PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+, Exams of Nursing

Download PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ and more Exams Nursing in PDF only on Docsity! PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a. mutual b. reciprocal c. nonprofit service organization d. stock - Verified Answer A. mutual funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. if all funds are paid out, no dividends are paid Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? a. retention b. reduction c. transfer d. avoidance - Verified Answer B. reduction the insured's change in lifestyle and habits would likely reduce the chances of health problems In insurance, an offer is usually made when a. an applicant submits an application to the insurer b. the insurer approves the application and receives the initial premium PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ c. the agent hands the policy to the policyholder d. an agent explains a policy to a potential applicant - Verified Answer A. an applicant submits an application to the insurer in insurance, the offer is usually made by the applicant in the form of an application. acceptance takes place when an insurer's underwriter approves the application and issues a policy the causes of loss insured against in an insurance policy are known as a. perils b. losses c. risks d. hazards - Verified Answer A. perils perils are the causes of loss insured against in an insurance policy what documentation grants express authority to an agent? a. agents contract with the principal b. agents insurance license c. fiduciary contract d. state provisions - Verified Answer A. agents contract with the principal the principal grants authority to an agent through the agent's contract which of the following best describes an insurance company that has been formed under the laws of this state? a. domestic b. sovereign PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? a. subrogation b. warranty c. aleatory d. adhesion - Verified Answer C. aleatory an insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a. legal purpose b. contract of adhesion c. acceptance d. consideration - Verified Answer D. consideration consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application which of the following would qualify as a competent party in an insurance contract? a. the applicant is intoxicated at the time of application b. the applicant is 12 year old student c. the applicant is under the influence of a mind-impairing medication at the time of application PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ d. the applicant has a prior felony conviction - Verified Answer D. the applicant has a prior felony conviction when an insurer and insured enter into a contract, both parties must be legal of age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, a 12 year old student is considered to be underage in most states and a person under mind-impairing medication most likely would not be mentally competent an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a. representation b. adhesion c. consideration d. good health - Verified Answer C. consideration the binding force in any contract is consideration. consideration on the part of the insureds the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the even of loss which of the following is a primary source of information used for insurance underwriting? a. application b. applicant interviews c. medical records. d. private investigations - Verified Answer A. application PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ the application contains most of the information used for underwriting purposes. this is why its completeness and accurarcy are so critical which of the following is the best reason to purchase life insurance rather than annuities? a. to liquidate a sum of money over a period of year b. to create regular income payments c. to liquidate a sum money over a lifetime d. to create an estate - Verified Answer D. to create an estate with insurance, the death creates an immediate estate should the insured die a producer is helping a married couple determine the financial needs of their children in the event of one or both should die prematurely. This is a personal use of life insurance known as a. survivorship insurance b. juvenile protection provision c. survivorship protection d. life planning - Verified Answer C. survivorship protection life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection a producer agent must do all of the following when delivering a new policy to the insured EXCEPT a. disclose commissions earned from the sale of the policy b. explain the policy provisions, riders, and exclusions PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ c. what requirements the producer needed to meet to obtain the insurance license d. from what outside sources the insurer would seek information, regarding the insured - Verified Answer C. what requirements the producer needed to meet to obtain the insurance license agents are required to inform prospects of the products they are selling, as well as their information collecting practices which of the following statements concerning buy-sell agreements is true? a. premium paid are deductible as a business expense b. benefits received are considered income taxable c. buy-sell agreements pay in the event of a medical emergency d. buy-sell agreements are normally funded with a life insurance expectancy - Verified Answer D. buy-sell agreements are normally funded with life insurance expectancy a buy-sell agreements is simply a contract that establishes what willl be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy Who may complete a paramedical report? a. an underwriter b. a nursing assistant c. a registered nurse d. a spouse - Verified Answer C. a registered nurse PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ paramedical reports are completed by paramedics or registered nurses. Full medical expectations are reserved for those wanting higher coverage or for those who have more complex medical history the term "illustrations" in a life insurance policy refers to a. a presentation of non guaranteed elements of a policy b. a depiction of policy benefits and guarantees c. pictures accompanying a policy d. charts and graphs - Verified Answer A. a presentation of non guaranteed elements of a policy the term "illustrations" means presentation of depiction that includes non guaranteed elements of a policy of individual of group life insurance over a period of years which is generally true regarding insureds who have been classified as preferred risks? a. they can borrow higher amounts off of their policies b. they can decide when to pay their monthly premiums c. they keep a higher percentage of any interest earned on their policies d. their premiums are lower - Verified Answer D. their premiums are lower the preferred risk classification indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify to lower premiums than those in other categories all of the following are requirements for life insurance illustrations EXCEPT? a. they may only be used as approved PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ b. they must identify non guaranteed values c. they must differentiate between guaranteed and projected amounts d. they must be part of the contract - Verified Answer D. they must be part of the contract an illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list non guaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a. term insurance only b. permanent insurance only c. universal life insurance only d. any form of life insurance - Verified Answer D.any form of life insurance any form of life insurance may be used to fund a buy-sell agreement an insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured and matures at the insured's age 100 is called? a. Modified Endowment Contract (MEG) b. level term life c. graded premium whole life d. single premium whole life - Verified Answer D. single premium whole life PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing premium, changing the premium paying-period, increasing or decreasing the fat amount of coverage, or changing the period of protection Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a. for 20 years or until death, whichever occurs first b. until the policyowner reaches age 65 c. for 20 years d. until the policyowner's age 100, when policy matures - Verified Answer A. for 20 years or until death, whichever occurs first under a 20-pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years; however, if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a. required a premium increase each renewal b. built cash value c. required proof of insurability ever year d. decreased death benefit each renewal - Verified Answer A. required a premium increase each renewal PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ annually renewable term policies premiums are adjusted each year to the insured's attained age, however, the policy may be guaranteed renewable. Death benefits remain level, and switch any term policy, there are no cash values Both Universal Life and Variable Universal Life have a a. flexible premium b. level fixed premium c. decreasing premium d. increasing premium - Verified Answer A. flexible premium variable universal life, like universal life itself, has a flexible premium that can be increased or decrease as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit all other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a. half the amount b. lower c. higher d. as high - Verified Answer B. lower survivorship life is much the same as joint life in that it insures 2 or more lives for a premium that is based on a joint age. the major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, residing in a lower premium thant that which is typically charged for a joint life what policy would be classified as a traditional level premium contract? - Verified Answer straight whole life PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ the ownership provision entitles the policyowner to do all of the following EXCEPT? a.set premium rates b. receive a policy loan c. assign the policy d. designate a beneficiary - Verified Answer A. set premium rates the insurer sets premium rates based upon underwriting considerations A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called a. accelerated benefit rider b. living need rider c. payor rider d. cost of living rider - Verified Answer D. cost of living rider a "cost of living rider" adjusts the face amount of a policy to maintain the relationship of the face amount and increase in the cost of living Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a. cash surrender b. reduced paid-up c. paid-up options d. extended term - Verified Answer a. cash surrender once the cash surrender value is paid, the contract is over PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ after a back injury, an insured is disabled for a year. His insurance policy carries a disability income death benefit rider. Which of the following benefits will he receive? a. monthly premium waiver and monthly income b. percentage of medical costs paid by the insurer c. payments for life d. yearly premium waiver and income - Verified Answer A.monthly premium waiver and monthly income the disability income death benefit rider waives the policy premiums, just like the Waiver of Premium rider. Unlike the Waiver Premium rider, it also allows the insured to receive a weekly or monthly income during the disability period The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a. complete contract b. entire contract c. total contract d. aleatory contract - Verified Answer D. entire contract the policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence than the contract and the attached application in a test of the contracts validity. This is a mandatory provision in life insurance if an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a. the death benefit will be larger b. the death benefit will be smaller c. the death benefit will be forfeited d. the death benefit will be the same as the original face amount - Verified Answer B. the death benefit will be smaller if an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by that amount, plus the amount of earning lost by the insurance company in the interest income j applied for a life insurance policy on January 10th. the policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid? a. February 28th, or 10 days after the time the policy is delivered b. the time varies from one policy to another c. it was already to late when j received the policy because the 10-day free-look period has expired d. anytime, because the agent did not deliver the policy promptly - Verified Answer A. February 28th, or 10 days after the time the policy is delivered the 10-day free-look period begins when the policy is delivered What limits the amount that a policyowner may borrow from a whole life insurance policy? a. cash value b. premiums paid c. amount stated in the policy PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ d. face amount - Verified Answer A. cash value the amount available to the policyowner for a loan is the policy owner's cash value. If there are any outstanding loans, that amount will be reduced by the amount of the unpaid loans and interest An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. accumulation at interest b. cash option c. reduction of premium d. annual dividend premium - Verified Answer B. cash option the cash option allows, an insurer to send the policyholder an annual, nontaxable dividend check an insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an automobile accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as an attachment? a. $0 b. $100,000 c. $200,000 d. $100,000 plus the total of paid premiums - Verified Answer C. $200,000 the beneficiary would most likely receive 2x the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ which of the following is NOT true regarding the annuitant? a. the annuitant receives the annuity benefits b. the annuitant must be a natural person c. the annuitant cannot be the same person as the annuity owner d. the annuitants life expectancy is taken into consideration for the annuity - Verified Answer C. the annuitant cannot be the same person as the annuity owner while they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written> since the annuitants's life expectancy is taken into consideration, the annuitant must be a natural person When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed? a. the insurance company's general account b. forwarded to an investor c. each contract's separate account d. the annuity owner's account - Verified Answer A. the insurance company's general account fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio.The company makes conservative investments to insure a guaranteed rate to the annuity owners PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ an individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a. payment for 15 years b. payments for 20 years c. payments for life d. nothing - Verified Answer A. payments for 15 years with any period certain, death of the annuitant within the state period will provide payments to the beneficiary only for the remainder of the period certain The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called a. joint life annuity b. life income with period certain c. life income with refund d. joint and survivorship - Verified Answer B. life income with period certain if the annuitant dies before the period certain, the payments continue to a beneficiary or the estate for the remainder of the period certain the annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is know as which type of annuity? a.flexible premium immediate annuity b. single premium deferred annuity c. flexible premium deferred annuity d. single premium immediate annuity - Verified Answer C. flexible premium deferred annuity PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ the flexible premium deferred annuity (FPDA) is purchased with multiple payments, such as a portion of each paycheck. The benefit payment begin sometime after a one year from the date of purchase which of the following will NOT be an appropriate use of a deferred annuity? a. creating an estate b. accumulating retirement funds c. accumulating funds in an IRA d. funding a child's college education - Verified Answer A. creating an estate which of the following products requires a securities license? a. variable annuity b. fixed annuity c. equity indexed annuity d. deferred annuity - Verified Answer A. variable annuity a variable annuity is considered to be a security and is regulated by the Securities Exchange Commission (SEC) in addition to state regulations. For that reason, a person must hold a securities license in addition to a life agent's license in order to sell variable annuities all of the following statements are true regarding installments for a fixed period annually settlement option EXCEPT: a. it will pay the benefit only for a designated period of time b. the payments are not guaranteed for life c. the insurer determines the amount for each payment d. it is a life contingency option - Verified Answer D. it is a life contingency option PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ when premiums are paid with after tax dollars, the death benefit is generally not subject to federal income taxation what is the main purpose of the Seven-pay test? a. it requires level premium payments for 7 years b. it ensures that the policy benefits are paid out in 7 years c. it guarantees interest minimum d. it determines if the insurance policy is an MEC - Verified Answer d. it determines if the insurance policy is an MEC the seven pay test determines whether an insurance policy is "over funded" or if its a modified endowment contract. In other words, the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of the net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest if a company has a simplified employee pension plan, what type of plan is it? a. the same as an IRA, with the same contribution limits b. an undefined contribution plan for large business c. a qualified plan for a small business d. the same as a 401(k) plan - Verified Answer C. a qualified plan for a small business a Simplified Employee Pension (SEP) is a type of qualified plan suited for the small employer for self employed. A SEP is an employer sponsored IRA with an expanded contribution rate up to 25% of compensation or a specified maximum contribution amount if taken as a lump sum, life insurance proceeds to beneficiaries are passed PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a. part tax-free and part taxable b. without interest c. free of federal income taxation d. tax-deductible - Verified Answer C. free of federal income taxation life insurance proceeds to beneficiaries are passed free of federal income taxation if taken as a lump sum distribution. If the proceeds are taken as other than lump sum, part of the proceeds will be tax free and part will be taxable. When paid in installements, part of the proceeds contains principal and some interest, so the interest portion is subject to federal income taxation When must an IRA be completely distributed when a beneficiary is not named? a. due date of beneficiary tax return including extensions b. december 31 of the year following the year of the owners death c. due date of the deceased owners first tax return including extensions d. december 31 of the year that contains the 5th anniversary of the owners death - Verified Answer D. December 31 of the year that contains he 5th anniversary of the owner's death if the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the 5th anniversary of the owners death, unless the owner named a beneficiary in life insurance policies, cash value increases a. are only taxed when the owner reaches age 65 b. grow tax deferred c. are income taxable immediately d. are taxed annually - Verified Answer B. grow tax deferred PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ generally life insurance cash values are only income taxed if the policy is surrendered totally or partially and the cash value exceeds the premiums paid according to agency law, the producer always represents the a. insurance company b. client c. public d. state insurance department - Verified Answer a. insurance company under agency law, producers legally represent the insurance company with which they are contracted a producer in another state wants to become a producer in Louisiana. The other state gives the same privileges to Louisiana producers wanting to be licensed in that state as it does to its own producers. Louisiana, therefore, extends the licensing privileges to the prospective producer of the other state. What is this called? a. fair exchange b. controlled business c. subrogation d. reciprocity - Verified Answer D. reciprocity reciprocity occurs when the state in which the person resides accords the same privilege to residents of Louisiana A producer has been notified by the Commissioner to stop using an unapproved trade name. How many days does the producer have to change the trade name before facing a fine? PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ the purpose of the fair credit reporting act is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer reporting agencies are fair and equitable in their treatment of consumers ABC insurance company wishes to begin transacting business in Louisiana. Before it can do so, it must do which of the following? a. receive permission from the governor of louisiana b. receive a letter of clearance from ABC's home state c. obtain approval of each of its corporate officer and executives d. obtain a certificate of authority - Verified Answer D. obtain a certificate of authority all insurers, regardless of the state in which they are chartered, must obtain a certificate of authority from the louisiana insurance department before they can transact insurance in the state a temporary license is good for a. 30 days b. 60 days c. 90 days d. 180 days - Verified Answer 180 days a temporary license is good for 180 days a temporary license may be issued without examination to all of the following EXCEPT: a. the surviving spouse of a deceased producer b. the spouse of a retired producer PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ c. the legal guardian of a disabled producer d. the designee of a producer entering active service in the US navy - Verified Answer B. the spouse of a retired producer there is no provision for a temporary license to be issued to conduct the business of a retired producer which would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a. disclosure rule b. replacement rule c. reinstatement rule d. conversion rule - Verified Answer B. replacement rule anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company if authorized to write life and property and casually insurance, how many hours of continuing education instruction are producers required to complete every 2 years? a. 10 b. 12 c. 14 d. 24 - Verified Answer D. 24 producers in louisiana are required to complete 24 hours of continuing education every 2 years, regardless of the number of lines for which the producer is licensed what is the main justification for the existence of the state insurance department? PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a. to protect producers from the national association of insurance commission b. to protect the state from harmful practices of companies and producers c. to protect the public d. to protect companies from malicious lawsuits - Verified Answer C. to protect the public the state insurance department exists to protect the public any payment to a producer from an insurer that is contingent on the sale of an insurance policy or contract is called a a. charge fee b. service fee c. commission d. regular fee - Verified Answer C. commission producers are normally compensated by commissions where a percentage of the premium is paid to the producer by the insurance company which type of assignment would be used for a loan? a. collateral b. absolute c. modified d. permanent - Verified Answer A. collateral if a policyowner returns a policy 7 days after the policy is delivered, the insurer will a. refund a prorated portion of the premium paid PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ b. increase gradually to the original face amount c. be reduced by the accelerated payment amount d. be forfeitures because it is taken out early - Verified Answer C. be reduced by the accelerated payment amount which of the following riders allows for increases to the face amount at specified times with no proof of insurability? a. spouse term b. waiver of premium c. return of premium d. guaranteed insurability - Verified Answer D. guaranteed insurability all of the following riders would increase the death benefit amount EXCEPT: a. accidental death b. waiver of premium c. guaranteed insurability d. term rider - Verified Answer B. waiver of premium when someone other than the insured is the owner of a life insurance policy, this is called a. contingent b. reinsurance c. third-party ownership d. co-ownership - Verified Answer C. third-party ownership which of the following is not a requirement of group life conversion? a. application must be made within 31 days of termination PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ b. the company may exclude term insurance c. proof of insurability is required d. premiums will increase based on attained age - Verified Answer C. proof of insurability is required when a group plan is contributory., what percentage of employees must participate in the plan? a. 50% b. 75% c. 100% d. the percentage depends upon the size of the group - Verified Answer B. 75% buying a policy to offset a financial loss in the event of a valuable employees death is called a. key person life insurance b. deferred compensation plan c. buy-sell agreements d. split-dollar insurance plan - Verified Answer A. key person life insurance all of the following requirements are correct about qualified retirement plans EXCEPT: a. they must be in writing b. they must be permanent c. they do not qualify for special federal tax treatment d. they must not discriminate in favor of highly compensated employees - Verified Answer C. they do not qualify for special federal tax treatment a 10% penalty must be paid on withdrawals made from a qualified plan before age PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a. 40 b. 70 1/2 c. 59 1/2 d. 65 - Verified Answer C. 59 1/2 which of the following does not allow contributions beyond 70 1/2? a. roth IRAs b. traditional IRAs c. fixed annuities d. interest sensitive whole life - Verified Answer B. traditional IRAs a whole life policy in which the cash value builds faster than a 7-pay whole life policy is a a. modified endowment contract b. universal life contract c. immediate annuity contract d. limited-pay contract - Verified Answer A. modified endowment contract death benefits paid to a beneficiary are a. taxed as ordinary income b. subject to inheritance tax c. subject to federal income tax d. tax-free - Verified Answer D. tax-free If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered? PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a. the policy owner must expect to benefit from the insureds death b. the policyowner must expect to suffer a loss when the insured dies c. the beneficiary, by definition, has an insurable interest in the insured d. the insured must have a personal or business relationship with the beneficiary - Verified Answer B. the policywner must expect to suffer a loss when the insured dies the statements made by an applicant on an application for life insurance are considered to be a. warranties b. affirmations c. representations d. declarations - Verified Answer C. representations in the formations of a legal contract, each party must give something of value. Under contract law, this is referred to as a. indemnity b. adhesion c. agreement d. consideration - Verified Answer D. consideration one of the main purposes of the USA PATRIOT Act was to establish new standards for banks brokers-dealers and other financial institutions including insurers, concerning a. insurance fraud b. anti-money laundering c. falsified financial records d. false death claims - Verified Answer B. anti-money laundering PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ which of the following is NOT a characteristic of term life insurance? a. provides temporary protection b. pays a death benefit if the insured dies during a stated period c. is the least expensive form of life insurance d. builds cash value - Verified Answer D. builds cash value which policy would be most appropriate for protecting the balance of a loan or mortgage? a. level term b. decreasing term c. universal life d. variable life - Verified Answer B. decreasing term how long does coverage continue for a limited-pay whole life policy? a. 20 years on a 20-pay policy b. 65 years on a life paid at 65 policy c. death or age 100 d. 10 years on a 10 pay policy - Verified Answer C. death or age 100 an insured purchased a $100,000 whole life policy. After a period of years, the cash value of the policy has grown to $42,000. If the insured dies at this time, how much will the beneficiary receive? a. $100,000 b. $142,000 c. $42,000 d. $58,000 - Verified Answer a. $100,000 PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ which of the following is not correct about universal life? a. the policyowner may increase or decrease the face amount b. the insurance portion is whole life insruance c. these policies allow for partial withdrawals or surrenders d. there are two death benefit options. Option A and Option B - Verified Answer B. the insurance portion is whole life insurance a policy that insures 2 or more lives and pays on the death of the last insured is a. joint life b. group life c. survivorship life d. family protection ife - Verified Answer C. survivorship life which type of policy builds cash value that is placed in a separate account where it is invested in stocks, bonds and other securities? a. variable life b. universal life c. index life d. term life - Verified Answer A. variable life all of the following about a fixed annuity is true EXCEPT: a. the interest rate is guaranteed b. the premium is instead in the insurers general account c. it does not protect against inflation d. the owner assumes the investment risk - Verified Answer D. the owner assumes the investment risk PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a.$0 b. $50,000 (50% of the policy value) c. $100,000 d. $300,000 (triple the amount of the policy value) - Verified Answer C. $100,000 Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT a. an agent offers the use of his lake house to person and inducement to buy b. an agent offers to share his commission with a policyholder c. an agent offers tickets to a baseball hame as an inducement to buy insurance d. an agent misrepresents policy benefits to convince a policyowner to replace policies - Verified Answer D. an agent misrepresents policy benefits to convince a policyowner to replace policies an insured is dissatisfied with her insurance policy and wants to negotiate certain provisions of the contract. What entity would her producer represent? a. the insurer b. the commissioner of insurance c. the government d. the insured - Verified Answer A. the insurer all of the following entities regulate variable life policies EXCEPT: a. the SEC b. the insurance department c. the guaranty association d. federal government - Verified Answer C. the guaranty association PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT a. the amount of the insurance b. the type of investment c. the length of the coverage d. the premium - Verified Answer B. the type of investment what type of annuity promises to pay a beneficiary, in a lump sum, the difference between the amount paid into the contract and the benefits received prior to the annuitants death? a. cash refund annuity b. installment refund annuity c. joint and survivor annuity d. pure life annuity - Verified Answer A.cash refund annuity which is true about a spouse term rider? a. the rider is usually level term insurance b. coverage is allowed for an unlimited time c. the rider is decreasing term insurance d. coverage is allowed up to age 75 - Verified Answer A. the rider is usually level term insurance if an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may a. increase medical requirements on existing members b. require evidence of insurability c. require a higher premium PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ d. prolong the open enrollment period - Verified Answer B. require evidence of insurability which of the following types of agent authority is also called "perceived authority" a. express b. implied c. fiduciary d. apparent - Verified Answer D. apparent who might receive dividends from a mutual insurer? a. stockholders b. agents c. policyholders d. subscribers - Verified Answer C. policyholders A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a. the insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums b. the insureds premiums will be waived until she is 21 c. the premiums will become tax deductible until the insureds 18th birthday d. since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected - Verified Answer B. the insureds premiums will be waived until she is 21 the life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is know as the PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ when producers give or promise anything of value that is not specified in the policy, they are guilty of rebating which of the following statements about group life is correct? a. the cost of coverage is based on the ratio of men and women in the group b. the premiums are higher than in an individual policy because there is no medical exam c. the group sponsor receives a certificate of insurance d. the ploy can be converted to an individual term insurance policy - Verified Answer A. the cost of coverage is based on the ratio of men and women in the group When would a 20-pay whole life policy endow? a) After 20 payments b) In 20 years c) When the insured reaches age 100 d) At the insured's age 65 - Verified Answer C. when the insured reaches age 100 a limited-pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. the premium is however completely paid off in 20 years If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? a. $3,000 b. $13,000 c. $10,000 PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ d. $7,000 - Verified Answer A. $3,000 if $100,000 of life insurance proceeds were used in a settlement option paying $13,000 per year for 10 years. $10,000 per year would be income tax free (as principal) and $3,000per year would be income taxable (as interest) how long will the beneficiary receive payments under the single life settlement options? a. until the insureds age 100 b. until the beneficiary death c. until the insureds death d. for a specified period of time - Verified Answer B. until the beneficiary death the single life option can provide a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop when applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. this is an example of a. warranty b. concealment c. misrepresentation d. fraud - Verified Answer B. concealment concealment occurs when a person withholds a material fact that is crucial to making a decision, in insurance, this involves withholding information that would be crucial to underwriting decisions An IRA purchased by a small employer to cover employees is known as a PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ a. simplified employee pension plan b. 401(k) plan c. defined contribution plan d. 403(b) plan - Verified Answer A. simplified employee pension plan a simplified employee pension plan(SEP) is an employer sponsored IRA. contributions to the plan are not included in the employers taxable income for the year, to the extent that they do nt exceed the maximums allowed. distributions from a SEP are taxable as ordinary income when received at retirement a long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has be raised 7% as a result. Which policy rider caused this change? a. inflation rider b. cost of living rider c. value of adjustment rider d. return of premium rider - Verified Answer B. cost of living rider the cost of living rider annually adjusts the policy's face vale in accordance with the national rate of inflation or deflation. This rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value of the policy constant over time Who makes up the Medical Information Bureau? a. former insured b. insurers c. physicians and paramedics d. hospitals - Verified Answer B. insurers PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ d. either the amount paid into the plan or the cash value of the plan, whichever is greater amount - Verified Answer D. either the amount paid into the plan or the cash value of the plan, whichever is greater amount all of the following are TRUE statements regarding the accumulation interest option EXCEPT: a. the annual dividend is retained by the company b. the interest is credited at a rate specified by the policy c. the policyholder has the right to withdraw the accumulations at anytime d. the interest is not taxable since it remains inside the insurance policy - Verified Answer D. the interest is not taxable since it remains inside the insurance policy a producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. this is a personal use of life insurance known as a. survivorship insurance b. juvenile protection provision c. survivor protection d. life plannning - Verified Answer C. survivor protection what is the maximum penalty for habitual willful noncompliance with the fair credit reporting act? a. revocation of license b. $2,500 c. $1,000 d. $100 per violation - Verified Answer B. $2,500 PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a. representation b. adhesion c. consideration d. good faith - Verified Answer C. consideration When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? a. interest only b. both principal and interest c. neither principal nor interest d. principal only - Verified Answer A. interest only What license or licenses are required to sell variable annuities? a. only life insurance license b. only a securities license c. no license is required d. both a life insurance license and securities license - Verified Answer D. both a life license and securities license The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a. waiver of premium b. guaranteed insurability c. waiver of cost of insurance d. payor benefit - Verified Answer A. waiver of premium PRIMERICA LIFE INSURANCE EXAM WITH CLOSE TO 200 QUIZZES & ANSWERS GRADED A+ all other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity? a. 60-year old woman b. 50-year old man c. 50-year old woman d. 60-year old man - Verified Answer D. 60-year old man according to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a. full premium refund without any charges b. guaranteed surrender value c. no payments d. annuity dividends - Verified Answer B. guaranteed surrender value which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a. a debtor has an insurable interest in the life of a lender b. business partners have an insurable interest in each other c. a husband or wife has insurable interest on their spouse d. an individual has an insurable interest on his or her own life - Verified Answer A. a debtor has an insurable interested on the life of a lender which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a. withdrawals are not taxable b. distributions before age 59 1/2 incur a 10% penalty on policy gains