PRIMERICA LIFE LICENSE EXAM
QUESTIONS WITH COMPLETE
ANSWERS
What limits the amount that a policyowner may borrow from a whole life insurance
policy? - ANSWER-Cash value
What is NOT true about a joint and survivor annuity benefit option? - ANSWER-
Payments stop after the first death among the annuitants.
If a beneficiary wants a guarantee that benefits paid from principal and interest would be
paid for a period of 10 years before being exhausted, what settlement option should the
beneficiary select? - ANSWER-Fixed period
The Waiver of Cost of Insurance rider is found in what type of insurance? - ANSWER-
Universal Life
This is not a duty or responsibility of producers at the time of application - ANSWER-
Change any incorrect statement on the application by personally initialing next to the
corrected statement.
For how long is the certificate of prelicensing course completion valid? - ANSWER-180
calendar days
An insured has a Modified Endowment Contract. He wants to withdraw some money in
order to pay medical bills. Which of the following is true? - ANSWER-He will have to pay
a penalty if he is younger than 59½.
When must an IRA be completely distributed when a beneficiary is not named? -
ANSWER-December 31 of the year that contains the fifth anniversary of the owner's
death.
All other factors being equal, the least expensive first-year premium payment is found in
- ANSWER-Annually Renewable Term.
If an insurer meets the state's financial requirements and is approved to transact
business in the state, it is considered to be - ANSWER-Authorized.
Which type of misrepresentation persuades an insured, to his or her detriment, to
cancel, lapse, or switch policies from one to another? - ANSWER-Twisting
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? - ANSWER-Guaranteed insurability option
Under what circumstances may a life insurance agent deliver a policy that is dated up to
3 months before the application was taken? - ANSWER-To avoid an increase in
premium rate for the insured
Which of the following best describes gross annual premium - ANSWER-Net premium
plus expenses
A couple own's a life policy with a Children's Term rider. Their daughter is reaching the
maximum age of dependent coverage, so she will have to convert to perm insurance in
the future. Which of the following will she need to provide for proof of insurability? -
ANSWER-Proof of insurability is not required.
What is not a term for a period of time during which the annuitant or beneficiary receives
income? - ANSWER-Depreciation period
What is the purpose of establishing the target premium for a universal life policy? -
ANSWER-To keep the policy in force
What produces evaluations of insurers' financial status often used by state departments
of insurance? - ANSWER-AM Best
An applicant buys a nonqualified annuity but dies before the starting date. For which of
the following beneficiaries would the contract's interest NOT be taxable? - ANSWER-
Spouse
What allows the insurer to relieve a minor insured from premium payments if the minor's
parents have died or become disabled? - ANSWER-Payor Benefit
If an insurance company makes a statement that its policies are guaranteed by the
existence of the Insurance Guaranty Association, that would be considered - ANSWER-
An unfair trade practice.
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a
beneficiary, the premiums must be paid - ANSWER-For 20 years or until death,
whichever occurs first.
A policyowner cancels his life policy but instructs the company to transfer the cash
value of his policy to an annuity. This nontaxable transaction is called - ANSWER-1035
exchange.
What is the waiting period for rate filing before each rate may become effective? -
ANSWER-30 days
, An employee quits her job where she has a balance of $10,000 in her qualified plan. If
she decides to do a direct transfer from her plan to a Traditional IRA, how much will be
transferred from one plan administrator to another and what is the tax consequence of a
direct transfer? - ANSWER-$10,000, no tax consequence
In an Adjustable Life policy what can't be changed by the policy owner - ANSWER-The
type of investment.
In Ohio, a temporary license may be issued for reasons EXCEPT - ANSWER-Agent's
retirement.
If an insured surrenders his life policy, which statement is true regarding the cash value
of the policy? - ANSWER-It is only taxable if the cash value exceeds the amount paid
for premiums.
IS true about a participating life insurance policy? - ANSWER-Pays dividends to
policyowners.
NOT an appropriate use of a deferred annuity? - ANSWER-Creating an estate
Upon policy owner's death, policy will pay portion of proceeds annually to his spouse,
but that the principal will be paid to their children when they reach a certain age. Which
settlement option should the policy owner choose? - ANSWER-Interest only option
When an annuity is written, whose life expectancy is taken into account? - ANSWER-
Annuitant
What is true concerning irrevocable beneficiaries? - ANSWER-They can be changed
only with the written consent of that beneficiary.
Life insurance death proceeds are - ANSWER-Generally not taxed as income.
What documentation grants express authority to an agent? - ANSWER-Agent's contract
with the principal
Why is an equity indexed annuity considered to be a fixed annuity? - ANSWER-It has a
guaranteed minimum interest rate.
NOT a characteristic of group life insurance - ANSWER-Premiums are determined by
the age, sex and occupation of each individual certificate holder.
Adverse selection is a concept best described as - ANSWER-Risks with higher
probability of loss seeking insurance more often than other risks.
QUESTIONS WITH COMPLETE
ANSWERS
What limits the amount that a policyowner may borrow from a whole life insurance
policy? - ANSWER-Cash value
What is NOT true about a joint and survivor annuity benefit option? - ANSWER-
Payments stop after the first death among the annuitants.
If a beneficiary wants a guarantee that benefits paid from principal and interest would be
paid for a period of 10 years before being exhausted, what settlement option should the
beneficiary select? - ANSWER-Fixed period
The Waiver of Cost of Insurance rider is found in what type of insurance? - ANSWER-
Universal Life
This is not a duty or responsibility of producers at the time of application - ANSWER-
Change any incorrect statement on the application by personally initialing next to the
corrected statement.
For how long is the certificate of prelicensing course completion valid? - ANSWER-180
calendar days
An insured has a Modified Endowment Contract. He wants to withdraw some money in
order to pay medical bills. Which of the following is true? - ANSWER-He will have to pay
a penalty if he is younger than 59½.
When must an IRA be completely distributed when a beneficiary is not named? -
ANSWER-December 31 of the year that contains the fifth anniversary of the owner's
death.
All other factors being equal, the least expensive first-year premium payment is found in
- ANSWER-Annually Renewable Term.
If an insurer meets the state's financial requirements and is approved to transact
business in the state, it is considered to be - ANSWER-Authorized.
Which type of misrepresentation persuades an insured, to his or her detriment, to
cancel, lapse, or switch policies from one to another? - ANSWER-Twisting
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? - ANSWER-Guaranteed insurability option
Under what circumstances may a life insurance agent deliver a policy that is dated up to
3 months before the application was taken? - ANSWER-To avoid an increase in
premium rate for the insured
Which of the following best describes gross annual premium - ANSWER-Net premium
plus expenses
A couple own's a life policy with a Children's Term rider. Their daughter is reaching the
maximum age of dependent coverage, so she will have to convert to perm insurance in
the future. Which of the following will she need to provide for proof of insurability? -
ANSWER-Proof of insurability is not required.
What is not a term for a period of time during which the annuitant or beneficiary receives
income? - ANSWER-Depreciation period
What is the purpose of establishing the target premium for a universal life policy? -
ANSWER-To keep the policy in force
What produces evaluations of insurers' financial status often used by state departments
of insurance? - ANSWER-AM Best
An applicant buys a nonqualified annuity but dies before the starting date. For which of
the following beneficiaries would the contract's interest NOT be taxable? - ANSWER-
Spouse
What allows the insurer to relieve a minor insured from premium payments if the minor's
parents have died or become disabled? - ANSWER-Payor Benefit
If an insurance company makes a statement that its policies are guaranteed by the
existence of the Insurance Guaranty Association, that would be considered - ANSWER-
An unfair trade practice.
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a
beneficiary, the premiums must be paid - ANSWER-For 20 years or until death,
whichever occurs first.
A policyowner cancels his life policy but instructs the company to transfer the cash
value of his policy to an annuity. This nontaxable transaction is called - ANSWER-1035
exchange.
What is the waiting period for rate filing before each rate may become effective? -
ANSWER-30 days
, An employee quits her job where she has a balance of $10,000 in her qualified plan. If
she decides to do a direct transfer from her plan to a Traditional IRA, how much will be
transferred from one plan administrator to another and what is the tax consequence of a
direct transfer? - ANSWER-$10,000, no tax consequence
In an Adjustable Life policy what can't be changed by the policy owner - ANSWER-The
type of investment.
In Ohio, a temporary license may be issued for reasons EXCEPT - ANSWER-Agent's
retirement.
If an insured surrenders his life policy, which statement is true regarding the cash value
of the policy? - ANSWER-It is only taxable if the cash value exceeds the amount paid
for premiums.
IS true about a participating life insurance policy? - ANSWER-Pays dividends to
policyowners.
NOT an appropriate use of a deferred annuity? - ANSWER-Creating an estate
Upon policy owner's death, policy will pay portion of proceeds annually to his spouse,
but that the principal will be paid to their children when they reach a certain age. Which
settlement option should the policy owner choose? - ANSWER-Interest only option
When an annuity is written, whose life expectancy is taken into account? - ANSWER-
Annuitant
What is true concerning irrevocable beneficiaries? - ANSWER-They can be changed
only with the written consent of that beneficiary.
Life insurance death proceeds are - ANSWER-Generally not taxed as income.
What documentation grants express authority to an agent? - ANSWER-Agent's contract
with the principal
Why is an equity indexed annuity considered to be a fixed annuity? - ANSWER-It has a
guaranteed minimum interest rate.
NOT a characteristic of group life insurance - ANSWER-Premiums are determined by
the age, sex and occupation of each individual certificate holder.
Adverse selection is a concept best described as - ANSWER-Risks with higher
probability of loss seeking insurance more often than other risks.
