LIFE AND HEALTH INSURANCE EXAM
QUESTIONS & UPDATED COMPLETE
SOLUTIONS
Concealment - CORRECT ANSWER The intentional failure to disclose known facts on
an insurance application is called
$94,800 - CORRECT ANSWER Betty owns a universal life insurance policy that was
issued with a $100,000 face amount and now has total death benefit protection of
$110,000. Several months ago she borrowed $15,000 from the policy. The outstanding
loan balance (Including Interest) is $15,200. If Betty dies today, what will be the amount
of the death benefit?
6 Months - CORRECT ANSWER Life insurance policies sold or delivered in Michigan
must not contain the provision that back dates the effective date of a policy any more
than how many months?
Nonforfeiture Provision - CORRECT ANSWER The privilege of accessing the cash
value of an insurance policy if it is surrendered is known as the
Mortality - CORRECT ANSWER Which of the following premium factors has the
greatest effect on life insurance premium calculations?
Who Issues Them - CORRECT ANSWER Annuities are classified by all of the following
EXCEPT
Decreasing Term - CORRECT ANSWER Joe buys his first home after obtaining a 30
year mortgage from his bank. He is considering the purchase of life insurance to ensure
that the mortgage will be paid in the event of his death, in which case he will leave the
house to his spouse and children. What would be the best life insurance protection for
Joe?
To provide for annuities to be payable in fixed or variable amounts or for variable life
insurance - CORRECT ANSWER For which of the following reasons would a domestic
insurer set up separate accounts?
Must have the application signed by the policyowner - CORRECT ANSWER Which of
the following statements regarding the delivery of a life insurance policy is NOT correct?
$3.00 - CORRECT ANSWER A producer must pay a fee of how much with each
change of address?
,1 to 12 months - CORRECT ANSWER Group life insurance policies include a
probationary period requiring new employees to wait a certain time before they can
enroll in the plan. How long is the typical range for these probationary periods?
$12,040 - CORRECT ANSWER James died after receiving $180 per month for 6 years
from a $25,000 life with refund annuity. His spouse, Lucy, as his beneficiary, will now
receive t he same monthly income until her payments total
25% of the employee's income up to a specified maximum amount - CORRECT
ANSWER Contributions to a simplified employee pension are not included in the
employee's taxable income for the year as long as the contribution does not exceed
Apparent Authority - CORRECT ANSWER Susan is the receptionist at an insurance
agency. She is currently studying for her life insurance license. One day at lunchtime,
Carla comes in the office to pay her auto insurance premium. Susan talks to her about
the importance of life insurance, and Carla immediately completes an application and
gives Susan a check for the premium. Carla leaves the agency believing she is covered
by life insurance. Susan has acted with
The proceed are payable to the insured's estate or the insured had any incidence of
ownership in the policy at time of death or transferred ownership within 3 years of death.
- CORRECT ANSWER Life insurance proceeds are included in t he gross estate if
to replace an individual's economic value - CORRECT ANSWER According to the
principle of human life value, the purpose of life insurance is
24 hours with a minimum of 3 hours in ethics - CORRECT ANSWER How many hours
of continuing education credit does an agent need to complete every two years?
Verify the applicant's military records, if any - CORRECT ANSWER During the
underwriting process, an insurer may do all of the following EXCEPT
The projected future earnings of the breadwinner and the number of years she expects
to work - CORRECT ANSWER Which of the following is NOT taken into account when
using the needs approach to determine the proper amount of insurance protection?
A mutual insurance company - CORRECT ANSWER An insurance company that is
owned by its policyowners, who share the insurer's divisible surplus in the form of
participating policy dividends, is known as
The death benefit of $50,000 is not guaranteed. - CORRECT ANSWER Michelle, age
31, just purchased a $50,000 variable life insurance policy. Which of the following
statements is NOT correct?
, loss must be intentional - CORRECT ANSWER All of the following are characteristics
of an insurable risk EXCEPT
Life insurance that is owned by the insured will avoid estate tax inclusion as long as
ownership is transferred to another party at least 1 year before the insured's death. -
CORRECT ANSWER Which of the following statements regarding the estate tax
treatment of life insurance owned by the insured at the insured's death is NOT correct?
Variable Life insurance cannot be proposed in sales situation unless the proposal is
preceded or accompanied by a prespectus. - CORRECT ANSWER Which of the
following statements pertaining to variable life insurance is CORRECT?
Accumulation Units - CORRECT ANSWER Premiums paid into a variable annuity are
used regularly to purchase
Concealment - CORRECT ANSWER When important and material facts are hidden by
an insured on an application, this is known as
The policyowner - CORRECT ANSWER The party to whom the life insurance policy
cash values belong is
The same for both individual and group life insurance policies - CORRECT ANSWER
The incontestability period is usually
The overall purpose of the USA patriot act is to - CORRECT ANSWER deter terrorist
activity
Employees' contributions to retirement plans are included in ordinary income. -
CORRECT ANSWER Which of the following statements about the tax advantages of a
qualified retirement plan is NOT true?
Use dividends to buy paid up additions - CORRECT ANSWER Wendy has a $100,000
whole life participating policy. She recently married and is planning to have a family.
She wants to increase her life insurance coverage but at minimal additional costs.
Which of the following dividend options would be most suitable for her needs?
Provides both pure insurance protection and cash value - CORRECT ANSWER In
contrast to traditional whole life insurance policies, term life insurance
is still required to fulfill its obligation - CORRECT ANSWER If an agent fails to perform
an act required by a policy, the insurer
An insurable risk must involve loss that is within the insured's control. - CORRECT
ANSWER With regard to insurable risks, which of the following statements is NOT
correct?
QUESTIONS & UPDATED COMPLETE
SOLUTIONS
Concealment - CORRECT ANSWER The intentional failure to disclose known facts on
an insurance application is called
$94,800 - CORRECT ANSWER Betty owns a universal life insurance policy that was
issued with a $100,000 face amount and now has total death benefit protection of
$110,000. Several months ago she borrowed $15,000 from the policy. The outstanding
loan balance (Including Interest) is $15,200. If Betty dies today, what will be the amount
of the death benefit?
6 Months - CORRECT ANSWER Life insurance policies sold or delivered in Michigan
must not contain the provision that back dates the effective date of a policy any more
than how many months?
Nonforfeiture Provision - CORRECT ANSWER The privilege of accessing the cash
value of an insurance policy if it is surrendered is known as the
Mortality - CORRECT ANSWER Which of the following premium factors has the
greatest effect on life insurance premium calculations?
Who Issues Them - CORRECT ANSWER Annuities are classified by all of the following
EXCEPT
Decreasing Term - CORRECT ANSWER Joe buys his first home after obtaining a 30
year mortgage from his bank. He is considering the purchase of life insurance to ensure
that the mortgage will be paid in the event of his death, in which case he will leave the
house to his spouse and children. What would be the best life insurance protection for
Joe?
To provide for annuities to be payable in fixed or variable amounts or for variable life
insurance - CORRECT ANSWER For which of the following reasons would a domestic
insurer set up separate accounts?
Must have the application signed by the policyowner - CORRECT ANSWER Which of
the following statements regarding the delivery of a life insurance policy is NOT correct?
$3.00 - CORRECT ANSWER A producer must pay a fee of how much with each
change of address?
,1 to 12 months - CORRECT ANSWER Group life insurance policies include a
probationary period requiring new employees to wait a certain time before they can
enroll in the plan. How long is the typical range for these probationary periods?
$12,040 - CORRECT ANSWER James died after receiving $180 per month for 6 years
from a $25,000 life with refund annuity. His spouse, Lucy, as his beneficiary, will now
receive t he same monthly income until her payments total
25% of the employee's income up to a specified maximum amount - CORRECT
ANSWER Contributions to a simplified employee pension are not included in the
employee's taxable income for the year as long as the contribution does not exceed
Apparent Authority - CORRECT ANSWER Susan is the receptionist at an insurance
agency. She is currently studying for her life insurance license. One day at lunchtime,
Carla comes in the office to pay her auto insurance premium. Susan talks to her about
the importance of life insurance, and Carla immediately completes an application and
gives Susan a check for the premium. Carla leaves the agency believing she is covered
by life insurance. Susan has acted with
The proceed are payable to the insured's estate or the insured had any incidence of
ownership in the policy at time of death or transferred ownership within 3 years of death.
- CORRECT ANSWER Life insurance proceeds are included in t he gross estate if
to replace an individual's economic value - CORRECT ANSWER According to the
principle of human life value, the purpose of life insurance is
24 hours with a minimum of 3 hours in ethics - CORRECT ANSWER How many hours
of continuing education credit does an agent need to complete every two years?
Verify the applicant's military records, if any - CORRECT ANSWER During the
underwriting process, an insurer may do all of the following EXCEPT
The projected future earnings of the breadwinner and the number of years she expects
to work - CORRECT ANSWER Which of the following is NOT taken into account when
using the needs approach to determine the proper amount of insurance protection?
A mutual insurance company - CORRECT ANSWER An insurance company that is
owned by its policyowners, who share the insurer's divisible surplus in the form of
participating policy dividends, is known as
The death benefit of $50,000 is not guaranteed. - CORRECT ANSWER Michelle, age
31, just purchased a $50,000 variable life insurance policy. Which of the following
statements is NOT correct?
, loss must be intentional - CORRECT ANSWER All of the following are characteristics
of an insurable risk EXCEPT
Life insurance that is owned by the insured will avoid estate tax inclusion as long as
ownership is transferred to another party at least 1 year before the insured's death. -
CORRECT ANSWER Which of the following statements regarding the estate tax
treatment of life insurance owned by the insured at the insured's death is NOT correct?
Variable Life insurance cannot be proposed in sales situation unless the proposal is
preceded or accompanied by a prespectus. - CORRECT ANSWER Which of the
following statements pertaining to variable life insurance is CORRECT?
Accumulation Units - CORRECT ANSWER Premiums paid into a variable annuity are
used regularly to purchase
Concealment - CORRECT ANSWER When important and material facts are hidden by
an insured on an application, this is known as
The policyowner - CORRECT ANSWER The party to whom the life insurance policy
cash values belong is
The same for both individual and group life insurance policies - CORRECT ANSWER
The incontestability period is usually
The overall purpose of the USA patriot act is to - CORRECT ANSWER deter terrorist
activity
Employees' contributions to retirement plans are included in ordinary income. -
CORRECT ANSWER Which of the following statements about the tax advantages of a
qualified retirement plan is NOT true?
Use dividends to buy paid up additions - CORRECT ANSWER Wendy has a $100,000
whole life participating policy. She recently married and is planning to have a family.
She wants to increase her life insurance coverage but at minimal additional costs.
Which of the following dividend options would be most suitable for her needs?
Provides both pure insurance protection and cash value - CORRECT ANSWER In
contrast to traditional whole life insurance policies, term life insurance
is still required to fulfill its obligation - CORRECT ANSWER If an agent fails to perform
an act required by a policy, the insurer
An insurable risk must involve loss that is within the insured's control. - CORRECT
ANSWER With regard to insurable risks, which of the following statements is NOT
correct?
