Life Insurance( ucanpass) UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Spendthrift Clause - CORRECT ANSWER - A clause that prevents the debtors of a
beneficiary from collecting the benefits before he/she receives them.
Stock Companies - CORRECT ANSWER - 1.) owned by the stockholders
2.) stock companies issue nonparticipating
*a nonparticipating (stock) policy does not pay dividends to Policyowner; however, taxable
dividends are paid to stockholder
Mutual companies - CORRECT ANSWER - 1.) are owned by the Policyowner and issue
participating policies
2.) Policyowner are entitled to dividends which, in the case of mutual companies, are a return of
excess premiums and are therefore nontaxable
3).dividends are not guaranteed
Modified endowment contracts - CORRECT ANSWER - 1).Cash value life policies that
fail the 7-pay test are classified as (MECS) for the life of the contract.
2.) modified endowment contracts (MECs) have 10% penalty for premature distributions
Single premium whole life - CORRECT ANSWER - 1.) is designed to provide a level
death benefit to the insured's age 100 for a own-time, lump-sum payment
2.) the policy is completely paid-up after one premium and generates immediate cash
Universal life - CORRECT ANSWER - -Also known by the generic name of flexible
premium adjustable life
-flexibility to increase the amount of premium paid into the policy & later decrease it again
-cash Value
, -minimum premium and target premium
- has 2 components an insurance component and a cash account
Variable life - CORRECT ANSWER - - is a level, fixed premium, investment based
product
-fixed premium and a guaranteed minimum death benefit
-cash Value is not guaranteed
-held separate account
***fixed: cannot be more and cannot not be less**
Variable universal life Insurance - CORRECT ANSWER - -is a type of insurance that
combines many features of the whole life with the flexible premium of universal life and the
investment component of variable life
Twisting - CORRECT ANSWER - -is a misrepresentation or incomplete or fraudulent
comparison of insurance policies that persuade an insured/Lower, to his or her detriment, to
cancel, lapse, switch policies, or take out a policy with another insured. TWISTING IS
PROHIBITED
Defamation - CORRECT ANSWER - -Occurs when an oral or written statement is made
that is intended to injure person engaged and the insurance business
- Also applies to statement that are maliciously critical of the financial condition of any person or
a company
Churning - CORRECT ANSWER - -Is defined as replacing insurance policies for the solo
purpose of making commissions
- the original policy value are used to purchase another insurance with the same insurer for the
purpose of earning additional premiums, fees or commissions
-it is illegal to replace existing life or disability policies with new policies
ACTUAL Exam Questions and CORRECT
Answers
Spendthrift Clause - CORRECT ANSWER - A clause that prevents the debtors of a
beneficiary from collecting the benefits before he/she receives them.
Stock Companies - CORRECT ANSWER - 1.) owned by the stockholders
2.) stock companies issue nonparticipating
*a nonparticipating (stock) policy does not pay dividends to Policyowner; however, taxable
dividends are paid to stockholder
Mutual companies - CORRECT ANSWER - 1.) are owned by the Policyowner and issue
participating policies
2.) Policyowner are entitled to dividends which, in the case of mutual companies, are a return of
excess premiums and are therefore nontaxable
3).dividends are not guaranteed
Modified endowment contracts - CORRECT ANSWER - 1).Cash value life policies that
fail the 7-pay test are classified as (MECS) for the life of the contract.
2.) modified endowment contracts (MECs) have 10% penalty for premature distributions
Single premium whole life - CORRECT ANSWER - 1.) is designed to provide a level
death benefit to the insured's age 100 for a own-time, lump-sum payment
2.) the policy is completely paid-up after one premium and generates immediate cash
Universal life - CORRECT ANSWER - -Also known by the generic name of flexible
premium adjustable life
-flexibility to increase the amount of premium paid into the policy & later decrease it again
-cash Value
, -minimum premium and target premium
- has 2 components an insurance component and a cash account
Variable life - CORRECT ANSWER - - is a level, fixed premium, investment based
product
-fixed premium and a guaranteed minimum death benefit
-cash Value is not guaranteed
-held separate account
***fixed: cannot be more and cannot not be less**
Variable universal life Insurance - CORRECT ANSWER - -is a type of insurance that
combines many features of the whole life with the flexible premium of universal life and the
investment component of variable life
Twisting - CORRECT ANSWER - -is a misrepresentation or incomplete or fraudulent
comparison of insurance policies that persuade an insured/Lower, to his or her detriment, to
cancel, lapse, switch policies, or take out a policy with another insured. TWISTING IS
PROHIBITED
Defamation - CORRECT ANSWER - -Occurs when an oral or written statement is made
that is intended to injure person engaged and the insurance business
- Also applies to statement that are maliciously critical of the financial condition of any person or
a company
Churning - CORRECT ANSWER - -Is defined as replacing insurance policies for the solo
purpose of making commissions
- the original policy value are used to purchase another insurance with the same insurer for the
purpose of earning additional premiums, fees or commissions
-it is illegal to replace existing life or disability policies with new policies
