WV State Life Insurance Exam Questions With 100% Correct Answers 2024

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a: - ANSRisk retention group Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated? - ANS1970-Fair Credit Reporting Act Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features? - ANSAleatory The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called: - ANSReserves All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: - ANSBilateral What year was the McCarran-Ferguson Act enacted? - ANS1945 Which of the following consists of an offer, acceptance, and consideration? - ANSContract Who elects the governing body of a mutual insurance company? - ANSPolicyholders Insurance policies are considered aleatory contracts because: - ANSPerformance is conditioned upon a future occurrence Who makes the legally enforceable promises in a unilateral contract? - ANSInsurance company Insurance contracts are known as _____ because certain future conditions or acts must occur before any claims can be paid. - ANSConditional A life insurance arrangement which circumvents insurable interest statutes is called: - ANSInvestor-Originated Life Insurance In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? - ANSUnilateral When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: - ANSInsurable interest in the proposed insured Which of these arrangements allows one to bypass insurable interest laws? - ANSInvestor-Originated Life Insurance When must insurable interest exist for a life insurance contract to be valid? - ANSInception of the contract If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? - ANSInsured Which of these is an element of a Variable Life policy? - ANSA fixed, level premium A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? - ANSPayor provision Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? - ANSPolicyowner Which of the following actions is NOT possible with a Universal Life policy? - ANSPremiums may be applied as a credit against income tax Which of the following policies is characterized by a flexible premium and death benefit and allows the policy owner control of the investment aspect of the plan? - ANSVariable universal life A term life insurance policy matures: - ANSupon the insured's death during the term of the policy What type of life policy covers two people and pays upon the death of the last insured? - ANSSurvivorship When is the face amount paid under a Joint Life and Survivor policy? - ANSUpon the death of the last insured Variable Whole Life Insurance can be described as: - ANSBoth an insurance and securities product All of these characteristics of an Adjustable Life policy, EXCEPT: - ANSFace amount can be adjusted using policy dividends Term insurance has which of the following characteristics? - ANSExpires at the end of the policy period P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? - ANSFamily Maintenance policy Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors? - ANSUniversal life A(n) ________ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities - ANSVariable K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies? - ANSEndowment at age 65 What type of life policy covers 2 lives and pays the face amount after the first one dies? - ANSJoint life policy A policy that becomes a Modified Endowment Contract (MEC): - ANSWill lose many of its tax advantages Which provision allows the policy owner to change a term life policy to a permanent one without providing proof of good health? - ANSConversion Which of the following statements is CORRECT about accelerated death benefits? - ANSMust have a terminal illness to qualify K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? - ANS$20,000 death benefit A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? - ANS20-pay life accumulates cash value faster than straight life Which of the following provisions guarantees that premiums will be waived if a juvenile life policy owner becomes disabled? - ANSPayor clause When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? - ANSVoid the policy only if it's discovered during the contestable period and proven to be material How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period? - ANSClaims are denied under the suicide clause of the policy Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? - ANSIt is taxed as ordinary income Which of these life insurance riders allows the applicant to have excess coverage? - ANSTerm rider Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? - ANSDecreasing term Which provision prevents an insurer from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself? - ANSEntire contract provision Quarterly premium payments increase the annual cost of insurance because: - ANSInterest to the insurer is decreased while the administrative costs are increased D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to? - ANSEx-wife S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT: - ANSBeneficiary's age What action can a policy owner take if an application for a bank loan requires collateral? - ANSAssign policy ownership to the bank If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? - ANSInsured's contingent beneficiary Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? - ANSVariable universal life A policy loan is made possible by which of these life insurance policy features? - ANSCash value provision J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions? - ANSReinstatement provision A policy owner is allowed to pay premiums more than once a year under which provision? - ANSMode of premium When can a policyowner change a revocable beneficiary? - ANSAnytime Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? - ANSAll proceeds are income tax in the year they are received Which statement regarding the Change of Beneficiary provision is true? - ANSThe beneficiary can only be charged with the consent of the insurer A policy owner's rights are limited under which beneficiary designation? - ANSIrrevocable The common disaster clause provides that if both the insured and the sole name beneficiary were to die in a common accident, which of the following is true? - ANSthis clause provides the payment of proceeds to the insured's estate A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? - ANSProceeds will go to the contingent beneficiary On a life insurance policy, who is qualified to change the beneficiary designation? - ANSpolicy owner Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - ANSlife income P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to - ANSP only