Indiana Life Insurance Exam
Which of the following is NOT a characteristic of a Variable Annuity?
A. Premium Payments may be level or flexible or single premium
B. The cash values are invested in securities.
C. The non-forfeiture values will provide for the return of the cash value should the annuitant die during
the accumulation period.
D. It provides for a tax-free death benefit. - Answer-D. It provides for a tax-free death benefit.
All of the following policies provide for the tax deferred accumulation of cash value EXCEPT:
A. Interest Sensitive Whole Life
B. Single Premium Variable Annuity
C. Variable Universal Life
D. Term Life - Answer-D. Term Life
All of the following are true statements about the taxation of life insurance benefits except:
A. Policy loans are taxed as ordinary income
B. The cash value in a life insurance policy grows on a tax deferred basis.
C. The interest earned on the "interest" Settlement Option is taxed as ordinary income.
D. The death benefit of a life policy is received by the beneficiary federal income tax free. - Answer-A.
Policy loans are taxed as ordinary income
Which of the following statements is true about the Group Life conversion privilege?
a. Death during the conversion period is covered even if the departing employee chooses NOT to convert
to an individual policy.
b. The departing employee must pay the premium if they elect to be covered during the conversion
period.
c. If a departing employee elects to convert their life insurance, the company must offer Term insurance
as a choice.
d. Under the COBRA laws a departing employee may elect to remain a member of the Group Life plan for
a limited period of time. - Answer-A. Death during the conversion period is covered even if the departing
employee chooses NOT to convert to an individual policy.
Which of the following is a combination of Decreasing Term and Whole Life?
a. Family Income Policy
b. Family Maintenance Policy
c. Modified Life
d. Family Policy - Answer-A. Family Income Policy
A type of Annuity in which the cash values are invested in securities is called:
a. Variable
b. Deferred
c. Joint and Survivorship
d. Flexible premium - Answer-Variable
Mary is receiving an annuity payout from her Variable Straight Life Annuity. Upon her death, which of the
following will be payable to her estate?
,a. Nothing
b. The policy death benefit
c. The remaining value of her account
d. The total premiums paid into the account, less the amount paid to Mary in benefits - Answer-A. Nothing
What is decreasing in a Decreasing Term policy?
a. The cash value
b. The premium
c. The face amount
d. The nonforfeiture values - Answer-The Face Amount
Endowment policies can mature in two ways. What are they?
a. The insured dies during the policy period or annuitizes the policy after age 59&1/2.
b. The insured dies during the policy period or reaches the endowment age as designated in the policy.
c. The insured dies during the policy period or retires at age 59&1/2.
d. The insured dies or reaches age 100. - Answer-B. The insured dies during the policy period or reaches
the endowment age as designated in the policy.
At age 30, Joe Insured purchases a 20 Pay Whole Life Policy. Which of the following statements is true
regarding Joe's policy coverage?
a. Joe's death protection will end at age 50.
b. Joe's nonforfeiture values will end at age 50.
c. Joe will be able to stop paying the premiums at age 50, but his death protection will run through age
100.
d. At age 50, Joe's cash value will equal the face value of his contract. - Answer-C. Joe will be able to
stop paying the premiums at age 50, but his death protection will run through age 100.
Warranties are:
a. The same as representations.
b. Statements that are absolutely true.
c. Statements that are believed to be true.
d. Critical to the formation of a life insurance contractual agreement. - Answer-B. Statements that are
absolutely true.
All the following are reasons why an insurance company may not pay a death benefit under a Term life
insurance policy EXCEPT:
a. A suicide before the end of the first two policy years.
b. Non payment of premium.
c. An accidental death resulting from drowning.
d. A material misrepresentation on the application discovered before the end of the contestable period. -
Answer-C. An accidental death resulting from drowning.
Which of the following life insurance policies offers the build up of cash value on an interest-sensitive
basis and the right to make partial withdrawals of that cash value without interest?
a. Universal Life
b. Adjustable Life
c. Variable Universal Life
d. Variable Whole Life - Answer-A. Universal Life
, Joel owns a $100,000 face amount Whole Life policy which has a cash value of $11,000. There is also an
outstanding loan of $4,000. If Joel dies, how much would the insurance company pay to his beneficiary?
a. $96,000
b. $100,000
c. $111,000
d. $107,000 - Answer-A. $96,000
You own a Life Annuity. Which of the following settlement options would guarantee that at least the value
of your Annuity would be paid to you or to your estate?
a. Straight Life Annuity
b. Life Annuity with Period Certain
c. Joint and Survivorship Life Annuity
d. Refund Life Annuity - Answer-D. Refund Life Annuity
Which of the following statements is NOT true about Fixed Annuities?
a. A securities license is necessary to sell Fixed Annuities.
b. There will be a guaranteed minimum rate of return payable on the investment.
c. Monies cannot be withdrawn prior to age 59 1/2 without penalty.
d. The monies invested will be in the company's General Account. - Answer-A. A securities license is
necessary to sell Fixed Annuities
Agent Steve takes a prepaid application from applicant Cindy and issues a 30 day Interim Term insurance
receipt to Cindy. The effective date of the interim coverage will be on the:
a. policy delivery date.
b. date of application or date of the medical exam, which ever occurs last, if the proposed insured is
insurable on that key date.
c. date of application.
d. policy issue date. - Answer-C. Date of Application
Which of the following regulates Group Life insurance conversion privileges?
a. State Law
b. HIPAA
c. COBRA
d. HCFA - Answer-A. State Law
Which of the following is true of a Whole Life policy purchased with a single premium?
a. The incontestable period will be shorter than it otherwise would have been.
b. The cash values will be larger than they otherwise would have been in the earlier policy years.
c. The suicide clause will be waived.
d. The death benefit will be larger than if the policy was purchased with a limited pay system. - Answer-B.
The cash values will be larger than they otherwise would have been in the earlier policy years.
The Reinstatement provision in a Whole Life policy states all the following EXCEPT that the:
a. policy on Extended Term may not be reinstated.
b. insured must pay all past due premiums plus interest.
c. reinstatement must occur within a designated period of time (such as three years).
d. insured must provide proof of insurability. - Answer-A. The policy on Extended Term may not be
reinstated.
Which of the following is NOT a characteristic of a Variable Annuity?
A. Premium Payments may be level or flexible or single premium
B. The cash values are invested in securities.
C. The non-forfeiture values will provide for the return of the cash value should the annuitant die during
the accumulation period.
D. It provides for a tax-free death benefit. - Answer-D. It provides for a tax-free death benefit.
All of the following policies provide for the tax deferred accumulation of cash value EXCEPT:
A. Interest Sensitive Whole Life
B. Single Premium Variable Annuity
C. Variable Universal Life
D. Term Life - Answer-D. Term Life
All of the following are true statements about the taxation of life insurance benefits except:
A. Policy loans are taxed as ordinary income
B. The cash value in a life insurance policy grows on a tax deferred basis.
C. The interest earned on the "interest" Settlement Option is taxed as ordinary income.
D. The death benefit of a life policy is received by the beneficiary federal income tax free. - Answer-A.
Policy loans are taxed as ordinary income
Which of the following statements is true about the Group Life conversion privilege?
a. Death during the conversion period is covered even if the departing employee chooses NOT to convert
to an individual policy.
b. The departing employee must pay the premium if they elect to be covered during the conversion
period.
c. If a departing employee elects to convert their life insurance, the company must offer Term insurance
as a choice.
d. Under the COBRA laws a departing employee may elect to remain a member of the Group Life plan for
a limited period of time. - Answer-A. Death during the conversion period is covered even if the departing
employee chooses NOT to convert to an individual policy.
Which of the following is a combination of Decreasing Term and Whole Life?
a. Family Income Policy
b. Family Maintenance Policy
c. Modified Life
d. Family Policy - Answer-A. Family Income Policy
A type of Annuity in which the cash values are invested in securities is called:
a. Variable
b. Deferred
c. Joint and Survivorship
d. Flexible premium - Answer-Variable
Mary is receiving an annuity payout from her Variable Straight Life Annuity. Upon her death, which of the
following will be payable to her estate?
,a. Nothing
b. The policy death benefit
c. The remaining value of her account
d. The total premiums paid into the account, less the amount paid to Mary in benefits - Answer-A. Nothing
What is decreasing in a Decreasing Term policy?
a. The cash value
b. The premium
c. The face amount
d. The nonforfeiture values - Answer-The Face Amount
Endowment policies can mature in two ways. What are they?
a. The insured dies during the policy period or annuitizes the policy after age 59&1/2.
b. The insured dies during the policy period or reaches the endowment age as designated in the policy.
c. The insured dies during the policy period or retires at age 59&1/2.
d. The insured dies or reaches age 100. - Answer-B. The insured dies during the policy period or reaches
the endowment age as designated in the policy.
At age 30, Joe Insured purchases a 20 Pay Whole Life Policy. Which of the following statements is true
regarding Joe's policy coverage?
a. Joe's death protection will end at age 50.
b. Joe's nonforfeiture values will end at age 50.
c. Joe will be able to stop paying the premiums at age 50, but his death protection will run through age
100.
d. At age 50, Joe's cash value will equal the face value of his contract. - Answer-C. Joe will be able to
stop paying the premiums at age 50, but his death protection will run through age 100.
Warranties are:
a. The same as representations.
b. Statements that are absolutely true.
c. Statements that are believed to be true.
d. Critical to the formation of a life insurance contractual agreement. - Answer-B. Statements that are
absolutely true.
All the following are reasons why an insurance company may not pay a death benefit under a Term life
insurance policy EXCEPT:
a. A suicide before the end of the first two policy years.
b. Non payment of premium.
c. An accidental death resulting from drowning.
d. A material misrepresentation on the application discovered before the end of the contestable period. -
Answer-C. An accidental death resulting from drowning.
Which of the following life insurance policies offers the build up of cash value on an interest-sensitive
basis and the right to make partial withdrawals of that cash value without interest?
a. Universal Life
b. Adjustable Life
c. Variable Universal Life
d. Variable Whole Life - Answer-A. Universal Life
, Joel owns a $100,000 face amount Whole Life policy which has a cash value of $11,000. There is also an
outstanding loan of $4,000. If Joel dies, how much would the insurance company pay to his beneficiary?
a. $96,000
b. $100,000
c. $111,000
d. $107,000 - Answer-A. $96,000
You own a Life Annuity. Which of the following settlement options would guarantee that at least the value
of your Annuity would be paid to you or to your estate?
a. Straight Life Annuity
b. Life Annuity with Period Certain
c. Joint and Survivorship Life Annuity
d. Refund Life Annuity - Answer-D. Refund Life Annuity
Which of the following statements is NOT true about Fixed Annuities?
a. A securities license is necessary to sell Fixed Annuities.
b. There will be a guaranteed minimum rate of return payable on the investment.
c. Monies cannot be withdrawn prior to age 59 1/2 without penalty.
d. The monies invested will be in the company's General Account. - Answer-A. A securities license is
necessary to sell Fixed Annuities
Agent Steve takes a prepaid application from applicant Cindy and issues a 30 day Interim Term insurance
receipt to Cindy. The effective date of the interim coverage will be on the:
a. policy delivery date.
b. date of application or date of the medical exam, which ever occurs last, if the proposed insured is
insurable on that key date.
c. date of application.
d. policy issue date. - Answer-C. Date of Application
Which of the following regulates Group Life insurance conversion privileges?
a. State Law
b. HIPAA
c. COBRA
d. HCFA - Answer-A. State Law
Which of the following is true of a Whole Life policy purchased with a single premium?
a. The incontestable period will be shorter than it otherwise would have been.
b. The cash values will be larger than they otherwise would have been in the earlier policy years.
c. The suicide clause will be waived.
d. The death benefit will be larger than if the policy was purchased with a limited pay system. - Answer-B.
The cash values will be larger than they otherwise would have been in the earlier policy years.
The Reinstatement provision in a Whole Life policy states all the following EXCEPT that the:
a. policy on Extended Term may not be reinstated.
b. insured must pay all past due premiums plus interest.
c. reinstatement must occur within a designated period of time (such as three years).
d. insured must provide proof of insurability. - Answer-A. The policy on Extended Term may not be
reinstated.
