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RHODE ISLAND INSURANCE
EXAM QUESTIONS AND ANSWERS 100% PASS
"The part of a life insurance policy guaranteed to be true is called a(n) - Correct Answer warranty"
"under a graded premium whole life policy - Correct Answer the premium increases each year during
the early years of the contract and remains the same after that time"
"Term insurance has which of the following characteristics? - Correct Answer expires at the end of the
policy period"
“the role of insurance is to - Correct Answer transfer the risk of financial loss from an individual or
business to an insurance company" "organized and incorporated under state law owned by stockholders who get a paid share of the company's profit through dividends. also referred to as a nonparticipating or non-par bc policy holder do
not participate in paid dividends - Correct Answer stock insurance company"
"organized and incorporated under state law. but they have no stockholders. instead, the policyholders own the company. owners get paid a share of the companies profits through dividends. participating or
par companies bc policy owners do not participate in paid dividends - Correct Answer mutual insurer
companies"
"process of a stock company being converted into a mutual company - Correct Answer mutualization"
"process of a mutual company being converted into a stock company - Correct Answer
demutualization" "an association formed to underwrite and issue insurance like coverage on certain items and areas that
might otherwise be uninsurable - Correct Answer Lloyds of London"
"are a specialized branch of the insurance industry that insurers other insurance company's risk. *is an arrangement by which an insurance company transfers or sells a portion of the risk to a reinsurance
company - Correct Answer reinsurers"
"the insurance company transferring the risk - Correct Answer ceding company"
"industrial insurance sold by home service or debit insurance companies - Correct Answer home
service insurers"
"when 3rd party ownership is involved, applicants who also happen to be the stated primary beneficiary
are required to have - Correct Answer insurable interest in the proposed insured"
"which is considered a statement that is assured to be true in every respect - Correct Answer
warranty"
"which best describes a warranty - Correct Answer statement guaranteed to be true"
"which of these is not considered to be an element of an insurance contract - Correct Answer
negotiating"
"All of these are considered sources of underwriting information about an applicant EXCEPT - Correct
Answer rating services"
"which of these factors do not play a role in underwriting of a life insurance policy - Correct Answer
martial status"
"group life insurance policies are generally written as - Correct Answer annually renewable term"
"a sole proprietor may use this plan only if the employees of this business are included - Correct
Answer Keogh pension plan"
"a life insurance policy would be considered contract without? - Correct Answer insurable interest"
"all of the following (bilateral unilateral aleatory adhesion) are considered to be typical characteristics
describing the nature of an insurance contract except - Correct Answer bilateral"
"in an insurance contract the insurer is the only party who makes a legally enforceable promise what
kind of contract is this - Correct Answer unilateral"
"Taking receipt of premiums and holding them for the insurance company is an example of - Correct
Answer fiduciary responsibility"
"a policy of adhesion can only be modified by whom - Correct Answer the insurance company"
"In regards to representations or warranties, which of these statements is TRUE? - Correct Answer if
material to the risk, false representation will void a policy" "Statements made on an insurance application that are believed to be true to the best of the applicant's
knowledge are called - Correct Answer representations"
"life and health insurance policies are - Correct Answer unilateral contracts"
"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? - Correct Answer 20 pay life"
"A(n) ________ life policy combines investment choices with a form of term coverage - Correct
Answer variable universal"
"a variable insurance policy - Correct Answer doesn't guarantee a return on investment accounts"
"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? -
Correct Answer equity index insurance"
"which of the following provisions guarantees that premiums will be waived if a juvenile life policy
owner becomes disabled - Correct Answer payor clause"
"which statement is true in regards to a policy loan - Correct Answer past due interest on a policy loan
is added to total debt"
"what action can a policy owner take if an application for a bank loan requires lateral - Correct Answer
assign policy ownership to the bank"
"Which of these Nonforfeiture Options continue a build-up of cash value? - Correct Answer reduced
paid up"
"the purpose of the _______ period clause is to avoid an unintentional lapse of a life insurance policy -
Correct Answer grace"
"the advantage of reinstating an original life policy is - Correct Answer the premiums are based on a
younger age"
"a policyowner may generate taxable income from which of the following dividend options - Correct
Answer accumilation of interest"
"in a life insurance policy, which features states that the policy will not cover certain risks - Correct
Answer exclusion"
"Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? -
Correct Answer decreasing term"
"a(n) _____ rider may be used to include coverage for children under their parents life insurance policy -
Correct Answer term"
"a long-term care rider in a life insurance policy pays a daily benefit. in the event of which of the
following? - Correct Answer inability of the insured to perform more than 2 activities of daily life
(ADL's)"
"which non forfeiture options offers the highest death benefit - Correct Answer extend term"
"a life insurance policy which ensures that the premium will be paid if the insured becomes disabled has
what kind of rider attached - Correct Answer waiver of premium"
"Which rider provides coverage for a child under a parent's life insurance policy? - Correct Answer
child term rider" "in a life insurance policy which provision states who may select policy options designate and name a
beneficiary and be the recipient of any financial benefits from the policy - Correct Answer owner
rights"
"the automatic premium loan provision is designed to - Correct Answer avoid a policy lapse"
"which of these provisions require proof of insurability after a policy has labled - Correct Answer
reinstatement"
"a cost of living rider gives the insured - Correct Answer additional death benefits"
"The provision that can be used to put an insurance policy back in force after it has lapsed due to
nonpayment is called - Correct Answer reinstatement"
"which of these statements in incorrect regarding the federal income tax treatment of life insurance -
Correct Answer entire cash surrender value is taxable"
"on a life insurance policy who is qualified to change the beneficiary designation - Correct Answer
policy owner" "J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these
statements is correct? - Correct Answer the gross premium is higher on a monthly payment mode as
compared to being paid annually"
"a level premium indicates - Correct Answer the premium is fixed for the entire duration of the
contract"
"An incomplete life insurance application submitted to an insurer will result in which of these actions? -
Correct Answer application will be returned to the writing agent"
"On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did
the coverage become effective? - Correct Answer Jan 26"
"What is being delivered during a policy delivery? - Correct Answer Insurance contract to the proposed
insured"
"a(n) ____ contained in a life insurance policy states that the policy will not cover certain risks - Correct
Answer exclusion"
"what is the purpose of the USA patriot act - Correct Answer detect and deter terrorism"
"The reason for backdating a policy is - Correct Answer to obtain a premium rate based on an earlier
age" "which factors are taken into consideration when an insurance company determines the premium rate
for a whole life policy on an applicant - Correct Answer risk classification"
"P is a producer who notices 5 questions on a life application were not answered. What actions should P
take? - Correct Answer set up meeting with applicant to answer the questions"
"what is the purpose of a policy summary - Correct Answer It highlights the critical parts of the policy
issued"
"When an employee is terminated, which statement about a group term life conversion is true? -
Correct Answer policy proceeds will be paid if the employees dies during the conversion period"
"what type of group insurance plan involves employees sharing cost - Correct Answer contributing
plan"
"An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be -
Correct Answer converted to an individual permanent policy at an individual rate"
"which of the following statements about noncontributing employee group life insurance is false -
Correct Answer a minimum # of employees is required to participate"
"which of the following is an important underwriting principle of group life insurance - Correct Answer
everyone must be covered in the group"
"Under a trustee group life policy, who would be eligible for a certificate of coverage? - Correct
Answer employee"
"Which provision is NOT a requirement in a group life policy? - Correct Answer accidental"
"a non-contributory plan requires ______ participation of all eligible employees - Correct Answer
"company xyz offers a group term life insurance plan to its employees what does each employee
covered under this plan receive? - Correct Answer certificate of insurance"
"all of the following regarding a tax sheltered annuity (TSA) are true except - Correct Answer income
derived from the TSA is received income free"
"a(n) _________ annuity pays benefits based on units rather than stated dollar amounts - Correct
Answer a variable annuity"
"N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What
type of annuity did N purchase? - Correct Answer fixed deferred"
"T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to
his son for the balance of the 20 years. What type of annuity is this? - Correct Answer life annuity with
period certain"
"variable annuities may invest premiums in each of the following except - Correct Answer insurers
corporate business account" "W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60.
All of these would be acceptable annuity choices EXCEPT a(n) - Correct Answer immediate annuity"
"which of these is an element of a single premium annuity - Correct Answer lump sum payment"
"What type of annuity has a cash value that is based upon the performance of it's underlying investment
funds? - Correct Answer variable"
"which type of contract liquidates an estate through recurrent payments - Correct Answer annuity"
"which of the following is not included in an annuity contract - Correct Answer AD&D rider"
"which of the following is true if the owner of an ira names their spouse as beneficiary, but then dies
before any distributions are made? - Correct Answer the account can be rolled into the surviving
spouses IRA" "Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the
agreement is funded with individual life insurance, what would it require? - Correct Answer each
partner must own a policy on the other partners" "a key employee policy is taken out by company x on its Vice President. 10 years later this employee leaves company x and begins working for company y. if individual were to die n the policy is still in force
& unchanged where would the death proceeds be directed - Correct Answer company x"
"In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT -
Correct Answer insured"
"Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the
purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? -
Correct Answer each partner owns $500,000 policy on their partners life"
"which of these is not a reason for a business to buy key person life insurance - Correct Answer a
pension deficiency if the key employee dies" "P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of
policy should P purchase? - Correct Answer family maintenance policy"
"P owns a $25,000 life policy that pays the face amount to him if he lives to age 70. or to his beneficiary
if he dies before age 70. what kind of policy does P own - Correct Answer endowment at age 70"
"M had an annual life insurance premium payment due January 1. She died January 10 without making
the premium payment. What action will the insurer take? - Correct Answer pay face amount minus the
past due premium"
"Quarterly premium payments increase the annual cost of insurance because - Correct Answer
interest to the insurer is decreased while the administrative costs are increased" "a whole life insurance policy owner doesn't wish to continue making premium payments. which of the
following enables the policy owner to sell the policy for more than its cash value - Correct Answer life
settlement contract" "
