,QUESTION:
P wants to name her husband as the beneficiary of her life policy. However, she wishes to retain all of
the rights of ownership. P should have her husband named as the:
A. Irrevocable beneficiary
B. Revocable beneficiary
C. Secondary beneficiary
D. Contingent beneficiary
ANSWER:
B. Revocable beneficiary
Rationale:
A revocable beneficiary allows the policy owner to retain full ownership rights, including the right to
change the beneficiary at any time.
QUESTION:
A contract that has as its basic function the systematic liquidation of accumulated assets through
periodic payments is called an:
A. Indemnity contract
B. Investment contract
C. Endowment
D. Annuity
ANSWER:
D. Annuity
Rationale:
An annuity is designed to provide periodic payments that systematically distribute accumulated funds,
often used for retirement income.
QUESTION:
An insurance producer takes an application for a life insurance policy but does not collect the initial
premium. On delivery of the policy to the proposed insured, the producer must collect the initial
premium and which of the following?
A. A copy of the MIB report
B. The insured’s signed statement of continued good health
C. A copy of the conditional receipt
D. A copy of the temporary insurance agreement
ANSWER:
B. The insured’s signed statement of continued good health
,Rationale:
When the initial premium is not collected at application, insurers require proof that the insured’s health
has not changed before coverage becomes effective.
QUESTION:
An employer can deduct premium payments as an ordinary business expense for which of the following
life coverages?
A. Buy and Sell Agreements
B. Group life insurance
C. Key Employee insurance
D. Joint Life insurance, if the business is the beneficiary
ANSWER:
B. Group life insurance
Rationale:
Premiums paid for group life insurance are considered a deductible business expense for employers.
QUESTION:
A producer takes applications from identical twins who want to buy the same type of policy in the same
amount. The insurer issues the policies as applied for, but charges a 25 percent higher premium for one
policy. The difference in premiums is most likely due to:
A. Incontestability
B. Insurable interest
C. Consideration
D. Risk classification
ANSWER:
D. Risk classification
Rationale:
Risk classification accounts for differences in underwriting factors such as health history or lifestyle,
which can result in different premium rates.
QUESTION:
In the event of an insured’s death, which of the following provides an income for the family during a
designated period of time followed by a lump sum death benefit?
A. Family Income rider
B. Survivorship Life policy
C. Joint Life policy
D. Modified Life policy
ANSWER:
A. Family Income rider
Rationale:
A Family Income rider provides periodic income payments for a set time after death, followed by
payment of the policy’s lump sum death benefit.
, QUESTION:
Which of the following statements is CORRECT about Group Life conversion privileges?
A. Under COBRA law, a departing employee may elect to remain a member of the Group Life plan for a
limited period of time.
B. Death during the conversion period is covered even if the departing employee chose not to convert
the policy.
C. A departing employee must individually pay the premium if the employee elects to be covered during
the conversion period.
D. If a departing employee elects to convert a life insurance policy, the insurer must offer Term insurance
as one of the choices.
ANSWER:
B. Death during the conversion period is covered even if the departing employee chose not to convert
the policy.
Rationale:
Most group life policies provide coverage during the conversion period even if the employee dies before
completing the conversion.
QUESTION:
Which of the following policies is an interest-sensitive form of permanent protection?
A. Universal Life
B. Limited-Pay Life
C. Graded Premium Whole Life
D. Modified Whole Life
ANSWER:
A. Universal Life
Rationale:
Universal Life policies are interest-sensitive and allow flexible premiums and adjustable death benefits.
QUESTION:
Reinstatement of a life insurance policy requires an insured to take all of the following actions EXCEPT:
A. Provide evidence of insurability
B. Make collateral assignment to the insurer
C. Pay back interest on any outstanding policy loan
D. Pay all past-due premiums
ANSWER:
B. Make collateral assignment to the insurer
Rationale:
Collateral assignment is not required for policy reinstatement; reinstatement focuses on premiums,
loans, and insurability.
QUESTION:
Which of the following statements about a Renewable Term policy is CORRECT?
A. It is renewable at the option of the insurer.
B. It is renewable at the option of the insured.
P wants to name her husband as the beneficiary of her life policy. However, she wishes to retain all of
the rights of ownership. P should have her husband named as the:
A. Irrevocable beneficiary
B. Revocable beneficiary
C. Secondary beneficiary
D. Contingent beneficiary
ANSWER:
B. Revocable beneficiary
Rationale:
A revocable beneficiary allows the policy owner to retain full ownership rights, including the right to
change the beneficiary at any time.
QUESTION:
A contract that has as its basic function the systematic liquidation of accumulated assets through
periodic payments is called an:
A. Indemnity contract
B. Investment contract
C. Endowment
D. Annuity
ANSWER:
D. Annuity
Rationale:
An annuity is designed to provide periodic payments that systematically distribute accumulated funds,
often used for retirement income.
QUESTION:
An insurance producer takes an application for a life insurance policy but does not collect the initial
premium. On delivery of the policy to the proposed insured, the producer must collect the initial
premium and which of the following?
A. A copy of the MIB report
B. The insured’s signed statement of continued good health
C. A copy of the conditional receipt
D. A copy of the temporary insurance agreement
ANSWER:
B. The insured’s signed statement of continued good health
,Rationale:
When the initial premium is not collected at application, insurers require proof that the insured’s health
has not changed before coverage becomes effective.
QUESTION:
An employer can deduct premium payments as an ordinary business expense for which of the following
life coverages?
A. Buy and Sell Agreements
B. Group life insurance
C. Key Employee insurance
D. Joint Life insurance, if the business is the beneficiary
ANSWER:
B. Group life insurance
Rationale:
Premiums paid for group life insurance are considered a deductible business expense for employers.
QUESTION:
A producer takes applications from identical twins who want to buy the same type of policy in the same
amount. The insurer issues the policies as applied for, but charges a 25 percent higher premium for one
policy. The difference in premiums is most likely due to:
A. Incontestability
B. Insurable interest
C. Consideration
D. Risk classification
ANSWER:
D. Risk classification
Rationale:
Risk classification accounts for differences in underwriting factors such as health history or lifestyle,
which can result in different premium rates.
QUESTION:
In the event of an insured’s death, which of the following provides an income for the family during a
designated period of time followed by a lump sum death benefit?
A. Family Income rider
B. Survivorship Life policy
C. Joint Life policy
D. Modified Life policy
ANSWER:
A. Family Income rider
Rationale:
A Family Income rider provides periodic income payments for a set time after death, followed by
payment of the policy’s lump sum death benefit.
, QUESTION:
Which of the following statements is CORRECT about Group Life conversion privileges?
A. Under COBRA law, a departing employee may elect to remain a member of the Group Life plan for a
limited period of time.
B. Death during the conversion period is covered even if the departing employee chose not to convert
the policy.
C. A departing employee must individually pay the premium if the employee elects to be covered during
the conversion period.
D. If a departing employee elects to convert a life insurance policy, the insurer must offer Term insurance
as one of the choices.
ANSWER:
B. Death during the conversion period is covered even if the departing employee chose not to convert
the policy.
Rationale:
Most group life policies provide coverage during the conversion period even if the employee dies before
completing the conversion.
QUESTION:
Which of the following policies is an interest-sensitive form of permanent protection?
A. Universal Life
B. Limited-Pay Life
C. Graded Premium Whole Life
D. Modified Whole Life
ANSWER:
A. Universal Life
Rationale:
Universal Life policies are interest-sensitive and allow flexible premiums and adjustable death benefits.
QUESTION:
Reinstatement of a life insurance policy requires an insured to take all of the following actions EXCEPT:
A. Provide evidence of insurability
B. Make collateral assignment to the insurer
C. Pay back interest on any outstanding policy loan
D. Pay all past-due premiums
ANSWER:
B. Make collateral assignment to the insurer
Rationale:
Collateral assignment is not required for policy reinstatement; reinstatement focuses on premiums,
loans, and insurability.
QUESTION:
Which of the following statements about a Renewable Term policy is CORRECT?
A. It is renewable at the option of the insurer.
B. It is renewable at the option of the insured.
