101 Life

According to the Gramm-Leach-Bliley Act, an insurer must notify insurance consumers of its policies and procedures for customer

privacy

A PRIMARY advantage of a limited payment policy over a continuous premium whole life policy is that a limited payment policy

allows the policy owner to pay for the entire policy in a shorter period of time.

Which of the following is a contract written on the lives of two or more persons and payable upon the death of the first person?

Joint Life Contract

What law do all insurers and their producers need to comply with in regards to information being obtained from a third party concerning the applicant?

Fair Credit Reporting Act

A modified Endowment contract qualifies as life insurance but fails to meet the seven-pay test. Which of the following describes the results of failing to meet the seven-pay test?

Pre-death distributions are likely to become taxable.

What is the annuity payment option that provides an income for a guaranteed period of time whether or not the annuitant is alive?

Period certain

Which is NOT provided by a fixed annuity?

Protection against inflation

Mortality is based on a larger risk pool of

people and time

The ownership provision of a life Insurance policy states that during the insured individual’s lifetime, the rights and privileges belong to the

owner only

What annuity payout option has no additional payouts regardless of when the annuitant dies?

Life only

A producer’s actions or deeds demonstrate what kind of authority?

Apparent

Under a Universal Life insurance policy, a corridor represents the

gap between the total death benefits and the policy’s cash value

The purpose of the spendthrift clause in a life insurance policy is to

prevent creditors of a beneficiary from claiming any future death benefits payable to the beneficiary

Which policy feature explains how life insurance creates an immediate estate?

The policy proceeds may be exempt from the claims of the creditors of the insured

An insured owns a whole Life Insurance Policy on himself. He would also like coverage for his son. One way the insured can accomplish this goal is to purchase a

Child Term Rider

In a speech to a local producers’ association, a producer incorrectly stated that XYZ Insurance Company is in financial difficulty and not paying claims. The producer may be guilty of:

Defamation

Which term describes naming a contingent beneficiary as “all of my children”?

Class designation

Kelvin is receiving tax deferred growth until retirement in what phase would Kelvin’s annuity be?

Accumulation period

Which is NOT one of the standard exclusions found in life insurance policies?

Disability

The process by which an insurer decides to whom to issue a policy is known as

underwriting

No existing insurance license will be revoked until

the licensee has been properly notified of the Department’s intent

If the Commissioner of Insurance finds that a producer has been engaging in unfair practices defined in the Louisiana Code, all of the following are true EXCEPT the

Commissioner’s decision is final

Which life insurance policy is used to protect a business from the financial consequences of the death of their executive director?

Key person insurance

An individual wants to retire at age 50 but but will not be able to receive any retirement, funds until he reaches the age of 65. He would like to purchase an annuity that would provide income from the date he retires to the age when the others retirement funds become available. What type of annuity is most suitable for this individual?

Annuity certain

An immediate annuity begins making payments after the

first premium has been paid

Under provisions of a life insurance policy suicide clause, if an insured commits suicide within the specified period from the inception of the policy, the insurer’s liability will be limited to the return of the premiums paid

without interest and minus any indebtedness

An incomplete application submitted to an insurer is

returned to the applicant for completion

The primary use of an annuity is to provide funds for

retirement

Prior to annuitization, what is the nonforfeiture value of an annuity?

All premiums paid, plus interest, minus any withdrawals and surrender charges

Joe has a $200,000 30-year mortgage on his new home. Which type of insurance could Joe purchase that is designed to pay off the mortgage balance if Joe dies during the 30-year pay-off period?

Decreasing term insurance

Which characteristics do a universal life insurance policy share with a traditional whole life policy?

Death protection and cash value

The applicant must face the possibility of losing something of value in the event of the insured’s death. This principle is known as

insurable interest

Statements by an applicant concerning personal health history, family health history, occupation, and hobbies ae referred to as

representations

In which type of annuity are the funds invested in a separate account?

Variable annuity

Which term describes and insurer operating in the state in which it is incorporated?

domestic

Which type of beneficiary designation allows the policyowner to name “all children” as beneficiaries?

Class

Which provides for the continuation of a business if the owner dies prematurely?

Buy-sell funding

When beneficiaries are designated “per capita” in a life insurance policy, it means

surviving beneficiaries must share equally in the death benefits regardless of heirs of beneficiaries who predecease the insured

Sarah is insured under a $100,00 10-year level term life insurance policy. If Sarah dies during the third year of the policy period, her beneficiaries will receive

$100,000

One of the major tax advantages of life insurance settlements is that

the beneficiary generally does not pay income tax on the proceeds

Which is an accurate statement regarding IRA rollovers?

They must be completed within a 60 day window

When naming his own estate as beneficiary of a life insurance policy, an insured may

direct that the policy proceeds be designated to pay off outstanding debts before the estate is settled

As a form of level premium permanent insurance, ordinary life insurance accumulates a reserve that eventually

results in a dividend payment to the policyowner

Any changes in an insurance application MUST be

Approved by the company

Even though the premium has NOT been paid, a life insurance policy will remain in force for a period of time after the premium is due because of the

Grace period provision

The Commissioner of Insurance may suspend any insurance producer’s license for all of the following reasons EXCEPT

soliciting insurance in adjoining states

Which is NOT considered to determine an individual term life insurance premium?

Aggregate claim amounts

Which is an accurate statement regarding modified endowment contracts?

A modified endowment contract has failed the seven-pay test

A reason for using consumer reporting agencies to gather information about insurance applicants is to obtain

verifiable information at little expense to the insurer

Which of the following represents a reduced paid-up nonforfeiture option?

The policy will have a decreased face amount

Insurance that is designed to pay the balance of a loan if the insured dies before the loan has been repaid in full is

credit life

Which rider allows the policyowner to increase the face amount to adjust for inflation?

Cost of living

The dividend option where the insurer issues the policyowner a check for the dividend amount is called a

cash dividend option

What information must be included in the statement accompanying an insurance claim payment made by an insurer?

The coverage under which the payment is being made

The Commissioner may suspend a producer’s license for all the following reasons EXCEPT

receiving commissions for business written

A company wants to offer a retirement plan to its employees. The plan will NOT qualify for favorable tax treatment if it

is temporary

Earned income is a requirement for contributing to all the following retirement plans EXCEPT

Variable annuities

Rob, Joe, and Mike are brothers who have a $60,000 “first-to-die” joint life policy covering all three of their lives if Joe dies first the policy proceeds

must be shared equally by Rob and Joe s wife

In general practice, can the Commissioner of Insurance inspect the business records of a company or agency for any valid reason?

es, because of the powers defined by state laws

Betty has a $200,000 whole life policy with a $50,000 cash value. she wishes to borrow $30,00 for the purchase of a new van. Which of the following is TRUE in this situation?

If the loan is not repaid, the net death benefit will be reduced

Specific statements made on an application that the insured guarantees to be TRUE are

warranties

If a retirement plan is established for the benefit of the employees and has a vesting requirement, the plan may be classified as

qualified

An applicant purchases a life insurance policy to avoid the force sale of assets upon his death. what is the action called?

Estate conservation

Risks are generally NOT insured if

the loss is expected

A life insurance policy’s double indemnity provisions would apply when the policyowner’s death occurs due to

an accident

The PRIMARY reason for purchasing life insurance is to provide

death benefits

Which of the following policies has a guaranteed interest rate with the possibility to earn an interest rate higher than the guaranteed rate?

Universal Life

Intentionally withholding information that should be provided to an insurer is known as

concealment

An applicant for an insurance policy is presumed to have an insurable interest in his

spouse

And insure would consider which of the following in determining whether to accept a group life plan?

Average age

Which type of beneficiary cannot be changed without consent?

The beneficiary is irrevocable

The premium mode defines the

the frequency of the premium payment

Continuing education requirements for insurance licensing must be met:

Every two years

The beneficiary provisions where the policyowner may change the beneficiary at any time and the beneficiary does not have the vested interest in the policy is considered

revocable

What is the approach to assessing the consumers need for life insurance that focuses on an individual’s future stream of income?

Human Life Value approach

An insurance contract in which the company makes promises that are legally enforceable is

bilateral

All of the following are unfair claimed settlement practices EXCEPT

attempt to settle a claim by Arbitration

The additional tax penalty for withdrawals from a lifted plan before the age of 59 1/2 is not waived for

distribution for the first new home

Under traditional fixed annuity contracts the party who assumes the investment risk is

insure

A married couple would like to buy an affordable life insurance policy that offers protection policy child after they die which policy defers estate taxes as long as possible?

joint survivorship life insurance policy

An insured has 20 pay life policies with a paid up dividend option this option the insured

pay up the policy early by using policy dividends

What is the purpose of a grace. Life insurance policies?

To prevent unintentional policy lapse

What is a condition which limits the company’s liability to provide coverage?

An exclusion

An individual purchased a standard whole life policy with a $250,000 death benefit when he was age 40. The producer told the insured that the policy would be completely paid up if he reached age 100. The cash value of the policy equals $125,000 when the insured died at age 70. What is the death benefit?

$250,000

Who is the beneficiary of a key person insurance policy?

Employer

The settlement option that pays a specified amount to an annuity, but pays no residual value to a beneficiary is known as

Interest only

Premiums paid on a personal life insurance policy are

not tax deductible

An annuity that guarantees a given number of income payments, whether or not the annuitant is alive to receive them, is referred to as

a life annuity certain

Jim purchased a $200,000 level term-to-age-65 life insurance policy when he was 35 years old. If Jim dies at age 50, what death benefits would he be paid by his policy?

$200,000

Which of the following is a provision in an interested-sensitive life policy which allows the policyowner to withdraw the policy’s cash value interest free?

Partial surrender

Which of the following provides a death benefit if the spouse of the insured dies?

Family Term insurance rider

A producer may be guilty of misreprentation if the producer

failed to disclose exclusions of the policy

The settlement option that allows proceeds to remain with the insurer and the earnings to be paid to the beneficiary on a monthly basis is called

interest only

A type of annuity that provides a guaranteed accumulation or a payout is called

fixed

Backdating on a life insurance policy is the practice of

making the policy effective on an earlier date than the present

Flexible premium adjustable life insurance is the generic name for

variable universal insurance

Term life insurance is more appropriate than whole life insurance when the

Maximum protection is needed, but the insured cannot afford premium payments for permanent insurance

In contracts, which of the following describes the term consideration?

Exchange of something value

What type of insure is owned by a policyowners?

Mutual

Which of the following riders allows for the insured to purchase additional insurance at specific dates or events without evidence of insurability?

Guaranteed Insurability