is chose
the policy owner can specify the way proceeds are split in the policy
All of the following statements about equity index annuities are correct EXCEPT
A. the interest rate is tied to an index such as the Standard & Poor’s 500
B. they must invest on a more aggressive basis aiming for higher returns
C. they have a guaranteed minimum interest rate
D. The annuitant receives a fixed amount in return
the annuitant receives a fixed amount of return
Which of the following explains the policyowner’s right to change beneficiaries, choose benefit payment options, and assign the policy?
A. owner’s rights
B. assignment rights
C. the entire contract provision
D. the consideration clause
the owner’s rights
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
A. equity indexed universal life
B. universal life - option a
C. universal life - option b
D. variable universal life
universal life - option a
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)
A. fraternal association
B. aleatory contract
C. executive bonus
D. key person policy
Executive bonus
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
A. 5 days
B. 3 days
C. 10 days
D. 7 days
5 days
A person requests that an insurance company quit sending hi e-mail solicitations. According to the law, the company has 10 days to stop e-mailing the complainant. However, the company sends him four more e-mails after that time limit has expired. Which of the following is true?
A. The company will be fined $6,000
B. The company will not be penalized, but it will put on a public “warning” list.
C. The company will be asked to cease business operations for 10 days
D. The company will be fined at least $250 for each e-mail
The company will be fined at least $250 per email
Adverse Selection is best described as
A. Poor choices of applicants to be covered
B. Only offering coverage to good risks
C. Risks with higher probability of loss seeking insurance more often than other risks
D. Underwriters slanting the odds in favor of the company
Risks with higher probability of loss seeking insurance more often than other risks
All of the following violations may result in an agent’s imprisonment EXCEPT
A. Embezzling funds from the insurer
B. Engaging in the business of insurance after being convicted of breach of trust
C. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
D. Knowingly obtaining information about a consumer under false pretenses
Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
What piece of legislation requires that any commercial e-mail must contain an opt-out mechanism?
A. CAN-SPAM
B. Anti-SPAM Amendment
C. Opt-out
D. AZ-SPAM
CAN-SPAM
Which of the following entities established the Do-Not-Call Registry?
A. The NAIC
B. The Consumer Protection Agency
C. The Better Business Bureau
D. The Federal Trade Commission
The Federal Trade Commission
Representations are written or oral statements made by the applicant that are
A. immaterial to the actual acceptability of the insurance contract
B. considered true to the best of the applicant’s knowledge
C. Found to be false after further investigation
D. Guaranteed to be true
Considered true to the best of the applicant’s knowledge
Which of the following are the authorities that an agent can hold?
A. apparent and allowed
B. primary and secondary
C. express and implied
D. authorized and admitted
Express and implied
In case of a loss, the indemnity provision in life insurance policies
A. pays the insured a percentage of the loss about and beyond the loss
B. allows the insured to collect 20% more than the actual loss
C. restores an insured person to the same financial state as before the loss
D. pays the insured as much as 95% of the loss
restores an insured person to the same financial state as before the loss
Hazard is best defined as
A. neglect to communicate a material fact
B. a deliberate attempt to deceive
C. something that increases the risk of loss
D. The uncertainty of loss
something that increases the risk of loss
An insurance contract must contain all of the following to be considered legally binding EXCEPT
- offer and acceptance
- beneficiary’s consent
- consideration
- competent parties
beneficiary consent
Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called
- material misrepresentations
- fraudulent statements
- common errors
- warranties
material representations
Which of the following is NOT an essential element of an insurance contract?
- counteroffer
- legal purpose
- agreement
- consideration
counteroffer
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
- $100 per violation
- $1,000
- revocation of license
- $2,500
$2,500
In insurance, an offer is usually made when
- the agent hands the policy to the policyholder
- the insurer approves the application and receives the initial premium
- an applicant submits an application to the insurer
- an agent explains a policy to a potential applicant
An applicant submits an application to the insurer
A key person insurance policy can pay for which of the following
- workers compensation
- loss of personal income
- costs of training a replacement
- hospital bills of the key employee
costs of training a replacement
When is the earliest a policy may go into effect?
- after the underwriter reviews the policy
- when the first premium is paid and the policy has been delivered
- when the insurer approves the application
- when the application is signed and a check is given to the agent
when the application is signed and a check is given to the agent
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
- the gender of the applicant
- whether an insurable interest exists between the individuals
- which individual will pay the premium
- the type of policy requested
whether an insurable interest exists between the individuals
Whose responsibility us it to make certain that an application for insurance is filled out completely and correctly?
- the insurance company
- the producer
- the beneficiary of the applicant
- the applicant
the producer
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
- the benefit is received tax free
- the benefit is subject to the exclusionary rule
- the benefit is received as taxable income
- IRS has no jurisdiction
the benefit is tax free
Which of the following is an example of liquidity in a life insurance contract?
- the money is a savings account
- the cash value available to the policyowner
- the flexible premium
- the death benefit paid to the beneficiary
the cash value available to the policyowner
In the underwriting process, it is determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium.
- it will likely be lower because the applicant is a preferred risk
- the applicant’s habits and health do not affect the premiums
- it will likely be the average premium issued to standard risk
- it will likely be higher because the applicant is a substandard risk
it will likely be higher because the applicant is a substandard risk
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy’s effective date?
- the date of application
- the date of policy delivery
- the date of medical exam
- the date of issue
the date of medical exam
Which of the following is NOT rue regarding the needs approach method of determining the value of an individual’s life?
- coverage is based on the predicted needs of the family
- need is predicted using the number of years until the insured’s retirement
- the death of an insured must be premature
- it must be assumed that the death of the insured will occur immediately
the need is predicted using the number of years until the insured’s retirement age
Which of the following is a risk classification used by underwriters for life insurance?
- poor
- normal
- Excellent
- Standard
standard
Which is the primary source of information used for insurance underwriting?
- private investigations
- medical records
- application
- application interviews
application
A producer must do all of the following when delivering a new policy to the insured EXCEPT
- collect any premium due
- explain the policy provisions, riders, and exclusions
- disclose commissions earned from the sale of the policy
- explain the rating procedures if the policy is rated differently than applied for
disclose commissions earned from the sale of the policy
Which of the following best describes the MIB?
- it is a government agency that collects medical information on the insured from the insurance companies
- it is a member organization that protects insured against insolvent insurers
- it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance
4.it is a rating organization for health insurance
it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance
Which of the following is NOT an example of a valid insurable interest?
- child in parents’ lives
- business partners in each other’s lives
- debtor in the life of the creditor
- employer in key employee’s life
debtor in the life of the creditor
All of the following are duties and responsibilities of producers at the time of application EXCEPT
- probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information
- change any incorrect statement on the application by personally initialing next to the corrected statement
- check to make sure that there are no unanswered questions on the application
- explain the nature and type of any receipt the producer is giving to the applicant
change any incorrect statement on the application by personally initialing next to the corrected statement
A domestic insurer issuing variable contract must establish one or more
- general accounts
- annuity accounts
- liability accounts
- separate accounts
separate accounts
which of the following statements is correct regarding a whole life policy?
- the policyowner is entitled to policy loans
- the death benefit may increase or decrease during the policy period
- the policy premium is based on the attained age
- cash value is not guaranteed
the policyowner is entitled to policy loans
to sell variable life insurance policies, an agent must receive all of the following EXCEPT
- FINRA registration
- SEC registration
- A life insurance license
- A securities license
SEC registration
