Primerica Exam Review with Complete
Solutions
An IRA purchased by a small employer to cover employees is known as a - correct
answer-simplified employee pension plan
The primary beneficiary of her husband's life policy found that no settlement option was
stated in the policy on the date of her husband's death. Who will select the settlement
option in this case? - correct answer-The beneficiary
The life insurance policy clause that prevents an insurance company from denying
payment of a death claim after a specified period time is known as the - correct answer-
Incontestability clause
The type of policy that can be changed from one that does not accumulate cash value
to the one that does is a - correct answer-convertible term policy
Which of the following types of risk will result in the highest premium? - correct answer-
substandard risk
An individual has just borrowed $10,000 from his bank on a 5 year installment loan
requiring monthly payments. What type of life insurance policy would be best suited to
this situation? - correct answer-decreasing term
Which of the following explains the Policyowner's right to change beneficiaries choose
options and receive proceeds of a policy? - correct answer-owners right
Which nonforfeiture option provides coverage for the longest period of time? - correct
answer-Reduced paid up
Insurance policies are not drawn up through negotiations and an insured has little to say
about its provisions. What contract characteristic does this describe? - correct answer-
Adhesion
Which of the following is correct concerning the taxation of premiums in a key person
life insurance policy? - correct answer-premiums are not tax deductible as a business
expense
To sell variable life insurance policies, an agent must receive all of the following
EXCEPT - correct answer-Sec registration
, Which universal life option has a gradually increasing cash value and a level death
benefit? - correct answer-Option A
If $100,000 of life insurance proceeds were used in a settlement option, which paid
$13,000 per year for ten years, which of the following would be taxable annually? -
correct answer-$3,000
A tax sheltered annuity is a special tax favored retirement plan available to - correct
answer-certain group of employees only
When is the earliest a policy may go into effect? - correct answer-When the application
is signed and a check is given to the agent
Which of the following is NOT the consideration in a policy? - correct answer-The
application given to a prospective insured
All of the following are true about variable products except - correct answer-The
premiums are invested in the insurer's general account
An insured has a life insurance policy that requires him to only pay premiums for a
specified number of years until the policy is paid up. What kind of policy is it? - correct
answer-Limited pay life
When the insured selects the extended term nonforfeiture option, the cash value will be
used to purchase term insurance with what face amount? - correct answer-Equal to the
original policy for as long as the cash values will purchase
What is the purpose of a conditional receipt? - correct answer-It is intended to provide
coverage on a date earlier than the date of the issuance of the policy.
When a whole policy lapses or is surrendered prior to maturity the cash value can be
used to - correct answer-purchase a single premium policy for a reduced face amount
If the annuitant dies during the accumulation period, who will receive the annuity
benefits? - correct answer-the beneficiary
If only one party to an insurance contract has made a legally enforceable promise what
kind of contract is it? - correct answer-unilateral
The insured had his wife named as the beneficiary of his life insurance policy. To
ensure that his wife had income for life after the insured's death, he chose the life
income settlement option. The amount of payments will be determined by taking into
account all of the following EXCEPT - correct answer-The insured's age at death
Solutions
An IRA purchased by a small employer to cover employees is known as a - correct
answer-simplified employee pension plan
The primary beneficiary of her husband's life policy found that no settlement option was
stated in the policy on the date of her husband's death. Who will select the settlement
option in this case? - correct answer-The beneficiary
The life insurance policy clause that prevents an insurance company from denying
payment of a death claim after a specified period time is known as the - correct answer-
Incontestability clause
The type of policy that can be changed from one that does not accumulate cash value
to the one that does is a - correct answer-convertible term policy
Which of the following types of risk will result in the highest premium? - correct answer-
substandard risk
An individual has just borrowed $10,000 from his bank on a 5 year installment loan
requiring monthly payments. What type of life insurance policy would be best suited to
this situation? - correct answer-decreasing term
Which of the following explains the Policyowner's right to change beneficiaries choose
options and receive proceeds of a policy? - correct answer-owners right
Which nonforfeiture option provides coverage for the longest period of time? - correct
answer-Reduced paid up
Insurance policies are not drawn up through negotiations and an insured has little to say
about its provisions. What contract characteristic does this describe? - correct answer-
Adhesion
Which of the following is correct concerning the taxation of premiums in a key person
life insurance policy? - correct answer-premiums are not tax deductible as a business
expense
To sell variable life insurance policies, an agent must receive all of the following
EXCEPT - correct answer-Sec registration
, Which universal life option has a gradually increasing cash value and a level death
benefit? - correct answer-Option A
If $100,000 of life insurance proceeds were used in a settlement option, which paid
$13,000 per year for ten years, which of the following would be taxable annually? -
correct answer-$3,000
A tax sheltered annuity is a special tax favored retirement plan available to - correct
answer-certain group of employees only
When is the earliest a policy may go into effect? - correct answer-When the application
is signed and a check is given to the agent
Which of the following is NOT the consideration in a policy? - correct answer-The
application given to a prospective insured
All of the following are true about variable products except - correct answer-The
premiums are invested in the insurer's general account
An insured has a life insurance policy that requires him to only pay premiums for a
specified number of years until the policy is paid up. What kind of policy is it? - correct
answer-Limited pay life
When the insured selects the extended term nonforfeiture option, the cash value will be
used to purchase term insurance with what face amount? - correct answer-Equal to the
original policy for as long as the cash values will purchase
What is the purpose of a conditional receipt? - correct answer-It is intended to provide
coverage on a date earlier than the date of the issuance of the policy.
When a whole policy lapses or is surrendered prior to maturity the cash value can be
used to - correct answer-purchase a single premium policy for a reduced face amount
If the annuitant dies during the accumulation period, who will receive the annuity
benefits? - correct answer-the beneficiary
If only one party to an insurance contract has made a legally enforceable promise what
kind of contract is it? - correct answer-unilateral
The insured had his wife named as the beneficiary of his life insurance policy. To
ensure that his wife had income for life after the insured's death, he chose the life
income settlement option. The amount of payments will be determined by taking into
account all of the following EXCEPT - correct answer-The insured's age at death
