Page 1 of 96
QUESTIONS AND CORRECT ANSWERS
VERSION A
An agent and an applicant for a life insurance policy fill out and sign the application. However, the
applicant does not wish to give the agent the initial premium, and no conditional receipt is issued.
When will coverage begin?
A. On the designated effective date
B. On the application date
C. when the agent submits the application to the company and the company issues a conditional
receipt
D. when the agent delivers the policy, collects the initial premium, and the applicant completes
an acceptable Statement of Good Health - ANSWER-D. When the agent delivers the policy,
collects the initial premium, and the applicant completes an acceptable Statement of Good
Health
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information
contained in his or her report, the reporting agency must
A. Defend the report if the agency feels it is accurate
B. Change the report
C. Send an actual certified copy of the entire report to the consumer
D. Respond to the consumer's complaint - ANSWER-D. respond to the consumer's complaint
1
, Page 2 of 96
The term "illustration" in a life insurance policy refers to
A. A presentation of non guaranteed elements of a policy
B. Depiction of policy benefits and guarantees
C. Pictures accompanying a policy
D. Charts and graphs - ANSWER-A. A presentation of nonguaranateed elements of a policy
A life insurance policy has a legal purpose if both of which of the following elements exist?
A. Underwriting and reciprocity
B. Offer and counteroffer
C. Policyowners and named beneficiaries
D. Insurable interest and consent - ANSWER-D. Insurable interest and consent
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information
contained in a consumer report
A. Are entitled to obtain a copy of the report from the party who ordered it
B. Must be advised that a copy of the report is available to anyone who request it
C. May sue the reporting agency in order to get inaccurate data corrected
D. Must be informed of the source of the report - ANSWER-D. Must be informed of the source of
the report
In terms of parties to a contract, which of the following does NOT describe a competent party?
A. The person must not be under the influence of drugs or alcohol
B. The person must be of legal age
C. The person must be mentally competent to understand the contract
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, Page 3 of 96
D. The person must have at least completed secondary education - ANSWER-D. The person must
have at least completed secondary education
Which of the following will be included in a policy summary?
A. Copies of illustrations and application
B. Comparisons of similar policies
C. Primary and secondary beneficiary designations
D. Premium amounts and surrender values - ANSWER-D. Premium amounts and surrender values
Which of the following types of risk will result in the highest premium?
A. Substandard risk
B. Standard risk
C. Preferred risk
D. All risks pay equal premiums - ANSWER-A. Substandard risk
In the underwriting process, it was determined that the applicant for life insurance is in poor
health and has some dangerous habits. Which of the following is true concerning the policy
premium?
A. It will likely be the average premium issued to standard risks
B. The applicant's habits and health do not affect the premiums
C. It will likely be lower because the applicant is a preferred risk
D. It will likely be higher because the applicant is a substandard risk - ANSWER-D. It will likely be
higher because the applicant is a substandard risk
In insurance, an offer is usually made when
3
, Page 4 of 96
A. The completed application is submitted
B. The insurer approves the application and receives the initial premium
C. The agent hands the policy to the policyholder
D. An agent explains a policy to a potential applicant - ANSWER-A. The completed application is
submitted
Which of the following is NOT true regarding the annuitant?
A. The annuitant receives the annuity benefits
B. The annuitant must be a natural person
C. The annuitant cannot be the same person as the annuity owner
D. The annuitants life expectancy is taken into consideration for the annuity - ANSWER-C. The
annuitant cannot be the same person as the annuity owner
An agent selling variable annuities must be registered with
A. Department of Insurance
B. The Guaranty Association
C. SEC
D. FINRA - ANSWER-D. FINRA
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?
A. Ordinary life policy
B. Limited pay whole life
C. Level term
D. Term to specified age - ANSWER-C. Level term
4
QUESTIONS AND CORRECT ANSWERS
VERSION A
An agent and an applicant for a life insurance policy fill out and sign the application. However, the
applicant does not wish to give the agent the initial premium, and no conditional receipt is issued.
When will coverage begin?
A. On the designated effective date
B. On the application date
C. when the agent submits the application to the company and the company issues a conditional
receipt
D. when the agent delivers the policy, collects the initial premium, and the applicant completes
an acceptable Statement of Good Health - ANSWER-D. When the agent delivers the policy,
collects the initial premium, and the applicant completes an acceptable Statement of Good
Health
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information
contained in his or her report, the reporting agency must
A. Defend the report if the agency feels it is accurate
B. Change the report
C. Send an actual certified copy of the entire report to the consumer
D. Respond to the consumer's complaint - ANSWER-D. respond to the consumer's complaint
1
, Page 2 of 96
The term "illustration" in a life insurance policy refers to
A. A presentation of non guaranteed elements of a policy
B. Depiction of policy benefits and guarantees
C. Pictures accompanying a policy
D. Charts and graphs - ANSWER-A. A presentation of nonguaranateed elements of a policy
A life insurance policy has a legal purpose if both of which of the following elements exist?
A. Underwriting and reciprocity
B. Offer and counteroffer
C. Policyowners and named beneficiaries
D. Insurable interest and consent - ANSWER-D. Insurable interest and consent
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information
contained in a consumer report
A. Are entitled to obtain a copy of the report from the party who ordered it
B. Must be advised that a copy of the report is available to anyone who request it
C. May sue the reporting agency in order to get inaccurate data corrected
D. Must be informed of the source of the report - ANSWER-D. Must be informed of the source of
the report
In terms of parties to a contract, which of the following does NOT describe a competent party?
A. The person must not be under the influence of drugs or alcohol
B. The person must be of legal age
C. The person must be mentally competent to understand the contract
2
, Page 3 of 96
D. The person must have at least completed secondary education - ANSWER-D. The person must
have at least completed secondary education
Which of the following will be included in a policy summary?
A. Copies of illustrations and application
B. Comparisons of similar policies
C. Primary and secondary beneficiary designations
D. Premium amounts and surrender values - ANSWER-D. Premium amounts and surrender values
Which of the following types of risk will result in the highest premium?
A. Substandard risk
B. Standard risk
C. Preferred risk
D. All risks pay equal premiums - ANSWER-A. Substandard risk
In the underwriting process, it was determined that the applicant for life insurance is in poor
health and has some dangerous habits. Which of the following is true concerning the policy
premium?
A. It will likely be the average premium issued to standard risks
B. The applicant's habits and health do not affect the premiums
C. It will likely be lower because the applicant is a preferred risk
D. It will likely be higher because the applicant is a substandard risk - ANSWER-D. It will likely be
higher because the applicant is a substandard risk
In insurance, an offer is usually made when
3
, Page 4 of 96
A. The completed application is submitted
B. The insurer approves the application and receives the initial premium
C. The agent hands the policy to the policyholder
D. An agent explains a policy to a potential applicant - ANSWER-A. The completed application is
submitted
Which of the following is NOT true regarding the annuitant?
A. The annuitant receives the annuity benefits
B. The annuitant must be a natural person
C. The annuitant cannot be the same person as the annuity owner
D. The annuitants life expectancy is taken into consideration for the annuity - ANSWER-C. The
annuitant cannot be the same person as the annuity owner
An agent selling variable annuities must be registered with
A. Department of Insurance
B. The Guaranty Association
C. SEC
D. FINRA - ANSWER-D. FINRA
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?
A. Ordinary life policy
B. Limited pay whole life
C. Level term
D. Term to specified age - ANSWER-C. Level term
4
