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PRIMERICA LIFE INSURANCE EXAM |
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An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a. mutual b. reciprocal c. nonprofit service organization d. stock - ✔✔A. mutual funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. if all funds are paid out, no dividends are paid Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? a. retention b. reduction c. transfer d. avoidance - ✔✔B. reduction the insured's change in lifestyle and habits would likely reduce the chances of health problems In insurance, an offer is usually made when
a. an applicant submits an application to the insurer b. the insurer approves the application and receives the initial premium c. the agent hands the policy to the policyholder d. an agent explains a policy to a potential applicant - ✔✔A. an applicant submits an application to the insurer in insurance, the offer is usually made by the applicant in the form of an application. acceptance takes place when an insurer's underwriter approves the application and issues a policy the causes of loss insured against in an insurance policy are known as a. perils b. losses c. risks d. hazards - ✔✔A. perils perils are the causes of loss insured against in an insurance policy what documentation grants express authority to an agent? a. agents contract with the principal b. agents insurance license c. fiduciary contract d. state provisions - ✔✔A. agents contract with the principal the principal grants authority to an agent through the agent's contract which of the following best describes an insurance company that has been formed under the laws of this state?
a. absolute authority b. express authority c. apparent authority d. implied authority - ✔✔B. express authority express powers are written into the contract between the insurer and the agent insurance policies are not drawn up though negotiations, and an insured has little to say about its provisions. what contract characteristic does this describe? a. unilateral b. conditional c. personal d. adhesion - ✔✔D. adhesion a contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as its written which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? a. reciprocal b. fraternal c. stock d. mutual - ✔✔C. stock only stock insurance companies are owned and controlled by stockholders which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?
a. subrogation b. warranty c. aleatory d. adhesion - ✔✔C. aleatory an insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a. legal purpose b. contract of adhesion c. acceptance d. consideration - ✔✔D. consideration consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application which of the following would qualify as a competent party in an insurance contract? a. the applicant is intoxicated at the time of application b. the applicant is 12 year old student c. the applicant is under the influence of a mind-impairing medication at the time of application d. the applicant has a prior felony conviction - ✔✔D. the applicant has a prior felony conviction when an insurer and insured enter into a contract, both parties must be legal of age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, a 12 year old student is considered to be underage in
d. to create an estate - ✔✔D. to create an estate with insurance, the death creates an immediate estate should the insured die a producer is helping a married couple determine the financial needs of their children in the event of one or both should die prematurely. This is a personal use of life insurance known as a. survivorship insurance b. juvenile protection provision c. survivorship protection d. life planning - ✔✔C. survivorship protection life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection a producer agent must do all of the following when delivering a new policy to the insured EXCEPT a. disclose commissions earned from the sale of the policy b. explain the policy provisions, riders, and exclusions c. collect any premium due d. explain the rating procedures if the policy is rated differently than applied for - ✔✔A. disclose commissions earned fro the sale of the policy a producer must explain policy provisions, exclusions, and riders at the time of the delivery, as well as the rating procedures especially if the policy is rated differently than applied for. The producer must also collect any due premium and have the insured sign the statement go continued good health if an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about a. which individual will pay the premium
b. whether an insurable interest exists between the individuals c. the gender of applicant d. the type of policy requested - ✔✔B. whether an insurable interest exists between the individuals an insurable interest must exist at the time of the policy is issued. Some relationships are automatically presumed to qualify as an insurable interest. ex: spouses, parents, children, and certain business relationships When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by a. a physician of the applicant's choice and at his expense b. a home office underwriter c. a paramedic or examining physician at the insurer's expense d. the agent - ✔✔C. a paramedic or examining physician at the insurer's expense the applicant may be allowed to select the physician or paramedic facility to perform the examination. The insurer pays the cost of such an examination The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called a. expenses b. legal reserve c. dividend accumulation d. premium tax - ✔✔A. expenses loading is another term for expenses. Net premium (mortality minus interest earned) plus expenses (or loading) equal the gross premium
a buy-sell agreements is simply a contract that establishes what willl be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy Who may complete a paramedical report? a. an underwriter b. a nursing assistant c. a registered nurse d. a spouse - ✔✔C. a registered nurse paramedical reports are completed by paramedics or registered nurses. Full medical expectations are reserved for those wanting higher coverage or for those who have more complex medical history the term "illustrations" in a life insurance policy refers to a. a presentation of non guaranteed elements of a policy b. a depiction of policy benefits and guarantees c. pictures accompanying a policy d. charts and graphs - ✔✔A. a presentation of non guaranteed elements of a policy the term "illustrations" means presentation of depiction that includes non guaranteed elements of a policy of individual of group life insurance over a period of years which is generally true regarding insureds who have been classified as preferred risks? a. they can borrow higher amounts off of their policies b. they can decide when to pay their monthly premiums c. they keep a higher percentage of any interest earned on their policies d. their premiums are lower - ✔✔D. their premiums are lower
the preferred risk classification indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify to lower premiums than those in other categories all of the following are requirements for life insurance illustrations EXCEPT? a. they may only be used as approved b. they must identify non guaranteed values c. they must differentiate between guaranteed and projected amounts d. they must be part of the contract - ✔✔D. they must be part of the contract an illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list non guaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a. term insurance only b. permanent insurance only c. universal life insurance only d. any form of life insurance - ✔✔D.any form of life insurance any form of life insurance may be used to fund a buy-sell agreement an insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured and matures at the insured's age 100 is called? a. Modified Endowment Contract (MEG) b. level term life c. graded premium whole life
b. the site of the group c. the insured's medical history d. the nature of the group - ✔✔C. the insured's medical history group life insurance is written on a group, not individual basis. Each individual completes an application that identifies the participant and the beneficiary. Then, the group is judged based on its nature and past claim experience. Generally, medical questions are not necessary what are the 2 components of a universal policy? a. insurance and investments b. mortality cost and interest c. separate account and policy loans d. insurance and cash account - ✔✔D. insurance and cash account a universal life policy has 2 components: an insurance components and cash account. The insurance component of a universal life policy is always renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher an adjustable life policyowner can change which of the following features? a. the coverage period b. the mortality expense c. the investment account d. the insured - ✔✔A. the coverage period typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing premium, changing the premium paying-period, increasing or decreasing the fat amount of coverage, or changing the period of protection
Under a 20 - pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a. for 20 years or until death, whichever occurs first b. until the policyowner reaches age 65 c. for 20 years d. until the policyowner's age 100 , when policy matures - ✔✔A. for 20 years or until death, whichever occurs first under a 20 - pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years; however, if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit A man decided to purchase a $ 100 , 000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a. required a premium increase each renewal b. built cash value c. required proof of insurability ever year d. decreased death benefit each renewal - ✔✔A. required a premium increase each renewal annually renewable term policies premiums are adjusted each year to the insured's attained age, however, the policy may be guaranteed renewable. Death benefits remain level, and switch any term policy, there are no cash values Both Universal Life and Variable Universal Life have a a. flexible premium b. level fixed premium c. decreasing premium d. increasing premium - ✔✔A. flexible premium
a. accelerated benefit rider b. living need rider c. payor rider d. cost of living rider - ✔✔D. cost of living rider a "cost of living rider" adjusts the face amount of a policy to maintain the relationship of the face amount and increase in the cost of living Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a. cash surrender b. reduced paid-up c. paid-up options d. extended term - ✔✔a. cash surrender once the cash surrender value is paid, the contract is over which of the following is true about the premium on the children's rider in a life insurance policy? a. it decreases when an adopted child is added to the policy b. it remains the same no matter how many children are added to the policy c. it decreases when the oldest child remains the age of 21 d. it increases when a newborn baby is added to the policy - ✔✔B. it remains the same no matter how many children are added to the policy the premium does not change on the inclusion of additional children, it is based on an average number of children the automatic premium loan provision is activated at the end of the
a. grace period b. free-look period c. elimination period d. policy period - ✔✔a. grace period provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a. the Entire Contract Provision b. The Consideration Clause c. Agreement Rights d. Owner's Rights - ✔✔D. owner's rights policy owners can learn about their ownership rights by referring to the policy The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? a. the proceeds will be split evenly between the 2 beneficiaries b. the policyowner can specify the way the proceeds are split in the policy c. the way proceeds are split between beneficiaries is decided by which type of policy is chosen D. life insurance policies may have only one beneficiary - ✔✔B. the policyowner can specifiy the way the proceeds are split in the policy the owner of a life policy may name any individual as a beneficiary for the policy proceeds. The owner may name more than one individual, in which case the individual beneficiaries will split the benefit by the percentage specified in the policy
c. total contract d. aleatory contract - ✔✔D. entire contract the policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence than the contract and the attached application in a test of the contracts validity. This is a mandatory provision in life insurance if an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? a. the death benefit will be larger b. the death benefit will be smaller c. the death benefit will be forfeited d. the death benefit will be the same as the original face amount - ✔✔B. the death benefit will be smaller if an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by that amount, plus the amount of earning lost by the insurance company in the interest income j applied for a life insurance policy on January 10 th. the policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid? a. February 28 th, or 10 days after the time the policy is delivered b. the time varies from one policy to another c. it was already to late when j received the policy because the 10 - day free-look period has expired d. anytime, because the agent did not deliver the policy promptly - ✔✔A. February 28 th, or 10 days after the time the policy is delivered the 10 - day free-look period begins when the policy is delivered
What limits the amount that a policyowner may borrow from a whole life insurance policy? a. cash value b. premiums paid c. amount stated in the policy d. face amount - ✔✔A. cash value the amount available to the policyowner for a loan is the policy owner's cash value. If there are any outstanding loans, that amount will be reduced by the amount of the unpaid loans and interest An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. accumulation at interest b. cash option c. reduction of premium d. annual dividend premium - ✔✔B. cash option the cash option allows, an insurer to send the policyholder an annual, nontaxable dividend check an insured purchased a 15 - year level term life insurance policy with a face amount of $ 100 ,0 00. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an automobile accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as an attachment? a. $ b. $ 100 , 000 c. $ 200 , 000 d. $ 100 , 000 plus the total of paid premiums - ✔✔C. $ 200 , 000
