Montana Life Review 2 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Which of the following riders would NOT cause the Death Benefit to increase? - CORRECT
ANSWER - Payor Benefit Rider
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and
the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This
indicates that the life insurance policy had what provision? - CORRECT ANSWER -
Common Disaster
A producer is helping a married couple determine the financial needs of their children in the
event one or both should die prematurely. This is a personal use of life insurance known as -
CORRECT ANSWER - Survivor Protection
Which of the following is correct concerning the taxation of premiums in a key-person life
insurance policy? - CORRECT ANSWER - Premiums are not tax deductible as a business
expense.
Life income joint and survivor settlement option guarantees - CORRECT ANSWER -
Income of 2 or more recipients until they die
Which policy component decreases in decreasing term insurance? - CORRECT
ANSWER - Face amount
Which of the following, when attached to a permanent life insurance policy, allows the
policyowner to customize the policy to provide an additional amount of temporary insurance on
the insured, or allows amounts of temporary insurance to cover other family members? -
CORRECT ANSWER - Term Rider
, Which of the following statements about the reinstatement provision is true? - CORRECT
ANSWER - It requires the policyowner to pay all overdue premiums with interest before
the policy is reinstated.
Fair Credit Reporting Act - CORRECT ANSWER - regulates consumer reports
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the
life of the policy, stock performance declined and the cash value fell to $10,000. If the insured
dies, how much will be paid out? - CORRECT ANSWER - $50,000
An insured receives an annual life insurance dividend check. What term best describes this
arrangement? - CORRECT ANSWER - cash option
Who bears all of the investment risk in a fixed annuity? - CORRECT ANSWER - the
insurance company
Which of the following is TRUE regarding the annuity period? - CORRECT ANSWER - it
may last the lifetime of the annuitant
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual
policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best
describes what will happen? - CORRECT ANSWER - The insurer will pay the full death
benefit to the beneficiary.
Which of the following is NOT true of life settlements? - CORRECT ANSWER - the
seller must be terminally ill
All of the following are true regarding a decreasing term policy EXCEPT - CORRECT
ANSWER - The payable premium amount steadily declines throughout the duration of the
contract.
ACTUAL Exam Questions and CORRECT
Answers
Which of the following riders would NOT cause the Death Benefit to increase? - CORRECT
ANSWER - Payor Benefit Rider
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and
the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This
indicates that the life insurance policy had what provision? - CORRECT ANSWER -
Common Disaster
A producer is helping a married couple determine the financial needs of their children in the
event one or both should die prematurely. This is a personal use of life insurance known as -
CORRECT ANSWER - Survivor Protection
Which of the following is correct concerning the taxation of premiums in a key-person life
insurance policy? - CORRECT ANSWER - Premiums are not tax deductible as a business
expense.
Life income joint and survivor settlement option guarantees - CORRECT ANSWER -
Income of 2 or more recipients until they die
Which policy component decreases in decreasing term insurance? - CORRECT
ANSWER - Face amount
Which of the following, when attached to a permanent life insurance policy, allows the
policyowner to customize the policy to provide an additional amount of temporary insurance on
the insured, or allows amounts of temporary insurance to cover other family members? -
CORRECT ANSWER - Term Rider
, Which of the following statements about the reinstatement provision is true? - CORRECT
ANSWER - It requires the policyowner to pay all overdue premiums with interest before
the policy is reinstated.
Fair Credit Reporting Act - CORRECT ANSWER - regulates consumer reports
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the
life of the policy, stock performance declined and the cash value fell to $10,000. If the insured
dies, how much will be paid out? - CORRECT ANSWER - $50,000
An insured receives an annual life insurance dividend check. What term best describes this
arrangement? - CORRECT ANSWER - cash option
Who bears all of the investment risk in a fixed annuity? - CORRECT ANSWER - the
insurance company
Which of the following is TRUE regarding the annuity period? - CORRECT ANSWER - it
may last the lifetime of the annuitant
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual
policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best
describes what will happen? - CORRECT ANSWER - The insurer will pay the full death
benefit to the beneficiary.
Which of the following is NOT true of life settlements? - CORRECT ANSWER - the
seller must be terminally ill
All of the following are true regarding a decreasing term policy EXCEPT - CORRECT
ANSWER - The payable premium amount steadily declines throughout the duration of the
contract.
