Know This

Question 1

Whole Life insurance

Answer 1

Provides lifetime (permanent) protection and accumulates cash value.

Question 2

Variable contracts

Answer 2

The policyowner bears the investment risk (assets in a separate account)

Question 3

Premium rates on joint life Policy

Answer 3

Are determined by averaging the ages of both insureds.

Question 4

Joint Life =

Answer 4

First to die; survivorship life =second to die (last survivor)

Question 5

Insured skips a premium payment on a universal lie policy

Answer 5

The missing premium may be deducted from the policy’s cash value. The policy will not lapse.

Question 6

“Level” in level insurance

Answer 6

Refers to the death benefit, which does not change

Question 7

Term insurance

Answer 7

A) provides the greatest amount of coverage for the lowest premium.
B) has no cash value.

Question 8

Annuities are based on

Answer 8

The life expectancy of the annuitant, the annuitant must be a natural person, regardless of who owns the policy.

Question 9

During the accumulation period

Answer 9

Funds are not paid into the annuity. During the annuity period, funds are paid out to the annuitant.

Question 10

Shorter life expectancy

Answer 10

= higher benefit; longer life expectancy = lower benefit.

Question 11

An immediate annuity

Answer 11

Is purchased with a single premium

Question 12

Income payments from a deferred annuity

Answer 12

Begin sometime after 1 year from the date of purchase.

Question 13

In fixed annuities

Answer 13

The premiums are deposited in the company’s general account

Question 14

Pure life annuity

Answer 14

Provides the highest monthly benefit, but there is no guarantee that the entire principal will be paid out

Question 15

The fixed -period option

Answer 15

Pays for a specific time only, whether the annuitant is living

Question 16

The main use of annuities

Answer 16

Is to provide retirement income

Question 17

Entire contract

Answer 17

= policy + copy of application + any riders of amendments

Question 18

Absolute assignment is

Answer 18

Complete and permanent transfer of ownership right; collateral assignment is the partial and temporary transfer of rights.

Question 19

No beneficiary is named

Answer 19

The policy proceeds go to the insured’s estate.

Question 20

Common disaster clause

Answer 20

Protects the contingent beneficiary

Question 21

Grace Periods

Answer 21

Protect the policyholders from losing insurance coverage if they are late on a premium payment

Question 22

Misstatement of age

Answer 22

On the application will result in adjustment of premium or benefits.

Question 23

Policy loans

Answer 23

Are only available in policies that have cash value (whole life)

Question 24

Wavier of premium rider

Answer 24

Waives the premium for a total disability after a waiting period.

Question 25

Children's term rider

Answer 25

One premium for all children

Question 26

Nonforfeiture options

Answer 26

Are triggered by policy surrender or lapse. Available options * Reduced paid-up * Extended term (automatic) * Cash

Question 27

Extended term

Answer 27

Is the automatic nonforfeiture option: same face amount, shorter term of coverage.

Question 28

Dividends

Answer 28

Are a return of excess premiums: therefore, not taxable when paid to the policyowner

Question 29

Settlement options

Answer 29

Are triggered by the insured's death or age 100 Available options * Cash * Reduction of premium * Accumulation at interest * Paid-up Additions (automatic) * Paid-up Insurance * One-year Term

Question 30

Under life-income (straight life) settlement option

Answer 30

The recipient cannot outlive the benefit payments.

Question 31

Indemnity

Answer 31

Means insureds cannot recover more than their loss

Question 32

Representations

Answer 32

Are statements believed to be true. Insured's statements on the application are representations.

Question 33

Insurer's consideration

Answer 33

Is the promise to pay for the losses; insured's consideration is the payment of premium and statements on the application.

Question 34

A Life insurance Producer

Answer 34

Is the company's field underwriter.

Question 35

Conditional receipt means

Answer 35

The applicant may be covered as early as the date of the application.

Question 36

An insurance application

Answer 36

Is the key source underwriters use for information about the applicant.

Question 37

No premium

Answer 37

No coverage

Question 38

Group insurance is

Answer 38

Written as annually renewable term insurance

Question 39

In group insurance

Answer 39

The master contract is the employer and certificates of the insurance are for individual insureds.

Question 40

When converting from group life

Answer 40

To individual life insurance, evidence of insurability is not required

Question 41

Credit life insurance

Answer 41

Cannot pay out more than the balance of the debt.

Question 42

Lump-sum

Answer 42

Cash payment of life policy proceeds are tax-free for the beneficiary

Question 43

Qualified plans

Answer 43

Have tax advantages

Question 44

Traditional IRA and Roth IRA

Answer 44

Are for individuals with earned income

Question 45

Contributions to a traditional IRA

Answer 45

Are with pre-tax dollars(tax-deductible); Contributions to a Roth IRA are with after-tax dollars (not tax-deductible)

Question 46

Traditional IRA

Answer 46

Distributions are taxable; Roth IRA distributions are NOT taxable.

Question 47

403 (b)

Answer 47

Plans are for nonprofits and public-school systems.

Question 48

Contributions

Answer 48

To qualified plans are limited to a maximum amount (establish by IRS)

Question 49

Domicile refers

Answer 49

To the location where an insurer is incorporated; not necessarily where the insurer conducts business.

Question 50

Restricted license

Answer 50

A foreign military sales agent representing a life insurance company in North Carolina.

Question 51

Pretext interviews

Answer 51

1) Pretends to be someone else 2) pretends to represent a person he or she is not, in fact, representing. 3) Misrepresent the true purpose of the interview; or 4) Refuses to identify him or herself upon request.

Question 52

Misrepresentation

Answer 52

Issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, or the payment of dividends.

Question 53

Rebating

Answer 53

Any inducement offered to the insured in the sale of insurance products that is not specified in the policy.

Question 54

Twisting

Answer 54

A misrepresentation persuades an insured/owner to his or her detriment to cancel, lapse, or switch policies from one to another

Question 55

False advertising

Answer 55

Advertisements cannot include any untrue, deceptive, or misleading statement that apply to the business of insurance or anyone who conducts it.

Question 56

Defamation

Answer 56

An unfair trade practice in which one agent or insurer makes an injurious statement about with the intent of harming the person's or company's reputation. 

Question 57

coercion

Answer 57

An unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance. 

Question 58

Broker

Answer 58

An individual who represents an insured in the process of purchasing and negotiating a contract of insurance. 

Question 59

Agent

Answer 59

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer. 

Question 60

Dividend Options

Answer 60

Available options * Cash * Reduction of Premium * accumulation at Interest * Paid-up Additions (automatic) * Paid-up Insurance * One-year Term