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EXAMFX PRACTICE MASTER STUDY PACK
2026 PREMIUM SOLVED COMPENDIUM
โ Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? Answer: Warranty โ All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT Answer: The employer can receive a current tax deduction for any contributions made to the plan. โ When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) Answer: Executive bonus. โ An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called Answer: Consideration
โ In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? Answer: The customer's associates, friends, and neighbors provide the report's data. โ When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? Answer: The insured's contingent beneficiary โ Which of the following is NOT true regarding the annuitant? Answer: The annuitant cannot be the same person as the annuity owner. โ What is the waiting period on a Waiver of Premium rider in life insurance policies? Answer: 6 months โ All of the following are general requirements of a qualified plan EXCEPT Answer: The plan must provide an offset for social security benefits.
Answer: Life income โ All of the following statements about equity index annuities are correct EXCEPT Answer: The annuitant receives a fixed amount of return. โ What is the purpose of settlement options? Answer: They determine how death proceeds will be paid. โ Which is TRUE about the cash surrender nonforfeiture option? Answer: Funds exceeding the premium paid are taxable as ordinary income. โ Which nonforfeiture option provides coverage for the longest period of time? Answer: Reduced paid-up โ Children's riders attached to whole life policies are usually issued as what type of insurance? Answer: Term โ Which of the following is NOT a type of whole life insurance? Answer: Level term
โ What is the purpose of a conditional receipt? Answer: It is intended to provide coverage on a date prior to the policy issue. โ Which of the following documents must be provided to the policyowner or applicant during policy replacement? Answer: Notice Regarding Replacement โ The premium of a survivorship life policy compared with that of a joint life policy would be Answer: Lower. โ Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term? Answer: Renewable โ Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? Answer: Warranty โ Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to
Answer: Settlement options. โ What kind of policy allows withdrawals or partial surrenders? Answer: Universal life โ Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? Answer: Premiums are not tax deductible as a business expense. โ A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as Answer: Survivor protection. โ What type of premium do both Universal Life and Variable Universal Life policies have? Answer: Flexible โ Which of the following best describes what the annuity period is? Answer: The period of time during which accumulated money is converted into income payments
โ The Ownership provision entitles the policyowner to do all of the following EXCEPT Answer: Set premium rates. โ An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? Answer: $100, โ Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose Answer: HR-10 (Keogh Plan). โ In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? Answer: Unilateral โ All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT Answer: The policy is owned by the company.
Answer: Twisting. โ Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits? Answer: Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued the original policy. โ Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Alaska? Answer: Nonresident producer โ All of the following are true regarding rebates EXCEPT Answer: Rebates are allowed if it is in the best interest of the client. โ Who is a person, other than a viator, that enters into a viatical settlement contract? Answer: Provider โ The Director must examine insurers at least Answer: Every 3 years.
โ A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of Answer: Coercion. โ If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered Answer: An unfair trade practice. โ A participating insurance policy may do which of the following? Answer: Pay dividends to the policyowner โ On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of Answer: Misrepresentation. โ Who is protected from financial loss by the Guaranty Association? Answer: Policyholders โ In which of the following situations is it legal to limit coverage based on marital status?
Answer: When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health โ A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy Answer: Required a premium increase each renewal. โ What is the purpose of key person insurance? Answer: To lessen the risk of financial loss because of the death of a key employee โ Which of the following applicants would NOT qualify for a Keogh Plan? Answer: Someone who works 400 hours per year โ Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? Answer: Automatic premium loan โ During replacement of life insurance, a replacing insurer must do which of the following?
Answer: Obtain a list of all life insurance policies that will be replaced โ Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as Answer: Contracts of adhesion. โ Which of the following best describes what the annuity period is? Answer: The period of time during which accumulated money is converted into income payments โ All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT Answer: Upon conversion, the death benefit of the permanent policy will be reduced by 50%. โ A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy Answer: Required a premium increase each renewal. โ Which of the following is INCORRECT concerning a noncontributory group plan? Answer: The employees receive individual policies.
โ The two types of assignments are Answer: Absolute and collateral. โ If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? Answer: The death benefit will be smaller. โ An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? Answer: Profit sharing plan โ When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy? Answer: Return of premium โ Which of the following products will protect an individual from outliving their money? Answer: Annuity
โ Why should the producer personally deliver the policy when the first premium has already been paid? Answer: To help the insured understand all aspects of the contract โ Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? Answer: Return the application to the applicant for completion โ What describes the specific information about a policy? Answer: Policy summary โ Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? Answer: Twisting โ This state provides for a temporary license to be issued to a producer's representative for all of the following reasons EXCEPT Answer: A producer's retirement. โ Who might receive dividends from a mutual insurer? Answer: Policyholders
โ A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as Answer: Survivor protection. โ Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? Answer: A policy summary โ A domestic insurer issuing variable contracts must establish one or more Answer: Separate accounts. โ If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? Answer: The death benefit will be smaller. โ Which of the following types of risk will result in the highest premium? Answer: Substandard risk โ Which of the following is an example of a limited-pay life policy?
Answer: Life Paid-up at Age 65 โ Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? Answer: Life income with period certain โ If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a Answer: Guaranteed insurability rider. โ Which of the following is INCORRECT regarding a $100,000 20- year level term policy? Answer: At the end of 20 years, the policy's cash value will equal $100,000. โ An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? Answer: Common Disaster
