USAA Test Questions & Answers 100% VERIFIED
CORRECT |latest updates 2025|
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: - ANSWER -fraternal benefit society
If a contract of adhesion contains questionable language, to whom would the
interpretation be in favor of? - ANSWER -insured
What is a warranty? - ANSWER -is a statement guaranteed to be true
A policy of adhesion can only be modified by whom? - ANSWER -insurance company
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which
of the following contractual elements? - ANSWER -Legal Purpose (Insurable Interest)
Which of these is considered a statement that is assured to be true in every respect? -
ANSWER -warranty
Which of these is NOT a type of agent authority? - ANSWER -principal
The Consideration clause of an insurance contract includes: - ANSWER -the schedule
and amount of premium payments
What is the consideration given by an insurer in the Consideration clause of the life
policy? - ANSWER -Promise to pay a death benefit to a named beneficiary
Who makes the legally enforceable promises in a unilateral insurance policy? -
ANSWER -insurance company
All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: - ANSWER -bilateral
At what point does an informal contact become binding? - ANSWER -When one party
makes an offer and the other party accepts that offer.
Which of these arrangements allows one to bypass insurable interest laws? - ANSWER
-Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of - ANSWER -fiduciary responsibility
Life and health insurance policies are: - ANSWER -unilateral contracts
, What type of life insurance gives the greatest amount of coverage for a limited period of
time? - ANSWER -Term life
Which type of life policy contains a monthly mortality charge as well as self-directed
investment choices? - ANSWER -Variable Universal Life
T has a term policy that allows him to continue the coverage after expiration of the
initial policy period. What type of term coverage is this? - ANSWER -renewable
Which of the following policies is characterized by a flexible premium and death benefit
and allows the policyowner control of the investment aspect of the plan? - ANSWER -
Variable universal life
D needs life insurance that provides coverage for only a limited amount of time while
also paying the lowest possible premium. What kind of policy is needed? - ANSWER -
Level term
A policy that becomes a Modified Endowment Contract (MEC) - ANSWER -will lose
many of its tax advantages
Term insurance has which of the following characteristics? - ANSWER -Expires at the
end of the policy period
What type of life policy covers two people and pays upon death of the last insured? -
ANSWER -survivorship
A father who dies within 3 years after purchasing a life insurance policy on his infant
daughter can have the policy premiums waived under which provision? - ANSWER -
Payor provision
G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If
G were to die at age 50, how long would G's family receive an income? - ANSWER -10
years
A potential client, age 40, would like to purchase a Whole Life policy that will
accumulate cash value at a faster rate in the early years of the policy. Which of these
statements made by the producer would be correct? - ANSWER -20-Pay Life
accumulates cash value faster than Straight Life
Which statement is TRUE regarding a Variable Whole Life Policy? - ANSWER -A
minimum guaranteed Death benefit is provided
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life
insurance policy with level premiums, permanent protection, and be paid-up at
retirement. Which of these should N purchase? - ANSWER -30 Pay Life
, Which of the following policies is characterized by flexible premium and death benefit
and allows the policyowner control of the investment aspect of the plan? - ANSWER -
Variable universal life
All of these are characteristics of an Adjustable Life policy EXCEPT - ANSWER -face
amount can be adjusted using policy dividends
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an
automobile accident. How much will the insurance company pay the beneficiary? -
ANSWER -$20,000 death benefit
Which of these is an element of a Variable Life policy? - ANSWER -A fixed, level
premium
Which of the following actions require a policyowner to provide proof of insurability in
an Adjustable Life policy? - ANSWER -increase face amount
When applied to Whole Life insurance, the word "straight" denotes: - ANSWER -The
duration of premium payments.
When is the face amount of a Whole Life policy paid? - ANSWER -When the insured
dies or at the policy's maturity date, whichever happens first
An insured is past due on his life insurance premium, but is still within the Grace
Period. What will the beneficiary receive if the insured dies during this Grace Period? -
ANSWER -Full face amount minus any past due premiums
T took out a $50,000 life insurance policy with an Accidental Death and
Dismemberment rider. Five years later, T commits suicide. How much will the insurer
pay? - ANSWER -50,000
Which type of life policy contains a monthly mortality charge as well as self-directed
investment choices? - ANSWER -Variable Universal Life
What benefit does the Payor clause on a Juvenile Life policy provide? - ANSWER -
Premiums are waived if payor becomes disabled
Which of these are NOT an example of Nonforfeiture option? - ANSWER -Life Income
Whose life is covered on a life insurance policy that contains a payor benefit clause? -
ANSWER -child
M had an annual life insurance premium payment due January 1. She died January 10
without making the premium payment. What action will the insurer take? - ANSWER -
Pay face amount minus the past due premium
CORRECT |latest updates 2025|
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: - ANSWER -fraternal benefit society
If a contract of adhesion contains questionable language, to whom would the
interpretation be in favor of? - ANSWER -insured
What is a warranty? - ANSWER -is a statement guaranteed to be true
A policy of adhesion can only be modified by whom? - ANSWER -insurance company
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which
of the following contractual elements? - ANSWER -Legal Purpose (Insurable Interest)
Which of these is considered a statement that is assured to be true in every respect? -
ANSWER -warranty
Which of these is NOT a type of agent authority? - ANSWER -principal
The Consideration clause of an insurance contract includes: - ANSWER -the schedule
and amount of premium payments
What is the consideration given by an insurer in the Consideration clause of the life
policy? - ANSWER -Promise to pay a death benefit to a named beneficiary
Who makes the legally enforceable promises in a unilateral insurance policy? -
ANSWER -insurance company
All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: - ANSWER -bilateral
At what point does an informal contact become binding? - ANSWER -When one party
makes an offer and the other party accepts that offer.
Which of these arrangements allows one to bypass insurable interest laws? - ANSWER
-Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of - ANSWER -fiduciary responsibility
Life and health insurance policies are: - ANSWER -unilateral contracts
, What type of life insurance gives the greatest amount of coverage for a limited period of
time? - ANSWER -Term life
Which type of life policy contains a monthly mortality charge as well as self-directed
investment choices? - ANSWER -Variable Universal Life
T has a term policy that allows him to continue the coverage after expiration of the
initial policy period. What type of term coverage is this? - ANSWER -renewable
Which of the following policies is characterized by a flexible premium and death benefit
and allows the policyowner control of the investment aspect of the plan? - ANSWER -
Variable universal life
D needs life insurance that provides coverage for only a limited amount of time while
also paying the lowest possible premium. What kind of policy is needed? - ANSWER -
Level term
A policy that becomes a Modified Endowment Contract (MEC) - ANSWER -will lose
many of its tax advantages
Term insurance has which of the following characteristics? - ANSWER -Expires at the
end of the policy period
What type of life policy covers two people and pays upon death of the last insured? -
ANSWER -survivorship
A father who dies within 3 years after purchasing a life insurance policy on his infant
daughter can have the policy premiums waived under which provision? - ANSWER -
Payor provision
G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If
G were to die at age 50, how long would G's family receive an income? - ANSWER -10
years
A potential client, age 40, would like to purchase a Whole Life policy that will
accumulate cash value at a faster rate in the early years of the policy. Which of these
statements made by the producer would be correct? - ANSWER -20-Pay Life
accumulates cash value faster than Straight Life
Which statement is TRUE regarding a Variable Whole Life Policy? - ANSWER -A
minimum guaranteed Death benefit is provided
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life
insurance policy with level premiums, permanent protection, and be paid-up at
retirement. Which of these should N purchase? - ANSWER -30 Pay Life
, Which of the following policies is characterized by flexible premium and death benefit
and allows the policyowner control of the investment aspect of the plan? - ANSWER -
Variable universal life
All of these are characteristics of an Adjustable Life policy EXCEPT - ANSWER -face
amount can be adjusted using policy dividends
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an
automobile accident. How much will the insurance company pay the beneficiary? -
ANSWER -$20,000 death benefit
Which of these is an element of a Variable Life policy? - ANSWER -A fixed, level
premium
Which of the following actions require a policyowner to provide proof of insurability in
an Adjustable Life policy? - ANSWER -increase face amount
When applied to Whole Life insurance, the word "straight" denotes: - ANSWER -The
duration of premium payments.
When is the face amount of a Whole Life policy paid? - ANSWER -When the insured
dies or at the policy's maturity date, whichever happens first
An insured is past due on his life insurance premium, but is still within the Grace
Period. What will the beneficiary receive if the insured dies during this Grace Period? -
ANSWER -Full face amount minus any past due premiums
T took out a $50,000 life insurance policy with an Accidental Death and
Dismemberment rider. Five years later, T commits suicide. How much will the insurer
pay? - ANSWER -50,000
Which type of life policy contains a monthly mortality charge as well as self-directed
investment choices? - ANSWER -Variable Universal Life
What benefit does the Payor clause on a Juvenile Life policy provide? - ANSWER -
Premiums are waived if payor becomes disabled
Which of these are NOT an example of Nonforfeiture option? - ANSWER -Life Income
Whose life is covered on a life insurance policy that contains a payor benefit clause? -
ANSWER -child
M had an annual life insurance premium payment due January 1. She died January 10
without making the premium payment. What action will the insurer take? - ANSWER -
Pay face amount minus the past due premium
