PEARSON VUE LIFE INSURANCE EXAM 2 2024 ( VERSION A & B ), Exams of Nursing

Download PEARSON VUE LIFE INSURANCE EXAM 2 2024 ( VERSION A & B ) and more Exams Nursing in PDF only on Docsity! 1 | P a g e PEARSON VUE LIFE INSURANCE EXAM 2 2024 ( VERSION A & B ) WITH ACTUAL CORRECT QUESTIONS AND VERIFIED DETAILED ANSWERS |FREQUENTLY TESTED QUESTIONS AND SOLUTIONS |ALREADY GRADED A+ |LATEST UPDATE | GUARANTEED PASS A payor benefit rider provides which of the following benefits A.A disability income benefit payable to the payor if the payor becomes disabled B.A permanent waiver of premium should the payor die C.A temporary waiver of premium should the payor die, until the insured reaches a predetermined age D.A double indemnity Death benefit payable to the beneficiary upon the death of the payor C 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 B.Key Employee Life policy C.Survivorship Life D.Joint and Several Annuity A If life insurance policy applicant is classified as a substandard risk, the insurance company will MOST likely: A.issue the policy with riders B.charge an extra premium 2 | P a g e C.require an annual medical examination D.lower the rate per thousand charged B 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 B.ensure any changes on the application were initialed by the applicant C.submit a completed medical information report D.complete the producer's report C In life insurance, the Free Look provision begins on the: A.effective date of coverage B.policy delivery date C.date of application D.date that the insurer issues the policy B 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 B.Adjustable Life C.Whole Life D.Limited-Pay Life A A life policy is usually contestable due to material misrepresentation on the application for a period of: A.30 days 5 | P a g e A 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 approves the application D 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 B.Nonforfeiture Option C.Grace Period provision D.Consideration clause C 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 B.Settlement Options C.Conditions D.Modes of Payment B An applicant's statements on an application are considered to be legal: A.warranties B.representations C.guarantees 6 | P a g e D.waivers B 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 B.Endorsement C.Transfer for value D.Assignment D A contract that promises to pay an income to an insured until his/her death is called: A.Family Income B.Modified Endowment C.Survivorship Life D.Life Annuity D Which of the following group life plans requires at least 75 percent of the eligible members to participate? A.Contributory B.Noncontributory C.Participating D.Nonparticipating A 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 7 | P a g e B.Pay the face amount of the policy if the death occurred after the end of the incontestable period C.Pay a reduced Death benefit based on the insured's actual age D.Pay the stated Death benefit less the unpaid premium owed to the company as a result of the understated age. C 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 B.A Single Premium Immediate Annuity C.A Level Premium Fixed Annuity D.A Flexible Premium Variable Annuity D 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 B.revocable beneficiary C.secondary beneficiary B A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an: A.indemnity contract B.investment contract C.endowment D.annuity D 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 10 | P a g e D. It is renewable at the option of the insured, with proof of insurability. B If 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 B.Refund only the premiums paid C.Refund the premiums paid plus interest D.Pay the Death benefit D Which of the following policy provisions provides for continuation of coverage despite nonpayment of premiums? A.Entire Contract B.Ownership clause C.Nonforfeiture Option D.Insuring clause C An applicant for life insurance may question the validity and source of any consumer information developed under the A.Medical Information Bureau Disclosure Act B.Fair Credit Reporting Act (Insurance Information and Privacy Protection Act) C.Equal Employment Opportunity Act D.Medicare Act B The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life policy is that the Variable Whole Life policy: 11 | P a g e A.provides flexible premium payments B.allows the policyowner to borrow a larger percentage of the cash value C.has the potential to earn a higher rate of return on the cash value D.allows the policyowner more flexibility in naming and changing beneficiaries C 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 him, and then he dies, who will receive the policy proceeds? A.The children B.The policyowner's estate C.The primary beneficiary's estate D.The tertiary beneficiary 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 B.Waive an insured's premiums if the insured becomes partially disabled for a minimum time C.Increase an insured's coverage at an attained age without imposing a premium increase D.Reduce an insured's premiums if the insured pays them annually instead of monthly A 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 B."primary insurance amount" C."fully insured" or "currently insured" status D.sex 12 | P a g e D The PRIMARY purpose of an inspection report is to assess an applicant's: A.credit rating B.personal characteristics C.job performance D.health profile B If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase: A.additional coverage when the insured reaches retirement age B.additional coverage whenever the insured changes jobs C.additional coverage at specified ages D.coverage on the insured's children within thirty-one days after they are born C Which of the following statements is NOT correct about representations? A.They can be a part of the contract. B.They are true in every respect. C.They are assumed to be accurate. D.They influence the insurer's acceptance of the risk. B 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 B.value of the Nonforfeiture Options may decrease C.face amount may increase D.length of coverage may increase 15 | P a g e premium and which of the following? A. A copy of the MIB report B. The insured's signed statement of continued good health C. A copy of the conditional receipt D. A copy of the temporary insurance agreement that covered the period between the application date and the delivery date. B An employer can deduct premium payments as an ordinary business expense for which of the following life coverages? A. Buy and Sell Agreements B. Group C. Key Employee D. Joint Life, if the business is named as the beneficiary B 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 probably due to which of the following factors? A. Incontestability B. Insurable interest C. Consideration D. Risk classification D 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 policy A 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. B. Death during the conversion period is covered even if the departing employee chose not to convert the policy. C. A departing employee must individually pay the premium if the employee elects to be covered during the conversion period. D .If a departing employee elects to convert a life insurance policy, the insurer must offer Term insurance as one of the choices. B 16 | P a g e Which of the following policies is an interest-sensitive form of permanent protection? A. Universal Life B. Limited-Pay Life C. Graded Premium Whole Life D. Modified Whole Life A 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 premiums B Which of the following statements about a Renewable Term policy is CORRECT? A. It is renewable at the option of the insurer. B. It is renewable at the option of the insured. C. It is renewable at the option of the insurer, with proof of insurability. D. It is renewable at the option of the insured, with proof of insurability. B If 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 B. Refund only the premiums paid C. Refund the premiums paid plus interest D. Pay the Death benefit D Which of the following policy provisions provides for continuation of coverage despite nonpayment of premiums? A. Entire Contract B. Ownership clause C. Nonforfeiture Option D. Insuring clause C An applicant for life insurance may question the validity and source of any consumer information developed under the A. Medical Information Bureau Disclosure Act B. Fair Credit Reporting Act (Insurance Information and Privacy Protection Act) C. Equal Employment Opportunity Act D. Medicare Act 17 | P a g e B 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 B. allows the policyowner to borrow a larger percentage of the cash value C. has the potential to earn a higher rate of return on the cash value D. allows the policyowner more flexibility in naming and changing beneficiaries C 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 him, and then he dies, who will receive the policy proceeds? A. The children B. The policyowner's estate C. The primary beneficiary's estate D. The tertiary beneficiary 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 B. Waive an insured's premiums if the insured becomes partially disabled for a minimum time C. Increase an insured's coverage at an attained age without imposing a premium increase D. Reduce an insured's premiums if the insured pays them annually instead of monthly A 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 B. "primary insurance amount" C. "fully insured" or "currently insured" status D. sex D The PRIMARY purpose of an inspection report is to assess an applicant's: A. credit rating B. personal characteristics C. job performance D. health profile B If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase: A. additional coverage when the insured reaches retirement age 20 | P a g e 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 B. ensure any changes on the application were initialed by the applicant C. submit a completed medical information report D. complete the producer's report C In life insurance, the Free Look provision begins on the: A. effective date of coverage B. policy delivery date C. date of application D. date that the insurer issues the policy B 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 B. Adjustable Life C. Whole Life D. Limited-Pay Life A A life policy is usually contestable due to material misrepresentation on the application for a period of: A. 30 days B. 6 months C. 2 years D. 5 years C Which of the following statements is CORRECT about the Paid-Up Additions in a participating Whole Life policy? A. They are subject to underwriting approval. B. They do not generate dividends. C. They are considered Term policies. D. They are purchased on an attained age basis. D In which of the following contracts is the Death benefit called the principal sum? A. Survivorship Annuity B. Accidental Death and Dismemberment (AD&D) C. Decreasing Term D. Joint Life 21 | P a g e B 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 premium receipt C 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 Premium Life B. Life Paid-Up at 65 C. Modified Whole Life D. Annual Renewable Term C Federal income tax laws generally treat proceeds of life insurance policies as: A. graduated taxes B. deferred taxes C. nontaxable D. tax credits C Which of the following policy provisions states that the application is part of the policy? A. Entire contract B. Ownership clause C. Nonforfeiture option D. Assignment clause A A type of annuity in which the cash values are invested in securities is called: A. Variable B. Deferred C. Fixed D. Joint and survivorship A 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 22 | P a g e C. insurer approves the application d: policy is delivered and payment is collected D 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 B. Nonforfeiture Option C. Grace Period provision D. Consideration clause C 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 B. Settlement Options C. Conditions D. Modes of Payment B An applicant's statements on an application are considered to be legal: A. warranties B. representations C. guarantees D. waivers B 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 B. Endorsement C. Transfer for value D. Assignment D A contract that promises to pay an income to an insured until his/her death is called: A. Family Income B. Modified Endowment C. Survivorship Life D. Life Annuity D Which of the following group life plans requires at least 75 percent of the eligible members to participate? 25 | P a g e An individual who has had a heart murmur since birth is likely to be issued an individual disability policy that includes: A. Guaranteed Insurability rider B. an Exclusionary/ Impairment rider C. Waiver of Premium rider D. Double Indemnity rider B Which of the following statements is CORRECT about coinsurance? A. It applies to deductibles as well as to claim payments. B. It helps control overutilization of benefits. C. It is effective for the first claim payment and waived for future claims. D. Insurance companies may adjust the coinsurance ratio after issuing a policy. B The insurance policy clause that identifies the contracting parties and defines the scope and limits of coverage is called the: A. Insuring clause B. Benefit clause C. Consideration clause D. Renewal clause A In an Accidental Death and Dismemberment (AD&D) policy, the term "capital sum" refers to: A. the benefit paid for death caused by a dread disease B. the monthly disability income paid if an insured loses a limb or the sight in one or both eyes C. a lump sum payment made when disease causes the amputation of an arm or a leg D. a lump sum payment made for an accidental dismemberment D A group long-term disability plan is integrated with Social Security when which of the following statements is CORRECT? A. Social Security and group benefits pay a combined maximum limit. B. Full group benefits are paid in addition to Social Security benefits. C. Full Social Security benefits are paid after group benefits are exhausted. D. Half of the allowable Social Security benefits are paid after group benefits are exhausted. A Medicare Part A covers which of the following expenses? A. Hospital room and board B. Surgical expenses C. Medications D. Physicians' services 26 | P a g e A J has a physical impairment, attends school, and is incapable of self-sustaining employment and/ or self care. Which of the following statements is CORRECT about J's medical coverage under J's father's group plan? A. J's coverage ceases, but J may apply for group student coverage. B. J's coverage automatically discontinues at age twenty-six. C. J's coverage continues only as long as J is a full-time student. D. J's coverage continues as long as J is continually incapacitated and is financially dependent on J's father. D Medicare Supplement policies are primarily designed to: A. offset the high cost of Medicare B. provide additional retirement income to supplement Social Security retirement benefits C. provide additional benefits beyond those provided by Medicare D. provide a reinsurance network that spreads the Medicare risk among private insurance companies C A producer and an applicant complete an application for a health policy and submit it to the insurer for underwriting without any premium. The underwriter issues a policy and mails it to the producer for delivery to the applicant. The producer should take all of the following actions during the delivery of the policy to the applicant EXCEPT: A. collect the initial premium payment B. issue a conditional receipt C. have the applicant complete a statement of continued good health D. explain the Free Look provision which begins on the policy delivery date B M and N own a small interior design studio that employs six people. The owners are concerned about the financial continuation of the business if either of them should become permanently disabled. In this situation, a producer would MOST likely recommend which of the following types of contracts? A. Basic Hospital B. Disability Buy-Out C. Comprehensive Major Medical D. Short-Term Disability Income B Which of the following definitions of disability would cover a permanent partial disability? A. Own occupation B. Any occupation C. Residual disability D. Presumptive disability C 27 | P a g e Group health insurance specifies that what percentage of eligible individuals MUST be offered coverage under a noncontributory plan? A. 25 B. 50 C. 75 D. 100 D An Eligible Expenses provision in a comprehensive major medical policy commonly identifies all of the following types of covered health care services EXCEPT: A. professional services of doctors and other medical practitioners B. hospital charges for semi-private room and board C. experimental and investigative services D. pre-approved home health care C Which of the following provisions explains that a producer does not have the authority to waive the provisions of an insurance contract? A. Legal actions B. Reinstatement C. Time limit on certain defenses D. Entire Contract D Under the Claims Forms provision of a health policy, if the insurance company fails to send claim forms within the time period required, the insured should: A. expect a full refund of all premiums paid plus interest B. submit the claim in any form, which must be accepted by the company as adequate proof of loss C. request the Department of Insurance mediate the claim settlement D. wait for the claim form to arrive B The Coordination of Benefits clause found in group health master contracts is used to: A. integrate Disability Income benefits with Major Medical benefits B. avoid double payment of benefits to an insured who has duplicate group coverages C. investigate the claims history of an insured D. avoid duplicate claims to an employer for the same employee B A precertification review prior to a nonemergency hospitalization is an example of: A. managed care B. Medicaid C. Medicare D. Disability Income 30 | P a g e C. 30 D. 45 B The Consideration clause in an accident and health policy states the: A. the applicant pays the initial premium B. conditions under which benefits are paid C. premiums will be refunded during the free look period D. certain claims will be excluded under the policy A All of the following elements are required of a contract EXCEPT: A. assignment B. acceptance C. legal capacity D. legal purpose A Which of the following types of provisions guarantees renewability to a specified date or age unless certain specified events occur? A. Noncancellable B. Optionally Renewable C. Guaranteed Renewable D. Conditionally Renewable D On June 1, S purchased a Major Medical policy and paid the initial premium to Producer T. On July 1, Producer T received the policy from the insurance company. The policy contained a Ten-Day Free Look provision. On July 3, Producer T attempted to deliver the policy but found that S was not at home. On July 5, Producer T was able to deliver the policy to S. On July 7, S decided he did not want the policy. S had 10 days from which of the following dates to return the policy to the company and obtain a full premium refund? A. July 1 B. July 3 C. July 5 D. July 7 C The Social Security program provides all of the following benefits EXCEPT: A. retirement B. survivor C. disability D. workers compensation 31 | P a g e D Which of the following statements is CORRECT about a Disability Income policy with a Guaranteed Insurability rider? A. The insured may periodically increase the amount of benefits payable under the policy. B. The insured may assign the policy to a member of the insured's family. C. The insurer is not permitted to cancel the policy. D. The insurer will issue the policy without a medical examination. A An applicant for insurance submits an application to an insurer for underwriting but does not forward any premium payment with the application. Legally, the applicant is making: A. an inquiry for an offer B. an offer C. a counteroffer D. an acceptance A The Internal Revenue Service (IRS) considers Disability Income benefits paid under an employer-paid group Disability Income to be: A. taxable for thirteen weeks only B. nontaxable for twenty-six weeks only C. fully taxable D. exempt from taxation C Which of the following provisions designates to whom claim payments are made? A. Time of Payment of Claims B. Claim Forms C. Notice of Claim D. Payment of Claims D A Disability Income policy may provide benefits for which of the following losses? A. Residual Disability B. Catastrophic medical expenses C. Long term care D. Supplemental payments to Medicare A When periodic claim payments are required under a long-term disability income policy, an insurer MUST make payments to an insured at least once every: A. month B. three months 32 | P a g e C. six months D. year A Under an Accidental Death and Dismemberment (AD&D) policy, insurable interest must exist at which of the following times? A. When a change of beneficiary is requested B. At the inception of the policy C. When a beneficiary other than a relative is named D. At the time a claim is submitted B Health insurance policies are offered on a "take it or leave it" basis and referred to as which of the following types of contracts? A. Aleatory Contracts B. Valued Contracts C. Unilateral Contracts D. Contracts of Adhesion D Which of the following health policies requires a beneficiary designation? A. Travel Accident B. Medicare Supplement C. Blanket D. Long Term Care A The PRIMARY reason for selecting a Variable Whole Life policy instead of a traditional Whole Life policy is that the Variable Whole Life policy: has the potential to earn a higher rate of return on the cash value 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. Which of the following statements is CORRECT about Group Life conversion privileges? Death during the conversion period is covered even if the departing employee chose not to convert the policy. 35 | P a g e 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? The insured's signed statement of continued good health Which of the following statements is NOT correct about representations? They are true in every respect. Which of the following group life plans requires at least 75 percent of the eligible members to participate? Contributory A type of annuity in which the cash values are invested in securities is called: Variable 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? Modified Whole Life 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? Family Income rider 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 probably due to which of the following factors? Risk classification All of the following policies may be examples of third party ownership EXCEPT: Modified Life The Waiver of Premium provision of a life policy allows the insurer to take which of the following actions? Waive an insured's premiums if the insured becomes totally disabled before a certain age A life policy is usually contestable due to material misrepresentation on the application for a period of: 2 years If an Adjustable Life policyowner makes an additional premium payment, the policy may be affected in all of the following ways EXCEPT the: value of the Nonforfeiture Options may decrease 36 | P a g e At which of the following times MUST a life insurance applicant be informed of their rights under the Fair Credit Reporting Act? When the policy is delivery The right to change a beneficiary designation is reserved for the: policyowner A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an: annuity A life insurance application is incomplete if it is missing the signature of which of the following? The proposed adult insured 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 him, and then he dies, who will receive the policy proceeds? the children Which of the following policies is an interest-sensitive form of permanent protection? Universal Life In life insurance, the Free Look provision begins on the: policy delivery date 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? Settlement Options 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 insured dies on December 31, the beneficiary will be entitled to a MAXIMUM of: $9,500 A payor benefit rider provides which of the following benefits? A temporary waiver of premium should the payor die, until the insured reaches a predetermined age In which of the following contracts is the Death benefit called the principal sum? Accidental Death and Dismemberment (AD&D) The PRIMARY purpose of an inspection report is to assess an applicant's: personal characteristics 37 | P a g e Which of the following statements about replacement of existing life insurance is CORRECT? Both the applicant for insurance and the insurance producer must sign a statement stating whether existing insurance is to be replaced. All of the following elements must be included in a policy summary given to a purchaser of life insurance EXCEPT the: names and addresses of each beneficiary The Insurance Commissioner may examine the records of an insurance company at which of the following times? At any time the Insurance Commissioner sees fit All of the following groups are considered eligible for group life insurance EXCEPT: volunteer religious groups Which of the following persons is authorized to enforce state insurance laws? The Insurance Commissioner Which of the following terms may be used in advertisements for life insurance? Universal Life Plan The Insurance Commissioner may revoke or suspend a producer's license if the producer: has forged another person's name on an insurance application 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: an acceleration of life insurance benefit An insurance company doing business in this state must operate under: a certificate of authority Which of the following situations is considered rebating? A producer returns a portion of the commission to an insured. Which of the following statements about Credit Life insurance is CORRECT? it may be provided through a group or individual policy. An individual appointed by an insurance company to solicit applications for a policy of insurance on its behalf is known as: an insurance producer All of the following provisions must be included in group life insurance policies issued in this state EXCEPT: 40 | P a g e The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called: reinstatement Which of these is NOT a type of agent authority? principal All of these are characteristics of an Adjustable Life Policy EXCEPT: Face amount can be adjusted using policy dividends On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? January 26 What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? Decreasing term Which action by insurance agent is considered rebating? Splitting Commissions with a policyholder who has purchased additional coverage Which of these statement describe a Modified Endowment Contract (MEC) exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract A young, married teacher has two children and own whole life policy. If the teacher wants an increasing Death Benefit to Protect against inflation, the teacher should select which of the following Dividend options Paid up additional insurance Why is an applicant's signature required on a life insurance application? to attest that all statements on the application are guaranteed to be true When can a policyowner change a revocable beneficiary? Anytime The commissioner of insurance may suspend or revoke the license of an agent who take any of the following actions EXCEPT represents more than one insurance company The Accelerated Death Benefits provision in a life insurance policy is also known as an 41 | P a g e Living Benefit What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Family Maintenance Policy When an existing life insurance policy is reissued with a reduction in cash value, the agent must sign Notice Regarding Replacement of Life Insurance or Annuity D was actively serving in the Marines when he was killed in automobile accident while on leave. His $100,000 whole life policy contains a war exclusion clause. How much will D's beneficiary's recieve? the full face amount A policy that become a modified endowment contract will lose many of its advantages the amount of coverage on a group credit life policy is limited to. the insured total loan value which of these would be considered a limited pay life policy life paid up at age 70 Which rider provides coverage for a child under a parent's life insurance policy? child term rider P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take? beneficiary will be paid the death benefit What type of life policy covers 2 lives and pays the face amount after the first one dies joint life policy J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? the gross premium is higher on a monthly payment mode as a compared to being paid annually N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? flexible installment deferred which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner? 42 | P a g e irrevocable beneficiary An insurance company formed under North Carolina laws is reffered to as an domestic comany W is a 39 year old female who just purchased an annuity to provide an income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT immediate annuity Variable annuities may invest premiums in each of the following except insurers corporate business account Which of the following statements is CORRECT about the period in which a Term Policy can be converted? it varied according to the contracts Which of the following actions is NOT possible with a Universal Life policy Premiums may be applied as a credit against income tax Which of these is NOT considered to be a cost connected with an individuals death business expenses Premature IRA distributions are assessed a penalty tax of 10% in North Carolina, which of the following MUST be delivered to a policy owner upon the sale of an individual life insurance policy a policy summary and buyers guide Credit life insurance is typically with which of the following types of coverage decreasing term What kind of life policy either paysthe face value upon the death of the insured or when the insured reaches age 100? whole life Which of the following is a characteristics of a variable annuity underlying equity investments ABC Insurance Company fails to pay death proceeds after satisfactory proof of loss was submitted. ABC must than begin paying interest on the death proceeds after ______ days of receieving proof of loss. 30 days 45 | P a g e Wave and insurance premium if insured Becomes partially disabled for a minimum time The insurance commissioner It may be provided there a group or individual policy Producer Form of ownership each company is permitted To ensure that policy owners receive adequate information on on which to base a replacement decision Group life As far as another persons name on a insurance application As far as another persons name on a insurance application 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 Sex In life insurance, insurance interest must exist at the time the Producer writes an application on a proposed insured Which of the following statements is NOT correct about representations? They are true in every respect 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? The insured's signed statement of continued good health Which of the following retirement plans is tax-qualified? Defined contribution 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 The right to change a beneficiary designation is reserved for the: Policyowner 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? Settlement options 46 | P a g e 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? buy-sell agreement The waiver of premium provision of a life policy allows the insurer to take which of the following actions? waive an insured's premiums if the insured becomes totally disabled before a certian age A life insurance application is incomplete if it is missing the signature of which of the following? The proposed adult insured Which of the following statements is correct about group life conversion privileges? Death during the conversion period is covered if the departing employee chose not to conver the policy. 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? Family income rider 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 him, and then he dies, who will receive the policy proceeds? children A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an annuity All of the following policies may be examples of third party ownership except Modified Life Group Life Split-dollar Life Key Employee Life Answer: Modified Life Which of the following group life plan requires at least 75 percent of the eligible members to participate? Contributory Which of the following features allows an insurance policy to remain in force for a specified number of days beyond the premium due date? Grace period provision 47 | P a g e In which of the following contracts is the death benefit called the principal sum? Accidental Death and Dismemberment (AD&D) The primary reason for selecting a variable whole life policy instead of a traditional whole life policy is that the variable whole life policy Has the potential to earn a higher rate of return on the cash value If an applicant for life insurance submits a completed application to a producer without paying the first premium, coverage becomes effective when the Policy is delivered and the premium paid An insured owns $10,000 policy with a $4000 cash value and a 6 percent interest rate. On January 1, the insured borrows $500 and pays one years interest in advance. During the year, the insured does not repay any part of the loan or interest. If the insured dies on December 31, the beneficiary will be entitled to a maximum of 9500 The primary purpose of an inspection report is to assess an applicants personal characteristics Which of the following annuities would best suit the needs of a 35 year old factory worker who is concerned about the inflation and wants to establish a retirement plan? A flexible Premium Variable Annuity A life policy is usually contestable due to material misrepresentation on the application for a period of: 2 years An employer can deduct premium payments as an ordinary business expense for which of the following life coverages? group Which of the following statements about a renewable term policy is correct? It is renewable at the option of the insured If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase: additional coverage at specified ages A contract that promises to pay an income to an insured until his/her death is called life annuity An insured intentionally understates her age on her application for a life policy. At death, the insurer will take which of the following actions? pay a reduced death benefit based on the insured's actual age