Practice Exam 4 - Life Insurance
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- 1.Every licensee must indicate on which of following documents his or her license number?
- A.
Print advertisements
- B.
Business cards
- C.
Written price quotations
- D.
All the above
- 2.When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner......?
- 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 certificate
- D.
Immediately
- 3.An agent makes a misleading comparision of a policy he is selling in order to convince a prespect to lapse an old insurance policy. What is this called?
- A.
Intimidation
- B.
Rebating
- C.
Boycotting
- D.
Twisting
- 4.Which of the following cannot legally be sued when determining premium rates for life insurance?
- A.
Gender
- B.
Age
- C.
Nationality
- D.
All the above may not be used
- 5.Generally, it is unfair to discriminate against any one class of individuals in the business of insruance. 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
- 6.Which of the following is not 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 the determination of insurance rates
- C.
Refusing to apply the practice of twisting in sales
- D.
All the above are legal in the state of California
- 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 premium notification on a non-participating plan
- 8.Jerry is using a new time management technique in his insurance sales presentation. In order to cut the amount of time he spends at each appointment he now longer answers questions when they are frst aksed. Instead he answers them only if htey are asked twice. He feels this will allowe him to get to his next meeting quicker. Most insurance professionals would consider this:
- A.
An unethical practice
- B.
A clever and ethical practice
- 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.
None of the above
- 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
- 11.Why would a busienss 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 consequence of the death of a vice president
- 12.Identify the staemnt 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 fo the premium
- C.
The employee will contribute to the premium payments
- D.
None of the above
- 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
- 14.Which of the following is true regarding the government's social insruance program known as Social Security?
- A.
The majority of worker 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
- 15.Choose the payments from an insurance policy which are not subject to federal income taxes:
- A.
Any part of the death benefit paid as the result of choosing the "life income" settlement option
- B.
The death benefit paid to a beneficiary in a lump sum
- C.
Any cash value received upon the surrender of a life insurance policy
- D.
Non of the above
- 16.Which of the following is false about dividends paid from life insurance policies? A dividend is:
- A.
Treated as a returen of excess premium paid by the owner and is therefore taxable
- B.
If interest is earned on dividends and paid to the policy owner, it is considered taxable
- C.
Not guaranteed to be paid to the policy owner
- 17.Which of these statements wih regard to the tax treament of life insurance is true?
- A.
Death benefits are generally exempt from taxation
- B.
Individual policy premium are tax deductible
- C.
Policy premiums that provide benefits to employees are not tax deductible
- D.
There are all true
- 18.Which of the following is false regrading the taxation of life insurance
- A.
Annuity death benefits are totally exempt from taxation
- B.
Businesses that buy group term life insurance for its employees can generally deduct the premiums because they are considered a business expense
- C.
Individuals making premiums payments on life insurance can not deduct those premiums
- D.
None of the above are false
- 19.Patrick has been dilignet in investing money for his retirement. He has managed to put $100,000 of after-tax money into a tax-deferred annuity. Now he is ready to take it out, and the insurance company that issued the annuity says his guaranteed payment is $8,000 a year for the remainder of his life. This means he can expect a total amount of $200,000 back over his life. How much of each year's annuity payment is taxable?
- A.
$8,000
- B.
$4,000
- C.
$2,000
- D.
@0
- 20.When applying for insurance, there is usually the owner of the contract, the insured and the applicant. They may be: 1. Three different individuals 2. the same person
- A.
1 only
- B.
2 only
- C.
Both 1 and 2
- D.
Neither of the above
- 21.Insurance companies have several departments handling varous responsibilities in the issuance of policies. Which department involved with the selection of risks?
- A.
The sales unit
- B.
The claims unit
- C.
The underwriting unit
- D.
The actuarial unit
- 22.Bill holds two jobs. If Bill were to apply for an insurance policy and the insurer reviews the rish exposure based on his occupation, which of the following would the insurer mist lifely use to classify him? The job:
- A.
Which would constitute the highest premium
- B.
That Bill has worked at the longest
- C.
That represents the highest hazard
- D.
That Bill devotes the most time to every week
- 23.Which of the following supports the Medical Information Bureau?
- A.
Insurance companies
- B.
The Department of insurance
- C.
Insurance agents
- D.
None of the above
- 24.Select the incorrect statement form the choices below concerning insuranace applications:
- A.
Before the insurer can issue the policy, the beneficiary must acknowledge any changes by providing her/her original initial
- B.
Applications become a part fo the contract, when attached
- C.
The statements made on the application are viewed as representations (statements made to the best of the applicant's knowledge)
- D.
The name of the insured must appear somewhere on the application
- 25.From the following, identify that which constitutes the "entire contract" in a life insurance policy. The policy:
- A.
And any oral statements along with the application
- B.
And a copy of application when attached
- C.
And a brochure on the insurer including code-approved financial information
- D.
But not the application
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