USAA TEST QUESTIONS AND ANSWERS
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? - Answer -treaty
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a - Answer -risk retention group
What is the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? - Answer -Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called: - Answer -reserves
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 type of reinsurance contract involves two companies automatically sharing their
risk exposure? - Answer -treaty
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a - Answer -risk retention group
What is the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? - Answer -Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called: - Answer -reserves
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
