Insurance Practice Exam 150 Questions and answers,. Graded A+. Latest Version.

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Insurance Practice Exam 150 Questions and answers,. Graded A+. Latest Version. What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made? *Irrevocable ... beneficiary *Tertiary beneficiary *Primary beneficiary *Revocable beneficiary - ✔✔-*Irrevocable beneficiary (An irrevocable designation may not be changed without the written consent of the beneficiary.) When can a policyowner change a revocable beneficiary? *Anytime *After the consent of the current beneficiary *Never *Only if primary beneficiary dies - ✔✔-*Anytime (With a revocable beneficiary designation, the policyowner may change the beneficiary at any time without notifying or getting permission from the beneficiary.) M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? *Tertiary *Irrevocable *Revocable *Contingent - ✔✔-*Revocable (With a revocable beneficiary designation, the policyowner may change the beneficiary at any time without notifying or getting permission from the beneficiary.) How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? *If the primary beneficiary is a minor at the time of the insured's death *If the primary beneficiary dies before the insured *If the insured died of accidental causes *If the insured died of natural causes - ✔✔-*If the primary beneficiary dies before the insured (A contingent beneficiary will receive the policy proceeds if the primary beneficiary dies before the insured's death.) Which statement regarding the Change of Beneficiary provision is true? *The beneficiary can only be changed with the consent of the insurer *The policyowner can change the beneficiary *The insured can change the beneficiary *A beneficiary change is subject to underwriting procedures - ✔✔-*The policyowner can change the beneficiary (A policyowner may change a beneficiary at any time. However, consent may be needed by the current beneficiary if designated as irrevocable.) A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need? *Revocable *Contingent *Irrevocable *Primary - ✔✔-*Irrevocable (An irrevocable designation may not be changed without the written consent of the beneficiary.) Which statement is true regarding a minor beneficiary? *Normally, the death proceeds are required to be held in trust until the beneficiary reaches the age of 21 *Normally, a guardian is required to be appointed in the Beneficiary clause of the contract *The minor must pay the debts of the insured's estate before receiving any of the proceeds *The minor is entitled to receive the death proceeds immediately - ✔✔-*Normally, a guardian is required to be appointed in the Beneficiary clause of the contract (In most cases, insurers require that a guardian be appointed in the Beneficiary clause of the policy or that a guardian be designated in the will.) What is the underlying concept regarding level premiums? *Level premiums build cash value quicker in the early years *The early years are charged more than what is needed *The early years are charged less than what is needed *Level premiums can only be paid annually - ✔✔-*The early years are charged more than what is needed (The concept of level premiums charges more than needed in early years.) A policyowner is able to choose the frequency of premium payments through what policy feature? *Consideration *Payor benefit *Premium Mode *Assignment provision - ✔✔-(Premium Mode is the feature that allows the policyowner to select the timing of premium payment, such as monthly, quarterly, annually etc.) A policyowner is allowed to pay premiums more than once a year under which provision? *Insuring *Consideration *Payor *Mode of Premium - ✔✔-*Mode of Premium (The Mode of Premium provision permits an insured to pay premiums more than once every year.) A life insurance application must be signed by all of these EXCEPT *the policyowner *the agent *the insured (if an adult) *beneficiary - ✔✔-*beneficiary () Any changes made on an insurance application requires the initials of whom? *Insured *Agent *Applicant *Beneficiary - ✔✔-*Applicant (When an applicant makes a mistake in the information given to an agent in completing the application, the applicant can have the agent correct the information, but the applicant must initial the correction.) T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later, provided that T is an acceptable risk. What item is given to T? *Binding receipt *Conditional receipt *Warranty receipt *Backdated receipt - ✔✔-*Conditional receipt (A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk.) M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT *policy is delivered *free-look period has expired *insurance company issues policy *initial premium is collected - ✔✔-*free-look period has expired (In this situation, the policy will go into effect after all these actions occur EXCEPT the expiration of the free-look period.) A noncontributory group term life plan is characterized by *the entire cost of the plan is paid for by the employer *the entire cost of the plan is paid for by the employee *the cost of the plan is shared by both employer and employee *both employer and employee must provide evidence of insurability - ✔✔-*the entire cost of the plan is paid for by the employer (When an employer provides noncontributory group term life insurance, the employer pays the entire cost of the plan.) Who is NOT required to sign a life insurance application? *Adult insured *Policyowner *Agent *Beneficiary - ✔✔-*Beneficiary (All of the following individuals must sign a life insurance application EXCEPT the beneficiary.) What action should a producer take if the initial premium is NOT submitted with the application? *Keep the application until premium is paid *Forward the application to the insurer after giving the applicant a binding receipt *Forward the application to the insurer without the initial premium *Forward the application to the insurer after giving the applicant a conditional receipt - ✔✔-*Forward the application to the insurer without the initial premium (In this situation, the producer should submit the application to the insurance company without the premium. However, if a premium is not paid with the application, the policy will not become valid until the initial premium is collected.) On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? *Collect initial premium *Collect initial premium along with a signed health statement *Explain to the applicant the policy is no longer in effect due to change in health condition *Collect initial premium and leave a binding receipt - ✔✔-*Collect initial premium along with a signed health statement (In this situation, the producer should deliver the policy and obtain the premium payment along with a signed health statement.) If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? *Noneligible *Noncontributory *Eligible *Contributory - ✔✔-*Contributory (Employees share in the premium costs with contributory plans.) 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 Period *Fixed Deferred *Fixed Immediate *Fixed Variable - ✔✔-*Fixed Deferred (A Fixed Deferred annuity pays out a fixed amount for life starting at a future date.) 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) *Flexible Premium Deferred annuity *Variable annuity *Immediate annuity *Straight Life annuity - ✔✔-*Immediate annuity (Immediate annuities start providing income payments usually starting within 30 days from the purchase date. Deferred annuities start providing income payments after the first year.) 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? *3 *4 *5 *6 - ✔✔-*5 (You are eligible to file for Social Security Disability benefits after being totally disabled for 5 months.) Question 23 Select the correct answer Which plan is intended to be used by a sole proprietor and the employees of that business? *SEP Plan *Keogh Plan *Individual Retirement Account (IRA) *SIMPLE Plan - ✔✔-*Keogh Plan (A Keogh Plan may be used by a sole proprietor only if the employees of the business are included.) A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed? *The employee's family *Company Y *Company X *The employee's estate - ✔✔-*Company X (With Key Person Insurance, the company purchases, owns, pays the premiums and is the beneficiary of the life insurance policy on the key person.) Which statement regarding a Key Employee Life policy is NOT true? *The application must be signed by the key employee *Its purpose is to prevent the financial loss that may ensue if a key employee dies *The beneficiary is named by the key employee *The company purchases, owns, pays the premiums and is the beneficiary - ✔✔-*The beneficiary is named by the key employee (The company names the beneficiary, not the employee.) At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? *Before the appointment is scheduled *Upon completion of the application *At the policy's delivery *When the insurer receives the MIB report - ✔✔-*Upon completion of the application (An applicant for life insurance must be informed of their rights upon completion of the application.) Who elects the governing body of a mutual insurance company? *chairman of the board *bondholders *stockholders *policyholders - ✔✔-*policyholders (The governing body of a mutual insurance company is elected by the policyholders.) 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 *type of life insurance *S's attained age *dividend amount used toward purchase *beneficiary's age - ✔✔-*S's attained age (The age of the beneficiary is irrelevant in determining how much paid-up additions can be purchased.) When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) *elimination *exclusion *limitation *exception - ✔✔-*exclusion (Exclusions are features of a life insurance policy stating that the policy will not cover certain risks.) What is the Suicide provision designed to do? *decline an applicant who is contemplating suicide *safeguard the insurer from an applicant who is contemplating suicide *protect the insurer from ever paying a claim that results from suicide *allows the insurer the option to pay a death benefit in the - ✔✔-*safeguard the insurer from an applicant who is contemplating suicide (The purpose of a Suicide provision is to protect the insurer against the purchase of a policy in contemplation of suicide.) The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n) *Entire Contract provision *Consideration clause *Insuring agreement *Assignment agreement - ✔✔-Insuring agreement (The insuring clause or provision sets forth the company's basic promise to pay benefits upon the insured's death.) Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? *Family Maintenance clause *Payor clause *Assignment provision *Automatic Premium Loan provision - ✔✔-*Payor clause (A Payor clause ensures that premiums will be waived for a Juvenile Life policy if the policyowner becomes disabled.) Which of these is NOT considered to be a right given to a policyowner? *Surrendering the policy's cash value *Modify a provision in the insurance contract *Assignment of ownership *Change the beneficiary, if revocable - ✔✔-*Modify a provision in the insurance contract (Changing contract provisions is not a policyowner right.) P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount? *Accelerated Benefits provision *Entire Contract *Accidental Death and Dismemberment provision *Consideration clause - ✔✔-*Accidental Death and Dismemberment provision (An AD&D clause provides benefits for death due to an accident or for the loss of one or more hands, feet, arms, legs, or loss of sight.) B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of *additional Term Life coverage at any time *additional Term Life coverage at specified intervals *additional Whole Life coverage at any time *additional Whole Life coverage at specified times - ✔✔-*additional Whole Life coverage at specified times (A guaranteed insurability option in a Whole Life Policy permits the policyowner to purchase, without evidence of insurability, stated amounts of Whole Life insurance at specified times.) Whose life is covered on a life insurance policy that contains a payor benefit clause? *Parent *Beneficiary *Child *Spouse - ✔✔-*Child (A payor benefit clause is generally added to a life policy that insures the life of a juvenile. It provides continuance of insurance coverage in the event of the death or total disability of the individual responsible for the payment of premiums.) The automatic premium loan provision is designed to *provide a source of revenue to the insurance company *avoid a policy lapse *allow a policyowner to request a policy loan *allow a policyowner to take out additional coverage without evidence of insurability - ✔✔-*avoid a policy lapse (The purpose of the automatic premium loan is to keep the policy from lapsing.) 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 *Automatic Premium Loan provision *Accelerated Benefits provision *Consideration clause - ✔✔-*Policy Loan provision (A policy loan will pay the policyowner an amount that, with interest, does NOT exceed the guaranteed cash value.) Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? *Variable Life *Credit Life *Universal Life *Interest-Sensitive Whole Life - ✔✔-*Variable Life (Because of the transfer of investment risk from the insurer to the policyowner, variable insurance products are considered securities contracts as well as insurance contracts.) Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? *Owner's Rights clause *Incontestable Period *Insuring Agreement *Conversion privilege - ✔✔-*Conversion privilege [Show More]

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