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- 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 Answer: B
- A contract that has as its basic function the systematic liquidation of accumulated assets through periodic payments is called an Answer: A.indemnity contract B.investment contract C.endowment D.annuity Answer: 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 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
2 / D.A copy of the temporary insurance agreement that covered the period between the application date and the delivery date. Answer: B
- An employer can deduct premium payments as an ordinary business ex- pense 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 Answer: B
4 / B.Death during the conversion period is covered even if the departing employ- ee 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. Answer: B
- Which of the following policies is an interest-sensitive form of permanent protection? A.Universal Life
5 / B.Limited-Pay Life C.Graded Premium Whole Life D.Modified Whole Life Answer: 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 Answer: B
- Which of the following statements about a Renewable Term policy is COR- RECT? 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. Answer: 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?
7 / A.Entire Contract B.Ownership clause C.Nonforfeiture Option D. Insuring clause Answer: 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 Answer: 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 beneficia- ries Answer: C
- A policyowner names his wife as the primary beneficiary of his Universal
8 / 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 poli- cyowner's wife predeceases him, and then he dies, who will receive the policy proceeds? A.The children B.The policyowner's estate
10 / C."fully insured" or "currently insured" status D.sex Answer: 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 Answer: B
- If a policy contains a Guaranteed Insurability rider, the insured has the right to purchase:
11 / 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 Answer: 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. Answer: 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 Answer: B
- 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
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D.$9,
Answer: D
- Which of the following retirement plans is tax-qualified? A.Key-person B.Defined contribution C.Section 457 deferred compensation D.Split dollar life insurance Answer: B
- A life insurance application is incomplete if it is missing the signature of which of the following? A.A revocable beneficiary B.The president of the insurer C.The proposed insured's primary care physician D.The proposed adult insured Answer: D
- The right to change a beneficiary designation is reserved for the Answer: A.beneficiary B.policyowner C.insurer D.insured Answer: B
- All of the following policies may be examples of third party ownership EXCEPT:
14 / A.Modified Life B.Group Life C.Split-dollar Life
16 / A.Buy and Sell Agreement B.Key Employee Life policy C.Survivorship Life D.Joint and Several Annuity Answer: A
- If life insurance policy applicant is classified as a substandard risk, the insurance company will MOST likely: A. issue the policy with riders
17 / B.charge an extra premium C. require an annual medical examination D.lower the rate per thousand charged Answer: 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 Answer: C
- In life insurance, the Free Look provision begins on the Answer: A.effective date of coverage B.policy delivery date C.date of application D.date that the insurer issues the policy Answer: 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
10 / 14 B.6 months C.2 years D.5 years Answer: C
- Which of the following statements is CORRECT about the Paid-Up Addi- tions 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. Answer: 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 Answer: B
- At which of the following times MUST a life insurance applicant be in-
10 / 14 formed 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 Answer: 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
