Questions
2: A Universal Life insurance policy has two types of interest rates that are called
A Fixed and Variable.
B Minimum and Target.
C Guaranteed and Current.
D Option A and Option B.
The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.
13: Which of the following Life Insurance policies would be considered interest sensitive?
A Whole life
B Increasing term
C Universal life
D Adjustable life
As well as being a flexible premium policy, universal life is also an interest-sensitive policy. The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.
A The State Treasurer
B The issuance and sale of variable contracts is not regulated
C The Superintendent
D The president of the insurance company
The Superintendent shall have sole authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules and regulations as may be appropriate.
7: To sell variable life insurance policies, an agent must receive all of the following EXCEPT
A A securities license.
B A life insurance license.
C SEC registration.
D FINRA registration.
Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.
8: The death protection component of Universal Life Insurance is always
A Whole Life
B Adjustable Life
C Increasing Term
D Annually Renewable Term
A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.
9: A Universal Life Insurance policy is best described as a/an
A Flexible Premium Variable Life policy.
B Annually Renewable Term policy with a cash value account.
C Variable Life with a cash value account.
D Whole Life policy with two premiums: target and minimum.
A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.
11: The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
A Decreasing whole life.
B Multiple Protection insurance.
C Credit life.
D Credit health.
Credit life is most often sold by lenders and is term insurance written with a face amount and term that is matched to the amount and length of the loan period. Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor.
15: All of the following could own group life insurance EXCEPT
A A group needing low-cost life insurance.
B A group sponsored by an employer.
C An alumni group.
D A debtor group.
Groups purchasing group life insurance must be formed for a reason other than purchasing insurance.
15: All of the following are characteristics of a group life insurance plan EXCEPT
A There is a requirement to prove insurability on the part of the participants.
B The participants receive a Certificate of Insurance as their proof of insurance.
C A minimum number of participants is required in order to underwrite the plan.
D The cost of the plan is determined by the average age of the group.
There is no individual underwriting for group life insurance.
1: Under an extended term nonforfeiture option, the policy cash value is converted to
A A lower face amount than the whole life policy.
B A higher face amount than the whole life policy.
C The same face amount as in the whole life policy.
D The face amount equal to the cash value.
Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.
5: An insured committed suicide one year after his life insurance policy was issued. The insurer will
A Pay nothing.
B Refund the premiums paid.
C Pay the policy’s cash value.
D Pay the full death benefit to the beneficiary.
If the insured commits suicide within 2 years following the policy effective date, the insurer's liability is limited to a refund of premium.
9: Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
A Reduced paid-up
B Paid-up options
C Extended term
D Cash surrender
Once the cash surrender value is paid, the contract is over.
10: What is the waiting period on a Waiver of Premium rider in life insurance policies?
A 30 days
B 3 months
C 5 months
D 6 months
Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.
13: An insured receives an annual life insurance dividend check. What term best describes this arrangement?
A Cash option
B Reduction of Premium
C Annual Dividend Provision
D Accumulation at Interest
The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.
15: Which of the following methods to designate a beneficiary literally means "by the head?"
A Contingent
B Per capita
C Per stirpes
D Tertiary
Per Capita means "by the head." Each person named as beneficiaries would receive equal portions.