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Question 1

What is the limit of liability in a term life insurance policy?

Answer 1

The face amount of the policy

Question 2

A participating life insurance policy is defined as a contract that

Answer 2

Allows the policyowner to receive a share of surplus in the form of policy dividends

Question 3

The number of deaths during a year compared with the total number of persons exposed in the class is known as the

Answer 3

Mortality rate

Question 4

Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual’s home?

Answer 4

Mortgage redemption

Question 5

Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual’s home?

Answer 5

Mortgage redemption

Question 6

An agent must submit all of the following to the insurer EXCEPT a

Answer 6

A copy of all printed communications used for the presentation

Question 7

An agent must submit all of the following to the insurer EXCEPT a

Answer 7

A copy of all printed communications used for the presentation

Question 8

An agent’s appointment with an insurer will be discontinued in all of the following circumstances EXCEP

Answer 8

Another insurer submits an appointment application

Question 9

The process by which an insurer decides whether to issue requested insurance is called

Answer 9

Underwriting

Question 10

Which provision in a life insurance contract prohibits a beneficiary from assigning his or her interest in the policy proceeds?

Answer 10

Spendthrift clause

Question 11

What is the amount of the penalty tax imposed on premature payments under annuity contracts?

Answer 11

10%

Question 12

Which of the following information is not required to be communicated in a life insurance contract?

Answer 12

Personal judgment

Question 13

How can partners guarantee a market for their share of the business in the event of death?

Answer 13

Buy-sell agreements

Question 14

What is the purpose of key person insurance?

Answer 14

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

Question 15

Your client has just bought a new home which he has financed with a $150,000, 7.5% interest, 30 year bank loan. He would like to be sure that if he dies prematurely, the unpaid balance of the mortgage would be paid. He wants a policy that will cover the mortgage balance - no more, no less - anytime during the life of the mortgage. Which policy is designed to meet this need?

Answer 15

Decreasing term policy

Question 16

A life insurance policy written after 1988 that fails to meet the seven-pay test is known as

Answer 16

A modified endowment contract

Question 17

The California Insurance Code requirements regarding the return of life or annuity contracts issued to seniors

Answer 17

Gives a senior at least 30 days to return specified life and/or annuity contracts for a full refund

Question 18

Benefits under Social Security are available only for workers who are

Answer 18

Fully insured

Question 19

A contract that restores an injured party to the condition that was present before the loss is

Answer 19

An indemnity agreement

Question 20

An insured replaces an existing annuity with a new one and must pay a surrender charge for canceling the existing annuity. The new policy holds no greater financial benefits to the insured than the existing contract. This is an example of

Answer 20

An unnecessary replacement