Alabama Life and Health Insurance Final Exam Practice questions verified, Exams of Socialization and the Life Course

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Alabama Life and Health Insurance Final

Exam Practice Questions

1. The minimum grace period for a life insurance policy sold in Alabama is ANS 30 days
2. Alabama's annuity disclosure regulation ANS Requires the delivery of a buyer's guide and a disclosure document to annuity applicant
3. An insurer pays a large claim for medical expenses after the insured has only made one premium payment. This is an example of an ANS Aleatory contract
4. Which of the following is NOT guaranteed by a whole life policy? ANS policy dividends
5. Any individual who has failed two Alabama insurance licensing examina- tions must wait how long before retaking it a third time? ANS 3 months

6. When an estate is named beneficiary to a life insurance policy, the policy proceeds are ANS distributed according to state law
7. Which of the following statements concerning a life insurance policy is TRUE? ANS an issued policy can never be changed by a producer
8. Julio, the insurance producer, has allowed his license to lapse. He would like to reinstate his licenses without retaking a pre license course or passing a written examination. To do this, Julio must reinstate the license within months from the renewal date. ANS 12 months
9. Janet is retired and looking to invest a lump-sum of money through an insurance company. Which product would be best suited for this? ANS annuity 10.Tina has an insurance policy with a 10-day free look provision. Which of these statements is correct? ANS Her policy can be returned for 100% refund of the premium within 10 days from the date the policy is delivered 11.A collateral assignment allows a policy owner to assign ANS

C. Be appointed by an insurer D. All of these ANS D. All of these

17. Paula has an insurance policy that has a guaranteed minimum cash value, a guaranteed death benefit, fixed premiums, ad grows at a rate reflected by a selected fund index. Which type of life policy fits this description? ANS Equity indexed life 18.Insurance policies issued by companies which are owned by stockholders and do not pay policy dividends are known as ANS non-participating policies 19.Albert surrenders his whole life policy ten years after it was purchased. What can he expect? ANS to pay taxes on the cash value in excess of premium paid 20.In Alabama, an insurer who violates state laws for the payment of in- surance commissions may be fined up to ANS Three times the amount off the commissions paid 21.All of these are correct concerning group life insurance , EXCEPT ANS Whole life insurance is the form of insurance typically used in group life insurance

22.An insured should be restored to the approximate financial condition occupied before the loss occurred. This is called the ANS principle of indemnity 23.A retirement plan intended for a sole proprietor and his/her employees would be an ANS Keogh plan 24.John is an annuitant who has surrendered his annuity at age

55. What will he pay? ANS Tax on interest earned 25.ABC Company takes out a Key Employee policy on its CEO. The CEO leaves ABC Company and begins working for XYZ company five years later. If this person were to die and the policy is still in force and unchanged,, where would the death proceeds be directed? ANS ABC Company 26.An insurance company licensed to solicit insurance in a specific state is called ANS an admitted company 27.Which of the following is an example of a "nonforfeiture value"? ANS After a policy owner cancels his/her permanent policy, the cash value accumulation must be made available to the policy

32. Which of these is a correct statement? A. Whole life insurance cannot build cash value B. Term life insurance cannot be converted or renewed C. Policy dividends cannot be guaranteed D. Policy dividends are always taxable ANS Policy dividends cannot be guaranteed 33.Rodney applies for an insurance policy and pays the first premium. The receipt given for the first premium is called an ANS Conditional receipt
33. Shawn has a waiver of premium rider on his life insurance policy. He becomes disabled for 3 years, during which the insurance company waives $3,000 in premiums. When Shawn recovers , he must ANS Resume paying premi- ums again 35.Who is considered the individual that retains all rights, values, and options of an insurance policy? ANS The policy owner 36.Which of these actions could result in a lapsed policy? ANS Premium was not paid during the grace period 37.John purchases insurance because he expects to experience

a loss. This is known as ANS adverse selection 38.When the gross premium of a life insurance policy is computed, which of these factors is NOT included? ANS number of beneficiaries 39.Which of the following dividends options allows the continuation of cash value accumulation? ANS Reduced paid-up insurance 40.A husband and wife are receiving annuity payments. When the husband dies, the wife still receives annuity payments for life. What kind of annuity is this? ANS joint and survivor life annuity 41.What is the applicant's consideration in an insurance contract? ANS Premiums 42.The withholding of facts in an insurance application is called ANS concealment 43.Which of the following permanent life insurance policy riders add more coverage for a limited amount of time? ANS Term rider

47.The premium payment mode which results in the highest total premium is ANS Monthly 48.The highest premium payment would be charged to which risk classifica- tion? ANS substandard 49.When can a lapsed life insurance policy usually be reinstated? ANS Within 3-5 years of the policy lapsing 50.How is the Alabama Life and Disability Insurance Guaranty Association able to pay claims for insolvent insurers? ANS assessments against other admitted insurers in Alabama 51.The aviation exclusion ANS excludes coverage when the insured is riding in cer- tain kinds of air travel 52.Pat applies for insurance, pays the initial premium, and receives a doc- ument from the agent. This document indicates that if the policy is issued, coverage begins on the date of the document. This document is called an ANS - Conditional receipt 53.A life insurance beneficiary has chosen a settlement option in which the principal never decreases unless the beneficiary makes a withdrawal. This settlement option is called the ANS Interest only option 54.Bert purchased an immediate annuity with quarterly payments. When will this annuity starts making payments? ANS 3 months after the annuity is bought 55.The option to convert term life insurance to a permanent form of coverage can normally be executed ANS without proof of insurability

56.Which of the following is considered the "automatic" Nonforfeiture option that most insurers will use? ANS Extended term 57.The objective of insurance is ANS transfer risk

58. All of these statements concerning a Key Employee Life policy is true, EXCEPT A. The company pays the premiums and names the beneficiary B. The key employee must sign the application C. The key employee names the beneficiary D. The company is the owner of the policy ANS The key employee names the bene- ficiary 59.Which of the following is true concerning the fixed period option? ANS Principal amount gradually decreases to zero 60.A written agreement that involves two or more parties and consideration is ANS A contract 61.Kim purchased a straight life annuity. What will this type of annuity provide her with? ANS A periodic income to the annuitant for life

regarding the insurability of insurance applicants B. The proposed insured must give authorization before information can be given to member companies C. The MIB is a nonprofit agency which aids in underwriting insurance policies D. All of the above ANS D. All of the above 69.Barbara has the right to change the beneficiary designation on her life insurance policy. Barbara's beneficiary is an ANS Revocable beneficiary 70.A substandard or special class risk typically results in ANS A premium that is higher than for a normal risk

71. A policy owner with a $100,000 whole life policy has a cash value of $10,000. There is an outstanding loan of $5,000 and a past due premium of $250. If the policy owner chooses the reduced paid- up option and then later dies, what will the beneficiary receive? ANS The reduced paid-up coverage amount minus $5,

72.An insurance producer must have which of the following in order to sell variable life insurance policies? ANS registered with finra, license for variable life and annuities contracts, and a valid insurance license 73.Carol is a life insurance policy owner who has transferred her ownership to a third party in exchange for a percentage of the death benefit. What is this called? ANS Viatical settlement agreement 74.Replacement regulation in Alabama does NOT apply to ANS Credit life insur- ance 75.Bob has an insurance policy that allows him to keep the policy in force until the next premium is due plus 30 days thereafter. Bob's policy ANS Contains a grace period 76.An insurance producer who offers a potential client something of value as an incentive to purchase insurance is engaging in ANS Rebating 77.An insurance company licensed to do business in Alabama, but incorpo- rated in another state, is called ANS foreign company 78.What does renewable term guarantee? ANS the insureds insurability 79.The exclusions and conditions in an insurance contract are required to be conspicuous,plain, and clearly stated. There should be no surprise when an insurance company denies a claim for a hidden clause. This is called the ANS Doctrine of

of $15,000 and an outstanding policy loan of $5,000. If she chooses the reduced paid-up

option, what will be the result? ANS A paid-up permanent policy purchased with $10, 89.Tim has a universal life policy. The cash value growth in his policy is ANS in- terest sensitive 90.At what age is an insured for life insurance considered statistically "dead"? ANS 100 91.Which of the following provisions may NOT be adjusted in an adjustable life policy? ANS insured 92.A Cross Purchase Buy-Sell Agreement is in place for ABC Company's four founding partners. What would this agreement require if the agreement is funded with individual life insurance? ANS Each partner must own a policy on the other partners 93.Which of the following is NOT an example of insurable interest? ANS an airline insuring the lives of its passengers 94.Under Alabama's annuity disclosure regulation, the disclosures must be mailed to the applicant within business days if the application is taken over the telephone ANS 5 days 95.The life and health insurance marketing system utilizing non- employee agents that represent just one insurance company and are often paid an allowance to cover office expense and staffing is the ANS General Agency System 96.The proceeds of a life insurance policy can be paid in a dorm other than a lump-sum payment. These forms of payment are called ANS Settlement options