Which of the following statements is CORRECT about the Paid-Up Additions in a participating Whole Life policy?
They are purchased on an attained age basis
A life policy is usually contestable due to material misrepresentation on the application for a period of:
2 years
Which of the following policies is an interest-sensitive form of permanent protection?
universal life
A contract that promises to pay an income to an insured until his/her death is called:
life annuity
All of the following policies may be examples of third party ownership
-group life
-split dollar life
-key employee life
Which of the following statements about a Renewable Term policy is CORRECT?
it is renewable at the option of the insured
Which of the following annuities would BEST suit the needs of a 35-year-old factory worker who is concerned about inflation and wants to establish a retirement plan?
A.A Single Premium Deferred Annuity
A.
A Single Premium Deferred Annuity
B.A Single Premi
d . a flexible premium variable annuity
A payor benefit rider provides which of the following benefits?
A.A disability income benefit payable to the payor if the payor becomes disabled
A.
A disability income benefit payable to the payor if the payor becomes disabled
B.A permanent waiver of prem
C.A temporary waiver of premium should the payor die, until the insured reaches a predetermined age
C.
A temporary waiver of premium should the payor die, until the insured reaches a predetermined a
The Waiver of Premium provision of a life policy allows the insurer to take which of the following actions?
A.Waive an insured's premiums if the insured becomes totally disabled before a certain age
A.
Waive an insured's premiums if the insured becomes to
A. Waive an insured's premiums if the insured becomes totally disabled before a certain age
If life insurance policy applicant is classified as a substandard risk, the insurance company will MOST likely:
A.issue the policy with riders
A.
issue the policy with riders
B.charge an extra premium
B.
charge an extra premium
C.require an annual medical
B. charge an extra premium
In life insurance, the Free Look provision begins on the:
A.effective date of coverage
A.
effective date of coverage
B.policy delivery date
B.
policy delivery date
C.date of application
C.
date of application
D.date that the insurer issues the policy
D.
d
B.policy delivery date
The right to change a beneficiary designation is reserved for the:
A.beneficiary
A.
beneficiary
B.policyowner
B.
policyowner
C.insurer
C.
insurer
D.insured
D.
insured
B. policyowner
An insured owns a $10,000 policy with a $4,000 cash value and a 6 percent interest rate. On January 1, the insured borrows $500 and pays one year's interest in advance. During the year, the insured does not repay any part of the loan or interest. If the i
D. $9,500
A type of annuity in which the cash values are invested in securities is called:
A.Variable
A.
Variable
B.Deferred
B.
Deferred
C.Fixed
C.
Fixed
D.Joint and survivorship
D.
Joint and survivorship
A. variable
An employer can deduct premium payments as an ordinary business expense for which of the following life coverages?
A.Buy and Sell Agreements
A.
Buy and Sell Agreements
B.Group
B.
Group
C.Key Employee
C.
Key Employee
D.Joint Life, if the business is named
B. group
Which of the following retirement plans is tax-qualified?
A.Key-person
A.
Key-person
B.Defined contribution
B.
Defined contribution
C.Section 457 deferred compensation
C.
Section 457 deferred compensation
D.Split dollar life insurance
D.
Split dollar life
B. Defined contribution
f an insured commits suicide after the Suicide clause in the insured's life insurance policy has expired, the insurer will take which of the following actions?
A.Refuse to pay the Death benefit or refund any premiums
A.
Refuse to pay the Death benefit or
D. pay the death benefit
At which of the following times MUST a life insurance applicant be informed of their rights under the Fair Credit Reporting Act?
A.During the initial appointment
B.When the insured's application is completed
C.When the policy is delivery
D.Upon initial pr
C. When the policy is delivery
If an applicant for life insurance submits a completed application to a producer without paying the first premium, coverage becomes effective when the:
A.producer accepts the application
B.applicant successfully completes the medical examination
C.insurer
D. policy is delivered and the premium paid
Federal income tax laws generally treat proceeds of life insurance policies as:
A.graduated taxes
B.deferred taxes
C.nontaxable
D.tax credits
C. nontaxable
In life insurance, insurable interest must exist at the time the:
A.producer delivers a policy
B.proposed insured has a medical examination
C.producer writes an application on a proposed insured
D.beneficiary files a claim
C.
producer writes an application on a proposed insured
In the event of an insured's death, which of the following provides an income for the family during a designated period of time followed by a lump sum death benefit?
A.Family Income rider
B.Survivorship Life policy
C.Joint Life policy
D.Modified Life poli
A. Family Income rider
Reinstatement of a life insurance policy requires an insured to take all of the following actions EXCEPT:
A.provide evidence of insurability
B.make collateral assignment to the insurer
C.pay back interest on any outstanding policy loan
D.pay all past-due
B.
make collateral assignment to the insure
If an Adjustable Life policyowner makes an additional premium payment, the policy may be affected in all of the following ways EXCEPT the:
A.premium paying period may decrease
A.
premium paying period may decrease
B.value of the Nonforfeiture Options may
B.
value of the Nonforfeiture Options may decrease
R has just graduated from law school. R knows that R's future earnings will be much higher than they are now, but wants to purchase a permanent policy now to cover future needs. Which of the following policies would BEST suit R's needs?
A.Return of Premiu
C. Modified Whole Life
he PRIMARY purpose of an inspection report is to assess an applicant's:
A.credit rating
A.
credit rating
B.personal characteristics
B.
personal characteristics
C.job performance
C.
job performance
D.health profile
D.
health profile
B. personal characteristics
When a producer submits an insurance application to the company, the producer must take all of the following actions EXCEPT:
A.submit the initial premium, if it was collected
A.
submit the initial premium, if it was collected
B.ensure any changes on the a
C. submit a completed medical information report
Which of the following statements is NOT correct about representations?
A.They can be a part of the contract.
A.
They can be a part of the contract.
B.They are true in every respect.
B.
They are true in every respect.
C.They are assumed to be accurate.
C.
B. THey are true in every sapect
An insured intentionally understates her age on her application for a life policy. At death, the insurer will take which of the following actions?
A.Refuse to pay the claim based on material misrepresentation on the application
A.
Refuse to pay the claim
C. Pay a reduced Death Benefit based on the insured's actual age
An insurance producer takes an application for a life insurance policy but does not collect the initial premium. On delivery of the policy to the proposed insured, the producer must collect the initial premium and which of the following?
A.A copy of the M
B. The insured's signed statement of continued good health
A client needs a substantial amount of protection but has limited financial resources. Which of the following insurance policies would BEST meet the client's needs?
A.Term Life
A.
Term Life
B.Adjustable Life
B.
Adjustable Life
C.Whole Life
C.
Whole Life
D
A. Term life
Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the other partner to buy 100 percent of the business interest?
A.Buy and Sell Agreement
A.
Buy and Sell Agreement
B.Key Employee Life
A. Buy and Sell Agreement
The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life policy is that the Variable Whole Life policy:
A.provides flexible premium payments
A.
provides flexible premium payments
B.allows the policyowner to borrow
C.
has the potential to earn a higher rate of return on the cash valuec
Which of the following statements is CORRECT about Group Life conversion privileges?
A.Under the COBRA law, a departing employee may elect to remain a member of the Group Life plan for a limited period of time.
A.
Under the COBRA law, a departing employee
B.
Death during the conversion period is covered even if the departing employee chose not to convert the policy.
In which of the following contracts is the Death benefit called the principal sum?
A.Survivorship Annuity
A.
Survivorship Annuity
B.Accidental Death and Dismemberment (AD&D)
B.
Accidental Death and Dismemberment (AD&D)
C.Decreasing Term
C.
Decreasing Term
B.
Accidental Death and Dismemberment (AD&D)
Which of the following provisions in a life policy specifies the manner in which proceeds will be paid to a beneficiary on the death of the insured?
A.Nonforfeiture Options
A.
Nonforfeiture Options
B.Settlement Options
B.
Settlement Options
C.Conditions
C
B. Settlement OPtions
A life insurance application is incomplete if it is missing the signature of which of the following?
A.A revocable beneficiary
A.
A revocable beneficiary
B.The president of the insurer
B.
The president of the insurer
C.The proposed insured's primary care
D. The proposed adult insured
A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an:
A.indemnity contract
A.
indemnity contract
B.investment contract
B.
investment contract
C.endowment
C.
endowment
D.annuity
D
D. annuity
Which of the following terms refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another?
A.Nonforfeiture
A.
Nonforfeiture
B.Endorsement
B.
Endorsement
C.Transfer for value
C.
Transfer for value
D. Assignment
An applicant's statements on an application are considered to be legal:
A.warranties
A.
warranties
B.representations
B.
representations
C.guarantees
C.
guarantees
D.waivers
D.
waivers
B. representations
A policyowner names his wife as the primary beneficiary of his Universal Life policy on a revocable basis. He also names his three children as his secondary beneficiaries and his estate as his tertiary beneficiary. If the policyowner's wife predeceases hi
A. The children
Which of the following group life plans requires at least 75 percent of the eligible members to participate?
A.Contributory
A.
Contributory
B.Noncontributory
B.
Noncontributory
C.Participating
C.
Participating
D.Nonparticipating
D.
Nonparticipating
A. Contributory
P wants to name her husband as the beneficiary of her life policy. However, she wishes to retain all of the rights of ownership. P should have her husband named as the:
A.irrevocable beneficiary
A.
irrevocable beneficiary
B.revocable beneficiary
B.
revoca
B. revocable beneficiary
Which of the following policy provisions provides for continuation of coverage despite nonpayment of premiums?
A.Entire Contract
A.
Entire Contract
B.Ownership clause
B.
Ownership clause
C.Nonforfeiture Option
C.
Nonforfeiture Option
D.Insuring clause
D.
C. Nonforfeiture Option
Under the Social Security Retirement Benefits, all of the following factors will influence how much a retiring individual will receive as a monthly income benefit EXCEPT the individual's:
A.age
A.
age
B."primary insurance amount"
B.
"primary insurance amo
D. sex
Which of the following policy provisions states that the application is part of the policy?
A.Entire contract
A.
Entire contract
B.Ownership clause
B.
Ownership clause
C.Nonforfeiture option
C.
Nonforfeiture option
D.Assignment clause
D.
Assignment clause
A. Entire Contract
A producer takes applications from identical twins who want to buy the same type of policy in the same amount. The insurer issues the policies as applied for, but charges a 25 percent higher premium for one of the policies. The difference in premiums is p
D. Risk classification
If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase:
A.additional coverage when the insured reaches retirement age
A.
additional coverage when the insured reaches retirement age
B.additional coverage whenever the in
C. additional coverage at specified ages
An applicant for life insurance may question the validity and source of any consumer information developed under the:
A.Medical Information Bureau Disclosure Act
A.
Medical Information Bureau Disclosure Act
B.Fair Credit Reporting Act (Insurance Informati
B.
Fair Credit Reporting Act (Insurance Information and Privacy Protection Act)
Which of the following features allows an insurance policy to remain in force for a specified number of days beyond the premium due date?
A.Reinstatement provision
A.
Reinstatement provision
B.Nonforfeiture Option
B.
Nonforfeiture Option
C.Grace Period pr
C.
Grace Period provision
Which of the following terms may be used in advertisements for life insurance?
A.Charter Life Plan
A.
Charter Life Plan
B.Universal Life Plan
B.
Universal Life Plan
C.Interest Life Plan
C.
Interest Life Plan
D.Investment Life Plan
D.
Investment Life Plan
B.
Universal Life Plan
The major difference between a mutual insurance company and a stock insurance company is the:
A.number of producers each is permitted to license
A.
number of producers each is permitted to license
B.size of the cash reserves each is required to maintain
B
D.form of ownership each company is permitted
D.
form of ownership each company is permitted
An insurance producer who makes false statements that harm the reputation of another insurance company is guilty of:
A.discrimination
A.
discrimination
B.defamation
B.
defamation
C.misrepresentation
C.
misrepresentation
D.controlled business
D.
controlled
B. defamation
All of the following provisions must be included in group life insurance policies issued in this state EXCEPT:
A.Nonforfeiture
A.
Nonforfeiture
B.Payment of Benefits
B.
Payment of Benefits
C.Suicide
C.
Suicide
D.Incontestable
D.
Incontestable
C. Suicide
In a life policy, a special benefit that prepays a portion of the death benefit during the lifetime of an insured in the event of a specified illness is called:
A.an accidental death and dismemberment benefit
A.
an accidental death and dismemberment benef
B.an acceleration of life insurance benefit
B.
an acceleration of life insurance benefit
All of the following elements must be included in a policy summary given to a purchaser of life insurance EXCEPT the:
A.names and addresses of each beneficiary
A.
names and addresses of each beneficiary
B.full name and address of the insurance company
B.
A. names and addresses of each beneficiary
The Insurance Commissioner may examine the records of an insurance company at which of the following times?
A.Only when a state court has ordered an examination
A.
Only when a state court has ordered an examination
B.Only when consumer complaints against
D.At any time the Insurance Commissioner sees fit
D.
At any time the Insurance Commissioner sees fit
A Variable Life contract must contain all of the following provisions EXCEPT:
A.Reinstatement
A.
Reinstatement
B.Nonforfeiture
B.
Nonforfeiture
C.Accidental Death
C.
Accidental Death
D.Grace Period
D.
Grace Period
C. Accidental Death
Which of the following statements is CORRECT about insurance producers who fail to satisfy the continuing education requirements?
A.They may be subject to a fine.
A.
They may be subject to a fine.
B.They may be subject to legal prosecution.
B.
They may be
C. Their licenses will be terminated
An individual may obtain a temporary insurance producer's license without passing the licensing examination if the individual:
A.is a deceased licensed producer's next of kin
A.
is a deceased licensed producer's next of kin
B.is taking insurance courses a
A.is a deceased licensed producer's next of kin
A.
is a deceased licensed producer's next of k
A producer may be guilty of misrepresentation if the producer:
A.tells an insured the deductible on a policy is less than it actually is
A.
tells an insured the deductible on a policy is less than it actually is
B.cancels a policy because of the insured's
A.tells an insured the deductible on a policy is less than it actually is
A.
tells an insured the deductible on a policy is less than it actually is
An insurance company doing business in this state must operate under:
A.an advisory board
A.
an advisory board
B.a resident board of directors
B.
a resident board of directors
C.a certificate of authority
C.
a certificate of authority
D.articles of incorp
C. a certificate of authority
An individual appointed by an insurance company to solicit applications for a policy of insurance on its behalf is known as:
A.an adjuster
A.
an adjuster
B.a consultant
B.
a consultant
C.an insurance broker
C.
an insurance broker
D.an insurance producer
D
D. an insurance producer
The Life Insurance and Annuity Replacement Rule is designed for which of the following purposes?
A.To prohibit the replacement of life insurance policies and annuities
A.
To prohibit the replacement of life insurance policies and annuities
B.To ensure tha
B.
To ensure that policyowners receive adequate information on which to base a replacement decision
Which of the following types of insurance policies is EXEMPT from the Life Insurance and Annuity Replacement Rule?
A.Group Life
A.
Group Life
B.Convertible Term Life
B.
Convertible Term Life
C.Ordinary Whole Life
C.
Ordinary Whole Life
D.Universal Life
D.
A. Group life
Which of the following persons is authorized to enforce state insurance laws?
A.The Insurance Commissioner
A.
The Insurance Commissioner
B.The state Attorney General
B.
The state Attorney General
C.The Governor
C.
The Governor
D.The state Auditor
D.
The s
A. The Insurance Commisioner
An individual who, for the purpose of collecting premiums, acts for another in negotiating a contract of insurance is considered to be:
A.a principal
A.
a principal
B.a broker
B.
a broker
C.a solicitor
C.
a solicitor
D.a producer
D.
a producer
D. a producer
The Insurance Commissioner may revoke or suspend a producer's license if the producer:
A.is no longer producing a minimum amount of business
A.
is no longer producing a minimum amount of business
B.has been indicted for a criminal offense
B.
has been indi
D.
has forged another person's name on an insurance application
In order for nonresident applicants to be eligible for an insurance producer license in this state, they MUST:
A.reside less than twenty-five miles from the state border
A.
reside less than twenty-five miles from the state border
B.hold a like license in
B.hold a like license in another state
B.
hold a like license in another state
Which of the following statements about replacement of existing life insurance is CORRECT?
A.Replacement of a policy that has been in existence for more than ten years is prohibited.
A.
Replacement of a policy that has been in existence for more than ten
D.
Both the applicant for insurance and the insurance producer must sign a statement stating whether existing insurance is to be replaced.
An insurance company formed under the laws of a state other than this state is known as:
A.a foreign company
A.
a foreign company
B.a reciprocal company
B.
a reciprocal company
C.a domestic company
C.
a domestic company
D.an alien company
D.
an alien comp
A. a foreign company
Which of the following situations is considered rebating?
A.A producer exaggerates the financial strength of the company to an insured.
A.
A producer exaggerates the financial strength of the company to an insured.
B.A producer returns a portion of the co
B.
A producer returns a portion of the commission to an insured.
Controlled business is defined as insurance a producer writes on all of the following individuals EXCEPT the producer's:
A.relatives
A.
relatives
B.employees
B.
employees
C.neighbors
C.
neighbors
D.spouse
D.
spouse
C. neighbors
Which of the following statements about Credit Life insurance is CORRECT?
A.It may be provided through a group or individual policy.
A.
It may be provided through a group or individual policy.
B.The face amount must exceed twice the amount of the debt.
B.
A.It may be provided through a group or individual policy.
A.
It may be provided through a group or individual policy.
All of the following groups are considered eligible for group life insurance EXCEPT:
A.veterans associations
A.
veterans associations
B.credit unions
B.
credit unions
C.labor union groups
C.
labor union groups
D.volunteer religious groups
D.
volunteer rel
D. volunteer religious groups