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Indiana Life Insurance new latest version
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What is the consideration given by an insurer in the Consideration clause of a life policy? A. Promise to never cancel coverage B. Promise to pay a death benefit to a named beneficiary C. Promise to not raise premiums D. Promise to accept an insured's assignment of benefits
- ANSWER B. Promise to pay a death benefit to a named beneficiary Which of these is NOT considered to be an element of an insurance contract? A. the offer B. acceptance C. negotiating D. consideration - ANSWER C. negotiating A policy of adhesion can only be modified by whom? A. The agent B. The applicant C. The primary beneficiary D. The insurance company - ANSWER D. The insurance company At what point does an informal agreement become a binding contract? A. When one party makes an invitation and the other makes an offer B. When an offer is made by one party and the other party rejects the offer and makes a counteroffer C. When one party make an offer and the other party accepts that offer D. When consideration is provided by one of the parties to the contract - ANSWER D. When consideration is provided by one of the parties to the contract In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? A. Subrogation B. Unenforceable C. Adhesion D. Unilateral
- ANSWER D. Unilateral The part of a life insurance policy guaranteed to be true is called a(n): A. representation B. exclusion C. warranty D. waiver
- ANSWER C. warranty Which of these arrangements allows one to bypass insurable interest laws? A. Concealment B. Indemnity contract C. Contract of adhesion D. Investor-Originated Life Insurance
- ANSWER D. Investor-Originated Life Insurance Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? A. Consideration B. Competent Parties C. Offer/Acceptance D. Legal Purpose (Insurable Interest)
- ANSWER D. Legal Purpose (Insurable Interest) Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: A. representations B. consideration C. warranties D. guarantees
- ANSWER A. representations When must insurable interest exist for a life insurance contract to be valid? A. Inception of the contract B. Throughout the entire length of the contract C. When the insured dies D. During the contestable period
- ANSWER A. Inception of the contract Which of the following BEST describes a warranty? A. Guarantees that an insurance company will pay a benefit B. Statement believed to be true to the best of one's knowledge C. Cannot be used to void the contract
C. Principal D. Apparent
- ANSWER C. Principal Insurance companies determine risk by which of the following? A. Insurable interest B. Insurance exchanges C. Law of large numbers and risk pooling D. Population table data
- ANSWER C. Law of large numbers and risk pooling The cause of a loss is referred to as a(n): A. hazard B. adversity C. peril D. risk
- ANSWER C. peril The probability of loss becoming more predictable is attributed to: A. Law of Large Numbers B. speculative risk C. insurable interest D. Law of Frequent Risks
- ANSWER A. Law of Large Numbers Which of the following is a requirement for a risk to be considered insurable? A. Catastrophic B. Speculative C. Chance of both a loss and gain D. Predictability of loss
- ANSWER D. Predictability of loss What is known as the immediate specific event causing loss and giving risk to risk? A. Peril B. Hazard C. Loss factor D. Liability
- ANSWER A. Peril When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: A. all statements be warranties B. insurable interest in the proposed insured C. the agent complete a third-party application
D. all those involved be family-related
- ANSWER B. insurable interest in the proposed insured A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of: A. adherence B. assimilation C. aleatory D. adhesion - ANSWER D. adhesion Who makes the legally enforceable promises in a unilateral contract? A. Beneficiary B. Insurance company C. Insured D. Applicant
- ANSWER B. Insurance company Life and health insurance policies are: A. Multi-lateral contracts B. Bilateral contacts C. Unilateral contracts D. Non-lateral contracts
- ANSWER C. Unilateral contracts Insurance policies are offered on a "take it or leave it" basis, which make them: A. Conditional Contracts B. Aleatory Contracts C. Unilateral Contracts D. Contracts of Adhesion - ANSWER D. Contracts of Adhesion When must insurable interest be present in order for a life insurance policy to be valid? A. When the insured dies B. Within the incontestability period C. When the application is made D. Before the insured dies
- ANSWER C. When the application is made Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. A. consideration B. unilateral
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? A. Life Paid-up at Age 70 B. 20 - pay Life C. Increasing Term to age 65 D. Straight Life
- ANSWER B. 20-pay Life F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? A. Level term policy B. Whole life policy C. Limited-pay policy D. Decreasing term policy
- ANSWER D. Decreasing term policy What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? A. Modified whole life B. 20 - year paid up policy C. Endowment D. Decreasing term - ANSWER D. Decreasing term A variable insurance policy: A. guarantees a minimum rate of return B. does not allow the policyowner to assume the investment risk C. does not guarantee a return on its investment accounts D. does not guarantee an assignment provision - ANSWER C. does not guarantee a return on its investment accounts When a life insurance policy exceeds certain IRS table values, the result would create which of the following? A. 1035 Exchange B. An investment C. Modified Endowment Contract (MEC) D. Endowment - ANSWER C. Modified Endowment Contract (MEC) A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? A. Payor provision B. Accelerated Benefits provision C. Assignment provision
D. Waiver of Premium provision - ANSWER A. Payor provision Under a Renewable Term policy, A. the face amount is automatically adjust at the time of renewal B. evidence of insurability must be provided at each renewal C. the renewal premium is calculated on the basis of the insured's attained age D. a new application must be completed at each renewal - ANSWER C. the renewal premium is calculated on the basis of the insured's attained age The investment gains from Universal Life Policy usually go toward: A. the death benefit B. the dividends C. the cash value D. paying off a policy loan - ANSWER C. the cash value All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for: A. Variable Life B. Modified Whole Life C. Universal Variable Life D. Variable Annuity - ANSWER B. Modified Whole Life How long does the coverage normally remain on a limited-pay life policy? A. age 65 B. age 100 C. when premium payments stop D. at the discretion of the insurer - ANSWER B. age 100 A policy that becomes a Modified Endowment Contract (MEC): A. will no longer allow for policy loans B. must be placed in an irrevocable trust C. can never be reinstated after a lapse D. will lose many of its tax advantages - ANSWER D. will lose many of its tax advantages All of these statements about Equity Indexed Life Insurance are correct EXCEPT: A. Cash value has minimum rate of accumulation B. If the gain on the index goes beyond the policy's minimum rate or return, the cash value will mirror that of the index C. The premiums can be lowered or raised, based on investment performance D. Tied to an equity index such as the S&P 500 - ANSWER C. The premiums can be lowered or raised, based on investment performance
A. Decreasing B. Universal C. Variable D. Level - ANSWER A. Decreasing Life insurance that covers an insured's whole life with level premiums paid over a limited time is called: A. Adjustable Life B. Renewable Term C. Limited Pay Life D. Joint Life - ANSWER C. Limited Pay Life S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be: A. Straight Life B. Universal Life C. an Endowment D. Modified Whole Life - ANSWER B. Universal Life In order to sell a(n) _ Life policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA). A. Variable B. Adjustable C. Straight D. Term - ANSWER A. Variable Which statement about a whole life policy is true? A. Beneficiary may be changed only with the consent of the premium payor B. Death benefit can usually be adjusted C. Cash value may be borrowed against D. Premiums are flexible - ANSWER C. Cash value may be borrowed against Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? A. Modified Whole Life B. Variable Life C. Universal Life D. Adjustable Life - ANSWER B. Variable Life Which of these characteristics is consistent with a Straight Life policy? A. Owner can adjust both premium and death benefit B. Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract C. Owner has the option of converting to term insurance
D. Premiums are payable for as long as there is insurance coverage in force - ANSWER D. Premiums are payable for as long as there is insurance coverage in force K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? A. Return of premiums paid B. Cash value plus interest C. $20,000 death benefit D. Face amount plus interest - ANSWER C. $20,000 death benefit Which of the following Life insurance policies combine term insurance with an investment element? A. Increasing Term Life B. Decreasing Term Life C. Universal Life D. Graded Life - ANSWER C. Universal Life What type of life policy covers two people and pays upon the death of the last insured? A. Shared B. Survivorship C. Adjustable D. Joint - ANSWER B. Survivorship Credit Life Insurance is: A. issued in any amount at the discretion of the applicant B. used in the event of loss of income C. issued in an amount no to exceed the amount of the loan D. coverage that waives the premiums on a loan payment ion the event of total disability
- ANSWER C. issued in an amount not to exceed the amount of the loan A Limited-Pay Life policy has: A. graded death benefits B. no cash value C. premium payments limited to a specified number of years D. premium payments that are paid to age 100 - ANSWER C. premium payments limited to a specified number of years A(n) _ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities. A. Adjustable B. Term C. Universal D. Variable - ANSWER D. Variable
C. Straight whole D. Interest-sensitive - ANSWER A. Single premium A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the: A. inherent risk B. commission rate C. inflation factor D. expense charges - ANSWER D. expense charges The Cash value in a(n) _ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors. A. Universal B. Graded C. Term D. Endowment - ANSWER A. Universal K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs? A. Endowment B. Straight Life C. 10 - year Renewable Term D. Joint life - ANSWER B. Straight Life A life insurance policy that provides a policyowner with cash value along with a level face amount is called: A. Whole life B. Level term C. Credit life D. Ordinary life - ANSWER A. Whole life An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager? A. Universal life insurance B. Key Person insurance C. Graded insurance D. Executive insurance - ANSWER B. Key Person insurance Under a Graded Premium policy, the premiums: A. are higher during the policy's early years B. are lower during the policy's early years C. are constant throughout the length of the policy
D. can be adjusted by the insured - ANSWER B. are lower during the policy's early years Which of the following actions is NOT possible with a Universal Life policy? A. Policy's cash value may be used to pay premiums B. Premium payments may be made at unscheduled times C. Premiums may be applied as a credit against income tax D. Face amount may be adjusted - ANSWER C. Premiums may be applied as a credit against income tax If a 10-Year Term Life policy contains a Renewability provision, the policy will renew A. along with a decrease in premium B. at the option of the insurer C. only with evidence of insurability D. without evidence of insurability - ANSWER D. without evidence of insurability G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? A. 5 years B. 10 years C. 15 years D. 20 years - ANSWER B. 10 years A(n) _ term life policy is normally used when covering an insured's mortgage balance. A. increasing B. decreasing C. level D. variable - ANSWER B. decreasing Which of these needs is satisfied by Adjustable Life insurance? A. Insured's need for level premiums B. Insured's need for flexible premiums C. Insured's needs for flexible nonforfeiture options D. Insured's need for level death benefits - ANSWER B. Insured's need for flexible premiums What type of policy would offer a 40-year old the quickest accumulation of cash value? A. Paid-up at 65 B. 20 - pay life C. 30 - pay life D. Straight whole life - ANSWER B. 20-pay life
B. upon death of the insured C. when the cash value equals the death benefit D. upon the insured's death during the term of the policy - ANSWER D. upon the insured's death during the term of the policy S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? A. Equity index insurance B. Endowment C. Graded whole life policy D. Return of premium policy - ANSWER A. Equity index insurance Which of the following information is NOT required to be included in a Whole Life policy? A. Policy's loan interest rate B. Policy's guaranteed dividend table C. Policy's premium D. Policy's cash value table - ANSWER B. Policy's guaranteed dividend table Which of the following types of policies pays a benefit if the insured goes blind? A. Universal life B. AD&D C. Endowment D. Adjustable life - ANSWER B. AD&D Credit life insurance is typically issued with which of the following types of coverage? A. Annual Renewable Term B. Decreasing Term C. Individual Whole Life D. Group Term - ANSWER B. Decreasing Term Term insurance has which of the following characteristics? A. Expires at the end of the policy period B. Builds cash value C. Has nonforfeiture options D. Endows at the end of the policy period - ANSWER A. Expires at the end of the policy period What advantage does the renewability feature give to a term policy? A. The insured may extend the coverage period at no additional cost B. The insured may apply for this policy with little or no underwriting C. The insured may borrow against the cash value
D. The insured may extend the coverage period - ANSWER D. The insured may extend the coverage period Under an interest sensitive whole life policy, A. premiums are determined by the policyowner B. no cash value ever accrues C. the policy normally renews every 10 years D. cash values are determined by interest rates - ANSWER D. cash values are determined by interest rates Which statement is correct regarding the premium payment schedule for whole life policies? A. Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured B. Premiums are payable for a set period/coverage expires at that point C. Premiums are payable until age 65/coverage lasts a lifetime D. A single premium is paid at time of application/coverage lasts until retirement - ANSWER A. Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured What kind or premium does a Whole Life policy have? A. decreasing B. adjustable C. level D. deferred - ANSWER C. level What type of life insurance incorporates flexible premiums and an adjustable death benefit? A. Endowment Policy B. Modified Whole Life C. Decreasing Term D. Universal Life - ANSWER D. Universal Life S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own? A. Endowment B. Variable Term Life C. Variable Whole Life D. Joint Life - ANSWER C. Variable Whole Life All of these are characteristics of an Adjustable Life policy EXCEPT: A. adjustable premiums B. adjustable premium payment period
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT: A. cash value that will ultimately replace the death benefit B. nonforfeiture benefit options C. premiums that remain fixed for the life of the policy D. partial withdrawal features beyond a surrender charge period - ANSWER D. partial withdrawal features beyond a surrender charge period What type of insurance offers permanent life coverage with premiums that are payable for life? A. Credit Life B. Renewable Term Life C. Whole Life D. Endowment - ANSWER C. Whole Life Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy? A. increase face amount B. decrease face amount' C. increase premium-paying period D. decrease premium payment - ANSWER A. increase face amount The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is: A. the cost B. the health of the insured C. the amount of coverage being converted D. who will be beneficiary - ANSWER A. the cost When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? A. Extended term option B. Conversion provision C. 1035 Exchange D. Incontestable period - ANSWER B. Conversion provision A Universal Life policy is sometimes referred to as an unbundles Life Policy because the owner can see the interest earned, expense charges, and the: A. inherent risk B. commission rate C. inflation factor D. cost of insurance - ANSWER D. cost of insurance
What type of life insurance are credit policies issued as? A. Whole B. Variable C. Term D. Universal - ANSWER C. Term Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan? A. Variable life B. Universal life C. Variable universal life D. Adjustable life - ANSWER C. Variable universal life Which of the following types of Term Life policies most likely contains a Renewability feature? A. Increasing Term B. 10 Year Convertible Term C. Decreasing Term D. Variable Term - ANSWER B. 10 Year Convertible Term A(n) _ _ Life policy combines investment choices with a form of Term coverage A. Straight Whole B. Variable Universal C. Variable Term D. Adjustable Universal - ANSWER B. Variable Universal Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n): A. underwriter B. sole proprietor with insurable interest C. third-party with no insurable interest D. relative with insurable interest - ANSWER C. third-party with no insurable interest Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? A. beneficiary B. insured C. policyowner D. insurer - ANSWER C. policyowner When is the face amount paid under a Joint Life and Survivor policy? A. when policy reaches maturation B. upon death of the first insured C. upon death of the last insured
