Test #1 (100 Ques.)

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  • 1/100 Questions

    Returning a policyholder to the same economic position prior to a loss is called:

    • Insurable interest
    • Indemnity
    • Replacement
    • Benefits restoration
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Economy Quizzes & Trivia
About This Quiz

TEST #1 (100 ques. ) assesses knowledge in insurance principles such as indemnity, insurable interest, and types of insurers. It is designed for individuals preparing for professional insurance exams, enhancing understanding of key concepts and industry terminology.

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  • 2. 

    A person has an insurable interest in?

    • A friend

    • A neighbor

    • A business partner

    • A boss

    Correct Answer
    A. A business partner
    Explanation
    A person has an insurable interest in a business partner because they have a financial stake in the success of the business. If something were to happen to the business partner, such as death or disability, it could have a significant impact on the person's financial well-being. Therefore, they have a legitimate interest in insuring the business partner to protect their own financial interests.

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  • 3. 

    Insurable interest must be evident?

    • When the policy is delivered

    • While the policy is being underwritten

    • At the time the policy is applied for

    • At the time the premium is paid at delivery

    Correct Answer
    A. At the time the policy is applied for
    Explanation
    Insurable interest refers to the financial or legal interest that a person has in the subject matter of an insurance policy. This interest must be present at the time the policy is applied for in order for the policy to be valid. It ensures that the person obtaining the insurance has a legitimate reason to protect against potential losses. Therefore, at the time the policy is applied for is the correct answer as it signifies the importance of having insurable interest at the beginning of the insurance process.

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  • 4. 

    An insurance company able to do business in the state Georgia is said to be?

    • Qualified

    • Registered

    • Authorized

    • Approved

    Correct Answer
    A. Authorized
    Explanation
    An insurance company that is able to do business in the state of Georgia is referred to as "authorized." This means that the company has obtained the necessary permissions, licenses, and approvals from the state regulatory authorities to operate and provide insurance services within the state. Being authorized signifies that the company has met all the legal requirements and is compliant with the state's regulations, allowing it to conduct its business operations in Georgia.

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  • 5. 

    An insurance company headquartered in Canada is conduction business in your state. In your state, this company would be referred to as an?

    • Foreign insurer

    • Domestic insurer

    • Alien insurer

    • Unauthorized insurer

    Correct Answer
    A. Alien insurer
    Explanation
    An insurance company headquartered in Canada conducting business in a different state would be referred to as an alien insurer. This term is used to describe an insurance company that is based in a foreign country and operates in a different jurisdiction. Since the company is not domestic to the state where it is conducting business, it is considered an alien insurer.

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  • 6. 

    What type of plan pays benefits directly to the providers of the medical service on behalf of the subscriber?

    • Comprehensive medical plan

    • Blue cross/blue shield

    • Medicare

    • Medicaid

    Correct Answer
    A. Blue cross/blue shield
    Explanation
    Blue Cross/Blue Shield is a type of plan that pays benefits directly to the providers of the medical service on behalf of the subscriber. This type of plan is known as a health insurance plan, where the insurance company has contracts with specific healthcare providers. When a subscriber receives medical services, Blue Cross/Blue Shield directly pays the providers for the covered services, reducing the out-of-pocket expenses for the subscriber.

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  • 7. 

    A person who is hired and trained by one company to sell this company’s products only and who receives a temporary training allowance is known as?

    • A general agent

    • A temporary agent

    • An independent agent

    • A captive agent

    Correct Answer
    A. A captive agent
    Explanation
    A captive agent is a person who is hired and trained by one company to exclusively sell that company's products. They receive a temporary training allowance during their initial training period. Unlike an independent agent, who is not tied to any specific company, a captive agent is bound to sell only the products of the company that hired them. This arrangement allows the company to have more control over the agent's sales efforts and ensures that the agent promotes the company's products exclusively.

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  • 8. 

    A company wanting to do business in Georgia must

    • Meet financial requirements

    • Have a home office located in state

    • Have resident agents

    • Have been in business at least 7 years

    Correct Answer
    A. Meet financial requirements
    Explanation
    To do business in Georgia, a company must meet financial requirements. This means that the company needs to have the necessary financial resources and stability to operate in the state. This requirement ensures that the company has the capability to fulfill its financial obligations and contribute to the economic growth of Georgia. It also helps protect consumers and other businesses from potential financial risks associated with doing business with unstable or financially insecure companies.

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  • 9. 

    Facultative reinsurance is negotiated on?

    • An individual basis

    • On an excess only basis

    • On members of the faculty only

    • On an Automatic basis

    Correct Answer
    A. An individual basis
    Explanation
    Facultative reinsurance is negotiated on an individual basis. This means that each reinsurance contract is negotiated separately and tailored to the specific needs of the ceding company. Unlike automatic reinsurance, which covers all risks meeting predetermined criteria, facultative reinsurance allows for more flexibility and customization. It allows the ceding company to select which risks they want to cede and negotiate the terms and conditions of each individual contract. This individualized approach ensures that each risk is assessed and priced accordingly, providing more precise coverage for the ceding company.

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  • 10. 

    An agent’s contract does not expressly grant him the authority to collect premiums after the first premium. However, the agent does so on a regular basis. This continuing authority would be described as?

    • Apparent authority

    • Express authority

    • Presumed authority

    • Implied authority

    Correct Answer
    A. Implied authority
    Explanation
    Implied authority refers to the authority that is not explicitly stated in a contract but is reasonably assumed or inferred based on the agent's actions and the nature of their role. In this scenario, even though the agent's contract does not specifically grant them the authority to collect premiums after the first premium, they continue to do so on a regular basis. This suggests that the agent has implied authority to collect premiums beyond the first one.

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  • 11. 

    If benefits from a hospital expense policy are paid to the insured, it is considered to be a ?

    • Service policy

    • Limited policy

    • Special risk policy

    • Reimbursement policy

    Correct Answer
    A. Reimbursement policy
    Explanation
    If benefits from a hospital expense policy are paid to the insured, it is considered to be a reimbursement policy. This means that the insured pays for the hospital expenses out of pocket and then submits a claim to the insurance company for reimbursement. The insurance company will then review the claim and pay the insured back for the covered expenses. This is different from a service policy, limited policy, or special risk policy, which may provide direct payment to the hospital or have specific limitations or conditions on the benefits provided.

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  • 12. 

    What type of company is able to pass on its losses to its insureds?

    • Assessment

    • Whole life

    • Reciprocal

    • Holding

    Correct Answer
    A. Assessment
    Explanation
    An assessment company is able to pass on its losses to its insureds. This type of company operates on the principle of mutual insurance, where policyholders contribute to a common fund that is used to cover losses. If the company experiences losses, it can assess its insureds to make up for the shortfall. This allows the company to distribute the financial burden of losses among its policyholders, ensuring that no individual policyholder bears the full cost of a loss.

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  • 13. 

    What is the name of unincorporated groups of people providing insurance for one another through individual indemnity agreements and are handled by an attorney-in-fact-?

    • Reciprocal

    • Fraternal

    • Lloyds

    • Assessment

    Correct Answer
    A. Reciprocal
    Explanation
    A reciprocal is the correct answer because it refers to unincorporated groups of people who provide insurance for one another through individual indemnity agreements. These groups are managed by an attorney-in-fact, who is responsible for overseeing the operations and administration of the reciprocal.

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  • 14. 

    In the event that an insurance company should happen to become insolvent, what will the Guarantee Association are required to pay?

    • 50K

    • 100K

    • 150K

    • 300K

    Correct Answer
    A. 300K
    Explanation
    If an insurance company becomes insolvent, the Guarantee Association is required to pay up to 300K. This means that if the insurance company is unable to fulfill its financial obligations, the Guarantee Association will step in and provide coverage up to the specified amount. This ensures that policyholders are protected and their claims are honored even if the insurance company goes bankrupt.

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  • 15. 

    What is the term use to describe a party intentionally and voluntary give up a known right?

    • Waiver

    • Estoppel

    • Warranty

    • Condition

    Correct Answer
    A. Waiver
    Explanation
    A waiver is the correct term used to describe a party intentionally and voluntarily giving up a known right. When a party waives a right, they are choosing to forgo the benefits or protections that the right would have provided them. This can be done through explicit agreement or through actions that imply the intention to waive the right. Waivers are commonly used in legal and contractual contexts to settle disputes or to modify the terms of an agreement.

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  • 16. 

    What is the term used to describe that a part may be precluded from asserting a right that would act to the detriment of the first party?

    • Waiver

    • Estoppel

    • Warranty

    • Condition

    Correct Answer
    A. Estoppel
    Explanation
    Estoppel is a legal term used to describe the situation where a party is prevented from asserting a right or claim that would be detrimental to another party. It is a doctrine that prevents a person from denying or asserting something contrary to what they have previously stated or done. In this context, estoppel would apply when a part is precluded from asserting a right that would act to the detriment of the first party.

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  • 17. 

    The Supreme Court stated that the Federal Government had the right to regulate the business of insurance, but only when Not regulates by state law. The is an example of?

    • Federal regulation

    • State regulation

    • Self regulation

    • Paul versus Virginia

    Correct Answer
    A. Federal regulation
    Explanation
    This statement reflects the concept of federal regulation. The Supreme Court ruled that the federal government has the authority to regulate the insurance business, but only in cases where it is not already regulated by state law. This means that the federal government can step in and regulate insurance when there is a gap or conflict in state regulations.

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  • 18. 

    Important information that assists the Company Underwriter in determining insurability comes from?

    • M.I.B.

    • Inspection report

    • Applicant's statements on the application

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The Company Underwriter relies on important information from multiple sources to determine insurability. The M.I.B. (Medical Information Bureau) provides valuable data about an applicant's medical history, which helps assess the risk involved. The inspection report provides information about the condition of the property or assets being insured, enabling the underwriter to evaluate potential risks. Lastly, the applicant's statements on the application form provide additional details about their personal circumstances and any potential risks. Considering all of these sources together allows the underwriter to make a comprehensive assessment of insurability.

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  • 19. 

    A type of insurer that is chartered in another country in known as ?

    • Alien

    • Foreign

    • Domestic

    • Admitted

    Correct Answer
    A. Alien
    Explanation
    An insurer that is chartered in another country is known as an "alien" insurer. This term is used to describe insurance companies that are incorporated and licensed in a country other than the one in which they operate. Alien insurers may offer coverage to individuals or businesses in the country where they are chartered, as well as in other countries through various arrangements such as reinsurance agreements or branch offices.

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  • 20. 

    In a Stock Company, all of the following are true, EXCEPT?

    • Management control rests with the board of directors

    • Stockholders advance money to organize the company

    • Policy holders share in the profits and losses

    • Stockholders share in the profits and losses

    Correct Answer
    A. Policy holders share in the profits and losses
    Explanation
    In a Stock Company, policy holders do not share in the profits and losses. This is because policy holders are typically individuals who purchase insurance policies from the company, and their relationship with the company is different from that of stockholders. While stockholders are the owners of the company and have a financial stake in its success, policy holders are customers who pay premiums for insurance coverage. Therefore, policy holders do not have a direct involvement in the profits and losses of the company.

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  • 21. 

    The law of Large Numbers can best be described as?

    • The fewer the number of units be considered, the greater the chance of a correct prediction

    • The greater the number of units being considered, the lower the chances of a correct prediction

    • The larger number of insureds that die during a given year, the lower the premium

    • The greater the number of units being considered, the greater the chance for a correct prediction

    Correct Answer
    A. The greater the number of units being considered, the greater the chance for a correct prediction
    Explanation
    The law of Large Numbers states that as the sample size or number of units being considered increases, the more accurate and reliable the predictions or outcomes will be. This is because with a larger sample size, the results are more likely to represent the true population characteristics, reducing the influence of random variation. Therefore, the greater the number of units being considered, the greater the chance for a correct prediction.

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  • 22. 

    The terms of the Fair Credit Reporting Act prohibits a consumer reporting agency from supplying all of the following information, except?

    • Bankruptcies less than fourteen years old

    • Suits and judgments over seven years old

    • Paid tax liens over seven years old

    • Criminal convictions over seven years old

    Correct Answer
    A. Bankruptcies less than fourteen years old
    Explanation
    The Fair Credit Reporting Act prohibits a consumer reporting agency from supplying bankruptcies less than fourteen years old. This means that the agency is not allowed to provide information about bankruptcies that occurred within the last fourteen years. However, the agency is allowed to supply information about suits and judgments over seven years old, paid tax liens over seven years old, and criminal convictions over seven years old.

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  • 23. 

    A person attempting to obtain information about another person and pretends to be someone he is not or misrepresents the true purpose of the interview is conduction what?

    • Consumer reports

    • Pretext interviews

    • Investigative consumer reports

    • All of the above

    Correct Answer
    A. Pretext interviews
    Explanation
    A person attempting to obtain information about another person and misrepresenting their true purpose of the interview is conducting pretext interviews. This involves pretending to be someone else or using deceptive tactics to gather information. It is a form of investigative technique used to gather information covertly.

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  • 24. 

    An insurance institution or agent must provide a notice of information practices to all applicants                ?

    • No later than at the time the collection of personal information begins

    • When the policy is delivered

    • It's not necessary to do

    • At the time of claim

    Correct Answer
    A. No later than at the time the collection of personal information begins
    Explanation
    The correct answer is "no later than at the time the collection of personal information begins" because it is important for an insurance institution or agent to inform applicants about their information practices before collecting any personal information. This allows applicants to make an informed decision about sharing their personal information and ensures transparency in the insurance process.

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  • 25. 

    The accounting measure used by insurance companies to cover the insurer’s liabilities to the Policyholders?

    • Surplus

    • Dividend

    • Reserve

    • Risk

    Correct Answer
    A. Reserve
    Explanation
    Insurance companies use reserves as an accounting measure to cover their liabilities to policyholders. Reserves are funds set aside by insurers to ensure that they have enough money to pay out claims and fulfill their obligations to policyholders. These reserves act as a financial cushion and provide a safety net for the company in case of unexpected losses or a high number of claims. By maintaining adequate reserves, insurance companies can demonstrate their financial stability and ability to meet their policyholders' needs.

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  • 26. 

    The Fair Credit Reporting Act does NOT apply?

    • Individual life insurance

    • Consumer reports

    • Individual health insurance

    • Medical information bureau (M.I.B)

    Correct Answer
    A. Medical information bureau (M.I.B)
    Explanation
    The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection, dissemination, and use of consumer credit information. It ensures that consumer reporting agencies maintain accurate and fair information. While the FCRA applies to consumer reports, individual life insurance, and individual health insurance, it does not apply to the Medical Information Bureau (M.I.B). The M.I.B is a specialized database that collects and shares medical information about individuals for the purpose of underwriting insurance policies. As it focuses on medical information rather than credit information, it falls outside the scope of the FCRA.

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  • 27. 

    The insurance commissioner is required to examine a domestic insurer every ?

    • 1 year

    • 2 years

    • 3 years

    • 4 years

    Correct Answer
    A. 3 years
    Explanation
    The insurance commissioner is required to examine a domestic insurer every 3 years. This means that the commissioner must conduct a thorough review and assessment of the insurer's operations, financial health, and compliance with regulations every three years. This regular examination helps ensure that the insurer is operating in a sound and responsible manner, protecting the interests of policyholders and maintaining the stability of the insurance market.

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  • 28. 

    How often are rating organizations examined?

    • Every 2 years

    • Every 3 years

    • Every 4 years

    • Every 5 years

    Correct Answer
    A. Every 5 years
    Explanation
    Rating organizations are examined every 5 years. This means that every 5 years, these organizations undergo a thorough evaluation to assess their performance, credibility, and adherence to industry standards. This periodic examination ensures that rating organizations are operating effectively and providing accurate and reliable ratings. It also allows for any necessary adjustments or improvements to be made to their processes and methodologies. By conducting these examinations every 5 years, the industry can maintain transparency and confidence in the ratings provided by these organizations.

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  • 29. 

    How long must advertising files be kept by the insurer?

    • 2 years

    • 3 years

    • 4 years

    • 5 years

    Correct Answer
    A. 4 years
    Explanation
    Advertising files must be kept by the insurer for a period of 4 years. This is likely to ensure compliance with legal and regulatory requirements, as well as to facilitate any potential audits or investigations that may arise in the future. Keeping advertising files for this duration allows the insurer to maintain a record of their advertising activities and ensures that they have access to relevant documentation if needed.

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  • 30. 

    In an insurance contract the consideration from the applicant consists of the application and ?

    • The conditional receipt

    • The first initial premium

    • The application accepted by the company

    • The acceptance of the policy by the insured

    Correct Answer
    A. The first initial premium
    Explanation
    In an insurance contract, the consideration from the applicant consists of the application and the first initial premium. This means that in order for the insurance contract to be valid, the applicant must submit both the completed application form and make the first premium payment. These two components are essential for the insurance company to assess the risk and provide coverage to the insured individual. Without the initial premium payment, the contract cannot be fully executed and the insurance coverage cannot begin.

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  • 31. 

    The Fair Credit Reporting Act does all of the following except?

    • Specifies when the applicant must be notified about an investigation

    • Insures that information obtained is properly used and confidential

    • Provides credit reports

    • Ensures that the agent collect accurate information from the applicant

    Correct Answer
    A. Provides credit reports
    Explanation
    The Fair Credit Reporting Act (FCRA) does not provide credit reports. Instead, it regulates how credit reporting agencies collect, use, and disclose consumer credit information. The FCRA specifies when an applicant must be notified about an investigation, ensures that information obtained is properly used and kept confidential, and requires that agents collect accurate information from the applicant. However, it does not directly provide credit reports to consumers.

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  • 32. 

    When an agent accepts an insureds payment, he is acting as a ?

    • Underwriter

    • Fiduciary

    • Insurer

    • Company

    Correct Answer
    A. Fiduciary
    Explanation
    When an agent accepts an insured's payment, they are acting as a fiduciary. A fiduciary is a person who is entrusted with the responsibility to act in the best interest of another party. In this case, the agent is entrusted with the insured's payment and is expected to handle it responsibly and in the insured's best interest. This includes ensuring that the payment is properly allocated, managing any claims or benefits, and providing accurate information and advice to the insured. The agent's role as a fiduciary is essential in maintaining trust and protecting the insured's financial interests.

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  • 33. 

    In order for a contract to be a binding agreement, there must be ?

    • An offer and acceptance

    • An offer only

    • An acceptance only

    • Good faith by at least one party

    Correct Answer
    A. An offer and acceptance
    Explanation
    For a contract to be a binding agreement, there must be an offer and acceptance. An offer is a proposal made by one party to another, indicating their willingness to enter into a contract. Acceptance is the agreement by the other party to the terms of the offer. Both offer and acceptance are essential elements to create a legally enforceable contract. Without an offer, there would be no terms for the other party to accept, and without acceptance, there would be no agreement between the parties. Therefore, both offer and acceptance are necessary for a contract to be binding.

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  • 34. 

    An agent accepts premium payment from applicants and e deposits them in his own person account. The agent is guilty of ?

    • Twisting

    • Rebating

    • Embezzlement

    • Misrepresentation

    Correct Answer
    A. Embezzlement
    Explanation
    The agent is guilty of embezzlement because they are accepting premium payments from applicants and depositing them into their own personal account instead of the appropriate account. Embezzlement involves the misappropriation or theft of funds entrusted to someone's care. In this case, the agent is misusing the funds for their personal gain, which is a clear act of embezzlement.

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  • 35. 

    A statement made by the applicant that he believes to be true is?

    • A promise

    • A representation

    • A warranty

    • A binder

    Correct Answer
    A. A representation
    Explanation
    A representation is a statement made by the applicant that they believe to be true. It is a statement of fact or opinion that is made during the application process. Unlike a promise, which is a commitment to do or not do something in the future, a representation is a statement about the present or past. It is also different from a warranty, which is a guarantee or assurance about the quality or performance of a product or service. Finally, a binder is a temporary contract that provides immediate coverage until a permanent policy is issued.

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  • 36. 

    What appears on the policy face?

    • Exclusions

    • The insuring clause

    • The entire contract

    • A copy of the application

    Correct Answer
    A. The insuring clause
    Explanation
    The correct answer is "the insuring clause." The policy face is the front page of an insurance policy that contains important information about the policy, including the insuring clause. The insuring clause is a statement that outlines the coverage provided by the policy and specifies the risks that are insured against. It is a crucial part of the policy as it defines the scope of coverage and sets out the obligations of the insurer to the insured.

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  • 37. 

    What is the insuring clause?

    • The company's promise to pay for losses

    • The acceptance of the policy

    • Utmost good faith

    • An offer by the company

    Correct Answer
    A. The company's promise to pay for losses
    Explanation
    The insuring clause refers to the company's promise to pay for losses. This clause is a fundamental part of an insurance policy as it outlines the company's obligation to provide coverage and compensation for any covered losses or damages. It establishes the contractual agreement between the insured and the insurer, ensuring that the insured will be financially protected in the event of a covered loss.

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  • 38. 

    An agent obtains an application from his prospect and forwards the application to the insurance company whiteout the initial premium. The company issues a policy at a standard rare. Who is making the offer?

    • The applicant

    • The insurance company

    • The agent

    • All of the above

    Correct Answer
    A. The insurance company
    Explanation
    The insurance company is making the offer in this scenario. Even though the agent obtained the application and forwarded it to the company, the policy was issued by the company itself. The applicant may have initiated the process by submitting the application, but ultimately it is the insurance company that is making the offer by issuing the policy.

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  • 39. 

    When an insurance company issues a life insurance policy, where would the company show insurance premiums, policy limits and premium mode?

    • The policy face

    • The policy conditions

    • The application

    • The delivery form

    Correct Answer
    A. The policy face
    Explanation
    The correct answer is the policy face. The policy face is a document that contains important information about the insurance policy, including the insurance premiums, policy limits, and premium mode. It is usually located on the first page of the policy and serves as a summary of the key terms and conditions of the policy. Insured individuals can refer to the policy face to quickly access and understand the basic details of their insurance coverage.

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  • 40. 

    All of the following would be costs associated with death, except?

    • Doctor and hospital bills from a final illness or accident

    • Funeral expenses

    • Estate settlement costs

    • Intervivos transfers of assets

    Correct Answer
    A. Intervivos transfers of assets
    Explanation
    Intervivos transfers of assets refer to the transfer of assets between living individuals during their lifetime. This is not a cost associated with death, as it occurs before death. The other options, such as doctor and hospital bills, funeral expenses, and estate settlement costs, are all costs that can be incurred after death.

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  • 41. 

    A premium payment is usually part of what element?

    • Offer

    • Acceptance

    • Consideration

    • Agreement

    Correct Answer
    A. Consideration
    Explanation
    A premium payment is usually part of consideration. Consideration refers to something of value that is exchanged between parties in a contract. In the context of insurance, the premium payment is the consideration provided by the insured party in exchange for the promise of coverage and benefits from the insurance company. It is a crucial element in the formation of a valid insurance agreement.

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  • 42. 

    What is a guarantee in an insurance contract?

    • A representation

    • A warranty

    • Parole evidence rule

    • Contract

    Correct Answer
    A. A warranty
    Explanation
    A guarantee in an insurance contract refers to a warranty. A warranty is a statement made by the insured party that assures the truthfulness of certain facts or conditions. It is a condition that must be fulfilled in order for the insurance contract to remain valid. In the context of insurance, a warranty serves as a promise to the insurer that certain conditions will be met, and failure to meet these conditions may result in the denial of a claim or the termination of the contract. Therefore, a guarantee in an insurance contract is best described as a warranty.

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  • 43. 

    Two people are equal owners in a business. They wish to protect their assets and provide income for their family in the event of either of their deaths. What should their agent recommend?

    • A family plan

    • Universal life

    • A buy/sell agreement funded with life insurance

    • An intervivos trust

    Correct Answer
    A. A buy/sell agreement funded with life insurance
    Explanation
    A buy/sell agreement funded with life insurance would be the most suitable recommendation for the two equal owners in order to protect their assets and provide income for their family in the event of either of their deaths. This agreement ensures that if one of the owners passes away, the other owner will be able to purchase their share of the business using the life insurance proceeds. This helps to maintain the stability and continuity of the business while also providing financial support for the deceased owner's family.

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  • 44. 

    In order to be eligible for Retirement Benefits under Social Security a person must be fully insured. This means?

    • The worker have earned 40 quarters of coverage

    • The worker must be at least 65 years old

    • The worker must have earned 20 quarters of coverage

    • The worker must have paid taxes for at least 10 years

    Correct Answer
    A. The worker have earned 40 quarters of coverage
    Explanation
    To be eligible for Retirement Benefits under Social Security, a person must be fully insured, which means they must have earned 40 quarters of coverage. This means that the worker must have worked and paid Social Security taxes for a total of 40 quarters, which is equivalent to 10 years. By meeting this requirement, the worker becomes eligible to receive retirement benefits from Social Security.

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  • 45. 

    Under a “Key Person” life insurance policy, who receives the death proceeds when the ”Key Person” dies?

    • The "key person's " estate

    • The "key person's " spouse

    • The company

    • Split between the company and the "key person's " estate

    Correct Answer
    A. The company
    Explanation
    In a "Key Person" life insurance policy, the company receives the death proceeds when the "Key Person" dies. This is because the purpose of this type of policy is to financially protect the company in the event of the death of a key employee or executive who plays a vital role in the business. By receiving the death proceeds, the company can use the funds to cover any financial losses or expenses that may arise due to the loss of the key person.

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  • 46. 

    What is the minimum participation requirement for a Contributory Group Policy?

    • 100%

    • 25%

    • 50%

    • 75%

    Correct Answer
    A. 75%
    Explanation
    A minimum participation requirement of 75% means that at least 75% of eligible members of a group must participate in the Contributory Group Policy. This ensures that a significant majority of the group is covered by the policy, spreading the risk among a large number of individuals. It also helps to keep the premiums affordable for all participants by having a high level of participation.

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  • 47. 

    A high salaried executive is about to receive a $25,000.00 bonus from his company. He doesn’t need the additional income and doesn’t want to pat additional taxes on the bonus. What type on non qualified plan could his employer set up for him?

    • A profit sharing plan

    • A Keogh Plan

    • A deferred compensation plan

    • A defined benefit plan

    Correct Answer
    A. A deferred compensation plan
    Explanation
    A deferred compensation plan could be set up for the high salaried executive to avoid paying additional taxes on the $25,000.00 bonus. This type of plan allows the executive to defer receiving the bonus until a later date, typically after retirement, when they may be in a lower tax bracket. By deferring the income, the executive can potentially reduce their tax liability and avoid immediate taxation on the bonus.

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  • 48. 

    What is the name of the Consumer publication that describes the type of coverage being offered and provides general information to help applicants compare different policies and reach a decision about whether the coverage is appropriate?

    • A buyer's guide

    • An inspection report

    • A policy summary

    • The agent's report

    Correct Answer
    A. A buyer's guide
    Explanation
    A buyer's guide is a consumer publication that provides general information about the type of coverage being offered and helps applicants compare different policies. It is designed to assist consumers in making an informed decision about whether the coverage is suitable for their needs. The buyer's guide offers valuable information that can help individuals understand the terms and conditions of the policy, compare prices and benefits, and ultimately decide whether the coverage is appropriate for them.

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  • 49. 

    Retirement benefits through Social Security are available if the recipient is?

    • Currently insured

    • Fully insured (40 quarters)

    • Disabled

    • A dependent

    Correct Answer
    A. Fully insured (40 quarters)
    Explanation
    Retirement benefits through Social Security are available to individuals who have earned enough credits, also known as quarters of coverage, to be considered fully insured. To be fully insured, an individual must have accumulated a total of 40 quarters, which is equivalent to 10 years of work. This means that they have paid Social Security taxes for at least 40 quarters throughout their working years, making them eligible for retirement benefits. Being currently insured, disabled, or a dependent does not guarantee eligibility for retirement benefits, but being fully insured does.

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Quiz Review Timeline (Updated): Mar 20, 2023 +

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
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  • Apr 05, 2014
    Quiz Created by
    Xtang0729

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