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PRIMERICA LIFE INSURANCE EXAM QUESTIONS AND ANSWERS WITH COMPLETE TOP SOLUTIONS
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, ... [Show More] 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 c. age d. race D. race age, medical history, and sex provide sound statistical date for determining the probability of loss. Race, religion, sexual orientation, etc. are the factors that cannot be used because there is not sound statistical data to show that they effect the probability of loss; therefore, they are considered to be discriminatory in insurance transactions, fiduciary responsibility means a. handling insurer funds in a trust capacity b. maintaining good credit record c. being liable with respect to payment of claims d. commingling premiums with agents personal funds A. handling insurer funds in a trust capacity an agents fiduciary responsibility includes handling insurer funds in a trust capacity the authority granted to an agent through the agent's contract is referred to as a. absolute authority b. express authority c. apparent authority d. implied authority B. express authority express powers are written into the contract between the insurer and the agent insurance policies are not drawn up though negotiations, and an insured has little to say about its provisions. what contract characteristic does this describe? a. unilateral b. conditional c. personal d. adhesion D. adhesion 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 which of the following is the best reason to purchase life insurance rather than annuities? a. to liquidate a sum of money over a period of year b. to create regular income payments c. to liquidate a sum money over a lifetime d. to create an estate D. to create an estate with insurance, the death creates an immediate estate should the insured die a producer is helping a married couple determine the financial needs of their children in the event of one or both should die prematurely. This is a personal use of life insurance known as a. survivorship insurance b. juvenile protection provision c. survivorship protection d. life planning C. survivorship protection life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection a producer agent must do all of the following when delivering a new policy to the insured EXCEPT a. disclose commissions earned from the sale of the policy b. explain the policy provisions, riders, and exclusions c. collect any premium due d. explain the rating procedures if the policy is rated differently than applied for A. disclose commissions earned fro the sale of the policy a producer must explain policy provisions, exclusions, and riders at the time of the delivery, as well as the rating procedures especially if the policy is rated differently than applied for. The producer must also collect any due premium and have the insured sign the statement go continued good health if an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about a. which individual will pay the premium 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? a. an underwriter b. a nursing assistant c. a registered nurse d. a spouse C. a registered nurse paramedical reports are completed by paramedics or registered nurses. Full medical expectations are reserved for those wanting higher coverage or for those who have more complex medical history the term "illustrations" in a life insurance policy refers to a. a presentation of non guaranteed elements of a policy b. a depiction of policy benefits and guarantees c. pictures accompanying a policy d. charts and graphs A. a presentation of non guaranteed elements of a policy the term "illustrations" means presentation of depiction that includes non guaranteed elements of a policy of individual of group life insurance over a period of years which is generally true regarding insureds who have been classified as preferred risks? a. they can borrow higher amounts off of their policies b. they can decide when to pay their monthly premiums c. they keep a higher percentage of any interest earned on their policies d. their premiums are lower D. their premiums are lower 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 decreasing term policy's face amount decreases as the amount of debt is reduced which of the following are generally NOT considered when underwriting group insurance? a. the group's past claim experience b. the site of the group c. the insured's medical history d. the nature of the group C. the insured's medical history group life insurance is written on a group, not individual basis. Each individual completes an application that identifies the participant and the beneficiary. Then, the group is judged based on its nature and past claim experience. Generally, medical questions are not necessary what are the 2 components of a universal policy? a. insurance and investments b. mortality cost and interest c. separate account and policy loans d. insurance and cash account D. insurance and cash account a universal life policy has 2 components: an insurance components and cash account. The insurance component of a universal life policy is always renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher an adjustable life policyowner can change which of the following features? 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 what policy would be classified as a traditional level premium contract? straight whole life the ownership provision entitles the policyowner to do all of the following EXCEPT? a.set premium rates b. receive a policy loan c. assign the policy d. designate a beneficiary A. set premium rates the insurer sets premium rates based upon underwriting considerations A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called a. accelerated benefit rider b. living need rider c. payor rider d. cost of living rider D. cost of living rider a "cost of living rider" adjusts the face amount of a policy to maintain the relationship of the face amount and increase in the cost of living Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? 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 c. pay a reduced death benefit d. pay the full death benefit C. pay a reduced death benefit the incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, is does not apply to statements relating to age, sex, and identity after a back injury, an insured is disabled for a year. His insurance policy carries a disability income death benefit rider. Which of the following benefits will he receive? a. monthly premium waiver and monthly income b. percentage of medical costs paid by the insurer c. payments for life d. yearly premium waiver and income A.monthly premium waiver and monthly income the disability income death benefit rider waives the policy premiums, just like the Waiver of Premium rider. Unlike the Waiver Premium rider, it also allows the insured to receive a weekly or monthly income during the disability period The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a. complete contract b. entire contract c. total contract d. aleatory contract D. entire contract 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. $0 b. $100,000 c. $200,000 d. $100,000 plus the total of paid premiums C. $200,000 the beneficiary would most likely receive 2x the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies When an annuity is written, whose life expectancy is taken into account? a. annuitant b. beneficiary c. life expectancy is not a factor when writing an annuity d. owner A. annuitant the annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be which of the following is a true comparison between annuities and life insurance? a. both annuities and life insurance use mortality tables b. annuities serve the same function as life insurance c. both provide a lifetime of income d. neither annuities or life insurance subject to income taxes A. both annuities and life insurance use mortality tables annuities are not life insurance, they do not pay a face amount upon the death of the annuitant. In most cases, the payment phase stops upon the death of the annuitant. Annuities use mortality tables, which reflect a longer life expectancy than the tables used in life insruance [Show Less]
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Primerica Practice Test questions with solutions
The receipt given to a life insurance applicant when the application is completed and the initial premium is received is called a(n) conditional receipt ... [Show More] Statements in the application for insurance that are believed to be true to the best of the applicant's knowledge are called representations An annuity is considered fixed when it does all of the following EXCEPT provides the annuitant with an interest rate that is the lesser of the guaranteed or current rate The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called continuous premium (straight) life The policy and a copy of the application, along with any riders and amendments, is called the entire contract Money borrowed from the policy's cash value is not taxable Which of the following annuity products requires an agent to hold a securities license? variable annuities Which type of annuity settlement stops when the annuitant dies? life income annuity At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty? 59.5 Which settlement option guarantees an income for 2 or more recipients for as long as they live joint and survivor Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the surviving partner to use the death benefit to purchase the deceased's business interests? buy-sell agreement Which of the following would be considered a flexible premium policy? universal life If an annuitant dies during the accumulation period, what will the beneficiary receive? either the cash value or the premiums paid, whichever is greater Any insurer who is NOT approved to do business in this state is considered nonadmitted To prevent people from profiting from a loss, insurers must be certain insurable interest exists If a misstatement of age is discovered during the processing of a life insurance claim, what will the insurer do? adjusts the death benefit based on the premiums that were paid Which of the following allows an insurance company to deny coverage if the insured's death occurs in a war? policy exclusions Each of the following is a typical characteristic of group life insurance EXCEPT evidence of insurability is usually required A life settlement opinion that pays out the death benefit incrementally, in a specified amount until all of the proceeds are exhausted, is called fixed-amount installments A life insurance death benefit paid in a lump sum to a beneficiary is not subject to any taxes Which of the follow is NOT a nonforfeiture option in whole life policies? accumulation at interest Which of the following indicates the person upon whose life the annuity income amount is determined? annuitant An annuity that is purchased with a lump-sum payment, and that begins income payments within one year is a single premium immediate annuity Which statement is INCORRECT concerning policy dividends? the insurer may guarantee dividends What is the risk classification for those who are insurable, but have a higher than average risk? substandard Which of the following features of the Equity Indexed Whole Life policy is NOT fixed? cash value growth An insurance agent represents the insurer The transfer of a possible financial loss to another party refers to insurance Underwriting is the process of determining the company's risk regarding a proposed insured An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered delivered This part of the application provides information about an applicant's financial condition and character, as well as the purpose of sale and how long the agent has known the applicant: agent's report If a licensed life insurance agent wants to sell variable life policies, what additional license must the agent obtain? securities An agent delivers a policy to an insured, and 9 days later the insured returns the policy and wants a complete refund. What provision covers this circumstance? free look The "pay in" phase of the annuity is known as what period? accumulation period For an insurance contract, the principle of utmost good faith means each party relies upon the truthfulness of the other Who would be allowed catch-up contributions in a qualified plan? individuals who are age 50 and older Which of the following types of annuities would be best suited for a retired couple who are seeking income for as long as either lives? joint and survivor Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated? law of large numbers The MIB is a nonprofit trade association that maintains medical information on applicants for life adn health insurance What is the purpose of the grace period in life insurance policies to protect the policyowner against an unintentional lapse of the policy What type of permanent insurance allows the policyowner to pay for a policy in a specified period of time, and the policyowner does not have to make any more premium payments for the life of the policy? limited payment What does the payor benefit rider protect? premium payments for a juvenile policy How long does an employee have to convert group policy coverage to an individual policy without evidence of insurability? 31 days If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered the portion that exceeds the premiums paid is taxable Betty is the only beneficiary named on her husband Bob's policy which has a Common Disaster provision. They are in a car wreck, and Bob dies instantly. Betty lives for 29 days. Who will receive the death benefit? Bob's estate The legal transfer of all or part of a policyowners rights, title or interest is called a(n) assignment What do employees covered under a group contract receive? certificate of insurance An annuity in which investment growth is dependent on the performance of an index such as the Standard and Poor's 500 is called a(n) equity indexed annuity The premium payment mode can be best described as the frequency with which the policy premium will be paid All other factors being equal, which of the following types of policies will accumulate cash value at the fastest rate? 20-pay life [Show Less]
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Primerica life insurance state exam questions and answers 2023
Deferred Annuity An annuity in which the income payments begin sometime after one year from the date of purchase.deferred annuities can be funded with a s... [Show More] ingle lump sum payment so it is referred to as a single premium differed annuities. Human life values approach Calculates an individual's life value by looking at the insureds future wages,inflation,the number of years to retirement,and the time value of money. What time must the producer present the applicant with a notice regarding replacement of life insurance Producers must present to the applicant a notice regarding replacement that is signed by both the applicant and the producer. A copy must be left with the applicant. Risk Is the uncertainty or chance of a loss occurring. MIB (medical information bureau MIB is a non profit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals Perjury If a person signs a fraudulent claim form,that person may be found guilty Universal life policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annually renewable term insurance . The right to a full refund of premiums for insureds age 60 or older The right of recission for a full refund must last for at least 30 days The premium modes Is the frequency of premium payment. Concealment Is the withholding of information by the applicant that will result in an imprecise underwriting decision. may void the policy Tax sheltered annuity (tsa) Is a qualified plan available to employees of certain nonprofit organizations of the internal revenue code for example employees of public school systems. Intent of replacement regulations Are written to protect the consumers of California,not the insurance company or its producers. Reinstatement Provision allows a lapsed policy to be put back in force. The maximum time limit for reinstatement is usually 3 years after the policy has lapsed. Alien insurer An insurer incorporated in a foreign country. Mortality Means the rate of death.mortalilty tables used by insurers ,indicate the number of individuals within a specified group starting at a certain age. Group life insurance the group must be created for a purpose other than to obtain group insurance. Conditional receipt The applicant is covered by the insurance company as of the date of the application if the applicant is insurable at the classification for which the policy was applied. Law of large numbers states that the larger the number of people with a similar exposure to loss,the more predictable actual losses will be. Insolvent If an insurer's legal reserve funds are less than the minimum required by law, the company is impaired in its ability to pay claims Decreasing term coverage Is commonly purchased to insure the payment of a mortgage or other debts. Insurable interest In life insurance, must exist between the policy owner and the insured at the time of applications; however, once a life insurance policy has been issued, the insurer must pay the policy benefit, Whether or not exists. [Show Less]
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Primerica Practice test part 1 questions and answers 100% correct
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state wi... [Show More] ll worsen even more with the upcoming medical expenses. What option could the insured utilize? a) Estate liquidation b) Nonpayment of premium c) Change of beneficiary d) Viatical settlement d Which of the following best describes fixed-period settlement option? a) Only the principal amount will be paid out within a specified period of time. b) The death benefit must be paid out in a lump sum within a certain time period. c) Income is guaranteed for the life of the beneficiary. d) Both the principal and interest will be liquidated over a selected period of time. d Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a) Insurance Index b) Policy Summary c) Illustrations d) Buyer's Guide d Which of the following is called a "second-to-die" policy? a) Juvenile life b) Joint life c) Survivorship life d) Family income c Which of the following best describes annually renewable term insurance? a) Neither the premium nor the death benefit is affected by the insured's age. b) It provides an annually increasing death benefit. c) It is level term insurance. d) It requires proof of insurability at each renewal. c Which of the following best describes annually renewable term insurance? a) Neither the premium nor the death benefit is affected by the insured's age. b) It provides an annually increasing death benefit. c) It is level term insurance. d) It requires proof of insurability at each renewal. c If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? a) Conditional b) A legal (but unethical) contract c) Unilateral d) Adhesion c To attain currently insured status under Social Security, an worker must have earned at least how many credits during the last 13 quarters? a) 4 credits b) 6 credits c) 10 credits d) 40 credits b Insurance is the transfer of a) Hazard. b) Peril. c) Risk. d) Loss. c Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Representation b) Warranty c) Concealment d) Indemnity b Which of the following is NOT true regarding the accumulation period of an annuity? a) It would not occur in a deferred annuity. b) It is the period during which the annuity payments earn interest. c) It is the period over which the annuitant makes payments into an annuity. d) It is also known as the pay-in period. a An insured committed suicide one year after his life insurance policy was issued. The insurer will a) Refund the premiums paid. b) Pay the policy's cash value. c) Pay the full death benefit to the beneficiary. d) Pay nothing. a In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT a) Applicant's present physical condition. b) Applicant's present occupation. c) Applicant's past income. d) Applicant's past medical history. c Which two terms are associated directly with the way an annuity is funded? a) Renewable or convertible b) Single payment or periodic payments c) Increasing or decreasing d) Immediate or deferred b Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a) Premiums are taxable to the employee. b) Premiums are not tax deductible as a business expense. c) Premiums are tax deductible by the key employee. d) Premiums are tax deductible as a business expense. b Nonforfeiture values guarantee which of the following for the policyowner? a) That the dividends will be paid annually b) That the death benefit will be paid in a lump sum c) That the policy premiums will never increase d) That the cash value will not be lost d A Straight Life policy has what type of premium? a) A decreasing annual premium for the life of the insured b) A variable annual premium for the life of the insured c) A level annual premium for the life of the insured d) An increasing annual premium for the life of the insured c Which of the following is INCORRECT concerning a noncontributory group plan? a) They help to reduce adverse selection against the insurer. b) They require 100% employee participation. c) The employer pays 100% of the premiums. d) The employees receive individual policies. d Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) Beneficiary clause b) Consideration clause c) Insuring clause d) Entire contract clause c Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be a) Based on the issue age of the insured. b) Discounted. c) Adjusted to the insured's age at the time of renewal. d) Determined by the health of the insured. c Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a) Joint and survivor b) Single life c) Fixed-amount d) Life income with period certain d All of the following are personal uses of life insurance EXCEPT a) Buy-sell agreement. b) Survivor protection. c) Estate creation. d) Cash accumulation. a All of the following benefits are available under Social Security EXCEPT a) Old-age and retirement benefits. b) Disability benefits. c) Death benefits. d) Welfare benefits. d An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? a) She will still be covered under the group plan, but will have to pay an individual policy premium. b) She can only convert her coverage without proof of insurability if she has the master policy. c) She must apply for a new policy, which requires her to provide proof of insurability. d) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan d [Show Less]
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Primerica Practice test part 2, questions with verified content
Which of the following statements regarding HIV testing for insurance purposes is NOT true? a) HIV testing is regulated at the state level. b) Insurers a... [Show More] re barred from requesting HIV testing. c) Positive test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant. d) The testing practices must meet the criteria of the U.S. Department of Health and Human Services. b Which policy component decreases in decreasing term insurance? a) Face amount b) Cash value c) Dividend d) Premium a 00:30 01:20 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? a) The insurer will pay a reduced death benefit to the beneficiary. b) The insurer will pay the death benefit minus one month's premium. c) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. d) The insurer will pay the full death benefit from the group policy to the beneficiary. d 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 (MEC). b) Level term life. c) Graded premium whole life. d) Single premium whole life. d The Ownership provision entitles the policyowner to do all of the following EXCEPTa) Assign the policy. b) Designate a beneficiary. c) Set premium rates. d) Receive a policy loan. c If an agent fails to obtain an applicant's signature on the application, the agent must a) Sign the application, stating it was by the agent. b) Send the application to the insurer with a note explaining the absence of signature. c) Return the application to the applicant for a signature. d) Sign the application for the applicant. c Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The beneficiary must pay interest to the insurer. b) The beneficiary will receive the lump sum, plus interest. c) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. d) The beneficiary will only receive payments of the interest earned on the death benefit. d What is the waiting period on a Waiver of Premium rider in life insurance policies? a) 30 days b) 3 months c) 5 months d) 6 months d What is the benefit of choosing extended term as a nonforfeiture option? a) It matures at age 100. b) It allows for coverage to continue beyond maturity date. c) It can be converted to a fixed annuity. d) It has the highest amount of insurance protection. d A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a) Medical exam and parents' medical history b) Proof of insurability is not required. c) Medical exam d) Her parents' federal income tax receipts b If an annuitant dies before annuitization occurs, what will the beneficiary receive? a) Cash value of the plan b) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount c) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount d) Amount paid into the plan b Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? a) Paid-up additions b) Dividend Accumulation option c) Paid-up option d) Accumulation at Interest c 00:05 01:20 A producer agent must do all of the following when delivering a new policy to the insured EXCEPT a) Explain the policy provisions, riders, and exclusions. b) Collect any premium due. c) Explain the rating procedures if the policy is rated differently than applied for. d) Disclose commissions earned from the sale of the policy. d [Show Less]
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Primerica - Exam test Questions with complete answers
An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants ... [Show More] to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? a) Unilateral b) Conditional c) Personal d) Adhesion Adhesion 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 (MEC). b) Level term life. c) Graded premium whole life. d) Single premium whole life. Single Premium Whole Life All of the following are true regarding a decreasing term policy EXCEPT a) The payable premium amount steadily declines throughout the duration of the contract. b) It has a lower premium than level term. c) The contract pays only in the event of death during the term and there is no cash value. d) The face amount steadily declines throughout the duration of the contract. The payable premium amount steadily declines throughout the duration of the contract The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a a) Decreasing Term Policy. b) Whole Life Policy. c) Convertible Term Policy. d) Renewable Term Policy. Convertible Term Policy The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a) The death benefit can be increased by providing evidence of insurability. b) The death benefit cannot be increased. c) The death benefit can be increased only when the policy has developed a cash value. d) The death benefit can be increased only by exchanging the existing policy for a new one. The death benefit can be increased by providing evidence of insurability When would a 20-pay whole life policy endow? a) After 20 payments b) In 20 years c) When the insured reaches age 100 d) At the insured's age 65 When the insured reaches age 100 An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? a) $0 b) $200 c) $9,800 d) $10,000 $9,800 What is the term for how frequently a policyowner is required to pay the policy premium? a) Consideration b) Mode c) Schedule d) Grace period Mode Which of the following types of insurance policies would perform the function of cash accumulation? a) Increasing term b) Whole life c) Term life d) Credit life Whole Life Which of the following is called a "second-to-die" policy? a) Juvenile life b) Joint life c) Survivorship life d) Family income Survivorship Life When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount a) In lesser amounts for the remaining policy term of age 100. b) Equal to the cash value surrendered from the policy. c) The same as the original policy minus the cash value. d) Equal to the original policy for as long a period of time that the cash values will purchase. Equal to the original policy for as long a period of time that the cash values will purchase. Which of the following is the best reason to purchase life insurance rather than annuities? a) To liquidate a sum of money over a lifetime b) To create an estate c) To liquidate a sum of money over a period of years d) To create regular income payments To create an estate Which of the following is NOT the consideration in a policy? a) The application given to a prospective insured b) Something of value exchanged between parties c) The premium amount paid at the time of application d) The promise to pay covered losses The application given to a prospective insured If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a) The insurer may deny coverage later, because of the information missing on the application. b) The policy will be interpreted as if the insurer waived its right to have an answer on the application. c) The policy will be interpreted as if the insured did not have an answer to the question. d) The policy will be void. The policy will be interpreted as if the insurer waived its right to have an answer on the application Who is a third-party owner? a) An insurer who issues a policy for two people b) An employee in a group policy c) An irrevocable beneficiary d) A policyowner who is not the insured A policy owner who is not the insured Which is TRUE about the cash surrender nonforfeiture option? a) Funds exceeding the premium paid are taxable as ordinary income. b) After the cash surrender, the insured is covered for a grace period of 1 month. c) The policy remains active for some time after the policyholder opts for cash surrender. d) The policyholder receives the original cash value of the policy. Funds exceeding the premium paid are taxable as ordinary income According to the Entire Contract provision, a policy must contain a) A declarations page with a summary of insureds. b) Buyer's guide to life insurance. c) Listing of the insured's former insurer(s) for incontestability provisions. d) A copy of the original application for insurance A copy of the original application for insurance All of the following are general requirements of a qualified plan EXCEPT a) The plan must be communicated to all employees. b) The plan must be for the exclusive benefits of the employees and their beneficiaries. c) The plan must be permanent, written and legally binding. d) The plan must provide an offset for social security benefits. The plan must provide an offset for social security benefits [Show Less]
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Primerica Practice Exam 5 questions and answers 2023
Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as: Replacement According to the CA In... [Show More] surance Code, in which if the following classes of insurance can a binder NOT be issued? Life Insurance or Auto Insurance An organization will cease to exist as an entity eligible to hold a license for all of the following reasons, except: Termination of key employee What does it mean if an agent's license is inactive? The agent cannot transact any insurance business for which a license is required If the Commissioner issues a Notice of Seizure for documents and the individual fails to send those documents what is the penalty? 1 year in jail and/or $1000 fine Which of the following must any person engaged in the business of acting as an insurance agent or broker who receives compensation for arranging or directing sales in connection with a premium financing agreement do? Maintain a list of accounts in connection with compensation exempted in premium financing payments for three years. All of the following would be considered one of the three major types of loss exposures, except: Financial loss exposure Tony Brown has a CLU certification. Which of the following names would be automatically approved for his agency's use? None of these would be automatically approved A person has paid $50,000 into a fixed annuity over 20 years. When he decides to begin income payments the insurer calculates that he will receive $4,000 per year for life, which means that he will receive a total of $100,000. In the first 10 years of payments how much is taxable each year? $2,000 According to the code, all insurers must maintain a department to investigate: Possible fraudulent claims from insureds What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage? Suspend or revoke the license of the agent An insured bought an annuity ten years ago. He will retire in five years. To determine the value of the annuity, the number of accumulation units is multiplied by the value of the separate account. What type of annuity was purchased? Variable annuity The class beneficiary designation which means that the beneficiaries will receive equal shares of the death benefit divided among the surviving members of the class is: Per capita The mathematical rule that says that as the number of individual but similar exposure units increases the easier it is to predict losses is which of the following? The law of large numbers Which of the following is a description of a Life and Disability Analyst? A person licensed to advise clients about life and disability insurance for a fee What happens to a license after the death of a natural person who holds a valid insurance license? It always terminates Which of the following are common insurance policy provisions? Entire contract, grace period, reinstatement With the cost of a living rider, the insurance policy holder: Gets the automatic increase in the face value if there is an increase in the cost of living index. There is an additional coverage All of the following is required on a life insurance application, except: The amount of disability income insurance in force All of the following statements regarding survivorship life insurance are true, except: The policy face amount is made out based only on the death of the first to die Which of the following is not an option for the use of the policy dividends? Fund the distribution of monthly income payment What information can a party to a contract of insurance be allowed NOT to communicate according to California Law? Information which the other party already knows According to CA Insurance Code, a judgment against an applicant who entered a plea of "nolo contendere" is considered to be: Convicted The policy provision which prevents an insurer from voiding a policy for misstatements after two years is: Incontestability The clause that protects the proceeds of a life insurance policy from attachment by creditors after the death of the insured is: Spendthrift trust clause Which of the following gives individuals the right to purchase additional life insurance regardless of their insurability? Guaranteed insurability Which is NOT part of transacting insurance? Establishing a list of clients An insurer organized under the laws of the State of California is a: Domestic insurer An insured and beneficiary die in a car accident and it is impossible to determine who died first. Who will receive the life insurance proceeds? The insured's estate A beneficiary wants to receive $2,000 per month until the principal and interest are exhausted. Which settlement option should be chosen? Fixed amount option Which of the following applies to the social insurance program known as Social Security? Contributions are compulsory for most workers Any person who diverts or misappropriates fiduciary funds is guilty of: Theft A probationary period in a group policy is intended for people: With a pre-existing condition when joined the group An insurer owned by policyholder is: Mutual insurer All of the following are valid reasons for the Insurance Commissioner to deny the applicant for an insurance license, except: Applicant does not have a California business address An agent who replaces an existing life insurance contract, must do all of the following, except: Submit a copy of the replacement notice to the existing insurer Why should a contingent beneficiary be named in a life insurance policy? To determine who receives the policy benefits if the primary beneficiary is decreased Which statement best describes a life insurance policy dividend? It is a distribution of excess funds accumulated by the insurer on participating policies In order for an entity to be eligible to hold a license, a co-partnership whose membership has changed must do all of the following, except: Return the old license with signatures of the original partners to the Commissioner with an explanation The Federal Act that is designed to protect group plan participants, establish pension equality, and mandates strict reporting and disclosures requirements is: ERISA The person whose life is the object of a life insurance policy is: Insured How is the Insurance Commissioner selected? An election by the people A policy is returned to the insurer within 10 days of the date the policy is delivered. How much of the premium is returned to the applicant? 100% The SEC is involved in the regulation of: Variable life policies The guaranteed insurability rider provides that the policy holder can purchase more insurance: On his own life at certain specified ages without proof of insurabilty The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, except: To protect the interests of life insurers and their agents Who has the right to change life insurance policy beneficiaries? The Policyholder A person who acts in a capacity that requires an active license without having a valid license, is guilty of a: Misdemeanor Any attempt by an existing insurer or their agent to dissuade a policy owner from replacing an existing life insurance or annuity contract is known as: Conservation Unless the applicant indicates otherwise during the right-to-return period in an individual annuity, the premium for a variable annuity would be invested only on: Fixed income investments and money market funds Along with having enough assets to provide for its liabilities and for reinsurances for all outstanding risks, in order to remain solvent, the insurer must also meet minimum requirements equal to what amount required by the California Code? Paid-in capital All of the following would be considered unfair trade practices, except: Committing an act of discrimination whether it be fair or unfair All of the following would be considered unfair claim practices, except: Directly advising a claimant to obtain the services of an attorney A variable annuity applicant requests that the premium be immediately invested in a stock portfolio. The policy is returned to the insurer within the cancellation period. What is the applicant entitled to receive? The policy amount value on the date the policy was received by the insurer If a person gives an erroneous statement on an application unintentionally, this is: False [Show Less]
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primerica exam review questions and answers latest updated
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be Authorized A parti... [Show More] cipating insurance policy may do which of the following? Pay dividends to the policy owner An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? Universal life All of the following are examples of third-party ownership of a life insurance policy EXCEPT An insured borrows money from the back and makes a collateral assignment of a part of the death benefit to secure the loan. Which statement is NOT true regarding a Straight Life policy? Its premium steadily decreases over time, in response to its growing cash value. An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? $100,000 A person takes out a loan in order to pay off his house. He dies several years later, having paid off only a small portion of the debt. Which of the following is true? If the lender has credit insurance, this amount will be paid to the lender. Two individuals are in the same risk and age class; yet, they are charged different rates of their insurance policies die to an insignificant factor. What is this called? Discrimination 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 Required a premium increase each renewal. If a consumer requests additional information concerning an investigation consumer report, how long does the insurer or reporting agency have to comply? 5 days How is the Insurance Guaranty Association funded? By its members-authorized insurers An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? Decreasing term After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? Monthly premium waiver and monthly income All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT Dividends from a mutual insurer. The type of policy that can be changed from one that does not accumulate cash value to the one that does is a Convertible Term Policy. After its issuance, the temporary work authority expires after how many days 180 days not 60 All of the following would be considered an insurance transaction EXCEPT Obtaining an insurance license. The requirement that agents must account for all insurance funds collected, and are not permitted to comingle those funds with their own is known as Fiduciary responsibility. What is the purpose of a fixed-period settlement option? To provide a guaranteed income for a certain amount of time During policy replacement, the replacing insurer must notify existing insurers within what time period? 5 business days What significance did U.S. vs. South-Eastern Underwriters have on the insurance industry? It reversed the decision of Paul vs. Virginia, determining that insurance is interstate commerce and should be regulated federally. Items stipulated in the contract that the insurer will not provide coverage for are found in the Exclusions clause. When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount Equal to the original policy for as long a period of time that the cash values will purchase. All of the following are characteristics of group life insurance EXCEPT Premiums are determined by the age, sex and occupation of each individual certificate holder. An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? The date of medical exam For a retirement plan to be qualified, it must be designed for the benefit of Employees. Which of the following statements about a life insurance policy would be allowed in an insurance advertisement? This is a term life insurance policy. Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? Buyer's Guide Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? Those who have been insured under the plan for at least 5 years The interest earned on policy dividends is taxable A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called Cost of living rider. According to the Entire Contract provision, a policy must contain A copy of the original application for insurance. Which is NOT true about beneficiary designations? The beneficiary must have insurable interest in the insured. Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement? Recipient's life expectancy and amount of principal An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? Reduction of Premium Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? The employer is the owner and beneficiary. What is reinsurance? An agreement between a ceding insurer an assuming insurer The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the States On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are Not taxable since the IRS treats them as a return of a portion of the premium paid. When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of Defamation Which of the following determines the cash value of a variable life policy? The performance of the policy portfolio Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? Insuring clause Which of the following types of insurance policies is most commonly used in credit life insurance? Decreasing term If a producer has been convicted of a crime, he or she must notify the Commissioner within 30 days Traditional IRA contributions are tax deducted What do individuals use to transfer their risk of loss to a larger group? Insurance If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about Whether an insurable interest exists between the individuals. Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT Some of the premiums were paid in an attempt to defraud creditors. Which of the following is TRUE about the 10-day free look period in the Life Insurance Policy> It begins when the policy is delivered The National Do Not Call Registry was created to regulate telemarketers The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in this case, what will the policy beneficiary receive? $100,000 All of the following are unfair claims settlement practices EXCEPT Suggesting negotiations in settling a claim All of the following information about the applicant is identifies in the General Information section of a life Insurance application Except Education Which of the following statements is TRUE about the policy assignment? It transfers rights of ownership from the owner to another person Life insurance death proceeds are Generally not taxed as income What describes the specific information about a policy? Policy summary Death benefits payable to a beneficiary under a life insurance policy are generally Not subject to income taxation by Federal Government Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner? Cash surrender Which of the following types of insurance would be written by a limited lines agent? Credit Insurance if an insurer issued a policy based on the application that held unanswered questions, which of the following will be TRUE? The policy will be interpreted as if the insurer waived its right to have an answer on the application A producer's license was revoked as a result of the Insurance Code violation. Which the following is TRUE? The producer will have to wait 5 years before applying for license reinstatement Which of the following would be considered false advertisement? Implying that the agent is the insurer If an insurance company wished to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicants Ancestry A life insurance policy does not have a war clause. Of the insured is killed during a time of war, what will the beneficiary receive from the policy? The full death benefit Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? Family Term Rider Which Universal Life option has a gradually increasing cash value and a level death benefit? Option A If a telemarketer wants to make an unsolicited sales call to a potential customer whaat is the earliest time the telemarketer can call the prospects residence? 8 am Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a Premium receipt Why is an equity indexed annuity considered to be a fixed annuity? It has a guaranteed minimum interest rate Which of the following are NOT fundable by annuities? Death benefits Which of the following best describes an insurance company that as been formed under the laws of this state? Domestic An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? If the primary beneficiary predeceases the insured The insurer must maintain copies of Notice Regarding Replacement and the comparative information form, policy summary, and all sales materials until the next regular examination by the Department of Banking and Insurance or for at least 5 years Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of Twisting At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called Guaranteed Insurability If a violation of the New Jersey insurance code were to occur, a cease and desist order and/or penalty may be issued. Who may issue a cease and desist order? Commissioner Provided that it is a first offense, what is the maximum penalty for failing to respond to a subpoena? $5000 What method do insurers use to protect themselves against catastrophic losses? Reinsurance In order to become a producer in New Jersey, after submitting a licensing applicatoin, candidates must pass a licensing examination with 1 year What is the fine for violating the Commissioner's cease and desist order? 5000 Which of the following describes the tax advantage of a qualified retirement plan? The earnings in the plan accumulate tax deferred. [Show Less]
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Primerica Life Exam (State) questions and answers
The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the: ... [Show More] a. Counties b. Federal Government c. Insurers in a state d. States ? Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a. False advertising b. Defamation c. Coercion d. Misrepresentation ? A "certification of license status" report can be run on any currently licensed New Jersey producer, but can only contain information on formal disciplinary actions taken within the past a. 7 years. b. 10 years. c. 6 months. d. 4 years. ? Which of the following must an insurer obtain in order to transact insurance within a given state? a. Business entity license b. Insurer's license c. Certificate of authority d. Producer's certificate c Why is an equity indexed annuity considered to be a fixed annuity? a. It is not tied to an index like the S&P 500. b. It has a guaranteed minimum interest rate. c. It has modest investment potential. d. It has a fixed rate of return. ? In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a. The customer has no knowledge of this action. b. The customer's associates, friends, and neighbors provide the report's data. c. They provide additional information from an outside source about a particular risk. d. They provide information about a customer's character and reputation. ? The company owes premium money to the insured. The insurer gave the funds to the producer to return to the insured. Within how many days must the producer pay the insured? a. 5 b. 10 c. 14 d. 30 a The Waiver of Cost of Insurance rider is found in what type of insurance? a. Joint and Survivor b. Juvenile Life c. Universal Life d. Whole Life c If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? a. The insured and the policyowner b. Beneficiary c. Insured d. Policyowner ? Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a. Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest b. Charging a client a higher premium for the same policy as another client in the same insuring class c. Making deceptive statements about a competitor d. Telling a client that his first premium will be waived if he purchased the insurance policy today d Which of the following entities established the Do-Not-Call Registry? a. The Better Business Bureau b. The NAIC c. The Consumer Protection Agency d. The Federal Trade Commission d If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence? a. 7 am b. 8 am c. 9 am d. Noon b The company has issued a policy and delivered it to Producer B on May 1st, Monday. By what date must the policy be delivered to the insured? a. May 2nd (immediately) b. May 31st (within a month) c. May 10th (within 10 calendar days) d. May 12, Friday (within 10 business days) c Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a. 100% participation of members is required in noncontributory plans. b. Each member covered receives a policy. c. Coverage cannot be converted when an individual leaves the group. d. Premiums are determined by age, occupation, and individual underwriting. ? The Paul vs. Virginia case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today? a. The decision has changed. Insurance and securities are now regulated by the same federal agency. b. It still stands in full. Insurance is not considered to be interstate commerce, and is not subject to regulation by the federal government. c. It still stands in full. Insurance and securities are still regulated by two distinct agencies. d. The decision has changed. Insurance is considered to be interstate commerce, and is subject to regulation by the federal government. d The two types of assignments are a. Complete and partial. b. Complete and proportionate. c. Absolute and collateral. d. Absolute and partial. c Who is a third-party owner? a. An irrevocable beneficiary b. A policyowner who is not the insured c. An insurer who issues a policy for two people d. An employee in a group policy b In which of the following situations is it legal to limit coverage based on marital status? a. Legal separation during the application process b. Divorce within the last six months of applying for insurance c. It is never legal to limit coverage based on marital status. d. Excessive number of divorces, as defined by the Insurance Code c Which of the following provide(s) funding for the New Jersey Life and Health Guaranty Association? a. Insolvent insurers b. Member insurers c. Tax payers d. Fundraising b Which of the following best describes a misrepresentation? a. Discriminating among individuals of the same insuring class b. Issuing sales material with exaggerated statements about policy benefits c. Making a deceptive or untrue statement about a person engaged in the insurance business d. Making a maliciously critical statement that is intended to injure another person b Which of the following entities is held responsible for the contents of an insurer's advertisement on local TV station? a. The insurance company b. The Department of Insurance c. The TV station d. The Guaranty Association a What license or licenses are required to sell variable annuities? a. Only a securities license b. No license is required c. Both a life insurance license and a securities license d. Only a life insurance license c When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will a. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. b. Return the premium to Y's estate, since it has no obligation to pay the death claim. c. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued. d. Issue the policy anyway and pay the face value to the beneficiary. d How is the Insurance Guaranty Association funded? a. By NAIC b. By the Government c. By its members - authorized insurers d. By the Department of Insurance c [Show Less]
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