2-15 Insurance Course Chapters 24 –
30 Exam-Graded A
1. A life insurance company is organized in Orlando where it maintains its home office.
In Florida, the company is classified as a
a. domestic company
b. local company
c. foreign company
d. preferred company - ANS-a
2. With regard to life insurance, all of the following statements are correct EXCEPT
a. all individuals are considered to have insurable interests in themselves
b. spouses are automatically considered to have insurable interest in each other
c. a creditor has an insurable interest in a debtor
d. insurable interest must be maintained throughout the life of the contract - ANS-d
3. With ten partners in a corporation, how many life insurance policies would be
required to insure a cross-purchase buy-sell plan?
a. 1
b. 10
c. 90
d. 100 - ANS-c
4. All of the following statements about variable annuities are correct EXCEPT
a. Variable products are regulated by the SEC and the Office of Insurance Regulation.
b. The consumer directs the investments of the product.
,c. An annuitized variable annuity will provide a level income amount to the annuitant for
life.
d. Variable annuities are sold by insurance companies. - ANS-c
5. All of the following statements regarding policy replacement are correct EXCEPT
a. replacement involves convincing a policyholder to lapse or terminate an existing
policy and to purchase another
b. interrupting one cash value insurance plan to begin another could cause serious
financial problems for the policy owner
c. even if the customer wants to replace his or her existing policy, an agent can effect a
policy replacement only by following the replacement regulations in his or her state
d. premiums for replacement policies are generally lower than premiums for the existing
policy they replace - ANS-d
6. How are accumulation unit gains taxed?
a. Gains in accumulation units are taxed as ordinary income.
b. Gains in accumulation units are taxed as capital gains.
c. Gains in accumulation units are taxed using the exclusion ratio.
d. Gains in accumulation units are not taxed - ANS-d
7. After a family's breadwinner dies, the "blackout period" generally can be defined as
the period
a. during which children are living at home
b. that begins with the youngest child turns 16 and ends with the surviving parent retires
c. during which children are in school
d. from the surviving parent's retirement to death - ANS-b
8. All of the following approaches are used by insurers to determine benefits payable
under basic surgical expense insurance EXCEPT
a. relative value scale approach
b. traditional net cost method
,c. reasonable and customary approach
d. surgical schedule method - ANS-b
9. When may a health insurance company change the wording of a uniform policy
provision?
a. It may only be changed if approved by the Office of Insurance Regulation.
b. It may only be changed if the new wording is not less favorable to the insurer.
c. It may only be changed if the new wording is not less favorable to the insured.
d. It may only be changed if the new wording is more favorable to the insurer. - ANS-c
10. The surviving spouse may begin receiving retirement benefits as early as what age?
a. 59 1/2
b. 60
c. 62
d. 65 - ANS-b
11. Beth's health insurance policy contains a provision that allows her to renew
coverage up to age 65. However, the policy also states that should Beth lose her job,
the insurance company will cancel the policy, regardless of Beth's age. In terms of
renewability, what type of policy does Beth have?
a. Cancellable
b. Optionally renewable
c. Guaranteed renewable
d. Conditionally renewable - ANS-d
12. Which of the following constitutes an insurable interest?
a. The policy owner must expect to benefit from the insured's death.
b. The policy owner must expect to suffer a loss when the insured dies or becomes
disabled.
c. The beneficiary, by definition, has an insurable interest in the insured.
, d. The insured must have a personal or business relationship with the beneficiary. -
ANS-b
13. Which of the following is NOT included in the definition of "transacting insurance"?
a. issuing an insurance policy
b. accepting an insurance application
c. underwriting a policy
d. accepting a premium payment - ANS-c
Which of the following is CORRECT?
a. Applicants cannot dispute their consumer reports.
b. Applicants will be notified by the credit reporting agency that the application for life
insurance has been rejected.
c. If the applicant requests their credit report, the insurance company must provide a
copy of one.
d. Insurance companies have to notify applicants within a few days that a consumer
report has been requested. - ANS-d
15. All of the following are features of an equity indexed product EXCEPT:
a. Equity index products are usually invested in the S&P 500.
b. Equity index products allow the contract holder to direct the investments.
c. Equity index products are primarily for accumulation.
d. Equity index products guarantee a minimum interest rate. - ANS-b
16. Regular notices sent to policy-owners for payment of their life insurance policy
premiums reflect
a. gross premium
b. net level premium
c. net single premium
d. none of the above - ANS-a
30 Exam-Graded A
1. A life insurance company is organized in Orlando where it maintains its home office.
In Florida, the company is classified as a
a. domestic company
b. local company
c. foreign company
d. preferred company - ANS-a
2. With regard to life insurance, all of the following statements are correct EXCEPT
a. all individuals are considered to have insurable interests in themselves
b. spouses are automatically considered to have insurable interest in each other
c. a creditor has an insurable interest in a debtor
d. insurable interest must be maintained throughout the life of the contract - ANS-d
3. With ten partners in a corporation, how many life insurance policies would be
required to insure a cross-purchase buy-sell plan?
a. 1
b. 10
c. 90
d. 100 - ANS-c
4. All of the following statements about variable annuities are correct EXCEPT
a. Variable products are regulated by the SEC and the Office of Insurance Regulation.
b. The consumer directs the investments of the product.
,c. An annuitized variable annuity will provide a level income amount to the annuitant for
life.
d. Variable annuities are sold by insurance companies. - ANS-c
5. All of the following statements regarding policy replacement are correct EXCEPT
a. replacement involves convincing a policyholder to lapse or terminate an existing
policy and to purchase another
b. interrupting one cash value insurance plan to begin another could cause serious
financial problems for the policy owner
c. even if the customer wants to replace his or her existing policy, an agent can effect a
policy replacement only by following the replacement regulations in his or her state
d. premiums for replacement policies are generally lower than premiums for the existing
policy they replace - ANS-d
6. How are accumulation unit gains taxed?
a. Gains in accumulation units are taxed as ordinary income.
b. Gains in accumulation units are taxed as capital gains.
c. Gains in accumulation units are taxed using the exclusion ratio.
d. Gains in accumulation units are not taxed - ANS-d
7. After a family's breadwinner dies, the "blackout period" generally can be defined as
the period
a. during which children are living at home
b. that begins with the youngest child turns 16 and ends with the surviving parent retires
c. during which children are in school
d. from the surviving parent's retirement to death - ANS-b
8. All of the following approaches are used by insurers to determine benefits payable
under basic surgical expense insurance EXCEPT
a. relative value scale approach
b. traditional net cost method
,c. reasonable and customary approach
d. surgical schedule method - ANS-b
9. When may a health insurance company change the wording of a uniform policy
provision?
a. It may only be changed if approved by the Office of Insurance Regulation.
b. It may only be changed if the new wording is not less favorable to the insurer.
c. It may only be changed if the new wording is not less favorable to the insured.
d. It may only be changed if the new wording is more favorable to the insurer. - ANS-c
10. The surviving spouse may begin receiving retirement benefits as early as what age?
a. 59 1/2
b. 60
c. 62
d. 65 - ANS-b
11. Beth's health insurance policy contains a provision that allows her to renew
coverage up to age 65. However, the policy also states that should Beth lose her job,
the insurance company will cancel the policy, regardless of Beth's age. In terms of
renewability, what type of policy does Beth have?
a. Cancellable
b. Optionally renewable
c. Guaranteed renewable
d. Conditionally renewable - ANS-d
12. Which of the following constitutes an insurable interest?
a. The policy owner must expect to benefit from the insured's death.
b. The policy owner must expect to suffer a loss when the insured dies or becomes
disabled.
c. The beneficiary, by definition, has an insurable interest in the insured.
, d. The insured must have a personal or business relationship with the beneficiary. -
ANS-b
13. Which of the following is NOT included in the definition of "transacting insurance"?
a. issuing an insurance policy
b. accepting an insurance application
c. underwriting a policy
d. accepting a premium payment - ANS-c
Which of the following is CORRECT?
a. Applicants cannot dispute their consumer reports.
b. Applicants will be notified by the credit reporting agency that the application for life
insurance has been rejected.
c. If the applicant requests their credit report, the insurance company must provide a
copy of one.
d. Insurance companies have to notify applicants within a few days that a consumer
report has been requested. - ANS-d
15. All of the following are features of an equity indexed product EXCEPT:
a. Equity index products are usually invested in the S&P 500.
b. Equity index products allow the contract holder to direct the investments.
c. Equity index products are primarily for accumulation.
d. Equity index products guarantee a minimum interest rate. - ANS-b
16. Regular notices sent to policy-owners for payment of their life insurance policy
premiums reflect
a. gross premium
b. net level premium
c. net single premium
d. none of the above - ANS-a
