Insurance Policies and Life Settlements: Understanding Key Concepts and Questions, Exams of Nursing

Download Insurance Policies and Life Settlements: Understanding Key Concepts and Questions and more Exams Nursing in PDF only on Docsity! GA Life Insurance Exam Questions and Answers 2024 Who elects the governing body of a mutual insurance company? Correct Answer is policyholders What year was the McCarran-Ferguson Act enacted? Correct Answer is 1945 A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: Correct Answer is a fraternal benefit society The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called: Correct Answer is reserves What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained? Correct Answer is Fair Credit Reporting Act The part of a life insurance policy guaranteed to be true is called a: Correct Answer is warranty What is the consideration given by an insurer in the consideration clause of a life policy? Correct Answer is promise to pay a death benefit to a named beneficiary Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: Correct Answer is representations Which of the following consists of an offer, acceptance, and consideration? Correct Answer is contract Which of these require an offer, acceptance, and consideration? Correct Answer is contract In regards to representation or warranties, which of these statements is TRUE? Correct Answer is If material to the risk, false representation will void a policy Insurance policies are offered on a "take it or leave it" basis, which make them: Correct Answer is Contracts of Adhesion A life insurance policy would be considered a wagering contract WITHOUT: Correct Answer is insurable interest Insurance policies are considered aleatory contracts because Correct Answer is performance is conditioned upon a future occurance Life and health insurance policies are: Correct Answer is Unilateral contracts Who makes the legally enforceable promises in a unilateral contract? Correct Answer is insurance company When must insurable interest be present in order for a life insurance policy to be valid? Correct Answer is when the application is made Which of these is NOT a type of agent authority Correct Answer is principal When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: Correct Answer is insurable interest in the proposed insured What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? Correct Answer is family maintenance policy When is the face amount paid under a Joint Life and Survivor policy? Correct Answer is upon the death of the insured A 15-year mortgage is best protected by what kind of life policy? Correct Answer is 15-year decreasing term A term life insurance policy matures: Correct Answer is upon the insured's death during the term of the policy The amount of coverage on a group credit life policy is limited to: Correct Answer is the insured's total loan value Which statement is TRUE regarding a Variable Whole Life policy? Correct Answer is a minimum guaranteed Death benefit is provided Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: Correct Answer is limited pay life Which of the following characteristics is CORRECT about Interest Sensitive Whole Life? Correct Answer is premium payments can vary S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made? Correct Answer is automatic policy loan All of these statements concerning Settlement Options are true, EXCEPT: Correct Answer is only the beneficiary may select How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period? Correct Answer is claims are denied under the Suicide clause of the policy The automatic premium loan provision is designed to: Correct Answer is avoid policy lapse Which of these is NOT considered to be a right given to a policy owner? Correct Answer is modify a provision in the insurance contract P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount? Correct Answer is accidental death a dismemberment clause What does the ownership clause in a life insurance policy state? Correct Answer is who the policy owner is and what rights the policy owner is entitled to S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT: Correct Answer is beneficiary's age J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used? Correct Answer is Revocable What is the underlying concept regarding level premiums? Correct Answer is the early years are changed more than what is needed The Common Disaster Clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true? Correct Answer is the clause provides the payment of proceeds to the insured's estate A policy owner would like to change the beneficiary on a Life insurance policy and make the changes permanent. Which type of designation would fulfill this need? Correct Answer is irrevocable A level premium indicates: Correct Answer is the premium is fixed for the entire duration of the contract Which statement regarding the Change of Beneficiary provision is true? Correct Answer is the policy owner can change the beneficiary Which of these statements is incorrect regarding the federal income tax treatment of life insurance? Correct Answer is entire cash surrender value is taxable A policy owner is able to choose the frequency of premium payments through what policy feature? Correct Answer is premium mode A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? Correct Answer is proceeds will go to the contingent beneficiary A policy owner's rights are limited under which beneficiary designation? Correct Answer is irrevocable On a life insurance policy, who is qualified to change the beneficiary designation? Correct Answer is policyholder Which of the following statements is correct regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? Correct Answer is All proceeds are income tax free in the year they are received Which statement is true regarding a minor beneficiary? Correct Answer is normally, a guardian is required to be appointed in the Beneficiary clause of the contract T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? Correct Answer is $0 C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most? Correct Answer is the cost Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? Correct Answer is risk classification Which Federal law allows an insurer to obtain an inspection report on a potential insured? Correct Answer is Fair Credit Reporting Act The USA Patriot Act was enacted in: Correct Answer is 2001 P is a producer who notices 5 questions on a life application were not answered. What actions should P take? Correct Answer is set up a meeting with the applicant to answer the remaining questions Before a life insurance policy is issued, which of these components of the contract is required? Correct Answer is applicant's signature on application A life insurance application must be signed by all these, EXCEPT: Correct Answer is beneficiary A Medical Information Report (MIB) report may disclose which of the following: Correct Answer is prior use of marjuana M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT: Correct Answer is free-look period has expired Any changes made on an insurance application requires the initials of whom? Correct Answer is applicant Which of these do NOT constitute policy delivery? Correct Answer is Policy issued with a rating At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? Correct Answer is at the time of application What is being delivered during a policy delivery? Correct Answer is Insurance contract to the proposed insured Upon delivery of a rated life insurance policy, the Producer must obtain each of the following, EXCEPT: Correct Answer is signed HIPAA disclosure What determines the full amount of Social Security retirement benefits a qualifies individual is entitles to receive? Correct Answer is Primary Insurance Amount (PIA) One becomes eligible for Social Security disability benefits after having been disabled for: Correct Answer is 5 months What type of reinsurance contract involves two companies automatically sharing their risk exposure? Correct Answer is Treaty Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits? Correct Answer is 5 All of these are considered to be a benefit under Social Security, EXCEPT for: Correct Answer is unemployment A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: Correct Answer is mandatory income tax withholding on the transfer amount A qualified profit-sharing plan is designed to: Correct Answer is allow employees to participate in the profits of the company What type of employee welfare plans are not subject to ERISA regulations? Correct Answer is church plans Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? Correct Answer is the account can be rolled into the surviving spouse's IRA Which plan is intended to be used by a sole proprietor and the employees of that business? Correct Answer is Keogh Plan A retirement plan that sets aside part of the company's net income for distributions to qualifies employees is called a: Correct Answer is profit-sharing plan An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable? Correct Answer is $2,500 Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? Correct Answer is If Tom's employment is terminated, 20% of the funds would be forfeited What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan? Correct Answer is 100 What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan? Correct Answer is 50% C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true? Correct Answer is ABC is the policy owner, C is insured, and ABC is the beneficiary What is considered a valid reason for small business to insure the lives of its major shareholders? Correct Answer is fund a buy-sell agreement A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed? Correct Answer is Company X An engineering firm that would suffer financially from the death of a project manager should purchase a: Correct Answer is Key Person Life Policy The premiums paid by an employer for his employee's group life insurance are usually considered to be: Correct Answer is tax-deductible to the employer