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PRIMERICA LIFE INSURANCE
EXAM-WITH 100% COMPLETE
SOLUTIONS | RATED A+
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a. mutual b. reciprocal c. nonprofit service organization d. stock A. mutual funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. if all funds are paid out, no dividends are paid Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? a. retention b. reduction c. transfer d. avoidance B. reduction the insured's change in lifestyle and habits would likely reduce the chances of health problems In insurance, an offer is usually made when a. an applicant submits an application to the insurer b. the insurer approves the application and receives the initial premium c. the agent hands the policy to the policyholder d. an agent explains a policy to a potential applicant A. an applicant submits an application to the insurer in insurance, the offer is usually made by the applicant in the form of an application. acceptance takes place when an insurer's underwriter approves the application and issues a policy
the causes of loss insured against in an insurance policy are known as a. perils b. losses c. risks d. hazards A. perils perils are the causes of loss insured against in an insurance policy what documentation grants express authority to an agent? a. agents contract with the principal b. agents insurance license c. fiduciary contract d. state provisions A. agents contract with the principal the principal grants authority to an agent through the agent's contract which of the following best describes an insurance company that has been formed under the laws of this state? a. domestic b. sovereign c. alien d. foreign A. domestic a company is domestic when doing business within the state in which it is incorporated which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? a. medical history b. sex
a contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as its written which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? a. reciprocal b. fraternal c. stock d. mutual C. stock only stock insurance companies are owned and controlled by stockholders which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? a. subrogation b. warranty c. aleatory d. adhesion C. aleatory an insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a. legal purpose b. contract of adhesion c. acceptance d. consideration D. consideration consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application
which of the following would qualify as a competent party in an insurance contract? a. the applicant is intoxicated at the time of application b. the applicant is 12 year old student c. the applicant is under the influence of a mind-impairing medication at the time of application d. the applicant has a prior felony conviction D. the applicant has a prior felony conviction when an insurer and insured enter into a contract, both parties must be legal of age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, a 12 year old student is considered to be underage in most states and a person under mind-impairing medication most likely would not be mentally competent an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a. representation b. adhesion c. consideration d. good health C. consideration the binding force in any contract is consideration. consideration on the part of the insureds the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the even of loss which of the following is a primary source of information used for insurance underwriting? a. application b. applicant interviews c. medical records. d. private investigations A. application the application contains most of the information used for underwriting purposes. this is why its completeness and accurarcy are so critical
b. whether an insurable interest exists between the individuals c. the gender of applicant d. the type of policy requested B. whether an insurable interest exists between the individuals an insurable interest must exist at the time of the policy is issued. Some relationships are automatically presumed to qualify as an insurable interest. ex: spouses, parents, children, and certain business relationships When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by a. a physician of the applicant's choice and at his expense b. a home office underwriter c. a paramedic or examining physician at the insurer's expense d. the agent C. a paramedic or examining physician at the insurer's expense the applicant may be allowed to select the physician or paramedic facility to perform the examination. The insurer pays the cost of such an examination The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called a. expenses b. legal reserve c. dividend accumulation d. premium tax A. expenses loading is another term for expenses. Net premium (mortality minus interest earned) plus expenses (or loading) equal the gross premium which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? a. needs approach b. blackout approach c. lump-sum approach
d. human life value approach D. human life value approach human life value approach is determined by the loss of the income that would result with the death of the insured, after making adjustments for expenses, inflation, etc. which of the following is NOT required for a producer to tell a prospect? a. how the insurer would use any outside information regarding the applicant b. an explanation of products that the insurer is selling c. what requirements the producer needed to meet to obtain the insurance license d. from what outside sources the insurer would seek information, regarding the insured C. what requirements the producer needed to meet to obtain the insurance license agents are required to inform prospects of the products they are selling, as well as their information collecting practices which of the following statements concerning buy-sell agreements is true? a. premium paid are deductible as a business expense b. benefits received are considered income taxable c. buy-sell agreements pay in the event of a medical emergency d. buy-sell agreements are normally funded with a life insurance expectancy D. buy-sell agreements are normally funded with life insurance expectancy a buy-sell agreements is simply a contract that establishes what willl be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy Who may complete a paramedical report?
the preferred risk classification indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify to lower premiums than those in other categories all of the following are requirements for life insurance illustrations EXCEPT? a. they may only be used as approved b. they must identify non guaranteed values c. they must differentiate between guaranteed and projected amounts d. they must be part of the contract D. they must be part of the contract an illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list non guaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a. term insurance only b. permanent insurance only c. universal life insurance only d. any form of life insurance D.any form of life insurance any form of life insurance may be used to fund a buy-sell agreement an insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured and matures at the insured's age 100 is called?
a. Modified Endowment Contract (MEG) b. level term life c. graded premium whole life d. single premium whole life D. single premium whole life single premium whole life requires the entire premium to be paid in one lump sum at the policy's inception Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? a. ordinary life b. joint life c. decreasing term d. whole life B. joint life a joint life policy covering 2 lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death an individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of the life insurance policy would be best suited to this situation? a. universal life b. whole life c. decreasing term d. variable life C. decreasing term
a. the coverage period b. the mortality expense c. the investment account d. the insured A. the coverage period typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing premium, changing the premium paying-period, increasing or decreasing the fat amount of coverage, or changing the period of protection Under a 20 - pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a. for 20 years or until death, whichever occurs first b. until the policyowner reaches age 65 c. for 20 years d. until the policyowner's age 100, when policy matures A. for 20 years or until death, whichever occurs first under a 20-pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years; however, if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a. required a premium increase each renewal b. built cash value c. required proof of insurability ever year d. decreased death benefit each renewal A. required a premium increase each renewal
annually renewable term policies premiums are adjusted each year to the insured's attained age, however, the policy may be guaranteed renewable. Death benefits remain level, and switch any term policy, there are no cash values Both Universal Life and Variable Universal Life have a a. flexible premium b. level fixed premium c. decreasing premium d. increasing premium A. flexible premium variable universal life, like universal life itself, has a flexible premium that can be increased or decrease as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit all other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a. half the amount b. lower c. higher d. as high B. lower survivorship life is much the same as joint life in that it insures 2 or more lives for a premium that is based on a joint age. the major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, residing in a lower premium thant that which is typically charged for a joint life
a. cash surrender b. reduced paid-up c. paid-up options d. extended term a. cash surrender once the cash surrender value is paid, the contract is over which of the following is true about the premium on the children's rider in a life insurance policy? a. it decreases when an adopted child is added to the policy b. it remains the same no matter how many children are added to the policy c. it decreases when the oldest child remains the age of 21 d. it increases when a newborn baby is added to the policy B. it remains the same no matter how many children are added to the policy the premium does not change on the inclusion of additional children, it is based on an average number of children the automatic premium loan provision is activated at the end of the a. grace period b. free-look period c. elimination period d. policy period a. grace period provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force
which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a. the Entire Contract Provision b. The Consideration Clause c. Agreement Rights d. Owner's Rights D. owner's rights policy owners can learn about their ownership rights by referring to the policy The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? a. the proceeds will be split evenly between the 2 beneficiaries b. the policyowner can specify the way the proceeds are split in the policy c. the way proceeds are split between beneficiaries is decided by which type of policy is chosen D. life insurance policies may have only one beneficiary B. the policyowner can specifiy the way the proceeds are split in the policy the owner of a life policy may name any individual as a beneficiary for the policy proceeds. The owner may name more than one individual, in which case the individual beneficiaries will split the benefit by the percentage specified in the policy An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a. pay nothing, there was a misrepresentation on the application b. pay the full death benefit and refund excess premium
the policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence than the contract and the attached application in a test of the contracts validity. This is a mandatory provision in life insurance if an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? a. the death benefit will be larger b. the death benefit will be smaller c. the death benefit will be forfeited d. the death benefit will be the same as the original face amount B. the death benefit will be smaller if an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by that amount, plus the amount of earning lost by the insurance company in the interest income j applied for a life insurance policy on January 10th. the policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid? a. February 28th, or 10 days after the time the policy is delivered b. the time varies from one policy to another c. it was already to late when j received the policy because the 10 - day free-look period has expired d. anytime, because the agent did not deliver the policy promptly A. February 28th, or 10 days after the time the policy is delivered the 10 - day free-look period begins when the policy is delivered What limits the amount that a policyowner may borrow from a whole life insurance policy?
a. cash value b. premiums paid c. amount stated in the policy d. face amount A. cash value the amount available to the policyowner for a loan is the policy owner's cash value. If there are any outstanding loans, that amount will be reduced by the amount of the unpaid loans and interest An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. accumulation at interest b. cash option c. reduction of premium d. annual dividend premium B. cash option the cash option allows, an insurer to send the policyholder an annual, nontaxable dividend check an insured purchased a 15 - year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an automobile accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as an attachment? a. $ b. $100, c. $200, d. $100,000 plus the total of paid premiums C. $200,
