Life Practice Exam 2 Part II


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1) Typically group life insurance is written as annual renewable term?

a) true b) false

 

2) Is it possible for group life insurance to be written as permanent life?

a) true b) false

 

3) When assessing group life as a permanent product to group life as a term product an employee may consider the permanent group life to have which of the following disadvantages:

a) the employee is taxed on the employer contributions

b) the age brakets for premium are very different

c) cash values are greater

d) renewability is a problem

 

4) Which type of life insurance would help a sole proprietorship in the event the owner passes away?

a) cross purchase buy-sell

b) entity purchase buy-sell

c) business continuation insurance

d) deferred compensation plan

 

5) Regarding group life conversion; all of the following are true except:

a) the option must be used by a specific time

b) no evidence of insurability is required

c) available when employee terminates

 

d) no benefits payable when terminated employee dies before conversion

6) All of the following are true regarding underwriting of group life insurance except:

a) late enrollments usually require medical underwriting

b) upon the original enrollment, unhealthy employees will be rejected

c) the entire group is considered as a risk unit

d) contributory plans have different participation guidelines vs. non-contributory plans

 

7) Regarding business partnerships; the death of any one partner cancels the partnership entity. To assist in obligations of such an arrangement life insurance would be a good tool. Each of the following structures may be used by a partnership except:

a) cross purchase plan

b) buy-sell agreement

c) small group income plan

d) entity purchase plan

 

8) An intervivos transfer can minimize estate taxes for a deceased estate?

a) true b) false

 

9) To be considered for Social Security benefits, a worker must have earned:

a) minimum amount of income in any given year

b) had at least some income in any year

c) earned the required amount of work credits

d) paid Social Security taxes

 

10) Life insurance proceeds paid to an insured’s estate is considered first:

a) taxable to the beneficiary

b) not taxable to the beneficiary

c) may be subjected to estate taxes

d) no taxes due

 

11) Life insurance death proceeds paid to a beneficiary are:

a) taxed only on the gain

b) not taxed

c) estate taxed by the State of residence

d) taxed only after age 59 and a half

 

12) A participating life insurance policyowner has just received a dividend. This dividend is therefore:

a) taxed as ordinary income

b) is only taxable in excess of 10% of adjusted gross income

c) is not taxed at all

d) is only taxed by the State in which the policyowner lives

 

13) Of the following which would be most appropriate to describe a deferred incomeretirement plan for self-employed persons:

a) 401 k plan

b) TSA

c) IRA

d) Keogh plan

 

14) Under the following circumstances which one descibes the earliest date when after an applicant has completed the appropriate paperwork and paid the first premium would a life policy take effect?

a) a conditional receipt has been issued

b) a binder has been issued

c) insurer approval of the application

d) when the insurer cashes the payment check

 

15) In life insurance, mortality tables are used for all of the following except:

a) valuation of reserve liabilities

b) calculation of expense factors

c) calculation of nonforfeiture values

d) life contract premiums

 

16) Interest earnings on invested premiums help to offset life policy expenses?

a) true b) false

 

17) Regarding Social Security survivor’s benefits; in which of the following cases would benefits not be payable?

a) a surviving spouse caring for the deceased children who are under age 16

b) Mary a widow age 57

c) unmarried children of the deceased under 18

d) a permanently disabled child of the deceased under 22

 

18) Group life insurance policies do provide dependent coverage. Of the following cases which one would not be considered elgible for benefits under a group life policy?

a) a spouse

b) a son or daughter in college age 26

c) an adopted child in college age 18

d) elderly parent living in the insured’s (now deceased) home

 

19) Term insurance policies are considered to be one of the most affordable types of policies available for mature individuals.

a) true b) false

 

20) John bought an insurance policy that provides protection for 20 years with no change in coverage amount or premiums. After the 20 years of coverage John has no cash value build up. John has purchased:

a) permanent 20 year policy

b) decreasing 20 year policy

c) 20 year level term insurance

d) 20 year split life term policy

 

21) John and Mary have purchased a joint life policy for $250,000. Upon the death of her husband, Mary will receive:

a) half of the death benefit; the other half paid when she dies

b) full death benefit only

c) nothing paid until she dies

d) John and Mary’s benficiaries receive the proceeds

 

22) Which of the following is not associated with straight life insurance (continuous whole life insurance) policies?

a) premiums are paid until a specified age

b) amount of protection does not change

c) premiums are level

d) policies build cash accumulations

 

23) Split life insurance contracts are actually a combination of:

a) two policies in one contract for two people

b) whole life insurance with a term policy

c) life policy with an annuity contract

d) none of the above

 

24) With regards to traditional whole life insurance policies; the cash accumulations will equal the amount of insurance:

a) when the insured reaches age 100

b) when the insured reaches age 70

c) when the insured retires age 65

d) when the insured reaches age 55

 

25) All of the following are considered to be combination policies except:

a) family protection policy

b) family income policy

c) family maintenance policy

d) family convertible plans

 

26) Jumping juvenile policies are set to increase the premiums at a specified age like 21 or 25.

a) true b) false

 

27) The phrase... face amount.... in a life policy refers to:

a) the amount paid to the beneficiary less premiums paid to the policy

b) amount of insurance

c) the amount paid to the beneficiary plus cash vlaues

d) cash value amount

 

28) A life insurance policy that is a combination of whole life and level term on the family members other than the breadwinner is called:

a) family income plan

b) family maintenance plan

c) family protection plan

d) split life plan

 

29) There is a type of policy design that will provide for regular installments for a specified number of years at the death of the breadwinner of a family. Upon the insured’s death the policy typically will pay a lump sum and continue installments for a stated number of years from the date of the insured’s death. This policy is called:

a) family protection plan

b) family maintenance plan

c) family income policy

d) split life combination plan

 

30) Of the following elements which is not consideration for obtaining convertible term insurance contracts?

a) proposed insured’s age

b) total assets

c) medical history

d) annual earnings

 

31) A type of life insurance policy that provides protection for a set period of time and does not typically provide for cash values and has the amount of insurance modify in greater increments each year is:

a) decreasing term

b) universal life

c) increasing term

d) variable life

 

32) Cash surrender value in a life policy is the amount that:

a) the policyowner has paid in total premiums

b) the policyowner would get if premiums were not paid any more

c) the policyowner would get by the tenth year

d) the policyowner would get because of a disability

 

33) All of the following are false regarding renewable term policies except:

a) the provision to renew must be made part of the original policy

b) the provision to renew is automatically provided in all term policies

c) the provision to renew requires proof of insurability

d) the provision to renew puts the insurer at no additional risk financially

 

34) An insurance policy in which the amount of insurance declines over time is:

a) convertible term

b) renewable term

c) deposit term

d) decreasing term

 

35) One very important presentation requirement of a variable life policy is that:

a) the presentation must include a prospectus approved by the SEC

b) the presentation must include a prospectus and a cash value illustration

c) the presentation must be done by a stock broker

d) the presentation must be done by a licensed life agent only

 

36) With regards to a variable life policy the guaranteed death benefit is:

a) the amount of cash only

b) the amount of premiums paid

c) the amount of cash plus insurance amount

d) the amonut of insurance only

 

37) Universal life policies have all of the following except:

a) flexible premium capability

b) flexible insurance coverages

c) flexible contract provisions

d) a guaranteed cash value interest rate

 

38) Universal life is more popular than term life insurance because it is low cost.

a) true b) false

 

39) Deposit term insurance is very unique because it pays an endowment.

a) true b) false

 

40) Term insurance is very affordable as compared to permanent life policies like universal life or variable life insurance.

a) true b) false

 

41) A life insurance policy that allows for small premiums in the beginning years and higher premiums later is typically called:

a) variable life

b) universal life

c) graded premium policy

d) minimum deposit term policy

 

42) Adjustable life insurance provides for flexibility. This allows the policyowner:

a) change the interest rate for cash value growth

b) change the amount of premium or coverage

c) change the investment accounts in the cash value account

d) change the time period for coverage

 

43) The type of policy that is a combination of whole life and decreasing term insurance is:

a) family protection policy

b) business continuation policy

c) family income plan

d) deferred compensation plan

 

44) What do we call a life policy whereby the living benefits performance can cause the

death proceeds to be fairly unpredictable?

a) universal life

b) continuous whole life

c) index fund

d) variable life

 

45) A life insurance policy whereby the amount of premiums paid initially are lower than required and by a set time period increase to a level slightly higher than they would have been originally is called:

a) adjustable life

b) adjustable variable life

c) modified life

d) modified adjustable life

 

46) George has recently been marreid at age 23. He needs life insurance because his wife is expecting to have twins. What type of policy would most likely be best for their situation?

a) universal life

b) variable

c) term insurance

 

47) George’s brother is younger than George and is considering life insurance too. Which of the following types of policies would have the lowest premium rate per $1,000 of life insurance?

a) endowment policy

b) continuous whole life

c) 20 pay life

d) 30 pay life

 

48) Of the following situations; which would most likely be the best fit for a decreasing term life policy?

a) education fund

b) retirement fund

c) mortgage

d) buy-sell agreement fund

 

49) The type of life policy that would provide coverage for all members of a family:

a) joint life

b) family protection policy

c) family income policy

d) family maintenance policy

 

50) What type of label would be used to describe a situation whereby at the disability of the policyowner the policy premiums are waived:

a) nonforfeiture benefit

b) limited payments benefit

c) multiple protection benefit

d) payor benefit

 

Answers to Part 2

1) a 2)a 3) a 4) c 5) d 6) b 7) c 8) a 9) c 10) c 11) b 12) c 13) d 14) b 15) b 16) a 17) b

18) b 19) a 20) c 21) b 22) a 23) c 24) a 25) d 26) b 27) b 28) c 29) b 30) b 31) c 32)b

33) a 34) d 35) a 36) d 37) c 38) b 39) a 40) q 41) c 42) b 43)c 44) d 45) c 46) c 47)b

48) c 49)b 50)d

 

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