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Life Insurance Exam > Readiness Exam 2 > Flashcards

Readiness Exam 2 Flashcards

1
Q

And insured pays $1200 annually for her life insurance premium. The insured applies this year is $300 worth of accumulated dividends to the next year’s premium, thus reducing it to $900. What option does this describe?

A

Reduction of premium

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2
Q

What determines the length of time that benefits will be received under the Fixed-Amount settlement option?

A

Size of each installment

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3
Q

All of the following statements are correct regarding credit life insurance except?

A
  1. The amount of insurance permissible is limited per borrower.
  2. Benefits are paid to the borrowers beneficiary.**
  3. Benefits are paid to the creditor.
  4. Premiums are usually paid by the borrower.
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4
Q

An insured buys a five year level premium term policy with a face amount of $10,000. The policy also contains a renewability and convertibility options. When the insured renews the policy in five years, what will happen to the premium?

A

It will increase because the insured will be 5 years older than when the policy was originally purchased.

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5
Q

When an insured begins underwriting procedures for an applicant, what will be the main source for its underwriting information?

A

Application

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6
Q

Variable whole life insurance is based on what type of premium?

A

Level fixed

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7
Q

Which of the following products requires a securities license?

A
  1. Equity indexed annuity.
  2. Deferred annuity.
  3. Variable annuity.**
  4. Fixed annuity.
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8
Q

Any person who knowingly attempts to obtain money, goods, or any other thing of value with the intent to cheat & defraud is guilty of?

A

A felony

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9
Q

Which of the following is not a duty of the commissioner?

A
  1. Develop insurance rates.**
  2. And force violations of the insurance code.
  3. Regulate insurance rates.
  4. License insurance, companies, agents, and brokers.
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10
Q

Which of the following is not true regarding the accumulation period of an annuity?

A
  1. It is also known as the pay-in period.
  2. It is the period over which the owner makes payments into an annuity.
  3. It would not occur in a deferred annuity.**
  4. It is the period during which the annuity payments earn interest.
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11
Q

What protects consumers against the circulation of inaccurate or obsolete personal or financial information?

A

The fair credit reporting act

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12
Q

Which of the following is true about nonforfeiture values?

A
  1. Policy owners do not have the authority to decide how to exercise nonforfeiture values.
  2. They are optional provisions.
  3. They are required by state law to be included in the policy.**
  4. A table showing nonforfeiture values for the next 10 years must be included in the policy.
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13
Q

Which of the following statements is not true concerning insurable interest as it applies to life insurance?

A
  1. A married person has an insurable interest in their spouse.
  2. An individual has an insurable interest in their own life.
  3. A debtor has an insurable interest in the life of a lender.**
  4. Business partners have an insurable interest in each other.
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14
Q

What product will protect an individual from outliving their money

A

Annuity

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15
Q

Graded premium whole life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premium will what?

A

Be level thereafter

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16
Q

Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insured’s death?

A
  1. A minor son of the insured.**
  2. The former wife of the deceased insured.
  3. The wife of the deceased insured.
  4. A business partner of the insured.
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17
Q

Which of the following is correct regarding credit life insurance?

A
  1. It ensures the life of creditor.
  2. It has a maximum term of 20 years.
  3. It is purchased on an installment basis.
  4. It ensures the life of a debtor.**
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18
Q

What is the basic source of information used by the company and the risk selection process?

A

Application

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19
Q

The primary beneficiary of her husband’s life policy found that no settlement option with stated in the policy on the date of her husband’s death. Who will select the settlement option in this case?

A
  1. The court.
  2. The beneficiary.**
  3. The insurance company.
  4. The benefit must be paid in a lump sum.
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20
Q

As a field underwriter, a producer is responsible for all of the following tasks, except?

A
  1. Solicit business that will fall within the insures underwriting guidelines.
  2. Help prevent adverse selection.
  3. Issue the policy that is requested.**
  4. Obtain appropriate signatures on the application for insurance.
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21
Q

Which of the following is a feature of a variable annuity?

A
  1. But if it payment amounts are not guaranteed.**
  2. Securities license is not required.
  3. Interest rate is guaranteed.
  4. Payments into the annuity are kept in the companies general account.
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22
Q

What is the waiting period on a waiver of premium rider in life insurance policies?

A

6 months

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23
Q

The medical information bureau was created to protect?

A

Insurance companies from adverse risk selection by high-risk persons

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24
Q

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy except ?

A
  1. Claims incurred before cancellation must be honored.
    2 unearned premiums are retained by the insurance company.**
  2. An insurance company may cancel the policy at any time.
  3. The insurer must provide the insured a written notice of the cancellation.
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25
Q

When Susie applied for insurance and paid the initial premium on August 14 she was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than a standard. Susie was killed in an automobile accident on August 22 before the policy was issued. In this case, the insurance company will?

A

Issue the policy anyway and pay the face value to the beneficiary

26
Q

If an applicant for a life insurance policy is found to be substandard risk, the insurance company is most likely to what?

A

Charge a higher premium

27
Q

The insured is also the policy owner of a whole life policy. What age must be insured attain in order to receive the policies face amount?

A

Age 100

28
Q

What is the term for how frequently a policy owner is required to pay the policy premium?

A

Mode

29
Q

All of the following acts constitute transacting insurance, except?

A
  1. Preliminary insurance negotiations.
  2. Delivering insurance contracts.
  3. Collecting premiums.
  4. Obtaining an insurance license.**
30
Q

All of the following information about the applicant has identified in the general information section of a life insurance application, except?

A
  1. Education.**
  2. Age.
  3. Gender
  4. Occupation.
31
Q

And insured has a level term insurance policy that is guaranteed renewable and also includes a reentry provision. The reentry provision would allow the insured to renew the policy and what?

A

Pay a lower renewal premium by proving insurability

32
Q

What determines the cash value of a variable life policy?

A

The performance of the policy portfolio

33
Q

In classifying a risk the home office underwriting department will look at all of the following except?

A
  1. Applicants past medical history.
  2. Applicants past income.**
  3. Applicants present physical condition.
  4. Applicants present occupation.
34
Q

What is the name for the owner of a life insurance policy who enters into a viatical settlement contract?

A

Viator

35
Q

A license may be denied, suspended, or revoked if a licensee performs any of the following acts except?

A
  1. Materially miss represent an insurance policy.
  2. Conceals coverage due to nonpayment of premium.**
  3. Engages in a fraudulent transaction.
  4. Manages insurance outside the scope of the license.
36
Q

Any life insurance policy that accumulates cash values must include a provision for policy blondes after a certain period of time. In the state of Oklahoma that period of time is when?

A

After 3 full years of premium payments

37
Q

What characteristic makes whole life permanent protection?

A

Coverage until death or age 100

38
Q

Which premium payment mode incurs the lowest overall payment?

A

Annual

39
Q

What licensee is not compensated directly related to the amount of insurance sold?

A

Insurance consultant

40
Q

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 a medical exam. If the policy is issued, what would be the policies effective date?

A

Date of the medical exam

41
Q

What is the maximum allowed amount of aggregate commissions earned by a producer on a controlled business in a 12 month period?

A

25%

42
Q

What best defines target premium in a universal life policy?

A

The recommended amount to keep the policy in force throughout its lifetime

43
Q

Which of the following is not allowed in credit life insurance?

A
  1. Creditor requiring that a debtor has a Life Insurance.
  2. Creditor requiring that a debtor buys insurance from a certain insurer.**
  3. Creditor becoming a policy beneficiary.
  4. Creditor having a controlled collateral assignment on the policy.
44
Q

Who is the beneficiary and credit life insurance?

A

Creditor

45
Q

All of the following are true statements regarding the accumulation at interest option,except?

A
  1. The annual dividend is retained by the company.
  2. The interest is credited at a rate specified by the policy.
  3. The interest is not taxable since it remains inside the insurance policy.**
  4. The policyholder has the right to withdraw the accumulations at any time.
46
Q

And insured committed suicide one year after his life insurance policy was issued. The insurer will what?

A

Refund the premiums paid

47
Q

Which option is being utilized when the insurer accumulates dividends and interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

A

Paid-up option

48
Q

On a participating insurance policy, issued by a mutual insurance company, dividends paid to the policy holders are what?

A

Nontaxable since the IRS treats them as a return of a portion of the premium paid

49
Q

All of the following would be considered an insurance transaction except?

A
  1. Negotiating coverage.
  2. Effectuating an insurance contract.
  3. Soliciting a policy.
  4. Obtaining an insurance license.**
50
Q

What would provide an underwriter with information concerning an applicants health history?

A

Medical information bureau

51
Q

Which of the following would be considered an unfair claims settlement practice?

A
  1. Requesting the insured to submit a sign proof of loss of statement, after the insured has already verbally advise the insurer of the claim.
  2. Delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation.
  3. Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered.**
  4. Requesting the insured swear under oath concerning the facts of the claim.
52
Q

What allows the insurer to relieve a minor insured from premium payments if the minors parents have died or become disabled?

A

Payor benefit

53
Q

When I producer was receiving a potential customers coverage, written by another company, the producer made several remarks that were maliciously critical of that other insure. The producer could be found guilty of what?

A

Defamation

54
Q

Which provision of a life insurance policy states the insurance duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

A

Insuring clause

55
Q

What is the other term for the cash payment settlement option?

A

Lump sum

56
Q

In a single employer group plan, what is the name of the policy issued to the employer?

A

Master contract

57
Q

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. What will likely happen to the premium?

A

It will likely be higher because the applicant is a substandard risk

58
Q

Level term insurance provides a level death benefit in a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be what?

A

Adjusted to the insurance age of the time of renewal

59
Q

Which of the following statements is true concerning the accidental death rider?

A
  1. It will pay double or triple the face amount.**
  2. It is also known as a triple indemnity rider.
  3. It is only available in group insurance.
  4. The rider is only available to insurance over the age of 65.
60
Q

Circulating deceptive sales material to the public is what type of unfair trade practice?

A

False advertising

Life Insurance Exam (2 decks)

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