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Life Insurance Study Exam- Georgia
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An insurance producer selling a Variable Annuity whose cash value depends on the performance of an underlying investment account must be registered with: - ANS>> The Financial Industry Regulatory Authority (FINRA, formerly the NASD) A life insurance policy whose cash value will fluctuate depending upon the performance of a separate account is: - ANS>> Variable Life John Livingston owns a 30-Pay Life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: - ANS>> 100 Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? - ANS>> Term Which of the following statements about a Renewable Term policy is true? - ANS>> It is renewable at the option of the insured An Annuity is designed to provide which of the following financial features? I. The liquidation of principal and interest II. Favorable tax treatment III. The creation of an estate - ANS>> I and II A 45-year old customer who is seeking to supplement his retirement income at age 65 would not buy a: - ANS>> Immediate Annuity Which of the following is an example of a Limited-Pay Life policy? - ANS>> Life Paid- Up at Age 65 You have a client that is a real estate agent. Which of the following types of permanent protection is best for this type of client? - ANS>> Adjustable life Which of the following individual policy conversions is usually permitted without any evidence of insurability? - ANS>> Conversion from a Term policy to a Whole Life policy At age 30, Tom Morris wishes to purchase a Whole Life policy. His producer explains that he can pay for the policy in several ways. One method is called 20-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the
producer's most appropriate response? - ANS>> "20-Pay Life will accumulate cash value faster." Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year-amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay? - ANS>> A $50,000 Decreasing Term policy for 20 years In order to sell variable life insurance you must be registered with which of the following? - ANS>> The NASD Which of the following contracts requires that a series of benefit payments be made at specified intervals? - ANS>> Annuity A life insurance policy that covers two parties, but only pays when the last party dies is known as: - ANS>> Survivorship Life Most Term Life insurance: - ANS>> Is convertible to permanent Whole Life without a physical exam If a person wants to invest a lump sum in an annuity that may appreciate along with market and economic conditions, they should buy a: - ANS>> Variable Annuity If a client wants cash value life insurance with a flexible premium and an adjustable death benefit that will allow the policy owner a choice of various cash value investment options, he should buy: - ANS>> Variable/Universal Life Which of the following statements is true about the premium payment schedule for a Whole Life policy? - ANS>> Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation? - ANS>> Whole Life Which of the following is NOT correct regarding Ordinary Whole Life policies? - ANS>> The cash value grows more quickly in the beginning years of the policy A business owner with a fluctuating income who wants a life insurance policy that can be changed to suit economic conditions should buy: - ANS>> Adjustable Life Which of the following is an example of a Limited-Pay Life policy: - ANS>> 20-Pay Life A life insurance policy that combines term insurance protection, a flexible premium, and cash value accumulation is: - ANS>> Universal Life
II. Evidence of insurability is not required III. The insured can exercise the option at any time after the age of 21 IV. The maximum purchase is specified in the contract - ANS>> II and IV Which of the following is true about the Misstatement of Age provision: - ANS>> It allows the insurer to adjust benefits The purpose of the Grace Period is to: - ANS>> Protect the policy owner against unintentional lapse Which of the following is true about the Insuring Clause? - ANS>> It contains the insurer's enforceable promise to pay covered claims To add coverage for a child to your Whole Life policy you would purchase which of these riders? - ANS>> Child Term Rider The time period covered by the Free Look provision of a Life insurance contract starts:
- ANS>> When the insured receives the contract and makes the first premium payment, if needed Which of these is a rider that would ensure you can purchase additional insurance coverage, at specified ages, regardless of health? - ANS>> Guaranteed Insurability Rider On Life insurance, the purpose of the Entire Contract Clause is to: - ANS>> Limit the policy to the contract plus the application, if attached The life insurance policy provision that prevents the insurer from modifying a policy after it has been issued is the: - ANS>> Entire Contract Clause The Life insurance rider that will pay the insured's premium after a period of disability due to accident or sickness is: - ANS>> Waiver of Premium All of the following are considered to be owner's rights under a Life insurance policy, EXCEPT: - ANS>> Changing an irrevocable beneficiary Grandma owns a policy on her grandchild. Which rider would kick in if Grandma should die tomorrow? - ANS>> Payor Benefit Rider A customer buys a $25,000 Life insurance policy with a $25,000 Accidental Death Benefit rider attached. If he dies of cancer, how much will his policy pay? - ANS>> $25, Which of the following statements about the Misstatement of Age provision in a Life insurance policy is true? - ANS>> If the insured's age has been understated, it provides that a death benefit smaller than the face amount of the policy will be payable
Jim gets married and wants to add his new spouse to his existing Life insurance policy. Which rider should he add? - ANS>> Other Insured Rider In a policy insuring the life of a child, which of the following allows the premiums to be waived in the event of the death or disability of the person responsible for premium payments? - ANS>> Payor Benefit Rider Which of the following statements about the Reinstatement provision is true? - ANS>> It requires the policy owner to pay, with interest, all premiums that are in arrears in order for the policy to be reinstated A client buys a Life insurance policy on July 1st and dies by suicide 6 months later. The insurance company will: - ANS>> Deny the claim, but refund the premium Dividend projections may be included in a proposal for Life insurance when which of the following is true? - ANS>> There is a clear statement that payment of future dividends is not guaranteed The contingent beneficiary will receive policy proceeds when: - ANS>> The primary beneficiary pre-deceases the insured A rider that keeps a policy from lapsing due to non-payment of premium by borrowing from the cash value is: - ANS>> Automatic Premium Loan The clause that states the insurer's promise to pay the policy benefits in accordance with the contract's provisions is the: - ANS>> Insuring Clause Which of the following statements about a typical Suicide clause in a Life insurance policy is true? - ANS>> Suicide is excluded for a specific period of years and covered thereafter Margaret May wants to name her husband as the beneficiary of her Life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as: - ANS>> Revocable beneficiary If the insured understated his age and the error is discovered after the insured's death, the insurance company will: - ANS>> Pay the amount that the premium paid would have purchased at the correct age The Life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the: - ANS>> Incontestability clause An insured's premium for Life insurance is based mainly upon their: - ANS>> Risk classification
Once completed and signed by the applicant, a producer may change an application: - ANS>> If the applicant initials the change If an existing client of a producer wants to buy another Life insurance policy, the producer should: - ANS>> Have the customer come in and complete and sign a new application Which federal law governs consumer investigative reports: - ANS>> Fair Credit Reporting Act A producer sends a completed and signed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When would coverage start? - ANS>> When the producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health All of the following are a part of a Life insurance policy, EXCEPT the: - ANS>> Conditional Receipt With proper notice and authorization, insurers may report underwriting information that an applicant lists on their application for Life insurance to the: - ANS>> Medical Information Bureau (MIB) When giving a client a conditional receipt, which of the following is true? - ANS>> The coverage will begin at earliest as of the date of application or when the client passes a physical, whichever is later A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, she realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should: - ANS>> Refuse to deliver the policy or to accept any premium offered Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment. Mr. Metz has how many days in which to convert his group coverage to individual coverage? - ANS>> 31 When a company requires that their employees pay part of the premium for the Group Life insurance coverage, it is known as a ___________ group: - ANS>> Contributory Albert Metz, who has $2,000 of Group Life insurance, has just terminated his employment.The maximum amount that Mr. Metz will be able to convert is which of the following? - ANS>> $2,
A parent who wishes to have complete control of their son's life insurance policy until the son reaches age 25 can do so through the use of which of the following? - ANS>> Ownership provision Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application? I. Tim Watson II. Mike Carson III. Deborah Carson - ANS>> I and II A Life insurance policy of which the cash value is over-funded according to IRS rules is known as: - ANS>> A Modified Endowment Contract A client with a participating Life insurance policy receives both interest and dividends. What are the tax implications? - ANS>> The interest is taxable, but the dividends are not Which of the following statements is true about a policy assignment? - ANS>> It transfers the owner's rights under the policy to the extent expressed in the assignment form A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a: - ANS>> Buy and Sell Agreement Premature distributions from a Traditional IRA prior to age 59 1/2 are subject to: - ANS>> Ordinary income tax plus a 10% penalty Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the: - ANS>> Policy owner When someone other than the insured is the owner of a Life insurance policy, the owner may do all of the following without the insured's consent, EXCEPT: - ANS>> Increase the amount of insurance Traditional IRAs have a premature distribution penalty for distributions taken prior to age: - ANS>> 59 1/ The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is: - ANS>> $2, Which of the following is not considered to be a 'qualified' plan? - ANS>> Split Dollar
