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—›
Life Insurance Policy
Life Insurance Policy MCQs
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The term used to describe the individual who is covered by the insurance is
insurer
insured
policy owner
risk
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Which of the following is a risk?
a car may need to have new brakes installed after several years of regular driving
an individual may need medical attention after slipping on the ice and falling
both are examples of risk
neither is an example of risk
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The application of the law of large numbers enables insurers to
estimate the future losses of a class or group of people
predict the future losses of specific individuals
charge higher premiums for insurance
calculate mortality charges
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The estimation of future losses is more accurate when information is from
a small select group
a large group
a medium sized group
any size group
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which type of policy is designed to protect against the risk of living too long?
casualty
life
annuity
medical expense
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which of the following is a type of insurance company owned by its shareholders?
mutual
stock
lloyds
reinsurer
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The A insurance company is incorporated in Alabama. While doing business in Texas, it is
a domestic insurer
a foreign insurer
an alien insurer
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The A insurance company is incorporated in Mexico, While doing business in Texas, it is
a domestic insurer
foreign insurer
an alien insurer
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Self-insurance is an example of which method of handling risk?
acceptance
transference
avoidance
reduction
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which of the following terms is used to denote insurance companies?
broker
exchange
corporation
insurer
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a social device for spreading the chance of financial loss among a large number of people is definition of
hazard
risk
insurance
peril
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Katie becomes injured in a car accident caused when she took her eyes off the road to answer her phone. This is an example of
physical hazard
moral hazard
morale hazard
legal hazard
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an arrangement in which an insurer transfers part of the insurance risk to another insurance company is known as
avoidance
fraud
reinsurance
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hoosier insurance is owned by the policyholders. hoosier insurance is
stock insurer
mutual insurer
nonprofit
fraternal
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Which of the following people represents several insurance companies but own the policy expirations?
independent agent
exclusive agent
direct writing agent
general agent
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Which of the following can bind an insurance company by oral or written agreement?
property and casualty producer
life producer.
broker
solicitor
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Pretext interviews are
always illegal
not permitted without a warrant sworn by a sitting judge
generally accepted practice in the industry
not permitted unless some evidence of criminal activity exists
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A customer is anyone
about whom a company collects information.
with whom a company has an outgoing relationship
who prohibits the sharing of nonpublic personal information
who permits the sharing of nonpublic personal information
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The head of the state Department of Insurance usually called the Commissior is responsible for all of the following EXCEPT:
examining individual insurance policies before issuance
administering and enforcing state insurance laws.
imposing penalties for violations of the Insurance Code.
issuing insurance licenses and certificates of authority
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The tendency for poor risks to seek and be covered by insurance more often than average risk is
inappropriate selection
adverse selection
inappropriate risk
adverse risk
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Robin is a 25 year old who drinks occasionally does not smoke, and has no known health problems. He probably would be classified by an insurer as
standard risk
sustandard risk
superstandard risk
preferred risk
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Which of the following factors does NOT have an effect on insurance premium rates?
mortality and morbidity
interest rates
producer certification
expenses
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To be certain that insurers have the money available to pay claims as they arise, they are required to maintain,
a risk-based capital ratio
reserves
expense ratios
reinsurance
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Brenda decides that she wants to buy a policy. She fills out the application but does not pay the initial premium. What kind of receipt will Brenda re...
Conditional
binding
inspection
premium
?
Camille decides to buy a policy. She pays the first premium, and the producer issues a receipt and tells her that she is covered immediately, unless t...
Conditional
binding
inspection
premium
?
Which kinda of receipt is most commonly used in life insurance?
Conditional
binding
inspection
premium
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Insurers sometimes require personal delivery so that
the producer has another opportunity to sell policies
the producer can verify the insured’s good health at the time of delivery
the insurer can save mailing costs
the first premium may be collected
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If payment of a valid death claim is delayed, what is the usual reason?
a dispute over the validity of the claim
a dispute over the amount of the claim
the insurer has not received proper notification of the death
The insurer has not received the proper notification of the policy
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A policy may be issued in all of the following ways EXCEPT
as applied for
as a modified or amended policy
as an exchange policy, covering someone other than the original applicant
with a waiver excluding death by a certain cause
?
Term insurance provides
cash values
the ability to take a loan against the policy
pure insurance protection
lifelong protection
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Carl's insurance policy is designed to cover the mortgage on his house if he should die before paying it off. The policy is
convertible term
renewable term
increasing term
decreasing term
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The least common of the following types of insurance is
convertible term
renewable term
increasing term
decreasing term
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Pam owns a 1 year term policy. At the end of the year, she may purchase another identical policy without showing proof of insurability. Pam's pol...
convertible term
renewable term
increasing term
decreasing term
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Whole life insurance policies provide all of the following EXCEPT:
cash values
the ability to take a loan against the policy
pure insurance protection
an opportunity for significant investment gains
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Zelda agrees to pay premiums on her policy every year for 20 years. After that, she will no longer have to pay premiums, but her insurance protection ...
a whole life
limited-pay
single premium
economatic
?
Jerry has a policy that pays dividends, what are used to purchase additional paid-up insurance to increase the face value of the policy. Jerry has
whole life
limited-pay
single premium
economatic
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Ashley has a policy that she must pay premiums on until she is 100 years old or until she dies. Ashley has
continuous premium whole life
limited-pay
single premium
economatic
?
Which of the following is NOT flexible in a universal life policy?
Premium amounts
premium schedule
Guaranteed interest rate
Death benefit
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Adam purchases a universal life policy. In his second year, he decides to pay a $1,000 premium. What happens to the cash value of his policy at this p...
adam's cash value is increased by $1,000
Front-end load is deducted from the premium and the premium is added to the cash value
Front-end load is deducted from the premium, the premium is added to the cash value, and the cost of insurance is deducted from the cash value
The front-end load is deducted from the premium, the premium is added to the cash value, and the current interest rate is credited to the cash value.
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Martha has a universal life policy she purchased several years earlier. At that time, the death benefit in the policy was $100,000. Her cash value is ...
$20,000
$80,000
$100,000
$120,000
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Karen has a universal life policy she purchased several years earlier. At that time, the death benefit in the policy was $100,000. Her cash value is n...
$20,000
$80,000
$100,000
$120,000
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Assume that Martha and Karen are identical twins. Martha selects death benefit option A, and Karen selects death benefit option B. Who is probably pay...
Martha
Karen
Exact same
None of the above
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Which of the following is NOT required to be able to sell variable policies?
a state insurance producer license
Registration with FINRA
Registration with the NAIC
A passing score on the appropriate securities exam
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Which of the following must be the case once a year for a variable policy to meet the federal definition of life insurance?
the face amount must be higher than the cash value by a certain percentage.
the cash value must be higher than the face amount by a certain percentage.
the cash value and the face amount must be exactly equal
the cash value must equal zero
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Julia's variable policy deducts a certain percentage from the premiums as they are paid. What type of load does Julia's policy have?
back end load
front end load
premium load
face value load
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Laura collects insurance premiums every Friday at the home of several policyholders. Which type of policy do these policyholders probably have?
Home service life insurance
Credit life insurance
Term life insurance
Industrial life insurance
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George's brother, Jerry has a policy that will provide him an income if he is disabled from illness or injury, but only if he is confined to a ho...
disability income policy
medical expense insurance policy
long-term care policy
hospital income insurance policy
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Which type of insurance policy is most common today?
Home service life
Credit life insurance
Term life insurance
Industrial life insurance
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Sarah has a policy that will pay her family a monthly income until 2020 if she passes away before that time. Which type of policy does Sarah have?
family security policy
family maintenance policy
family income policy
family plan policy
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Tracy has a policy that provides perm life insurance on him, along with term insurance on his wife and children. Which type of policy is this?
family security policy
family maintenance policy
family income policy
family plan policy
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Which type of policy would not provide a tax-free death benefit under current laws?
joint life policy written on a survivor ship basis
minimum deposit policy
endowment policy
mortgage redemption policy
?
Between George and his brother, who has the more limited policy?
George
Jerry
neither, both policies probably have the same limitations
not possible to tell from the information provided
?
Which of the following types of insurance requires a level premium and provides lifelong protection?
whole life
variable life
term life
universal life
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Securities based whole life insurance is called
whole life
variable life
term life
universal life
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Christy has a term policy that will allow her to switch over to a whole life policy at any time during the first half of the term without providing ev...
level term
renewable term
convertible term
reentry term
?
Which of the following is an advantage of term insurance?
initial cost of the policy tends to be low.
the policy becomes more expensive over time
it provides temporary protection for a limited time
even if the policy is renewable, it is probably not renewable beyond a certain age such as 65
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Janice and Julie are identical twins who both work as teachers and live next door to each other. They each purchase a $75,000 whole life policy at the...
Janice
Julie
Same amount
None of the above
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Sally purchases $100,000 of participating whole life and $50,000 of term insurance. Over time, she intends to use the dividends from the whole life po...
adjustable life
economatic life
universal life
variable universal
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Gerald has a state insurance license but no other training or licenses. Gerald can sell any of the following EXCEPT:
adjustable life
economatic life
universal life
variable universal
?
LaKita buys a policy that allows her to adjust the face amount, premium, and length of protection without having to complete a new application or have...
adjustable life
economatic life
universal life
variable universal
?
Which type of policy is least likely to be sold today?
term
whole life
endowment
variable universal life
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Which type of policy combines whole life insurance with DECREASING term coverage?
family security policy
family maintenance policy
family income policy
family plan policy
?
Which type of policy combines whole life insurance on one family memeber with term coverage on other family members?
family security policy
family maintenance policy
family income policy
family plan policy
?
Dan and Dawn want to purchase a single policy that will provide a death benefit upon the death of either of them. The type of policy that might best f...
juvenile policy
minimum deposit policy
joint life
multiple protection policy
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Devon wants to purchase a policy that will cover his nephew until he turns 21. What type is this?
juvenile policy
minimum deposit policy
joint life
multiple protection policy
?
Which of the following types of insurance is designed to provide life insurance protection for only a limited time?
whole life
variable life
term life
universal life
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George has several policyowners at the factory set up on a plan that deducts the premium automatically from their bank accounts every month. Which typ...
Home service life
Credit life insurance
Term life insurance
Industrial life insurance
?
The main difference between traditional health insurance arrangements and HMOs is that
traditional health insurance companies provide both the health care service and the health care financing, but HMOs provide only the health care financing.
traditional health care insurance companies provide both the health care service and the health care financing, but HMOs provide only the health care service.
HMOs provide both the health care service and the health care financing, but traditional health care insurance companies provide only the financing.
HMOs provide both the health care service and the health care financing, but trad. health care insurance provide only the service.
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Which of the following types of health care insurers is an example of a producers' cooperative?
urgent care center
blue cross/blue shield
commercial insurer
skilled nursing facility
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The Hoosier HMO contracts with an independent medical group that specializes in a variety of medical services in order to provide those services to HM...
a staff model HMO
network model HMO
group model HMO
an individual practice association model HMO
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The Provider's Choice HMO was started by a group of individual physicians, and each physician operates out of his or her own office. The physicia...
a staff model HMO
network model HMO
group model HMO
an individual practice association model HMO
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Gwen's HMO requires that she receive health care services from a specified, limited number of health care providers chosen by the HMO. Gwen'...
open panel
closed panel
choice panel
guarded panel
?
Best Cleaners has a health plan that provides its employees with a high-deductible medical indemnity plan and an account funded by the business, which...
cafeteria plan
medical savings account
a multiple employer trust
third-party administrator
?
Bob's Balloons has a plan in which its employees can select benefits from a variety of coverage options based on individual and family needs. The...
cafeteria plan
medical savings account
a multiple employer trust
third-party administrator
?
The Garage company funds its own claims but uses another company to make sure the plan is run correctly, acting as a liaison between the insurer and t...
cafeteria plan
medical savings account
a multiple employer trust
third-party administrator
?
Which of the following individuals would probably qualify for Social Security disability benefits?
George, a ski instructor who breaks his leg
car, who becomes ill with a viral infection and is not expected to be abel to work for the next 6 months
Mike, a mechanic who loses his dominant hand in an accident
John, who experiences serious early-onset alzheimer’s and is unable to remember how to get to work
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Under workers' compensation, the permanent total disability benefit, while subject to minimum and maximum dollar amounts, is generally
50%of wkly wages
66.66% of wkly wages
70.5% of wkly wages
75% of wkly wages
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Under workers' compensation, individuals with partial disabilities who are able to perform some work are eligible to receive.
no benefits
66.66% of wkly wages, subject to minimum and max dollar amts.
entire wage loss, subject to min and max dollar amounts
percentage of wage loss, subject to min and max dollar amounts
?
No loss/no gain legislation requires a replacing policy to
have exactly the same premium as the policy it replaces
have exactly the same limits of coverage as the policy it replaces
continue to pay claims ongoing under the policy it replaces
continue to use the same producer to manage the policy as the policy it replaces
?
According to the entire contract provision, the entire contract includes all of the following EXCEPT
the insurance policy
premium payment
any endorsements
any attachments
?
In most states, the policy becomes incontestable after
2 years
3 years
4 years
5 years
?
All insurance policies may be canceled at any time by
the insurer only
the insured only
neither the insurer or the insured
neither the insurer nor the insured
?
Normally, written proofs of loss must be furnished within how many days after the loss?
15
45
60
90
?
If there is no beneficiary listed on a policy, benefits will be paid to
the state
the insured’s estate
the insured's nearest blood relative
the insured's nearest relative by marriage or blood
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When Betty purchased her insurance policy, her age was recorded as 32 when she was actually 34. Assuming her policy includes the misstatement of age p...
will be canceled for misrepresentation
will be unchanged because the incontestable period has expired
limits will be lowered
limits will be raised
?
The optional provisions that deal with multiple insurance policies of the same type on a single insured deal with the problem of
underinsurance
overinsurance
inappropriate insurance
incorrect insurance
?
If a policyholder has two or more policies from different companies that cover the same expenses and the insurers were not notified that the other cov...
have the option to cancel the policyholder's policy without notice
have the option to cancel the policyholder's policy with appropriate notice
pay the claim regardless, as long as the premiums have been paid
pay a proportionate share of any claim
?
if a policy includes the provision on conformity with state statutes, and the state changes the law to be in conflict with another provision of the po...
the policy will automatically be void
the provision will be automatically grandfathered and able to stay the same
the insurer will be able to apply for a grandfather provision for those policies already in force
the provision will automatically be amended to conform to the minimum requirement of the statutes
?
A pro rata return is one in which the insurer returns
all of the unearned premium
some of the unearned premium
both earned and unearned premium
neither earned nor unearned premium
?
The grace-period varies according to
premium payment frequency
premium payment amount
method of premium payment
type of policy
?
A reinstated policy will cover
sickness immediately and accidents after 10 days
both sickness and accidents after 10 days
accidents after 10 days and sickness after 30 days
accidents immediately and sickness after 10 days
?
if an insured is disable for at least 2 years, the insurer may require proof of continuance of disability every
month
2 months
6 months
year