Life Insurance Practice Exam C

75 Questions | Total Attempts: 297

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Life Insurance Quizzes & Trivia

Questions and Answers
  • 1. 
    A representation in an insurance contract qualifies as:
    • A. 

      An opinion

    • B. 

      An implied warranty

    • C. 

      An express warranty

    • D. 

      A policy provision

  • 2. 
    An insurer owned by the parent company to provide insurance to cover the parent company’s loss exposure only is called a:
    • A. 

      Reciprocal insurer

    • B. 

      Captive insurer

    • C. 

      Mutual insurer

    • D. 

      Stock insurer

  • 3. 
    Which of the following best represents what the phrase “life insurance creates an immediate estate” means?
    • A. 

      The policy creates immediate cash value.

    • B. 

      The death benefit will always be paid to the estate of the insured.

    • C. 

      The death benefit will always be paid to the estate of the insured.

    • D. 

      None of these represent what this phrase means.

  • 4. 
    When policy illustrations are used with senior citizen clients in California, which include non-guaranteed elements, a statement to that effect must be included with the illustration. Which of the following is true regarding this statement?
    • A. 

      Non-guaranteed elements must be printed in bold type.

    • B. 

      Guaranteed elements must be in bold print and the non-guaranteed elements must be in plain type.

    • C. 

      Whether the print is in bold type or plain type is at the discretion of the insurer.

    • D. 

      According to the code, all policy illustration statements must be uniform and in plain type.

  • 5. 
    In which of the following qualified plans are the benefits linked to the employee’s number of years of service and/or the amount of compensation they earned?
    • A. 

      Tax Sheltered Account (TSA)

    • B. 

      Defined benefit plan

    • C. 

      Koegh plan

    • D. 

      Defined contribution plan

  • 6. 
    In a group life insurance plan, unmarried children may be covered as eligible dependants until they reach the age of:
    • A. 

      18

    • B. 

      20

    • C. 

      21

    • D. 

      25

  • 7. 
    What happens to the insurance license of a corporation when the corporation ceases to exist?
    • A. 

      It becomes inactive

    • B. 

      It terminates unless the corporation files an application to continue business within 30 days.

    • C. 

      It is suspended temporarily by the DOI.

    • D. 

      It terminates

  • 8. 
    All of the following are true about the Social Security System except:
    • A. 

      The majority of workers in the U.S. are required to pay into the system.

    • B. 

      The system is fully funded.

    • C. 

      Meant to supplement other retirement income, it provides a minimum floor of income.

    • D. 

      Benefits are prescribed by law, not by contract.

  • 9. 
    The insured buys a non-participating whole life policy. Many years later the insured is disabled and cannot afford the premiums anymore. She exercises the Extended Term Non-forfeiture option. Which statement is not true?
    • A. 

      The policy will accrue cash value, but with a lower death benefit coverage.

    • B. 

      No more premium payments are required.

    • C. 

      The coverage amount will remain the same as the original policy.

    • D. 

      The policy will remain in force a certain number of years, then expire.

  • 10. 
    Which of the following best describes the reduced paid-up non-forfeiture option?
    • A. 

      The insured can no longer afford the policy so they receive the cash value minus the surrender charge.

    • B. 

      The insured receives a cheaper term policy with a reduced death benefit. No evidence of insurability required.

    • C. 

      The insured receives a cheaper term policy with a reduced death benefit. No evidence of insurability required.

    • D. 

      The insured exchanges the current whole life policy for another whole life policy with a lower death benefit. A reduced premium is charged. No additional premium is required.

  • 11. 
    When determining life insurance premium rates an insurer may not legally use which of the following?
    • A. 

      Age

    • B. 

      Gender

    • C. 

      Nationality

    • D. 

      All of the above may be used.

  • 12. 
    Group members that are covered by group life insurance policies are required to be issued which of the following?
    • A. 

      A Master Policy

    • B. 

      A Certificate of Insurance

    • C. 

      An estimate of the sponsor's premiums

    • D. 

      None of the above

  • 13. 
    Agent Bill has decided to use a new time management strategy while making sales presentations. To save time he decides to not answer a client’s question the first time it is asked. Instead he answers them only if they are asked a second time. This way he can make it to his next appointment on time. Professional insurance organizations would consider this to be:
    • A. 

      A smart and ethical strategy

    • B. 

      An unethical practice

    • C. 

      Not in violation of their codes of conduct

    • D. 

      None of the above

  • 14. 
    Which of the following is a true statement about contributory group life insurance?
    • A. 

      The employer must pay 100% of the premiums.

    • B. 

      All eligible employees must be covered by the plan.

    • C. 

      Participating employees will contribute towards the payment of premiums.

    • D. 

      All of the above

  • 15. 
    All of the following are not true about the Social Security program, except:
    • A. 

      It is mandatory for most workers to pay FICA taxes.

    • B. 

      All participants are provided with a copy of the contractual agreement.

    • C. 

      The retirement benefit is the same for everyone.

    • D. 

      The benefits received closely match the amount of the taxes paid in.

  • 16. 
    Keith has purchased a variable annuity. He has not waived his rights during the free-look period. Where will the premiums be initially invested during the free-look period?
    • A. 

      The policy’s separate account

    • B. 

      A fixed income or money market account

    • C. 

      A stock portfolio chosen by the insured

    • D. 

      The insurer’s general account for preservation of fund value

  • 17. 
    A variable annuity applicant invests his premiums immediately into the stock portfolio chosen for his annuity. He then returns his annuity during the free look period when the stock market drops significantly. What will the client receive?
    • A. 

      His entire premium

    • B. 

      The policy account value on the date the returned policy is received by the insured

    • C. 

      The policy account value on the date the returned policy is received by the insurer

    • D. 

      The full premium minus the surrender charge

  • 18. 
    Which statement about federal income taxation of life insurance settlement payments is true?
    • A. 

      Upon surrender of a whole life policy no part of the cash value is taxable because it is paid in a lump sum.

    • B. 

      Choosing the “life income” settlement option saves the beneficiary from paying any income taxes.

    • C. 

      The “interest only” option results in no taxation until the beneficiary selects one of the other options.

    • D. 

      A lump sum settlement is paid out tax free when paid to a natural person.

  • 19. 
    Concerning federal tax treatment of life insurance payments, which of the following statements is/are correct?
    • A. 

      Death benefits paid to the beneficiary are generally tax exempt.

    • B. 

      Ordinary life premiums are tax deductible for the owner.

    • C. 

      Employer paid premiums for their group life insurance plan are not tax deductible as a business expense.

    • D. 

      None of the above is incorrect.

  • 20. 
    All of the following are true regarding the taxation of life insurance products, except:
    • A. 

      Annuity death benefits are paid out totally tax free.

    • B. 

      When an individual pays their own life insurance premiums they can not deduct them on their personal income taxes.

    • C. 

      Premiums paid by an employer on a non-contributory group plan are tax deductible as a business expense.

    • D. 

      All of the above are true

  • 21. 
    Which department or division of an insurance company is responsible for the selection, evaluation, and distribution of risks?
    • A. 

      Marketing and sales

    • B. 

      Underwriting

    • C. 

      Claims

    • D. 

      Actuarial

  • 22. 
    Which of the following are members of and financially supports the Medical Information Bureau?
    • A. 

      Insurance companies

    • B. 

      National Association of Insurance Commissioners

    • C. 

      Licensed insurance agents

    • D. 

      All of the above

  • 23. 
    Cliff, who is 44 years old, falls while mountain climbing on vacation. He is left paralyzed. After a year, doctors feel he will never recover from his injuries. Which of the following programs will he be able to collect disability income?
    • A. 

      Medi-Cal

    • B. 

      Worker's Compensation

    • C. 

      Social Security

    • D. 

      Medicare

  • 24. 
    The Social Security system has four main benefit programs. Disability, Retirement, & Medicare are three of them. The fourth program is:
    • A. 

      Rehabilitation

    • B. 

      Medical

    • C. 

      Hospice

    • D. 

      Survivors

  • 25. 
    Which of the following benefits is never included in a LTC policy?
    • A. 

      Hospice

    • B. 

      Hospice Acute Care

    • C. 

      Adult Day Care

    • D. 

      Respite Care

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