1. The State's __________ branch enforces the existing statutes that have been put in place.
A. Legislative
B. Executive
C. Electoral
D. Judicial
2. What should a producer do if the policy applied for is issued at a higher rate than was expected?
A. Personally deliver the policy, explain the rating, and reinforce the value of the policy
B. Have the home office re-issue the policy for a reduced amount of coverage for the original premium quoted so that it will be easier to explain at time of delivery
C. Immediately return the policy to the home office because the applicant will never accept it
D. Deliver the policy to the applicant and have the home office reduce the commission payout to cover the higher premium
3. When a producer receives an application for life insurance that is completed and signed, but without premium payment, when does coverage start?
A. 30 days after the application is received
B. At the end of the free-look period
C. On the date the policy is delivered and premium collected
D. On the date the application is received
4. Buying life insurance so that the death benefit will be available for paying estate taxes due upon the death of the insured is known as:
A. Survivor protection
B. Estate conservation
C. Estate creation
D. Preneed planning
5. With a Current Assumption Whole life policy, what can happen if the cash values increase too quickly?
A. The insurer will be forced to pay out the excess to the policyowner
B. The policy could mature sooner than expected
C. The face amount of the policy will decrease
D. The policy will lapse
6. When the death of an insured occurs within a specified period, causing the policy to pay double or triple benefits, this policy must have which of the following riders?
A. Accidental Death Rider
B. Enhanced Settlement Rider
C. Increased Death Benefit Rider
D. Accelerated Benefit Rider
7. Which type of term protection has an increasing face value as the insured gets older?
A. Convertible Term
B. Level Term
C. Increasing Term
D. Renewable Term
8. Which of the following is designed for someone with a large insurance need but with limited cash flow?
A. Whole Life Insurance
B. Variable Life Insurance
C. Term Life Insurance
D. Home Service Life Insurance
9. When the owner of the policy and insurer must meet certain conditions in order for the health insurance policy to be enforceable, it is referred to as a(n):
A. Unilateral contract
B. Conditional contract
C. Contract of adhesion
D. Aleatory contract
10. A married couple purchases a $250,000 Joint Life Policy. When the older of the two dies, what is the amount payable to the survivor?
A. $250,000
B. $125,000
C. $500,000
D. Zero
11. Equity Universal, Variable, and Variable Universal all have which of the following characteristics in common?
A. The overall policy performance has something to do with the stock market in general
B. A securities license is required to sell each policy
C. All have a guaranteed death benefit
D. The owner chooses the separate account(s) to invest the cash values in
12. In a viatical settlement transaction, the life insurance policyowner is referred to as the _________.
A. Provider
B. Third party
C. Viator
D. Viatee
13. A is the insured under a $100,000 10 year term life insurance policy with her spouse named as her beneficiary. If she dies in year 9, what will her spouse receive?
A. The face amount of the policy
B. A refund of all premiums paid
C. The policy's cash values
D. Nothing since this is term insurance
14. A mother with a teenage son purchases a life policy on his life. The policy includes an optional rider called the Payor Benefit. What will happen to the policy if the mother dies or is disabled before her son reaches age of majority?
A. The policy would pay out a modest lump sum to the beneficiary
B. The premiums would be suspended and later paid back by the son
C. The amount of coverage is reduced as the policy is paid up
15. A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n):
A. Aleatory Contract
B. Conditional Contract
C. Contract of Adhesion
D. Unilateral Contract
16. What happens to the overall policy premium when most riders on a life insurance policy expire?
A. It stays the same
B. It goes down
C. It is refunded
D. It goes up
17. Which of the following policies must be sold by prospectus?
A. Ordinary Whole Life
B. Universal Life
C. Equity Indexed Whole Life
D. Variable Whole Life
18. Which of the following policies must be sold by prospectus?
A. Ordinary Whole Life
B. Universal Life
C. Equity Indexed Whole Life
D. Variable Whole Life
19. M purchased a traditional permanent life insurance plan many years ago. What happens when he attains age 100?
A. M gets a check for the face amount of the policy
B. M gets a dividend check from the insurer
C. M gets a refund of all premiums paid
D. M receives nothing from the insurer because the traditional permanent insurance plan expires
20. Lucy uses her dividends to purchase single premium additional permanent benefits at her attained age. Which Dividend Option is Lucy exercising?
A. One-Year Term
B. Paid-up Additions
C. Paid-up Option
D. Reduced Paid-Up
21. An insurer which is formed under the laws of another country is a(n):
A. Non-authorized insurer
B. Domestic insurer
C. Alien insurer
D. Foreign insurer
22. The ___________ branch is responsible for interpreting and determining the constitutionality of the statutes.
A. Legislative
B. Electoral
C. Judicial
D. Executive
23. It is the _________ who issues a Certificate of Authority enabling an insurer to conduct insurance business within a particular state.
A. Secretary of State
B. State Insurance Commissioner
C. State Congress
D. State Senate
24. Jerry has selected a Life Income 10 year Period Certain. What happens to the income payments if he dies in year 4 after starting to receive income benefit payments?
A. The payments are increased by 60% and paid out for the balance of the time remaining on the guaranteed benefit
B. The payments are reduced by 40% then paid out to the surviving beneficiary for the remainder of their life
C. The payments end immediately with any residual values retained by the insurer
D. The payments continue for the balance of the Period Certain to a named beneficiary
25. Which of the following provisions commence at the time of the delivery of the policy to the insured?
A. Misstatement of Age or Gender
B. Insuring Clause
C. Suicide Clause
D. Free Look Period
26. A client purchases an individual disability income policy and receives the policy from the insurer 45 days after application. Upon receipt of the policy, the client typically has ______days to review and return the policy to receive a full refund for any reason.
A. 20
B. 45
C. 35
D. 10
27. The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period.
A. Conservation
B. Automatic Premium Loan
C. Reinstatement
D. Mode of Premium
28. A universal life policy has a death benefit of $125,000 and a cash accumulation value of $15,000. Generally, what will happen to the policy if there is a $5,000 partial withdrawal?
A. The policy will immediately be voided by the insurer
B. The policy will become paid up
C. The death benefit or cash accumulation will be reduced by the partial withdrawal
D. The policy will be used as collateral for a loan from the insurer for which interest will be charged
29. In order to make sure that a creditor of the insured is not paid more than the outstanding loan at time of claim, the policyowner should:
A. Indicate the percentage of the face amount the creditor will receive
B. Specify a dollar amount the creditor should receive at time of claim
C. Purchase a decreasing benefit policy that matches the loan repayment schedule
D. Name the creditor as a primary beneficiary
30. When there is enough cash value within a life policy to pay the premium, the Automatic Premium Loan provision prevents the policy from:
A. Surrendering
B. Converting
C. Lapsing
D. Renewing
31. All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except:
A. The insurer discovers the gender of the insured was misstated
B. The premiums have not been paid and have been overdue for 3 years
C. An insured commits suicide 7 years after the policy was issued
D .The insured was an experienced pilot who died in a plane crash but had a policy issued with an aviation rider for an additional premium