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AD BANKER COMPREHENSIVE EXAM 202 5 /ACTUAL
EXAM WITH 100% CORRECT DETAILED AND
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A producer who is acting as an agent is representing: A The insured, the applicant and the beneficiary B Always the insured C The insured and the insurer D Always the insurer - correct answer ✔✔D In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as: A Restricted persons B Considerations C Competent parties Agreement - correct answer ✔✔C A company that is licensed to sell insurance in a particular state is: A A domiciled company B.A nonadmitted company C An authorized company
D A foreign company
- correct answer ✔✔C A company that is licensed to sell insurance in a particular state is: An insurance contract is an aleatory contract. This means: A Equal value is not given by both parties to the contract B The contract must be for a legal purpose C Parties to the contract must have the legal capacity to enter into the contract Statements made in the application are guaranteed to be true in all respects - correct answer ✔✔A Which of the following would be considered a speculative risk? A The possibility your car is totaled in an auto accident B The possibility the painting you bought might be a long-lost masterpiece C The possibility you will die on the job at a young age D The possibility you will become disabled - correct answer ✔✔B
B
Withholding of known material facts C Intentional material misrepresentation with the intent of causing injury to another party An individual warrants a fact stated on the application - correct answer ✔✔D Legally speaking, a producer has a duty when handling life insurance premiums and applications for an insurer. A Fiduciary B Undisputed C Negotiated D Professional - correct answer ✔✔A refers to the jurisdiction where an insurer was formed or incorporated. A Authorized B Approved C
Domicile Admitted - correct answer ✔✔C To address adverse selection what can an insurer legally do? A Limit the amount of coverage issued B Raise the premium higher than most people can afford to pay C Establish and enforce sound underwriting practices D Not offer policies to those over age 55 - correct answer ✔✔C The relationship of a person who acts on behalf of a company whereby the person's actions can bind the company is known as: A Surplus lines or excess insurance B The law of large numbers C The law of agency Brokerage business - correct answer ✔✔C consists of groups of underwriters called syndicates, each of which specializes in insuring a particular type of risk.
Legal Purpose C Offer and Acceptance D Conditions - correct answer ✔✔D The most effective way to ensure that the applicant will accept the policy when it is issued is: A To collect the initial premium upon policy delivery, not at the time of application B To deliver the policy with a gift certificate to a local restaurant C Offer to pay the first premium for them D To have the applicant pay the initial premium at the time of application - correct answer ✔✔D
Which of the following is NOT a characteristic of life insurance as property? A It may be paid for in installments B It requires a fund portfolio manager C It creates an immediate estate D It requires no physical maintenance - correct answer ✔✔B Which of the following statements about the average number of people who die each year is true? A It is called the mortality rate B It is called the principle of indemnity C It is called the predictability rate D It is called the principle of life insurance - correct answer ✔✔A
A
The amount of money the insurance company reserves for expected mortality costs B The amount the company anticipates for dividend payout C Assignment of the appropriate share of the company's operating expenses to each policy D Surrender charges applied to the cash surrender of the policy - correct answer ✔✔C Which statement best describes the term reserve? A That amount that enables the insurer to provide sales bonuses and incentives for their commissioned sales staff B That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims C That amount, required by law, that the company must hold in reserve to pay only cash value accumulations on permanent insurance policies D That amount insurer's maintain in reserve to guarantee that they can profit from future death claims - correct answer ✔✔B
Controlled business may be defined as insurance sold: A To individuals needing an increased amount of term insurance B To existing clients only C To anyone willing to buy D To the producer, the producer's family and friends, and the producer's business associates - correct answer ✔✔D Which of the following policies could be expected to have the lowest premium? A Whole life B Endowment to age 65 C Single pay life D 10 - pay life - correct answer ✔✔A
Cancel the waiver of premium rider - correct answer ✔✔B D Provides a variety of living benefits - correct answer ✔✔C The waiver of premium rider normally expires at age: A 55 B 60 C 70 D 65 - correct answer ✔✔B Term insurance differs from permanent insurance in that term: A Builds cash value and provides limited death benefit options only B Costs more than permanent insurance C Builds no cash value, pays a death benefit only
D
The third year - correct answer ✔✔D If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance: A On his own life at certain specified ages without proof of insurability B On his own life at specified periods of time at a fixed guaranteed premium C Anytime before the age of 65 D On his own life at specified periods, but must prove insurability - correct answer ✔✔A In many jurisdictions, permanent policies are required to have some cash value by the end of: A The fourth year B The first year C The second year
D
Allen purchases an estate builder (jumping juvenile) policy for his 5 - year old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following statements is NOT correct? A Donald has enjoyed protection against the problems of premature death B The premium will continue to be based on his original age of 5 C The face value of Donald's policy has increased by 5 times D Donald must change the beneficiaries immediately - correct answer ✔✔D The type of policy that can be changed from one that does not accumulate cash values to one that does is a: A Universal life policy B Variable life policy C Permanent policy
D
Convertible term policy - correct answer ✔✔D With a modified premium whole life contract, premium payments: A Are lower in the early years of the contract B Are invested in the stock market C Never change for the life of the policy D Are modified throughout the life of the plan and may fluctuate at the insurer's discretion - correct answer ✔✔A With regard to the waiver of premium rider, after the disability a policyowner normally: A Must prove insurability to continue the policy on an annual basis B Must reapply for the insurance C Need not repay the premiums paid by the company during disability
D
C
The loan value of a policy cannot exceed the current cash value Reduced paid up policy - correct answer ✔✔C Each of the following is a source of life insurance policy dividends, except: A Guaranteed cash value accumulations B Reductions in operating expenses C Savings in mortality D Additional interest earnings - correct answer ✔✔A Each of the following statements about policy loans is correct, except: A A policy loan cannot be made on a policy until it has been in force long enough to accumulate some cash value B If a policy has cash value, the insurance company cannot refuse to lend the policyowner money
D
C
Encumbering the proceeds of the policy Policy loans may be made on any type of policy - correct answer ✔✔D Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan? A If the loan amount, plus interest charged exceeds the face amount at death, the beneficiary would owe the insurance company the balance of the loan B If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance C If a loan payment is not established within one year, the insurance company may cancel the policy - correct answer ✔✔B The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing all of the following, except: A Purchasing a new car once the claim has been settled and proceeds have been paid out according to the beneficiary designations B Transferring the proceeds of the policy
