Insurance Exam Review Flashcards

This set of flashcards is designed to help review and study key concepts related to life insurance and annuities, including terms, provisions, policies, and regulations.

What provision states that both parties must give something of value for an insurance contract to be valid?

Consideration

When does an applicant’s coverage become effective if a premium was collected with a conditional receipt?

The date the insurer approves the application

Which type of term insurance decreases on a schedule while premiums remain level?

Decreasing Term

Which rider allows purchase of additional insurance without proof of insurability?

Guaranteed Insurability Rider

A policyowner stops paying premiums and uses the cash value to continue coverage. This is known as:

Extended Term

What does the incontestability clause prevent the insurer from doing after two years?

Denying claims based on application misstatements

A participating life policy returns unused premiums to policyowners. These are called:

Dividends

Which settlement option guarantees payments for life, regardless of how long the beneficiary lives?

Life Income

What is the purpose of the suicide clause?

Protect the insurer from early large losses

Which annuity pays the highest monthly income?

Straight Life

Which life policy automatically adjusts premiums and face amount based on interest rate performance?

Universal Life

A person licensed to sell life insurance but representing the insurer is a:

Producer

A temporary license may be issued for which situation?

Producer dies

What is twisting?

Replacing a policy with false comparisons

Which is considered a prohibited practice?

Rebating

The free-look period in Missouri is typically:

10 days

A policy that builds cash value and has level premiums for life is:

Whole Life

What determines the cash value of a variable life policy?

Separate account investment performance

The purpose of the Human Life Value approach is to determine:

Replacement of future earnings

Which provision allows a lapsed policy to be reinstated?

Reinstatement Provision

Which type of annuity begins income payments immediately?

Single Premium Immediate

In group life insurance, who receives the master policy?

Employer

What is the primary purpose of the grace period?

Allow payment after due date without lapse

A misstatement of age will result in:

Adjustment of the benefit

Creditor life insurance is typically used to cover:

Personal loans

Which nonforfeiture option provides the highest term coverage for the longest period?

Extended Term

A policyowner wants lifetime income with no refund to beneficiaries. Which option fits?

Straight Life Income

When must insurable interest exist?

At the time of application

Which describes a policy of adhesion?

Ambiguities favor the insured

Which dividend option buys small paid-up additions?

Paid-Up Additions

Which policy has separate accounts and no guaranteed cash value?

Variable Life

The primary advantage of whole life is:

Lifetime coverage

A modified endowment contract (MEC) is triggered by:

Excess premium funding

What does the waiver of premium rider do?

Pays premiums during disability

Which receipt provides coverage only if the policy is approved as applied?

Conditional Receipt

A policy loan is:

Taken from cash value

Which annuity protects against inflation?

Equity Indexed

Which best describes level term insurance?

Level premium, level face amount

The primary purpose of underwriting is to:

Evaluate risk

What does the cost-of-living rider do?

Adjusts coverage based on CPI

Which statement about group life is true?

No medical underwriting for employees

A temporary contract providing coverage during underwriting is:

Interim Term Insurance

What is the renewable feature of term insurance?

Renewal without proof of insurability

Which premium mode results in the highest total cost?

Monthly

When can a revocable beneficiary be changed?

Anytime by the policyowner

What is the purpose of the entire contract provision?

States policy + application = whole contract

A viatical settlement is sold by:

Terminally ill insureds

In a replacement situation, the producer must:

Provide a Notice Regarding Replacement

Which rider doubles benefit for accidental death?

Accidental Death Benefit

What is the grace period for group life?

31 days

Which is true about whole life premiums?

They remain level

A juvenile policy that increases to 5x face amount at age 21 is:

Jumping Juvenile

Credit life insurance is usually written as:

Decreasing Term

Which annuity payout guarantees payments for a stated period only?

Period Certain

The owner of a group life certificate is the:

Employer

Which is a dividend option?

Paid-Up Additions

A universal life policy with minimum premium payments will have:

Slow cash growth

Which rider returns all premiums at death?

Return of Premium

What is the primary purpose of the NAIC?

Establish uniform insurance standards

The assignment provision allows the policyowner to:

Transfer policy rights

An annuity purchased with a large single payment is:

Single Premium

Which is a characteristic of life insurance contracts?

Bilateral

Which policy is the least expensive initially?

Term

Which applicant is considered a substandard risk?

Terminally ill applicant

What is the purpose of the policy summary?

Explains all riders and values

A partial surrender is allowed in which policy?

Universal Life

A life-only annuity pays until:

The annuitant dies

Producer fiduciary responsibility means:

Handle client funds ethically

Which policy has flexible premiums and an adjustable death benefit?

Universal Life

When does the free-look period begin?

On policy delivery

Who must sign the application?

Agent, applicant, and owner

A voided policy means:

It never legally existed

The insuring clause states the:

Conditions under which insurer pays

Which best describes survivorship life?

Pays on second death

Which of the following is NOT required for a valid contract?

Beneficiary consent

What is the purpose of the conversion privilege in group life?

Converts to individual life with no medical exam

A deferred annuity begins payments:

At a future date

Which dividend option lowers the next premium?

Reduce Premium

Which provision states that the application is part of the contract?

Entire Contract

The primary purpose of life insurance is:

Income replacement

The policy loan rate must be disclosed in the:

Policy Illustration

Which rider covers additional family members under one policy?

Family Term Rider

Which describes the cash value of whole life?

Grows at guaranteed rate

A life insurance illustration must show:

Guaranteed values

What is the purpose of the MIB?

Stores medical information to reduce fraud

Which premium mode is least expensive overall?

Annual

What is required for reinstatement?

New application and back premiums

A flexible premium policy that allows investment choices is:

Variable Universal Life

When must replacement forms be provided?

At the time of application

The term ‘aleatory’ means:

Unequal exchange of value

Which type of annuity guarantees a minimum interest rate?

Fixed

Joint and survivor annuity payments stop when:

Second annuitant dies

Backdating an application may lower:

Premium

Which policy is best for covering a mortgage?

Decreasing Term

What is the purpose of the policy delivery receipt?

Confirms delivery

What is the contestable period in Missouri?

2 years

What does the reinstatement provision NOT require?

New policy issuance

What type of contract is life insurance?

Unilateral

Cash values of whole life belong to:

Policyowner

Which policy provides temporary coverage only?

Term