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Rhode Island Insurance Exam New Questions
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the role of insurance is to - ✔✔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 profit through dividends. also referred to as a nonparticipating or non-par bc policy holder do not participate in paid dividends - ✔✔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 bc policy owners do not participate in paid dividends - ✔✔mutual insurer companies process of a stock company being converted into a mutual company - ✔✔mutualization process of a mutual company being converted into a stock company - ✔✔demutualization an association formed to underwrite and issue insurance like coverage on certain items and areas that might otherwise be uninsurable - ✔✔Lloyds of London 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 - ✔✔reinsurers the insurance company transferring the risk - ✔✔ceding company
industrial insurance sold by home service or debit insurance companies - ✔✔home service insurers when 3rd party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have - ✔✔insurable interest in the proposed insured which is considered a statement that is assured to be true in every respect - ✔✔warranty which best describes a warranty - ✔✔statement guaranteed to be true which of these is not considered to be an element of an insurance contract - ✔✔negotiating a life insurance policy would be considered contract without? - ✔✔insurable interest all of the following (bilateral unilateral aleatory adhesion) are considered to be typical characteristics describing the nature of an insurance contract except - ✔✔bilateral in an insurance contract the insurer is the only party who makes a legally enforceable promise what kind of contract is this - ✔✔unilateral Taking receipt of premiums and holding them for the insurance company is an example of - ✔✔fiduciary responsibility
which statement is true regarding a variable whole life policy - ✔✔a minimum guaranteed death benefit is provided Which of these life products is NOT considered interest-sensitive? - ✔✔modified whole life which of the following type of policies pays a benefit if the insured goes blind - ✔✔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? - ✔✔level term Term insurance has which of the following characteristics? - ✔✔expires at the end of the policy period which is true concerning a variable universal life policy - ✔✔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? - ✔✔$20,000 death benefit When is the face amount paid under a Joint Life and Survivor policy? - ✔✔upon death of the last insured What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? - ✔✔family maintenance policy
if a 10 year term life policy contains a renewability in provision, the policy will renew - ✔✔w/o evidence of insurability which of the following types of term life policies most likely contains a renewability feature - ✔✔ 10 year convertible term 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? - ✔✔20 pay life A(n) life policy combines investment choices with a form of term coverage - ✔✔variable universal a variable insurance policy - ✔✔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? - ✔✔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 or risk. Which product would S be advised to purchase? - ✔✔equity index insurance P owns a $25,000 life policy that 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 - ✔✔endowment at age 70
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take? - ✔✔pay face amount minus the past due premium Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? - ✔✔decreasing term a(n) rider may be used to include coverage for children under their parents life insurance policy - ✔✔term a long-term care rider in a life insurance policy pays a daily benefit. in the event of which of the following? - ✔✔inability of the insured to perform more than 2 activities of daily life (ADL's) which non forfeiture options offers the highest death benefit - ✔✔extend term a life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached - ✔✔waiver of premium Which rider provides coverage for a child under a parent's life insurance policy? - ✔✔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 - ✔✔owner rights
the automatic premium loan provision is designed to - ✔✔avoid a policy lapse which of these provisions require proof of insurability after a policy has labled - ✔✔reinstatement a cost of living rider gives the insured - ✔✔additional death benefits 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 statements in incorrect regarding the federal income tax treatment of life insurance - ✔✔entire cash surrender value is taxable Quarterly premium payments increase the annual cost of insurance because - ✔✔interest to the insurer is decreased while the administrative costs are increased on a life insurance policy who is qualified to change the beneficiary designation - ✔✔policy owner 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 compared to being paid annually a level premium indicates - ✔✔the premium is fixed for the entire duration of the contract
which is correct regarding the tax treatment of a lump sum payment paid to a life insurance policy primary beneficiary - ✔✔all proceeds are income tax free in the year they are received Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - ✔✔policy was returned within the free look period, premium will be fully refunded At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? - ✔✔at the time of application An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the - ✔✔applicant's physician a $20,000 life insurance policy applications is completed, however the producer does not collect the initial premium. at what point does the coverage go into effect - ✔✔when the applicant receives the policy and pays the initial premium An incomplete life insurance application submitted to an insurer will result in which of these actions? - ✔✔application will be returned to the writing agent 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? - ✔✔Jan 26
What is being delivered during a policy delivery? - ✔✔Insurance contract to the proposed insured a(n) contained in a life insurance policy states that the policy will not cover certain risks - ✔✔exclusion what is the purpose of the USA patriot act - ✔✔detect and deter terrorism The reason for backdating a policy is - ✔✔to obtain a premium rate based on an earlier age All of these are considered sources of underwriting information about an applicant EXCEPT - ✔✔rating services which factors are taken into consideration when an insurance company determines the premium rate for a whole life policy on an applicant - ✔✔risk classification P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - ✔✔set up meeting with applicant to answer the questions what is the purpose of a policy summary - ✔✔It highlights the critical parts of the policy issued which of these factors do not play a role in underwriting of a life insurance policy - ✔✔martial status
all of the following regarding a tax sheltered annuity (TSA) are true except - ✔✔income derived from the TSA is received income free a(n) annuity pays benefits based on units rather than stated dollar amounts - ✔✔a variable annuity N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? - ✔✔fixed deferred T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - ✔✔life annuity with period certain variable annuities may invest premiums in each of the following except - ✔✔insurers corporate business account W is a 39 - year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n) - ✔✔immediate annuity which of these is an element of a single premium annuity - ✔✔lump sum payment What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? - ✔✔variable
which type of contract liquidates an estate through recurrent payments - ✔✔annuity which of the following is not included in an annuity contract - ✔✔AD&D rider Q is 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? - ✔✔ 5 months To be eligable for social security disability benefits, an employee must be unable to perform - ✔✔any occupation which of the following does social security not provide benefits for - ✔✔dismemberment what determines the full amount of social security retirement benefits a qualified individual is entitled to receive - ✔✔primary insurance amount (PIA) all of these are considered to be a benefit under social security expect for - ✔✔unemployment Premature IRA distributions are assessed a penalty tax of - ✔✔10% a sole proprietor may use this plan only if the employees of this business are included - ✔✔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
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? - ✔✔each 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 - ✔✔company x In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT
- ✔✔insured Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? - ✔✔each partner owns $500,000 policy on their partners life which of these is not a reason for a business to buy key person life insurance - ✔✔a pension deficiency if the key employee dies
