Rhode Island Adjuster's Exam Questions With Complete Solutions 2026, Exams of Insurance Economics

Download Rhode Island Adjuster's Exam Questions With Complete Solutions 2026 and more Exams Insurance Economics in PDF only on Docsity!

Rhode Island Adjuster's Exam Questions With Complete Solutions 2026

“1 I I I I I I I I I I I I I I I I I I I I I I I I al Rhode Island Adjuster's Exam Questions With Complete Solutions 2026 the role of insurance is to - CORRICTANSWER transfer the risk of financial loss from an individual or business to an insurance company organized and incorporated under state law owned by stockholders who get a paid share of the company's profic through dividends, also referred to as a nonparticipating or non-par be policy holder do not participate in paid dividends - CORRECT ANSWER -stock insurance company organized and incorporated under state law. but they have no stockholders. instead, the policyholders own the company. owners get paid a share of the companies profits through dividends. participating or par companies be policy owners do not participate in paid dividends - GORRECTANSWER. mutual insurer companies process of a stock company being converted into a mutual company - SQRRECIIANSWER! mu cualizacion process of a mutual company being converted into a stock company - CORRECT ANSWER - demutualization an association formed to underwrite and issue insurance like coverage on certain items and areas that might (GORRUSIANSWER Loy of London otherwise be uninsurable are a specialized branch of the insurance industry that insurers other insurance company’s risk. *is an arrangement by which an insurance company transfers or sells a portion of the risk to a reinsurance company - the insurance company transferring the risk - GORRECTANSWER ceding company r I I I I I I I I I I I I I I I I I I I I I I I I L a | industrial insurance sold by home service or debit insurance companies - GORRECHANSWER-home service insurers when 3rd party ownership is involved, applicants who also happen to be the stated primary beneficiary are insurable interest in the proposed insured which is considered a statement that is assured to be true in every respect - CORRTCTANS WER warranty which best describes a warranty GORRECTANSWER statement guaranteed to be true which of these is not considered to be an element of an insurance contract - CORRECT ANSWER - negotiating a life insurance policy would be considered contract without? - GORRECHANS WER insurable incerest all of the following (bilateral unilateral aleatory adhesion) are considered to be typical characteristics describing the nature of an insurance contract except - CORRECTANSWER bilaceral in an insurance contract the insurer is the only party who makes a legally enforceable promise what kind of contract is this - GORRECTANSWER! unilaceral Taking receipt of premiums and holding them for the insurance company is an example of - CORRECT AINSSVBRY fic uciary responsibilicy a policy of adhesion can only be modified by whom CORRECT ANSWER. he insurance company bua ee ee ee ee eee ee ee ee ee eee eee eee he es eee ee ee ee ee a | he es eee ee ee ee ee Which of these life products is NOT considered interest-sensitive? - GORRECTANGWER! modified whole life which of the following type of policies pays a benefic if the insured goes blind - GORRECIANSWER- AD&D D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium, What kind of policy is needed? - CORRECTANGWER)-lcve! term Term insurance has which of the following characteristics? - (ORRECIANSWVER expires ac the end of the policy period which is crue concerning a variable universal life policy - GORRECINANSWER! policy owner controls where the investment will go and selects the amount of the premium payment 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? - GORRECIANSWERI $20,000 death benefic When is the face amount paid under a Joint Life and Survivor policy? - CORRECTANSWERupon death of the last insured What kind of insurance policy supplies an income stream over a set period of time that starts when the GORRECTANSWER family maintenance policy insured dies ifa 10 year term life policy contains a renewability in provision, the policy will renew - CORRECT ANSWER) w/o evidence of insurability which of the following types of term life policies most likely contains a renewability feature - GORRECD, ANSWER -10 year convertible term bua ee ee ee ee eee ee ee ee ee eee eee eee “1 I I I I I I I I I I I I I I I I I I I I I I I I al 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? - CORRECT ANSWER -20 pay life A(n) life policy combines investment choices with a form of term coverage - CORRECT ANSWER) variable universal a variable insurance policy - GORRESTANSWER) doesn't guarantee a return on investment accounts P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? - GORRECTANSWER family maintenance 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 ot risk. Which product would § be advised to purchase? - GORRECTANGWER equity index insurance P owns a $25,000 life policy chat pays the face amount to him if he lives to age 70. or to his beneficiary if he dies before age 70. what kind of policy does P own - GORRECTANSWER endowment at age 70 which of the following provisions guarantees that premiums will be waived if juvenile life policy owner becomes disabled - GORRECTEANSWER payor clause which statement is true in regards to a policy loan - CORRECT ANSWER -past due interest on a policy loan is added to total debt what action can a policy owner take if an application for a bank loan requires lateral - CORRECT ANSWER -assign policy ownership to the bank r I I I I I I I I I I I I I I I I I I I I I I I I L “1 I I I I I I I I I I I I I I I I I I I I I I I I al a life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached CORRECT ANSWER. waiver of premium Which rider provides coverage for a child under a parent's life insurance policy? - CORRECT ANSWER - child term rider in a life insurance policy which provision states who may select policy options designate and name a beneficiary and be the recipient of any financial benefits from the policy - GORRECTANSWER! owner rights the automatic premium loan provision is designed to - GORRECTANSWER- void a policy lapse which of these provisions require proof of insurability after a policy has labled - SORRECIANS WERT reinstatement ditional death benefits a cost of living rider gives the insured - CORRECT ANSWER ~ The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called - GORRECTANSWER ccinscatement which of these statements in incorrect regarding the federal income tax treatment of life insurance - GORRECTANGWER entire cash surrender value is taxable Quarterly premium payments increase the annual cost of insurance because - CORRECT ANSWER ~ to the insurer is decreased while the administrative costs are increased r I I I I I I I I I I I I I I I I I I I I I I I I L “1 I I I I I I I I I I I I I I I I I I I I I I I I al ona life insurance policy who is qualified to change the beneficiary designation - CORRECT ANSWER - policy owner J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? - CORRECT ANSWER -the gross premium is higher on a monthly payment mode as compared to being paid annually a level premium indicates - CORRECT ANSWER -the premium is fixed for the entire duration of the contract a(n) beneficiary may be changed by the policy owner without the consent of the beneficiary - CORREGHANSWAR, och Which premium schedule results in the lowest cost to the policyowner? - GORRECHANSWER! annual the common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which is true? CORRECT ANSWER -this clause provides the payment of proceeds to the insured estate a whole life insurance policy owner doesn't wish to continue making premium payments. which of the following enables the policy owner to sell the policy for more than its cash value - CORREGIPANS WER! |ife settlement contract Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? - GORREGTANSWER-80 because T is still alive r I I I I I I I I I I I I I I I I I I I I I I I I L a | 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? - CORRECT ANSWER-[an 26 What is being delivered during a policy delivery: GORRECTENSWER Insurance contract to the proposed insured a(n) ___ contained in a life insurance policy states that the policy will noc cover certain risks - GERREGH ANSWER «xclusion what is the purpose of the USA patriot act - GORRECTANSWER detect and deter terrorism. The reason for backdating a policy is - CORRECIANSWER| to obtain a premium rate based on an earlier age All of these are considered sources of underwriting information about an applicant EXCEPT - SORREGH ANSWER 4 ating services which factors are taken into consideration when an insurance company determines the premium rate for a whole life policy on an applicant - CORRECT ANSWER -tisk classification P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - CORRECT ANSWER. set up mcosing with spplicant w answer che questions what is the purpose of a policy summary - CORRECT ANSWER -I highlights the critical parts of the policy issued bua ee ee ee ee eee ee ee ee ee eee eee eee he es eee ee ee ee ee “1 I I I I I I I I I I I I I I I I I I I I I I I I al which of these factors do not play a role in underwriting of a life insurance policy - CORRECT ANSWER - martial status When an employee is terminated, which statement about a group term life conversion is true? - CORRECT ANSWER! policy proceeds will be paid if the employees dies during the conversion period what type of group insurance plan involves employees sharing cost - CORRECT ANSWER. contributing plan An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be - GORRECTANGWER converted to an individual permanent policy at an individual rate which of the following statements about noncontributing employee group life insurance is false - CORRECT ANSWER -& minimum # of employees is required to participate which of the following is an important underwriting principle of group life insurance ANSWER everyone must be covered in the group coup lle susurmace policies ace generally written as- CORRECT ANSWER annually renewable term Under a trustee group life policy, who would be eligible for a certificate of coverage? - CORRECT ANSWER -employee GORRECTIANSWER! accidental Which provision is NOT a requirement in a group life policy? a non-contributory plan requires participation of all eligible employees - GORRECHANSWERI- 100% r I I I I I I I I I I I I I I I I I I I I I I I I L “1 I I I I I I I I I I I I I I I I I I I I I I I I al he es eee ee ee ee ee which of the following is not included in an annuity contract - GORRECIANSWERLAD &D rider Qis severely injured in an automobile accident and becomes totally disabled, How many months must Q be disabled before being able to apply for Social Security disability benefits? - CORRECT ANSWER-5 months To be eligable for social security disability benefits, an employee must be unable to perform - CORRECT BNSIWERY any occupation which of the following does social security not provide benefits for - SORRECMANSNVER!-dismemberment what determines the full amount of social security retirement benefits a qualified individual is entitled to receive - GORRECTANSWER primary insurance amount (PIA) all of these are considered to be a benefit under social security expect for - SORRECIFANSIVERY- unemployment Premature IRA distributions are assessed a penalty tax of - GORRECTANGWER! 10% a sole proprietor may use this plan only if the employees of this business are included - CORRECT ANSWER Keogh pension plan An employee requested that the balance of her 401 (k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? - CORRECIANSIVER) distribution is subject to federal income tax withholding bua ee ee ee ee eee ee ee ee ee eee eee eee “1 I I I I I I I I I I I I I I I I I I I I I I I I al which of the Following is true abouta qualified retirement that is top heavy - S{ORRIRSINAINS WERE more than 60% of plan assets are in key employee accounts a retirement plan that sets aside part of the companys net income for distribution to qualified employees is GORREGTANSWER profir sharing plan called a An individual participant personally received eligible rollover funds from a profiesharing plan. What is the CORREGIANSWER! 20% is withheld for income tax withholding requirements for this transaction? income taxes all of the following statements about traditional individual retirement accounts are false except - CORRECT HINSIWERE-10% penalcy is applied co withdrawals before age 59 1/2 Post-tax dollar contributions are found in - GORRECTENGWER Roch IRA investments When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? - which of the following is true if the owner of an ira names their spouse as beneficiary, but then dies before any distributions are made? CORRECT ANSWER -the account can be rolled into the surviving spouses IRA Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners, If the CORRECT ANSWER ch agreement is funded with individual life insurance, what would it require partner must own a policy on the other partners a key employee policy is taken out by company x on its Vice President. 10 years later this employee leaves company x and begins working for company y. if individual were to die n the policy is still in force & unchanged where would the death proceeds be directed - GORREGTANSIVERT company x r I I I I I I I I I I I I I I I I I I I I I I I I L