If a premium is not paid at the time an application for life insurance is completed, when will
coverage go into effect?
A. At the time of application
B. When the application is approved and the policy is issued
C. As of the date of the conditional premium
D. When the producer delivers the policy and collects the premium
All of the following are types of premium receipts, EXCEPT:
A. Binding receipt
B. Approval conditional receipt
C. Countersignature receipt
D. Insurability conditional receipt
C. Countersignature receipt
What type of policy would you suggest your client purchase if she desires death
protection and a cash value build-up but is presently of limited means?
A. Whole life
B. Modified life
C. Universal life
D. Straight life
B. Modified life
All of the following are characteristics of a universal life policy, EXCEPT:
A. Fixed interest paid on cash value benefit
B. Bundled premiums
C. Adjustable death
D. Transparency
B. Bundled premiums
Which of the following types of life insurance is characterized by guaranteed coverage
but provides no guarantees with regard to cash value build-up?
A. Variable life policy
B. Universal life policy
C. Joint life policy
D. Modified life policy
A. Variable life policy
What type of life insurance policy allows insurers to adjust premiums to reflect any
changes in investment income?
A. Limited payment whole life
B. Permanent life insurance
C. Indeterminate premium whole life
D. Current assumption whole life
C. Indeterminate premium whole life
A life insurance policy which matures at the termination of a specified period is known
as:
A. Whole life policy
B. Variable life policy
C. Limited-pay policy
D. Endowment
A. Whole life policy
What type of policy did Bill buy if the contract states that the cash value will be $326 per
$1,000 of coverage in year eighteen?
A. Variable life
B. Convertible life
C. Level term
D. Whole life
D. Whole life
A family policy is a combination of:
A. Whole life and decreasing term
B. Whole life and an annuity
C. Whole life and level term
D. Whole life and increasing term
C. Whole life and level term
Paul is insured by a family income plan. The policy, purchased in 1994, includes a whole
life death benefit of $50,000 with an income rider of twenty years that will pay $1,000
per month. If Paul dies ten years after he buys this policy, what will be paid
D. $1,000 per month until the year 2014 and then the $50,000 benefit
A type of life insurance policy whose premium is initially lower than a traditional whole
life plan and increases each year for an introductory period best describes:
A. Universal life
B. Flexible premium life insurance
C. Variable life
D. Graded premium
D. Graded premium whole life
A policy covering a child characterized by an increasing death benefit at a future age with
no premium increase best describes:
A. Split life policy
B. Jumping juvenile policy
C. Payor benefit life
D. Junior endowment
B. Jumping juvenile policy
If a policy owner fails to pay the required premium by the end of the grace period, the
policy will lapse. The policy owner may request reinstatement of the lapsed policy as
long as such action is requested within what period of time following the lapse?
C. Three years
Which of the following beneficiaries is protected by the common disaster clause?
A. The primary beneficiary
B. A revocable beneficiary
C. An irrevocable beneficiary
D. The contingent beneficiary
D. The contingent beneficiary
Which of the following is true regarding an irrevocable beneficiary?
A. This designation may be changed at any time by the policy owner
B. This beneficiary has the right to receive a copy of the policy
C. This beneficiary has no rights in the policy
D. Th
B. This beneficiary has the right to receive a copy of the policy
Which of the following provisions allow the insurer to deny a claim if the insured is
killed while performing stunts in an air show?
A. Aviation exclusion
B. War exclusion
C. Exclusion provision
D. Modification provision
C. Exclusion provision
Which of the following policy provisions prevents a premium default in a cash value
policy?
A. Paid up additions
B. Automatic premium loan
C. Default provision
D. Premium payment provision
B. Automatic premium loan
Most grace periods which appear in life insurance policies provide for a period of:
A. 30 days
B. 31 days
C. 35 days
D. 60 days
B. 31 days
Which of the following policy provisions prevents an insurer from denying a death claim
in the future after the purchase of a life insurance policy?
A. Entire contract clause
B. Insuring clause
C. Consideration clause
D. Owner's rights clause
A. Entire contract clause
Alex owns a $50,000 life insurance policy. It also includes a waiver of premium and disability
income rider. If Alex is disabled for six straight months, he will begin to receive what amount of
income per month while he is disabled?
A. $250
B. $500
C. $1,
B. $500
Which of the following settlement options potentially provides a beneficiary with the greatest
benefit per $1,000 of proceeds?
A. Fixed period
B. Interest only
C. Life income
D. Fixed amount
C. Life income
A rider that pays an increasing amount of term insurance equal to the amount of total payments
made for coverage, in addition to the death benefit at the time of death, is known as a:
A. Return of cash value
B. Return of premium
C. Increasing benefits rid
B. Return of premium
All of the following are considered to be an activity of daily living, EXCEPT:
A. Dressing
B. Bathing
C. Working
D. Feeding
C. Working
Which non-forfeiture option is automatically exercised if a policy lapses with current cash value
and the insurer is unable to contact the policy owner?
A. Reduced paid-up insurance
B. Surrender for cash
C. Extended term insurance
D. Return of premium
C. Extended term insurance
A rider attached to a life insurance policy is part of the:
A. Face page of the policy
B. Incontestable provision
C. Owner's rights
D. Entire contract
D. Entire contract
In order to be eligible for long-term care benefits under a life insurance policy, the insured must
be unable to perform how many activities of daily living?
A. 2
B. 3
C. 4
D. 5
A. 2
Which of the following provides the least expensive form of life insurance protection?
A. Level term insurance
B. Decreasing term life insurance
C. Modified life insurance
D. Accidental death protection
D. Accidental death protection
An accelerated benefits rider may be added for an additional premium to a life insurance policy.
Living benefits may be paid for each of the following, EXCEPT:
A. Long-term care
B. Disability income
C. Terminal illness
D. Dread disease
B. Disability income
If a whole life policy premium is not paid by the end of the contract's grace period and the policy
contains several thousand dollars of equity, what policy option will protect the insured against a
coverage lapse?
A. The grace period
B. The automatic pre
C. The non-forfeiture benefit
Whole life policies include non-forfeiture options that are available in the event the policy owner
wishes to surrender the policy. Once a policy is surrendered it cannot be:
A. Renewed
B. Voided
C. Reissued
D. Reinstated
D. Reinstated
Each of the following riders affect the face amount of a life insurance policy, EXCEPT:
A. Cost of living rider
B. Return of premium
C. Waiver of premium
D. Accidental death
C. Waiver of premium
Which of the following types of annuities involves the use of a separate account?
A. Variable annuity
B. Fixed annuity
C. Life annuity
D. Deferred annuity
A. Variable annuity
Harry owns the Pumpkin Pub. He purchased an annuity years ago in order to provide him with
income when he retires. If Harry has a Pure Life annuity that begins to provide life income at
retirement, what will be paid to his beneficiary if he dies during th
D. Nothing, since there is no survivorship
An annuity is different from a life insurance contract in each of the following ways, EXCEPT:
A. An annuitant receiving benefits is living whereas death has to occur for a life insurance
benefit to be paid
B. An annuity has no stipulated benefit when the
C. An annuity is characterized by pre-paid financing whereas a life insurance contract is
characterized by a prepaid premium
Many annuities include surrender charges. These are charges assessed if the owner withdraws
more than specified percentage of the account value. Surrender charges are also referred to as:
A. Withdrawal expenses
B. Assessments
C. Back-end loads
D. Loading
C. Back-end loads
Which of the following best describes a fixed straight life annuity?
A. Fixed premium paying income for life
B. Predetermined income for life
C. Predetermined income with ten years guaranteed
D. Predetermined income for life with no survivorship
D. Predetermined income for life with no survivorship
Which of the following may take a loan or distribution from a fixed annuity?
A. Contract owner
B. Annuitant
C. Beneficiary
D. A non-living entity
A. Contract owner
If an individual wishes to purchase an immediate annuity, what type of premium payment plan
must he or she utilize?
A. A level premium plan
B. A single premium plan
C. A flexible premium plan
D. An immediate premium plan
B. A single premium plan
Federal and State death taxes must be paid within what period of time following the decedent's
death?
A. Six months
B. Eight months
C. Nine months
D. Twelve months
C. Nine months
When is the cash value in a Modified Endowment Contract not taxable?
A. When funds are distributed to the policy owner
B. When the policy is surrendered for its cash value
C. While it accumulates
D. While proceeds are capitalized
C. While it accumulates
The continual increase of cash value in a whole life policy:
A. Is subject to taxation when withdrawn if the policy fails the seven-pay test
B. Will never be subject to taxation
C. Will always be subject to taxation
D. Will be subject to taxation as soon
A. Is subject to taxation when withdrawn if the policy fails the seven-pay test
Which of the following statements is not true with regard to a whole life insurance policy loan?
A. A policy loan that is not repaid will be deducted from the face amount upon the death of the
insured
B. Funds borrowed against the cash savings value are t
B. Funds borrowed against the cash savings value are taxable income
Section 1035 of the Internal Revenue Code allows for the exchange of certain life insurance or
annuity products. All of the following would be permitted exchanges under this IRS regulation,
EXCEPT:
A. Exchanging a variable life policy for another variable
C. Exchanging an annuity for a life insurance policy
Which of the following is not true with regard to a 1035 Exchange?
A. It allows for the transfer or assignment of an existing policy to the insurer who replaces it with
another of like kind
B. Once begun, the exchange must be completed within thirty days
B. Once begun, the exchange must be completed within thirty days
Under a group life insurance policy, an insured is provided, as a tax-free benefit, up to what amount
of life insurance coverage?
A. $20,000
B. $25,000
C. $50,000
D. $100,000
C. $50,000
An individual may withdraw from an Individual Retirement Account, penalty-free, up to what
amount if the proceeds are to be used for the purchase of a first home?
A. $5,000
B. $10,000
C. $15,000
D. $20,000
B. $10,000
Which of the following is best suited for providing retirement benefits for a firm with 800
employees?
A. A 403(b) plan
B. A traditional IRA
C. A 457 deferred compensation plan
D. A pension plan
B. A traditional IRA
How do the earnings of a 529 savings plan grow?
A. Tax-deferred
B. Tax-exempt
C. Tax-deductible
D. Taxable
B. Tax-exempt
Which of the following may be used to fund an individual retirement account?
A. Whole life policy
B. Life paid-up at 65 policy
C. Universal life policy
D. Flexible premium annuity
D. Flexible premium annuity
All of the following are qualified plans, EXCEPT:
A. 403(b) plan
B. 501c Trust
C. 401(k) plan
D. Section 457 deferred compensation
B. 501c Trust
Which of the following describes a plan where a company buys life insurance on each partner?
A. Cross purchase plan
B. Entity plan
C. Split dollar plan
D. Stock bonus plan
B. Entity plan
Each of the following are supplements or optional coverages that may be added to HMO coverage,
EXCEPT:
A. Home health services
B. Emergency treatment
C. Long-term care
D. Pharmacy services
B. Emergency treatment
What is the function of a third party administrator?
A. To market insurance products
B. To process commissions
C. To issue insurance polices
D. To manage claims
D. To manage claims
A reciprocal is managed by which of the following?
A. A branch manager
B. A company officer
C. A fraternal
D. An attorney-in-fact
B. A company officer
Which of the following supports the theory of indemnity?
A. Exclusions
B. Reductions in coverage
C. The law of large numbers
D. No loss, no gain statutes
D. No loss, no gain statutes
An insurer owned by its policyholders without capital stock best describes?
A. A stock company
B. A mutual company
C. An alien company
D. A reciprocal company
D. A reciprocal company
All of the following are true regarding an HMO, EXCEPT:
A. Requires a prepaid premium
B. Focuses on preventive care
C. Functions on a reimbursement basis
D. Requires copayment before service is provided
C. Functions on a reimbursement basis
Disability income is one type of accident and health insurance contract. Which of the following
is covered by this type of policy?
A. Incurred medical expenses
B. Loss of income due to illness
C. Injury suffered off the job
D. Cost associated with surgery
B. Loss of income due to illness
Which of the following is offset by any benefits payable by social insurance?
A. Short term disability income insurance
B. Individual disability income insurance
C. Business overhead expense insurance
D. Business continuation insurance
A. Short term disability income insurance
Surgical expense benefits are paid according to a:
A. Reimbursement basis
B. Prepaid limitation
C. Schedule
D. Stated offset
C. Schedule
According to HIPAA, employers must make full health care coverage available immediately to
new employees who were previously covered by group health insurance at their old job for at
least how many months?
A. Six
B. Eight
C. Nine
D. Twelve
D. Twelve
An employee actively at work on the date coverage is transferred to another insurance carrier is:
A. Covered following a thirty-day waiting period
B. Covered automatically and exempt from any probationary period
C. Covered automatically but subject to a p
B. Covered automatically and exempt from any probationary period
Services provided by a nurse midwife are covered when they occur:
A. In a birthing center
B. In a skilled nursing facility
C. Prior to the policy period
D. Following the policy period
A. In a birthing center
Medicare Supplement policies must include a right to examine provision of:
A. Twenty days
B. Thirty days
C. Forty-five days
D. Sixty days
B. Thirty days
If a covered worker qualifies for disability benefits under Social Security, monthly income
benefits would begin after a waiting period of:
A. Three months
B. Five months
C. Six months
D. Eight months
B. Five months
Relief to a primary care giver is provided by:
A. Respite care
B. Home health care
C. Rehabilitation care
D. Intermediate care
A. Respite care
The waiting period that must be satisfied before premiums will be waived under an accident and
health contract is:
A. Two months
B. Three months
C. Six months
D. Nine months
B. Three months