EXAM FX: LIFE INSURANCE PRACTICE QUESTIONS
AND CORRECT ANSWERS VERIFIED LATEST 2023-
2024 GRADE A +
An insured purchased a variable life insurance policy with a face
amount of $50,000. Over the life of the policy, stock performance
declined and the cash value fell to $10,000. If the insured dies,
how much will be paid out? - CORRECT ANSWER>>$50,000
Which of the following documents must be provided to the
policyowner or applicant during policy replacement? - CORRECT
ANSWER>>Notice Regarding Replacement.
The president of a manufacturing company has offered one of the
company's officers a special individual annuity plan that is
unavailable to lower-echelon employees. This plan would be
funded with before-tax corporate dollars, and it does not meet
government approval standards. This annuity plan is - CORRECT
ANSWER>>A nonqualified annuity plan.
During replacement of life insurance, a replacing insurer must do
which of the following? - CORRECT ANSWER>>Obtain a list of
all life insurance policies that will be replaced
,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.
An insurance policy that only requires a payment of premium at its
inception, provides insurance protection for the life of the insured,
and matures at the insured's age 100 is called - CORRECT
ANSWER>>Single premium whole life.
Which of the following statements is TRUE concerning the
Accidental Death Rider? - CORRECT ANSWER>>It will pay
double or triple the face amount.
Which of the following statements concerning a Simplified
Employee Pension plan (SEP) is INCORRECT? - CORRECT
ANSWER>>SEPs are suitable for large companies.
In insurance, an offer is usually made when - CORRECT
ANSWER>>An applicant submits an application to the insurer.
,An individual is purchasing a permanent life insurance policy with
a face value of $25,000. While this is all the insurance that he can
afford at this time, he wants to be sure that additional coverage
will be available in the future. Which of the following options
should be included in the policy? - CORRECT
ANSWER>>Guaranteed insurability option
Who can make a fully deductible contribution to a traditional IRA?
- CORRECT ANSWER>>An individual not covered by an
employer-sponsored plan who has earned income
A producer is helping a married couple determine the financial
needs of their children in the event one or both should die
prematurely. This is a personal use of life insurance known as -
CORRECT ANSWER>>Survivor protection.
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 a key distinction between variable whole
life and variable universal life products? - CORRECT
ANSWER>>Variable whole life has a guaranteed death benefit.
, When an insured makes truthful statements on the application for
insurance and pays the required premium, it is known as which of
the following? - CORRECT ANSWER>>Consideration
A policy will pay the death benefit if the insured dies during the
20-year premium-paying period, and nothing if death occurs after
the 20-year period. What type of policy is this? - CORRECT
ANSWER>>Level term
A Return of Premium term life policy is written as what type of
term coverage? - CORRECT ANSWER>>Increasing
All of the following are duties and responsibilities of producers at
the time of application EXCEPT - CORRECT ANSWER>>Change
any incorrect statement on the application by personally initialing
next to the corrected statement.
The policyowner pays for her life insurance annually. Until now,
she has collected a nontaxable dividend check each year. She
has decided that she would rather use the dividends to help pay
for her next premium. What option would allow her to do this? -
CORRECT ANSWER>>Reduction of premium
AND CORRECT ANSWERS VERIFIED LATEST 2023-
2024 GRADE A +
An insured purchased a variable life insurance policy with a face
amount of $50,000. Over the life of the policy, stock performance
declined and the cash value fell to $10,000. If the insured dies,
how much will be paid out? - CORRECT ANSWER>>$50,000
Which of the following documents must be provided to the
policyowner or applicant during policy replacement? - CORRECT
ANSWER>>Notice Regarding Replacement.
The president of a manufacturing company has offered one of the
company's officers a special individual annuity plan that is
unavailable to lower-echelon employees. This plan would be
funded with before-tax corporate dollars, and it does not meet
government approval standards. This annuity plan is - CORRECT
ANSWER>>A nonqualified annuity plan.
During replacement of life insurance, a replacing insurer must do
which of the following? - CORRECT ANSWER>>Obtain a list of
all life insurance policies that will be replaced
,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.
An insurance policy that only requires a payment of premium at its
inception, provides insurance protection for the life of the insured,
and matures at the insured's age 100 is called - CORRECT
ANSWER>>Single premium whole life.
Which of the following statements is TRUE concerning the
Accidental Death Rider? - CORRECT ANSWER>>It will pay
double or triple the face amount.
Which of the following statements concerning a Simplified
Employee Pension plan (SEP) is INCORRECT? - CORRECT
ANSWER>>SEPs are suitable for large companies.
In insurance, an offer is usually made when - CORRECT
ANSWER>>An applicant submits an application to the insurer.
,An individual is purchasing a permanent life insurance policy with
a face value of $25,000. While this is all the insurance that he can
afford at this time, he wants to be sure that additional coverage
will be available in the future. Which of the following options
should be included in the policy? - CORRECT
ANSWER>>Guaranteed insurability option
Who can make a fully deductible contribution to a traditional IRA?
- CORRECT ANSWER>>An individual not covered by an
employer-sponsored plan who has earned income
A producer is helping a married couple determine the financial
needs of their children in the event one or both should die
prematurely. This is a personal use of life insurance known as -
CORRECT ANSWER>>Survivor protection.
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 a key distinction between variable whole
life and variable universal life products? - CORRECT
ANSWER>>Variable whole life has a guaranteed death benefit.
, When an insured makes truthful statements on the application for
insurance and pays the required premium, it is known as which of
the following? - CORRECT ANSWER>>Consideration
A policy will pay the death benefit if the insured dies during the
20-year premium-paying period, and nothing if death occurs after
the 20-year period. What type of policy is this? - CORRECT
ANSWER>>Level term
A Return of Premium term life policy is written as what type of
term coverage? - CORRECT ANSWER>>Increasing
All of the following are duties and responsibilities of producers at
the time of application EXCEPT - CORRECT ANSWER>>Change
any incorrect statement on the application by personally initialing
next to the corrected statement.
The policyowner pays for her life insurance annually. Until now,
she has collected a nontaxable dividend check each year. She
has decided that she would rather use the dividends to help pay
for her next premium. What option would allow her to do this? -
CORRECT ANSWER>>Reduction of premium
