Chpt 4 Life Agent
Life insurance practice test
Questions and Answers
- 1.
Every licensee must indicate on which of the following documents his or her license number?
- A.
Private Advertisement
- B.
Business card
- C.
Written Practice quotation
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
Licensees are required to indicate their license number on various documents to ensure transparency and accountability. This includes private advertisements, business cards, and written practice quotations. By doing so, licensees provide necessary information to clients or customers, allowing them to verify the legitimacy and qualifications of the licensee. This requirement helps maintain trust and professionalism in the industry.Rate this question:
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- 2.
When any change in residence address occurs, every licensee and every applicant must notify the comissioner________ ?
- A.
Within 6 months after the move has taken place
- B.
Within 6 months before the license is to expire
- C.
30 days before submitting a continuing education certficate
- D.
Immediately
Correct Answer
D. ImmediatelyExplanation
When any change in residence address occurs, it is important for licensees and applicants to notify the commissioner immediately. This is necessary to ensure that the commissioner has the most up-to-date and accurate information on file. Promptly notifying the commissioner allows for the necessary updates to be made in a timely manner, which helps to maintain the integrity of the licensing process and ensures that all relevant parties are aware of the change.Rate this question:
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- 3.
An agent makes a misleading comparison of a policy he is selling in order to convince a prospect to lapse an old insurance policy. What is that called?
- A.
Intimidation
- B.
Rebating
- C.
Boycotting
- D.
Twisting
Correct Answer
D. TwistingExplanation
Twisting is the correct answer because it refers to the unethical practice of an insurance agent making false or misleading statements to persuade a policyholder to surrender or lapse their existing insurance policy in order to purchase a new one. In this scenario, the agent is using a misleading comparison of the policies to convince the prospect to give up their old policy. Intimidation, rebating, and boycotting do not accurately describe this specific situation.Rate this question:
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- 4.
Which of the following cannot legally be used when determining premium rates for life insurance?
- A.
Gender
- B.
Age
- C.
Nationality
- D.
All of the above
Correct Answer
C. NationalityExplanation
Nationality cannot legally be used when determining premium rates for life insurance because it is considered discriminatory and violates anti-discrimination laws. Insurance companies are not allowed to base premium rates on an individual's nationality as it goes against the principles of fairness and equality. Factors such as gender and age may be taken into account as they are actuarially justified and have statistical relevance in determining life expectancy and risk assessment.Rate this question:
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- 5.
Generally, it is unfair to discriminate against any one class of individuals in the business of insurance. However, the code does permit the charging of a higher premium if such premiums can be supported by mortality tables segregated by sex (gender).
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that while it is generally unfair to discriminate against any one class of individuals in insurance, the code does allow for higher premiums based on mortality tables segregated by sex. This means that if the mortality tables show that one gender has a higher risk of mortality, it is permissible to charge them a higher premium. This is not considered discriminatory because it is based on actuarial data and statistical analysis. Therefore, the statement "True" is correct.Rate this question:
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- 6.
Which of the following is not a legal activity in this state?
- A.
Participating in a plan to offer free insurance if a person buys some form of service.
- B.
Disregarding age in determination of insurance rates.
- C.
Refusing to apply the practice of twisting in sales.
- D.
All of the above are legal in the state of California.
Correct Answer
A. Participating in a plan to offer free insurance if a person buys some form of service.Explanation
In the state of California, it is illegal to participate in a plan that offers free insurance if a person buys some form of service. This practice is considered a form of tying, where the sale of one product or service is conditioned on the purchase of another product or service. Tying is generally prohibited as it restricts consumer choice and competition. Therefore, the correct answer is participating in a plan to offer free insurance if a person buys some form of service.Rate this question:
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- 7.
Employees that have group life policies covering them are required to be issued a/an_____?
- A.
Estimate of employers premiums.
- B.
Certificate of insurance
- C.
Master policy
- D.
Monthly notification on a non-participating plan.
Correct Answer
B. Certificate of insuranceExplanation
Employees that have group life policies covering them are required to be issued a certificate of insurance. This document serves as proof of coverage and outlines the terms and conditions of the policy. It provides important information such as the policyholder's name, the insured employee's name, the coverage amount, and any exclusions or limitations. The certificate of insurance is typically provided to the employee upon enrollment in the group life policy and may be required for various purposes, such as making a claim or updating beneficiary information.Rate this question:
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- 8.
Jerry is using a new time management technique in his insurance sales presentation. In order to cut the amount of time he spends ar each appointment he no longer answers questions when they are first asked. instead he answers them only if they are asked twice. he feels this will allow him to get to his next meeting quicker. Most insurance professionals consider this:
- A.
An unethical practice
- B.
A clever and ethical practice
Correct Answer
A. An unethical practiceExplanation
The practice of not answering questions when they are first asked and only answering them if they are asked twice is considered unethical by most insurance professionals. This technique prioritizes time efficiency over providing complete and accurate information to clients. By deliberately withholding information, Jerry is not acting in the best interest of his clients and is potentially misleading them. This approach goes against the principles of transparency, trust, and ethical conduct that are expected in the insurance industry.Rate this question:
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- 9.
In the life insurance planning process, the "blackout period" is considered:
- A.
The period of time after a life insurance application is written and the date the coverage takes effect.
- B.
The period of time when there is not enough income available as required by the insured's beneficiaries.
- C.
The period of time when a surviving spouse does not receive any social security benefits.
- D.
All of the above
Correct Answer
C. The period of time when a surviving spouse does not receive any social security benefits.Explanation
The correct answer is "The period of time when a surviving spouse does not receive any social security benefits." The blackout period refers to the time when a surviving spouse does not receive any social security benefits after the death of their partner. This period can last for several months until the surviving spouse becomes eligible for benefits. During this time, the surviving spouse may face financial difficulties as they do not have access to their partner's social security income.Rate this question:
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- 10.
All of the following are reasons for an individual to purchase personal life insurance, except:
- A.
To have funds that can supplement Social Security at retirement
- B.
To cover a buy/sell agreement
- C.
For the creation of an immediate estate.
- D.
To have cash available for emergencies
Correct Answer
B. To cover a buy/sell agreementExplanation
Personal life insurance is typically purchased to provide financial protection for an individual's loved ones in the event of their death. It can also be used to supplement Social Security at retirement, create an immediate estate, and have cash available for emergencies. However, covering a buy/sell agreement is not a reason for an individual to purchase personal life insurance. A buy/sell agreement is a legal contract between business partners or co-owners that outlines what happens to a business if one of the owners dies or becomes disabled. In this case, life insurance is typically purchased by the business itself to fund the agreement, rather than by the individual.Rate this question:
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- 11.
Why would a business use a key person life insurance policy?
- A.
To provide the key employee's surviving family members with funds to live on after the death of the employee.
- B.
To help the employee's spouse supplement her Social Security benefits
- C.
To better allow the employee qualify for a bank loan.
- D.
To protect the company from the financial consequences of the death of a vice president.
Correct Answer
D. To protect the company from the financial consequences of the death of a vice president.Explanation
A business would use a key person life insurance policy to protect the company from the financial consequences of the death of a vice president. This type of insurance policy provides the company with a payout in the event of the key employee's death, which can be used to cover expenses such as hiring and training a replacement, paying off debts, or compensating for a loss in revenue. By having this insurance policy in place, the company can ensure that it has the financial resources to continue operating smoothly and mitigate any potential disruptions caused by the loss of a key employee.Rate this question:
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- 12.
Identify the statement that is true about contributory group life insurance.
- A.
The employer will make a cash contribution to the estate of a deceased employee
- B.
The employer will contribute the full amount of the premium
- C.
The employee will contribute to the premium payments
- D.
None of the above
Correct Answer
C. The employee will contribute to the premium paymentsExplanation
Contributory group life insurance is a type of insurance where both the employer and the employee contribute to the premium payments. This means that the employee will have to make payments towards the insurance coverage. Therefore, the statement "The employee will contribute to the premium payments" is true about contributory group life insurance.Rate this question:
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- 13.
Select the correct statement about the social Security system:
- A.
It is for the most part, a voluntary program.
- B.
It is only meant to be a supplement to an individual's major income: it only supplies a minimum floor of income
- C.
The system is completely and fully funded
- D.
The amount each person gets out is nearly exactly what they put in.
Correct Answer
B. It is only meant to be a supplement to an individual's major income: it only supplies a minimum floor of incomeExplanation
The statement that the social security system is only meant to be a supplement to an individual's major income and it only supplies a minimum floor of income is the correct statement. This means that the social security system is not designed to be the primary source of income for individuals, but rather to provide a safety net or additional support. It is intended to ensure that individuals have a minimum level of income, but it is not meant to fully fund their financial needs.Rate this question:
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- 14.
Which of the following is true regarding the government's social insurance program known as Social Security?
- A.
The majority of workers in the U.S.. must pay into the program.
- B.
The contributions paid in closely match the benefits received
- C.
Participants sign a contractual agreement with the insurer.
- D.
Both A and B above are true.
Correct Answer
A. The majority of workers in the U.S.. must pay into the program.Explanation
The correct answer is that the majority of workers in the U.S. must pay into the program. This means that a large percentage of individuals who are employed in the United States are required to contribute a portion of their wages to the Social Security program. This contribution is typically deducted from their paycheck and is used to fund the benefits that individuals may receive from the program in the future, such as retirement income or disability benefits.Rate this question:
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Current Version
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Mar 17, 2023Quiz Edited by
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Aug 11, 2009Quiz Created by
Sofie9373
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