Life Insurance Practice Exam Questions and Answers, Exams of Insurance law

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LIFE INSURANCE PRACTICE EXAM QUESTIONS AND

ANSWERS.

The receipt given to a life insurance applicant when the application is completed and the initial premium is received is called a (n) - Correct Answer Insurable Receipt Statements in the application for insurance that are believed to be true to the best of the applicants knowledge are - Correct Answer Representations An annuity is considered fixed when it does all of the following ACCEPT - Correct Answer Provide the annuitant with an interest rate that is lesser of the guaranteed or current rate The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called. - Correct Answer Continuous Premium (straight) life The policy and a copy of the application, along with any riders and amendments, is called the - Correct Answer Entire contract Money borrowed from the policy's cash value is - Correct Answer Not taxable Which of the following annuity products requires an agent to hold a securities license? - Correct Answer All annuities (Variable, Deferred & Equity Indexed) Which type of annuity settlement stops when the annuitant dies? - Correct Answer Life income annuity At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty - Correct Answer 59 1/2? Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the surviving partner to use the death benefit to purchase the deceased's business interests? - Correct Answer Buy-Sell Agreement Which type of policy allows the insured to change the amount of the dawn benefit, the amount of premium, or the type of coverage S their needs change? - Correct Answer Adjustable life If an annuitant dies during the accumulation period, what will the beneficiary receive? - Correct Answer either the cash value or the premiums paid, whichever is greater Any insurer who is NOT approved to do business in this state is considered - Correct Answer No admitted

To prevent people from profiting from a loss, insurers is the certain - Correct Answer Insurable Interest Exists If a misstatement of age is discovered during the processing of a life insurance claim what will the insurer do? - Correct Answer Adjusts the death benefit based on the premiums that were paid Which of the following allows an insurance company to deny coverage of the insurers earth occurs in war? - Correct Answer Policy Exclusions Each of the following is a typical characteristic of group’s life insurance EXCEPT - Correct Answer Evidence of insurability is usually required A life settlement option that pays out the death benefit is. Incrementally, in a specified amount until all of the proceeds are exhausted, is called - Correct Answer Fixed-Period Installments A life insurance death benefit paid in a lump sum to a beneficiary is - Correct Answer Not subject to any taxes Which of the following is NOT a no forfeiture option in whole life policies? - Correct Answer Accumulation at Interest Which of the following indicates the person upon whose life the annuity income amount is determined? - Correct Answer Annuitant An annuity that is purchased with a lump-sum payment, and that begins income payments within one year is a - Correct Answer Single premium immediate annuity Which statement is INCORRECT concerning policy dividends - Correct Answer Dividends are NOT taxable What is the risk classification for those who are insurable, but have a higher than average risk? - Correct Answer Substandard At age 25, an individual purchased a decreasing term policy. What happens to the coverage and the premiums as the insured gets older? - Correct Answer The coverage decrease but the premiums stay the same An insurance agent represents the - Correct Answer Insurer The transfer of a possible financial loss to another party refers to - Correct Answer Insurance Determine the company's risk regarding a proposed insured - Correct Answer Underwriting process

An insurer mails an insurance policy to a new policy owner. When the insurer relinquishes control of the policy, the policy is considered - Correct Answer Delivered This is the prtbirbthenapplication that provides information about an applicant’s Dina dial condition and character, as well as the purpose of sale and how long the agent has known the applicant: - Correct Answer Agents Report A whole life product that covers 2 lives and provides for payment or the death benefit on the death of the riser insurer is called - Correct Answer Joint Life An agent delivers a policy to an insured, and 9 days later the insured returns the policy and wants a complete refund. What provision covers this circumstance? - Correct Answer Free look The "pay in" phase of the annuity is known as what period? - Correct Answer Accumulation period For an insurance contract, the principle of utmost good faith means - Correct Answer Each party relies upon the truthfulness of the other Which of the following retirement plans is a special tax favored plan for NONPROFIT, charitable, educational or religious groups? - Correct Answer 403(b) Tax-Sheltered Annuity (TSAs) Which of the following types of annuities would be best suited for a retired couple who are seeking income for as long as either lives? - Correct Answer Joint and Survivor London Mutual Life is an insurer incorporated in England, and is transacting business in this state. London Mughal would be considered what type of insurer? - Correct Answer Alien Insurer The MIB is a nonprofit trade association that maintains - Correct Answer Medical Information on applicants for life and health insurance Its purpose in life insurance policies is to protect the policy owner against an unintentional lapse of the policy. - Correct Answer Grace Period What type of permanent insurance allows the policy owner to pay for a policy in a specified period of time, and the policy owner does not have to make any more premium payments for the life of the policy? - Correct Answer Limited Payment What does the payer benefit rider protect? - Correct Answer Contestability How long does an employee have to convert group policy coverage to an individual policy without evidence of insurability? - Correct Answer 31 days

If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered? - Correct Answer the portion that exceeds the premiums paid IS taxable Betty is the only beneficiary named on her husband Bob's policy which has a Common Disaster provision (within 90 days death benefit will go to primary estate) They are in a car wreck, and Bob dies instantly. Betty lives for 29 days. Who will receive the death benefit? - Correct Answer Bob’s estate The legal transfer of all or part of a policy owners’ rights, title or interest is called an (a) - Correct Answer Assignment What do employees covered under a group contract receive? - Correct Answer Certificate of Insurance An annuity in which investment growth is dependent on the performance of an index such as the Standard and Poor's 500 is called a (n) - Correct Answer Equity Indexed Annuity The premium payment mode can be best described as the - Correct Answer Payment method of the policy premium All other factors being equal, which of the following types of policies will accumulate cash value at the fastest rate. - Correct Answer 20-pay life