Indiana Life Insurance Final Exam NEW VERSION LATEST UPDATE 2024-2025 WITH ACCURATE ANS, Exams of Health sciences

Download Indiana Life Insurance Final Exam NEW VERSION LATEST UPDATE 2024-2025 WITH ACCURATE ANS and more Exams Health sciences in PDF only on Docsity! Indiana Life Insurance Final Exam NEW VERSION LATEST UPDATE 2024-2025 WITH ACCURATE ANSWERS GUARANTEED PASS Insurance companies determine risk by which of the following? A. Insurable interest B. Insurance exchanges C. Law of large numbers and risk pooling D. Population table data - ANSWER C. Law of large numbers and risk pooling The cause of a loss is referred to as a(n): A. hazard B. adversity C. peril D. risk - ANSWER C. peril The probability of loss becoming more predictable is attributed to: A. Law of Large Numbers B. speculative risk C. insurable interest D. Law of Frequent Risks - ANSWER A. Law of Large Numbers Which of the following is a requirement for a risk to be considered insurable? A. Catastrophic B. Speculative C. Chance of both a loss and gain D. Predictability of loss - ANSWER D. Predictability of loss What is known as the immediate specific event causing loss and giving risk to risk? A. Peril B. Hazard C. Loss factor D. Liability - ANSWER A. Peril When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: A. all statements be warranties B. insurable interest in the proposed insured C. the agent complete a third-party application D. all those involved be family-related - ANSWER B. insurable interest in the proposed insured A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of: A. adherence B. assimilation C. aleatory D. adhesion - ANSWER D. adhesion Who makes the legally enforceable promises in a unilateral contract? A. Beneficiary B. Insurance company C. Insured D. Applicant - ANSWER B. Insurance company Life and health insurance policies are: A. Multi-lateral contracts B. Bilateral contacts C. Unilateral contracts D. Non-lateral contracts - ANSWER C. Unilateral contracts What is the consideration given by an insurer in the Consideration clause of a life policy? A. Promise to never cancel coverage B. Promise to pay a death benefit to a named beneficiary C. Promise to not raise premiums D. Promise to accept an insured's assignment of benefits - ANSWER B. Promise to pay a death benefit to a named beneficiary Which of these is NOT considered to be an element of an insurance contract? A. the offer B. acceptance C. negotiating D. consideration - ANSWER C. negotiating A policy of adhesion can only be modified by whom? A. The agent B. The applicant Taking receipt of premiums and holding them for the insurance company is an example of: A. Commingling B. Misappropriation C. Theft D. Fiduciary responsibility - ANSWER D. Fiduciary responsibility Which of these is NOT a type of agent authority? A. Express B. Implied C. Principal D. Apparent - ANSWER C. Principal Insurance policies are offered on a "take it or leave it" basis, which make them: A. Conditional Contracts B. Aleatory Contracts C. Unilateral Contracts D. Contracts of Adhesion - ANSWER D. Contracts of Adhesion When must insurable interest be present in order for a life insurance policy to be valid? A. When the insured dies B. Within the incontestability period C. When the application is made D. Before the insured dies - ANSWER C. When the application is made Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. A. consideration B. unilateral C. aleatory D. conditional - ANSWER D. conditional A life insurance policy would be considered a wagering contract WITHOUT: A. insurable interest B. premium payment C. agent solicitation D. constructive delivery - ANSWER A. insurable interest All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: A. Bilateral B. Unilateral C. Aleatory D. Adhesion - ANSWER A. Bilateral Which is true concerning a Variable Universal Life policy? A. Policyowner controls where the investment will go and selects the amount of the premium payment B. Policyowner has no say where the investment will go but can choose the premium mode C. The investment vehicle for this type of policy is held in the insurer's general portfolio D. The death benefit can vary but the policyowner has no say in the premium amount paid - ANSWER A. Policyowner controls where the investment will go and selects the amount of the premium payment Variable Whole Life Insurance can be described as: A. both an insurance and securities product B. an insurance product only C. a securities product only D. the insurance company assumes the investment risk - ANSWER A. both an insurance and securities product Which of these would be considered a Limited-Pay Life policy? A. 10-year Renewable and Convertible Term B. Life Paid-Up at Age 70 C. Straight Whole Life D. Renewable Term to Age 100 - ANSWER B. Life Paid-Up at Age 70 J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? A. Life Paid-up at Age 70 B. 20-pay Life C. Increasing Term to age 65 D. Straight Life - ANSWER B. 20-pay Life F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? A. Level term policy B. Whole life policy C. Limited-pay policy D. Decreasing term policy - ANSWER D. Decreasing term policy What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? A. Modified whole life B. 20-year paid up policy C. Endowment D. Decreasing term - ANSWER D. Decreasing term A variable insurance policy: A. guarantees a minimum rate of return B. does not allow the policyowner to assume the investment risk C. does not guarantee a return on its investment accounts D. does not guarantee an assignment provision - ANSWER C. does not guarantee a return on its investment accounts When a life insurance policy exceeds certain IRS table values, the result would create which of the following? A. 1035 Exchange B. An investment C. Modified Endowment Contract (MEC) D. Endowment - ANSWER C. Modified Endowment Contract (MEC) A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? A. Payor provision B. Accelerated Benefits provision C. Assignment provision D. Waiver of Premium provision - ANSWER A. Payor provision Under a Renewable Term policy, A. the face amount is automatically adjust at the time of renewal B. evidence of insurability must be provided at each renewal C. the renewal premium is calculated on the basis of the insured's attained age D. a new application must be completed at each renewal - ANSWER C. the renewal premium is calculated on the basis of the insured's attained age The investment gains from Universal Life Policy usually go toward: A. the death benefit B. the dividends C. the cash value D. paying off a policy loan - ANSWER C. the cash value In order to sell a(n) _ Life policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA). A. Variable B. Adjustable C. Straight D. Term - ANSWER A. Variable Which statement about a whole life policy is true? A. Beneficiary may be changed only with the consent of the premium payor B. Death benefit can usually be adjusted C. Cash value may be borrowed against D. Premiums are flexible - ANSWER C. Cash value may be borrowed against Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? A. Modified Whole Life B. Variable Life C. Universal Life D. Adjustable Life - ANSWER B. Variable Life Which of these characteristics is consistent with a Straight Life policy? A. Owner can adjust both premium and death benefit B. Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract C. Owner has the option of converting to term insurance D. Premiums are payable for as long as there is insurance coverage in force - ANSWER D. Premiums are payable for as long as there is insurance coverage in force K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? A. Return of premiums paid B. Cash value plus interest C. $20,000 death benefit D. Face amount plus interest - ANSWER C. $20,000 death benefit Which of the following Life insurance policies combine term insurance with an investment element? A. Increasing Term Life B. Decreasing Term Life C. Universal Life D. Graded Life - ANSWER C. Universal Life What type of life policy covers two people and pays upon the death of the last insured? A. Shared B. Survivorship C. Adjustable D. Joint - ANSWER B. Survivorship Credit Life Insurance is: A. issued in any amount at the discretion of the applicant B. used in the event of loss of income C. issued in an amount no to exceed the amount of the loan D. coverage that waives the premiums on a loan payment ion the event of total disability - ANSWER C. issued in an amount not to exceed the amount of the loan A Limited-Pay Life policy has: A. graded death benefits B. no cash value C. premium payments limited to a specified number of years D. premium payments that are paid to age 100 - ANSWER C. premium payments limited to a specified number of years A(n) _ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities. A. Adjustable B. Term C. Universal D. Variable - ANSWER D. Variable The amount of coverage on a group credit life policy is limited to: A. half of the insured's total loan value B. the insured's total loan value C. 75% of the insured's total loan value D. $25,000 - ANSWER B. the insured's total loan value Under a Graded Premium Whole Life policy, A. the premium increases each year during the early years of the contract and remains the same after that time B. the premium decreases each year during the early years of the contract and remains the same after that time C. the premium can be adjusted by the policyowner at anytime D. the premium always remains the same while the death benefit increases during the early years - ANSWER A. the premium increases each year during the early years of the contract and remains the same after that time T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? A. Renewable B. Increasing C. Level D. Decreasing - ANSWER A. Renewable Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase? A. Endowment with Extended Term B. Endowment with a Payor Benefit C. Whole Life policy with an Other Insured Rider D. Family Income policy - ANSWER C. Whole Life policy with an Other Insured Rider J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this? A. Endowment B. Graded Premium Life C. Straight D. Modified Premium Life - ANSWER D. Modified Premium Life Which of the following types of permanent life insurance policies offers the highest initial cash value? A. Single premium B. Limited pay C. Straight whole D. Interest-sensitive - ANSWER A. Single premium A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the: A. inherent risk B. commission rate C. inflation factor D. expense charges - ANSWER D. expense charges The Cash value in a(n) _ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors. A. Universal B. Graded C. Term D. Endowment - ANSWER A. Universal K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs? A. Endowment B. Straight Life C. 10-year Renewable Term D. Joint life - ANSWER B. Straight Life C. Whole Life Paid-Up at Age 70 D. Endowment at Age 70 - ANSWER D. Endowment at Age 70 Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period: A. may be altered by the policyowner B. is controlled by the NAIC C. is the same in all contracts D. varies according to the contract - ANSWER D. varies according to the contract A term life insurance policy matures: A. upon endowment of the contract B. upon death of the insured C. when the cash value equals the death benefit D. upon the insured's death during the term of the policy - ANSWER D. upon the insured's death during the term of the policy S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? A. Equity index insurance B. Endowment C. Graded whole life policy D. Return of premium policy - ANSWER A. Equity index insurance Which of the following information is NOT required to be included in a Whole Life policy? A. Policy's loan interest rate B. Policy's guaranteed dividend table C. Policy's premium D. Policy's cash value table - ANSWER B. Policy's guaranteed dividend table Which of the following types of policies pays a benefit if the insured goes blind? A. Universal life B. AD&D C. Endowment D. Adjustable life - ANSWER B. AD&D Credit life insurance is typically issued with which of the following types of coverage? A. Annual Renewable Term B. Decreasing Term C. Individual Whole Life D. Group Term - ANSWER B. Decreasing Term Term insurance has which of the following characteristics? A. Expires at the end of the policy period B. Builds cash value C. Has nonforfeiture options D. Endows at the end of the policy period - ANSWER A. Expires at the end of the policy period What advantage does the renewability feature give to a term policy? A. The insured may extend the coverage period at no additional cost B. The insured may apply for this policy with little or no underwriting C. The insured may borrow against the cash value D. The insured may extend the coverage period - ANSWER D. The insured may extend the coverage period Under an interest sensitive whole life policy, A. premiums are determined by the policyowner B. no cash value ever accrues C. the policy normally renews every 10 years D. cash values are determined by interest rates - ANSWER D. cash values are determined by interest rates Which statement is correct regarding the premium payment schedule for whole life policies? A. Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured B. Premiums are payable for a set period/coverage expires at that point C. Premiums are payable until age 65/coverage lasts a lifetime D. A single premium is paid at time of application/coverage lasts until retirement - ANSWER A. Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured What kind or premium does a Whole Life policy have? A. decreasing B. adjustable C. level D. deferred - ANSWER C. level What type of life insurance incorporates flexible premiums and an adjustable death benefit? A. Endowment Policy B. Modified Whole Life C. Decreasing Term D. Universal Life - ANSWER D. Universal Life S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own? A. Endowment B. Variable Term Life C. Variable Whole Life D. Joint Life - ANSWER C. Variable Whole Life All of these are characteristics of an Adjustable Life policy EXCEPT: A. adjustable premiums B. adjustable premium payment period C. combination of term and whole life insurance D. face amount can be adjusted using policy dividends - ANSWER D. face amount can be adjusted using policy dividends Which of these statements describe a Modified Endowment Contract (MEC)? A. Falls below the minimum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract B. Exceeds the maximum amount or premium that can be paid into a policy and still have it recognized as a life insurance contract C. The 7-pay test is used to determine the minimum death benefit of the policy D. The 7-pay test is used to determine the maximum death benefit of the policy - ANSWER B. Exceeds the maximum amount or premium that can be paid into a policy and still have it recognized as a life insurance contract Variable Life products require a producer to: A. guarantee not more than a 12% return per annum B. hold a Life and Health Insurance license C. hold a Life Insurance license and a Securities license D. be regulated solely by State Law - ANSWER C. hold a Life Insurance license and a Securities license N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? A. 30 Pay Life B. Term to Age 70 C. Universal Life D. Adjustable Life - ANSWER A. 30 Pay Life What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? A. Term Life B. Whole Life C. Credit Life D. Universal Life - ANSWER B. Whole Life How does a typical Variable Life Policy investment account grow? A. Tied to price of gold B. Through mutual funds, stocks, bonds A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n): A. Joint Life policy B. Endowment C. Variable Universal Life policy D. Universal Life policy - ANSWER C. Variable Universal Life policy When is the face amount of a Whole Life policy paid? A. At the policy's maturity date only B. When the insured dies or at the policy's maturity date, whichever happens first C. Only when the insured dies D. When the policy is surrendered - ANSWER B. When the insured dies or at the policy's maturity date, whichever happens first T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? A. Interest-Sensitive Whole Life B. Ten-Year Endowment C. Variable Universal Life D. Ten-Year Renewable Term - ANSWER B. Ten-Year Endowment Who has the option to renew a Renewable Term policy? A. Agency B. Agent C. Insured D. Beneficiary - ANSWER C. Insured Which of the following is considered an element of a Variable Life Policy? A. Underlying equity investment B. Little or no risk insured C. Guaranteed dividends D. Insurer assumes all the risk - ANSWER A. Underlying equity investment Whole Life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate when using this phrase? A. The incontestable period B. The ability to borrow against the cash value C. The Grace Period D. The duration of premium payments - ANSWER D. The duration of premium payments Additional coverage can be added to a Whole Life policy by adding a(n): A. payor rider B. accelerated benefit rider C. decreasing term rider D. automatic premium loan rider - ANSWER C. decreasing term rider Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? A. Owner's Rights clause B. Incontestable Period C. Insuring Agreement D. Conversion privilege - ANSWER D. Conversion privilege What type of life policy covers two lives and pays the face amount after the first one dies? A. Group Life B. Joint Life Policy C. Family Income Policy D. Last Survivor Policy - ANSWER B. Joint Life Policy Which of these is an element of a Variable Life policy? A. A fixed, level premium B. Insurer assumes the investment risk C. No investment risk to the policyowner D. Rate of returns are guaranteed - ANSWER A. A fixed, level premium A life policy with a death and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as: A. Adjustable Life B. Graded-Premium Life C. Variable Life D. Modified Whole Life - ANSWER C. Variable Life Which type of policy is considered to be overfunded, as stated by IRS guidelines? A. Modified Whole Life B. Modified Endowment Contract C. Variable Universal Life D. Interest-Sensitive Whole Life - ANSWER B. Modified Endowment Contract What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? A. Face amount plus the policy's cash value B. Face amount plus the policy's dividends C. The greater amount of the policy's death benefit or the cash value D. Face amount plus total premium paid throughout the life of the policy - ANSWER A. Face amount plus the policy's cash value Which statement is TRUE regarding a Variable Whole Life policy? A. A minimum guaranteed Death benefit is provided B. It is a combination of an Endowment and a Increasing Term policy C. Its premiums and benefits are variable D. It has guaranteed dividends - ANSWER A. A minimum guaranteed Death benefit is provided Which of these life products is NOT considered interest-sensitive? A. Modified Whole Life B. Variable Universal Life C. Interest Sensitive Whole Life D. Variable Life - ANSWER A. Modified Whole Life A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? A. Straight life accumulates faster than Limited-pay Life B. 20-Pay Life accumulates cash value faster than Straight Life C. Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating D. 20-Pay Life and Straight Life accumulate cash value at the same rate - ANSWER B. 20-Pay Life accumulates cash value faster than Straight Life Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? A. Modified Whole Life B. 20-Pay Life C. Decreasing Term D. Endowment - ANSWER C. Decreasing Term What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? A. Family Lump Sum Policy B. Family Maintenance Policy C. Family Survivor Policy D. Family Income Policy - ANSWER B. Family Maintenance Policy What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability? A. Endowment policy B. Limited-Pay Whole life C. Convertible Term D. Decreasing Term - ANSWER C. Convertible Term K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? A. Variable Life B. Adjustable Life