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N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? |
30 Pay Life |
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What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? |
Whole Life |
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Which of these is an element of a Variable Life policy? |
A fixed, level premium |
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Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? |
Policyowner |
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A Limited-Pay Life policy has |
premium payments limited to a specified number of years |
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Which statement about a whole life policy is correct? |
Cash value may be borrowed against |
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What type of life insurance gives the greatest amount of coverage for a limited period of time? |
Term life |
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What type of insurance offers permanent life coverage with premiums that are payable for life? |
Whole Life |
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What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? |
Decreasing term |
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How does a typical Variable Life Policy investment account grow? |
Through mutual funds, stocks, bonds |
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Which of these life products is NOT considered interest-sensitive? |
Modified Whole Life |
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G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G’s family receive an income? |
10 years |
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Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase? |
Whole life policy with other insured rider |
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Which is true concerning a Variable Universal Life policy? |
Policyowner controls where the investment will go and selects the amount of the premium payment |
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Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health? |
Conversion |
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Which type of policy is considered to be overfunded, as stated by IRS guidelines? |
Modified Endowment Contract |
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Which of these statements describe a Modified Endowment Contract (MEC)? |
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract |
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Which of these would be considered a Limited-Pay Life policy? |
Life Paid-Up at Age 70 |
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Which statement is correct regarding the premium payment schedule for whole life policies? |
Premiums are payable throughout the insured’s lifetime/ coverage lasts until death of the insured |
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What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? |
Family Maintenance Policy |
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All of these insurance products require a producer to have proper FINRA securities registration in order to sell them EXCEPT for |
Modified Whole Life |
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K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? |
Modified Whole Life |
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All of these are characteristics of an Adjustable Life policy EXCEPT |
face amount can be adjusted using policy dividends |
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When is the face amount paid under a Joint Life and Survivor policy? |
upon death of the last insured |
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Which of these characteristics is consistent with a Straight Life policy? |
Premiums are payable for as long as there is insurance coverage in force |
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F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? |
Decreasing term policy |
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When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? |
at future dates specified in the contract with no evidence of insurability required |
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S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT |
beneficiary’s age |
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When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) |
exclusion |
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What provision in a life insurance policy states that the application is considered part of the contract? |
Entire Contract provision |
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Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? |
Payor clause |
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Which of these is NOT considered to be a right given to a policyowner? |
Modify a provision in the insurance contract |
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How do life insurance companies handle cases where the insured commits suicide within the contract’s stated Contestable period? |
Claims are denied under the Suicide clause of the policy |
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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 |
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In a Life insurance contract, an insurance company’s promise to pay stated benefits is called the |
Insuring clause |
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What does the ownership clause in a life insurance policy state? |
Who the policyowner is and what rights the policyowner is entitled to |
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The automatic premium loan provision is designed to |
avoid a policy lapse |
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S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? |
$50,000 |
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An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? |
Full face amount minus any past due premiums |
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A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the |
Policy Loan provision |
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The Consideration clause in a life insurance contract contains what pertinent information? |
Amount of premium payments and when they are due |
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The incontestable clause allows an insurer to |
contest a claim during the contestable period |
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All of these statements about the Waiver of Premium provision are correct EXCEPT |
Insured must be eligible for Social Security disability for claim to be accepted |
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Which of the following statements is CORRECT about accelerated death benefits? |
Must have a terminal illness to qualify |
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Which statement regarding the Misstatement of Age provision is considered to be true? |
Coverage will be adjusted to reflect the insured’s true age if a misstatement of age is discovered |
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S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made? |
Automatic Policy Loan |
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Which of these life insurance riders allows the applicant to have excess coverage? |
Term rider |
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P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P’s beneficiary? |
$50,000 minus any outstanding policy loans |
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Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? |
Evidence of insurability is required when the option is exercised |
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D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D’s wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to? |
Ex-wife |
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Which of these are NOT an example of a Nonforfeiture option? |
Life Income |
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P is the insured on a participating life policy. Which statement is true if P’s premiums are waived due to a disability? |
P will still receive declared dividends |
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N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? |
Claim will be denied |
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Which of these Nonforfeiture Options continue a build-up of cash value? |
Reduced Paid-Up |
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What action will an insurer take if an interest payment on a policy loan is not made on time? |
automatically add the amount of interest due to the loan balance |
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What is the Suicide provision designed to do? |
safeguard the insurer from an applicant who is contemplating suicide |
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The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called |
reinstatement |
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T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? |
50, 000 (The suicide occurred after the Suicide Provision which is typically 1-2 years) |
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N is a student pilot with a large life insurance policy. Which of these features would limit the insurer’s obligation in the event N was killed while flying as a student pilot? |
Exclusion |
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How are surrender charges deducted in a life policy with a rear-end loaded provision? |
Deducted when the policy is discontinued |
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The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) |
An Accidental Death and Dismemberment (AD&D) rider |
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P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take? |
Beneficiary will be paid the Death Benefit |
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Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? |
Decreasing term |
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Which statement is TRUE regarding Variable Whole Life Insurance policy |
A minimum guaranteed death benefit is provided |
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