LIFE, HEALTH & VARIABLE ANNUITY (2-15 EXAM) QUESTIONS AND ANSWERS LATEST UPDATE 2024/2025 (100% Solved)

LIFE, HEALTH & VARIABLE ANNUITY (2-15 EXAM) QUESTIONS AND ANSWERS LATEST UPDATE 2024/2025 (100% Solved) Insurance concept founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time. - CORRECT ANSWERS Law of Averages An owner is worried that employees will help themselves to products on the shelf without paying for them. This is an example of what type of hazard? - CORRECT ANSWERS Moral Hazard Won't fly an airplane, never drives a car and keeps money out of the stock market is known as what type of risk ? - CORRECT ANSWERS Risk Avoidance Only pure risk is insurable. TRUE or FALSE? - CORRECT ANSWERS TRUE The loss must not be due to chance. This does or does not describe an element of insurable risk? - CORRECT ANSWERS Does not Uncertainty regarding financial loss best describes this term? - CORRECT ANSWERS Risk Buying insurance is one of the most effective ways of... - CORRECT ANSWERS Transferring Risk Spreads financial risk over a large group to minimize the loss to any one individual. - CORRECT ANSWERS The function of Insurance A Tornado is an example of a what type of hazard? - CORRECT ANSWERS Peril Tom buys his wife a $50,000 diamond ring. When she is not wearing it he locks it up in his safe. This is an example of what type of risk? - CORRECT ANSWERS Risk Reduction Assessing the prospect's financial ability to pay commissions is or is not a standard of a producer's sales pitch? - CORRECT ANSWERS Is not LIFE, HEALTH & VARIABLE ANNUITY (2-15 EXAM) QUESTIONS AND ANSWERS LATEST UPDATE 2024/2025 (100% Solved) An insurance company organized and headquartered in Florida is what type of company? - CORRECT ANSWERS Domestic Reinsurers usually deal with group policy owners. TRUE OR FALSE? - CORRECT ANSWERS FALSE The Federal Trade Commission (FTC) directly supervises all insurance marketing activities. TRUE OR FALSE? - CORRECT ANSWERS FALSE The National Association of Insurance Commissioners (NAIC) is empowered to prosecute and punish criminal violators in the insurance industry. TRUE OR FALSE? - CORRECT ANSWERS FALSE In an insurance transaction, licensed agents legally represent who? -Applicant -Themselves -Insurer - CORRECT ANSWERS Insurer In Florida, properly licensed and appointed agents may act as brokers in insurance transactions , in which case they may legally represent who? -Themselves -Applicant & Insured -State office of Insurance Regulation - CORRECT ANSWERS Applicant & Insured A Life Insurance company organized in IL, with it's home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as? - CORRECT ANSWERS Foreign Lloyd's of London is a service provider. TRUE or FALSE? - CORRECT ANSWERS FALSE A reinsurer is a company that... - CORRECT ANSWERS Assumes a portion of the risk from another insurer The head of a state office of insurance regulation is generally responsible for making insurance laws. TRUE or FALSE - CORRECT ANSWERS FALSE In addition to the state, the organization that regulates variable life and variable annuities is the.. -FTC -NAIC -SEC - CORRECT ANSWERS SEC (Securities & Exchange Commission) The Buyer's Guide is intended to ensure that buyers obtain the lowest price for the insurance. TRUE or FALSE? - CORRECT ANSWERS FALSE The State Guaranty Association guarantees that.. - CORRECT ANSWERS A claim will be paid if the insurer becomes insolvent All of the following methods support the sale of insurance through agents and brokers EXCEPT -Independant agency systems -Career agency systems -Direct selling systems - CORRECT ANSWERS Direct Selling Systems The authority that an insurer gives to its agents by means of the agent's contract is known as -Implied Authority -General Authority -Express Authority - CORRECT ANSWERS Express Authority An insurance contract is prepared by one party, the insurer, rather than by negotiation between the contracting parties. Which of the following statements explains the characterisitcs of insurance contracts? -The contract is Aleatory -The contract is of Adhesion -The contract is of Acceptance - CORRECT ANSWERS The contract is of Adhesion A policy obtained by a person without an insurable interest can be enforced. TRUE or FALSE? - CORRECT ANSWERS FALSE Express Authority is determined by a principal's conduct. TRUE or FALSE? - CORRECT ANSWERS FALSE Most state insurance laws consider statements made in an application for an insurance policy to be representations not warranties. TRUE or FALSE? - CORRECT ANSWERS TRUE Which of the following statements describes an insurable interest? -The beneficiary, by definition, has an insurable interest in the insured -The insured must have a personal or business relationship with the beneficiary -The policy owner must expect to suffer a loss when the insured dies or becomes disabled - CORRECT ANSWERS The policy owner must expect to suffer a loss when the insured dies or becomes disabled A written contract cannot be changed by oral evidence. TRUE or FALSE? - CORRECT ANSWERS TRUE Which of the following is a distinguishing characteristic of an insurance contract? -Consideration -Conditional -Offer & Acceptance - CORRECT ANSWERS Conditional An insurer is considered competent if it is licensed or authorized by the state. TRUE or FALSE? - CORRECT ANSWERS TRUE Competent parties who can enter into contracts are... -Applicants -Trusts & Estates -Business Entities -All of the above - CORRECT ANSWERS All of the above Which of the following is an example of legal consideration? -Politeness -Legal Purpose -Initial Premium - CORRECT ANSWERS Initial Premium With life and health contracts, when must an insurable interest exist? - CORRECT ANSWERS At the inception of the policy An insurance company has how many years to challenge the validity of a life insurance contract? - CORRECT ANSWERS Two years Which of the following terms is used for the voluntary relinquishment of a known right? -Adhesion -Estoppel -Waiver - CORRECT ANSWERS Waiver Bob and Tom enter into a contract in which Bob agrees to fraudulently induce sick people to sell their insurance contracts to Tom's company can best be described as? - CORRECT ANSWERS VOID Which of the following terms bests describes a life insurance policy that provides a straight $100,000 of coverage for a period of 5 years? -Level Term -Whole Term -Permanent Level - CORRECT ANSWERS Level Term A 3 year renewable policy allows a term policy owner to increase coverage for the next 3 years. TRUE or FALSE? - CORRECT ANSWERS FALSE When level premium insurance is renewed, the premium amount rises to reflect the increased mortality risk of the insured's older age. What phrase best describes this approach to increasing premiums? -Step Rate -Seniority Rate -Targeted Rate - CORRECT ANSWERS Step Rate Whole life insurance is designed to mature at age 100. TRUE or FALSE? - CORRECT ANSWERS TRUE The cash values of life insurance policies belong to which of the following? -Beneficiary -Insured -Policyowner - CORRECT ANSWERS Policyowner Limited payment life provides protection only for the years during which premiums are paid. TRUE or FALSE? - CORRECT ANSWERS FALSE To avoid being classified as an MEC, a life insurance policy must satisfy the "7 pay test". TRUE or FALSE? - CORRECT ANSWERS TRUE Which of the following whole life insurance policies attempts to make insurance premiums more manageable by offering lower premiums during the first few years following issue? -Indexed whole life -Modified whole life -Intermediate premium whole life - CORRECT ANSWERS Modified Whole Life What type of policy would be best used when the need for protection declines year after year? -Level Term -Decreasing Term -Whole Life - CORRECT ANSWERS Decreasing Term In regards to Term Insurance, cash values build during the specified period. TRUE or FALSE? - CORRECT ANSWERS FALSE In regards to a 5 year level term policy, if the insured lives beyond 5 years, the policy's cash value will be paid. TRUE or FALSE? - CORRECT ANSWERS FALSE In regards to a 5 year level term policy, the premiums for the renewal period will be higher than the initial period. TRUE or FALSE? - CORRECT ANSWERS TRUE In regards to Variable Insurance, materials used in selling variable policies must be approved only by the State Office of Insurance Regulation. TRUE or FALSE? - CORRECT ANSWERS FALSE In contrast to traditional whole life insurance policies, with variable life insurance products, contract cash values are not guaranteed. TRUE or FALSE? - CORRECT ANSWERS TRUE All of the following statements about variable insurance are correct EXCEPT? -They are not considered securities contracts -They are considered insurance contracts -Sellers must hold a registered representative license from FINRA - CORRECT ANSWERS They are not considered securities contracts A policy covering 2 lives that only pays a death benefit when the second insured person dies is? -A family policy -A joint life policy -A joint and last survivor policy - CORRECT ANSWERS A joint and last survivor policy A policy that pays double or triple the face amount if death occurs during a specified period is? -A family policy -A multiple protection policy -A Joint life policy - CORRECT ANSWERS A multiple protection policy In which of the following situations does the incontestable clause apply? -No insurable interest -Concealment of smoking -Intent to murder - CORRECT ANSWERS Concealment of smoking An error in age is discovered after the death of an insured but before any policy death proceeds are distributed. The insured was older than previously assumed. How would an insurance company handle such a situation? -The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age. -No adjustment would be made, because the contestable period has already passed -The beneficiary would be required to pay all underpaid back premiums before the death benefit is received. - CORRECT ANSWERS The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age. Which of the following allows 30 days during which premiums may be paid to keep policies in force? -Reinstatement Clause -Waiting Period -Grace Period - CORRECT ANSWERS Grace Period Which of the following statements regarding the assignment of a life insurance policy is NOT correct? -Absolute assignment involves a complete transfer -Under a collateral assignement, policy proceeds in excess of the collateral amount pass to the insured's beneficiary -All beneficiaries must expressly approve any assignments of life insurance policies. - CORRECT ANSWERS All beneficiaries must expressly approve any assignments of life insurance policies. Which of the following is a common life insurance policy exclusion? -Death by commercial aviation -Death from War -Death by accidental means -All of the above - CORRECT ANSWERS Death from War All of the following are standard life insurance policy nonforfeiture options EXCEPT? -1-Year Term Insurance option -Cash surrender options -Reduced paid-up (permanent) insurance option -Extended Term insurance option - CORRECT ANSWERS 1-Year Term Insurance option Which of the following statements best describes life insurance policy dividends? -Policy dividends provide policyowners with a level, known annual cash inflow -Policy dividends are an intentional return of a portion of the premiums paid -Policy dividend represent earnings to shareowners who hold stock in insurance - CORRECT ANSWERS Policy dividends are an intentional return of a portion of the premiums paid