All of the following are appropriate uses of business life insurance EXCEPT

Funding against general financial losses

The purpose of life insurance settlement options is to

Determine how the death benefit will be paid

Which action by a producer is NOT a reason for the nonrenewal of a license?

Failing to meet insurer sales quotas

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant

Which of the following factors is NOT used in the Human Life Value approach?

Predicted needs of the family after the insured’s death

Under a pure life annuity, the annuity income is payable

Only for the life of the annuitant

Term limit on liability refers to the

Death benefit of a life insurance policy.

The law of large numbers allows an insurance company to predict the expected losses among

Members of a group of individuals with similar risks.

An equity indexed annuity is considered to be a fixed annuity because it has

A guaranteed minimum interest rate

All of the following characteristics of a group are considered by the underwriters EXCEPT

Medical condition of each insured

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Questions 111

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1
The right to a full refund of premiums for insureds age 60 or older is
20 days.
10 days.
14 days.
30 days.
2
Which of the following is NOT a risk management technique?
Avoidance
Retention
Exposure
Transfer
3
Which of the following policies could be expected to have the lowest premium?
20-pay life
15-pay life
30-pay life
Straight life
4
How does a survivorship life policy premium compare to the premium in a joint life policy?
Lower
The same
Half the amount
Higher
5
A private and civil wrong for which a remedy may be sought through legal action is known as a
Tort.
Legal purpose.
Contract.
Warranty.
6
In a group policy, the employer receives
Explanation of benefits.
Master contract.
Entire contract.
Executive contract.
7
Which of the following is the beneficiary in credit life insurance?
Insurer
Insured
Borrower
Creditor
8
After the receipt of life settlement proceeds, the owner may rescind the contract within
30 days
10 days
15 days
90 days
9
To be insurable, a risk must NOT be
Definite and measurable.
Predictable.
Catastrophic.
Due to chance.
10
All of the following are appropriate uses of business life insurance EXCEPT
Compensating executives
Funding against general financial losses
Paying the costs of training a replacement
Funding business continuation agreements
11
Which provision may allow a policy to be placed back in force if the coverage lapses?
Renewal
Conversion
Reinstatement
Incontestability
12
The requirement that an agent must not commingle monies with their own funds is
Express authority
Premium accountability
Accepted accounting principal
Fiduciary responsibility
13
The purpose of life insurance settlement options is to
Provide dividends for the beneficiary
Determine how the death benefit will be paid
Have nonforfeiture values built into the policy
Guarantee a return of excess premium
14
Mortality is defined as the
Rate of death.
Probability of a disability.
Probability of an illness.
Rate of annuitization.
15
Group life insurance plans provide a certificate of insurance to
The employer
Each insured
The insurance producer
The group sponsor
16
Intentionally omitting a history of heart problems on an application is
Misrepresentation.
Consideration.
Prudent.
Concealment.
17
A company organized to return any surplus money to their policyholders is a
Fraternal insurer
Stock company
Mutual insurer
Risk retention group
18
Which of the following types of beneficiaries may NOT be changed by the policyowner?
Contingent
Primary
Revocable
Irrevocable
19
Which action by a producer is NOT a reason for the nonrenewal of a license?
Failing to meet insurer sales quotas
Failing to complete a continuing education requirement
Felony convictions
Misrepresenting policy terms to policyowners
20
Who must file a notice of agent appointment with the Department?
The insured
The Commissioner
The insurer
The agent
21
Which of the nonforfeiture options will provide coverage for the longest period of time?
Life income
Accumulation at interest
Extended term
Reduced paid-up
22
Which of the following does NOT have tax consequences?
Life annuity income
Refund life benefits
Annuity certain payments
Policy loan
23
Which of the following is TRUE regarding the annuity period?
The annuity payments grow tax deferred
It is the same as accumulation period
The owner makes payments into the annuity
It may last for the lifetime of the annuitant
24
All of the following would be considered flexible-premium policies EXCEPT
Indexed universal life
Adjustable life
Variable whole life
Universal life
25
Which of the following is NOT a required element of an insurance contract?
Acceptance
Consideration
Counteroffer
Agreement
26
Which of the following factors is NOT used in the Human Life Value approach?
Predicted needs of the family after the insured’s death
Insured’s current and future income
Effect of inflation on income over time
Insured’s annual expenses
27
What is a major advantage of owning a qualified retirement annuity?
No filing with the IRS
Higher monthly income
Favorable tax treatment
Tax-free settlements
28
Which provision allows a policyowner to return the policy and receive a complete refund?
Entire contract
Free look
Consideration
Owner's rights
29
Which document describes the specific features and elements of a policy?
Personal contract
Policy summary
Conditional receipt
Illustrations
30
Which annuity payout option would be most appropriate for a married couple?
Joint life
Straight life
Joint and survivor life
Life with period certain
31
Which type of risk will result in the highest premium?
Preferred
Declined
Standard
Substandard
32
Under a pure life annuity, the annuity income is payable
For a guaranteed period of time
Only for the life of the annuitant
For the life of the annuitant or beneficiary
Until the principal and interest are exhausted
33
Term limit on liability refers to the
Incontestability provision.
Business overhead expenses.
Number of policy renewals.
Death benefit of a life insurance policy.
34
The law of large numbers allows an insurance company to predict the expected losses among
Members of a fraternal benefit society.
Individual with similar health conditions.
Members of a group of individuals with similar risks.
The insureds of a particular insurer.
35
The premium modes can be best described as the
Amount of premium payment.
Calculation of premium payment.
Method of premium payment.
Frequency of premium payment.
36
Which nonforfeiture option continues to build cash value?
Life income
Reduced paid-up
Extended term
Fixed amount
37
A person who signs a fraudulent claim form may be found guilty of
Perjury.
Misrepresentation.
Misdemeanor.
Rebating.
38
Earning 6 quarters of Social Security coverage during the previous 13 quarters is
Currently insured
Fully insured
Partially insured
Conditionally insured
39
An equity indexed annuity is considered to be a fixed annuity because it has
A fixed rate of return
A guaranteed minimum interest rate
No exposure to market fluctuations
Modest investment potential
40
Which one of the following is NOT one of the three basic types of term coverages?
Level
Renewable
Decreasing
Increasing
41
A terminated employee has to convert their group coverage to an individual policy within
10 days
45 days
90 days
31 days
42
Annuities can be used for all of the following needs EXCEPT
Funding a child’s college education
Retirement income
Estate creation
Lump-sum settlements
43
A field underwriter has all of the following responsibilities EXCEPT to
Collect the initial policy premium
Deliver the policy
Complete the agent’s report
Issue the policy
44
Before transacting insurance, each insurer must obtain a
Certificate of insurance
Certificate of authority
Business entity license
Director’s authorization
45
The intent of replacement regulations is to protect the
Insurance company.
Producer.
Agency.
Policyowner.
46
The frequency of premium payments is referred to as the premium
Term
Loading
Rating
Mode
47
When each party to a contract relies on the other to tell the truth, it is referred to as
Insurable interest
Reasonable expectations
Utmost good faith
Indemnity
48
Life-only agents may transact all of the following types of insurance EXCEPT
Endowments.
24-hour care coverage.
Disability income.
Annuities.
49
All of the following characteristics of a group are considered by the underwriters EXCEPT
Medical condition of each insured
Purpose of forming the group
Turnover rate
Financial strength
50
When must insurable interest exist?
When policy ownership is transferred
When death proceeds become payable
At the time of application
If cash values are borrowed
51
Which of the following is a type of risk that can only result in a loss or no change?
Pure risk
Unilateral risk
Adverse risk
Speculative risk
52
Which two terms are associated with premium payment options for annuities?
Fixed or variable
Individual or group
Level or flexible
Immediate or deferred
53
The risk of a loss to an insurance company is also referred to as a/an
Peril.
Hazard.
Exposure.
Adverse selection.
54
With a modified premium whole life contract, premium payments are
The same for the life of the contract.
Lower in the early years of the contract.
Variable during the life of the contract
Higher in the early years of the contract.
55
Any person who transacts insurance without a license
Is considered a life solicitor
May be found guilty of a misdemeanor
Is committing an act of fraud
Is permitted without receiving commission
56
The accelerated benefits provision will allow for an early payment of the death benefit when
The insured becomes terminally ill
The insured becomes permanently disabled
The insured reaches a certain age
Cash is needed for a home downpayment
57
Underwriting is the process of
Comparing different policies for an applicant.
Determining the company's risk regarding a proposed insured.
Writing policy forms to conform to Department guidelines.
Determining personal insurance needs.
58
Which of the following will NOT be considered unfair discrimination?
Providing different benefits based on habits or lifestyle
Charging similar applicants different premium rates
Assigning risk classifications based on ethnicity
Cancelling individual coverage based on marital status
59
Which settlement option may allow a beneficiary to receive more than the death benefit?
Cash payment
Fixed-amount installments
Life income
Fixed-period installments
60
Which method of handling risk is self-insurance?
Avoidance
Retention
Sharing
Transfer
61
What is given to a life insurance applicant when submitting an application with premium?
Insuring receipt
Sales receipt
Insurable receipt
Conditional receipt
62
Which of the following statements is NOT true about participating policies?
They have an intentional overcharge of premium.
They pay dividends to stockholders.
They pay dividends to policyowners.
They are commonly issued by mutual insurers.
63
Which of the following characterizes a speculative risk?
Transferring the risk of loss to another party
Having the possibility for loss or gain
Showing human carelessness or irresponsibility
Having a financial interest in an applicant
64
For federal tax purposes, lump-sum death benefits are
Subject to capital gains tax
Received tax free
Taxed as ordinary income
Taxed as a percentage of income
65
When completing an application for life insurance, a producer should do which of the following?
Give the applicant a statement of good health
Witness the applicant's signature
Complete the Medical Information Bureau report
Bind the applicant's coverage
66
Which of the following is consideration on the part of the insurer?
Underwriting
Payment of claims
Adding provisions and riders
Decreasing premiums
67
The purpose of the California Life & Health Guarantee Association is to
Protect policyowners against insolvent insurers
Protect state residents against insurance fraud
Enforce the nonforfeiture laws
Regulate domestic insurance companies
68
Which of the following would qualify as a Section 1035 exchange?
Variable annuity to universal life
Variable annuity to variable universal life
Fixed annuity to adjustable life
Whole life to variable life
69
When must insurable interest exist?
At the time of policy delivery
When cash values are borrowed
At the time of application
When policy ownership is transferred
70
Additional information about an applicant’s character and risk potential may be found in the
Agent’s report
Medical Information Bureau report
Buyer’s guide
Policy summary
71
What is the primary source of information used for insurance underwriting?
Private investigations
Medical records
Application
Credit reports
72
Which type of policy has two death benefit options?
Universal life
Variable life
Whole life
Adjustable life
73
Which of these is NOT an element of a legal contract?
Offer and Acceptance
Consideration
Unilateral
Competent Parties
74
An insured who submits a fraudulent claim to an insurer is an example of a/an
Morale hazard.
Moral hazard.
Peril.
Adverse selection.
75
A contract's agreement for life insurance is composed of a(n)
Acceptance and payment.
Opportunity and advantage.
Offer and acceptance.
Consideration and acceptance.
76
Which of the following would NOT be considered a replacement situation?
Causing a reduction in the benefit amount
Converting term insurance within the same company
Changing a policy to reduced paid-up insurance
Causing a lapse of an existing policy for a new policy
77
If the cash value exceeds the premiums paid when a policy is surrendered, the
Total amount received is taxable
Capital gain is tax deductible
Cash value is tax free
Portion that exceeds the premiums paid is taxable
78
A tax-sheltered annuity (TSA) is a qualified plan available for
Group life insurance.
Self-employed persons.
Nonprofit organizations.
Employees of corporations.
79
Which provision allows a lapsed policy to be put back in force?
Replacement
Incontestability
Reinstatement
Grace period
80
What type of policy shortens the premium paying period but continues coverage to age 100?
Convertible term
Decreasing term
Continuous premium
Limited payment
81
Under which condition would the estate become the beneficiary?
No beneficiary is designated
Too many beneficiaries are named
The primary dies before the contingent
The primary dies before the insured
82
If the annuitant dies during the accumulation period, the beneficiary will receive the
Face amount
Total of all premiums paid
Value of the contract less surrender charges
Contract value
83
Which statement is INCORRECT about a fixed annuity?
Premiums are invested in the general account.
Interest rates are guaranteed.
Insurer assumes the investment risk.
Income payments vary from month to month.
84
Material misrepresentations on the application are usually contestable for
5 years
2 years
3 years
1 year
85
Which type of authority is an example of the responsibility of an agent to collect premiums?
Express
Limited
Apparent
Implied
86
The cause of a loss is known as a/an
Peril.
Indemnity.
Exposure.
Hazard.
87
An annually renewable term life policy
Requires proof of insurability every year
Reduces the death benefit at each renewal
Builds cash value
Requires a premium increase at each renewal
88
All of the following actions by a person could be described as risk avoidance EXCEPT
Investing in the stock market
Never flying in an airplane
Taking a flu shot each year
Refusing to scuba dive
89
The purpose of the 7-pay Test is to
Require premium payments for 7 years
Determine if a life policy is a MEC
Determine if an insurer is solvent
Ensure that a policy is paid up in 7 years
90
The pay-in time for deferred annuities is known as the
Installment period.
Annuity period.
Payment period.
Accumulation period.
91
Money borrowed from a life insurance policy's cash value is
Taxed on a last-in first-out basis.
Taxed if the insured is terminally ill.
Fully taxable.
Not taxable.
92
Which of the following would NOT be considered a misrepresentation?
Embellishing the benefits provided in the policy
Guaranteeing policy dividends
Implying that a term policy has cash values
Showing conservative returns on policy illustrations
93
If an insured dies during the grace period, the insurance company is obligated to pay
The full face amount of the policy
The face amount less any owed premium
A refund of all premiums paid
The cash value of the policy, if any
94
The transfer of a possible financial loss to another party refers to
Insurance.
Peril.
Risk.
Indemnity.
95
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
The death benefit is split between first and second death
If the insured survives to age 100
Upon the first death
96
Which statement is INCORRECT concerning policy dividends?
Dividends are not taxable
The insurer may guarantee dividends
There are several options to receive dividends
Dividends are paid on participating policies
97
Which of the following is NOT a type of Social Security benefits?
Medical expense
Disability income
Retirement
Survivor benefits
98
Which statement regarding policy loans is INCORRECT?
The loan value may not exceed the cash value
Loans must be repaid within 2 years
An outstanding loan will reduce the death benefit
Loan requests may be deferred for up to 6 months
99
All of the following are true of an annuity owner EXCEPT
Must be the party to receive benefits
Is the party who may surrender the annuity
Must pay the premiums on the annuity
Has the right to name the beneficiary
100
When will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to age 100
As soon as the cash value exceed the face amount
At age 65
Only the beneficiary may receive the face amount
101
Selling which of the following polices would require a license issued by FINRA?
Convertible term
Variable universal life
Interest sensitive whole life
Universal life
102
Social Security benefits do NOT include
Workers Compensation.
Retirement.
Survivor.
Disability Income.
103
Which policy provides coverage for a specified period of time and does not build cash value?
Term life
Whole life
Joint and Survivor
Annuity
104
Which type of policy would be suitable to protect the balance of a home mortgage?
Whole life
Level term
Universal life
Decreasing term
105
Statements made by an applicant on an application for insurance are considered to be
Absolute.
Warranties.
Representations.
Implied.
106
For a person to collect only to the extent of the loss and not gain financially is known as
Indemnity
Reasonable expectations
Unilateral contract
Warranty
107
Which statement regarding installments for the fixed-period option is INCORRECT?
It is a life contingency option
The payments are not guaranteed for life
It will pay the benefit only for a period of time
The insurer determines the amount for each payment
108
A life insurance death benefit paid in a lump sum to a beneficiary is
Not subject to estate taxes.
Subject to federal, state, and estate taxes.
Subject to federal taxes only.
Not subject to any taxes.
109
The purpose of the buyer’s guide is to
Provide the name and address of the producer
Provide information about an issued policy
Educate consumers about life insurance policies
List all policy provisions and riders
110
The main responsibility of a company’s underwriting department is to
Limit business written by new producers
Make sure the applicant receives appropriate coverage
Manage risk selection
Select markets for its producers
111
Which nonforfeiture option maintains the original face value of the contract?
Fixed amount
Extended term
Reduced paid-up
Cash

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