Insurance Practice Exam 150 Questions| 36 PAGES| GRADED A
What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is
made?
*Irrevocable beneficiary
*Tertiary beneficiary
*Primary beneficiary
*Revocable beneficiary Correct Answer: *Irrevocable beneficiary
(An irrevocable designation may not be changed without the written consent of the beneficiary.)
When can a policyowner change a revocable beneficiary?
*Anytime
*After the consent of the current beneficiary
*Never
*Only if primary beneficiary dies Correct Answer: *Anytime
(With a revocable beneficiary designation, the policyowner may change the beneficiary at any
time without notifying or getting permission from the beneficiary.)
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as
beneficiary. M has the right to change the beneficiary designation at anytime. What type of
beneficiary is his son?
*Tertiary
*Irrevocable
*Revocable
*Contingent Correct Answer: *Revocable
(With a revocable beneficiary designation, the policyowner may change the beneficiary at any
time without notifying or getting permission from the beneficiary.)
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and
Dismemberment (AD&D) policy?
*If the primary beneficiary is a minor at the time of the insured's death
*If the primary beneficiary dies before the insured
*If the insured died of accidental causes
*If the insured died of natural causes Correct Answer: *If the primary beneficiary dies before
the insured
(A contingent beneficiary will receive the policy proceeds if the primary beneficiary dies before
the insured's death.)
,Which statement regarding the Change of Beneficiary provision is true?
*The beneficiary can only be changed with the consent of the insurer
*The policyowner can change the beneficiary
*The insured can change the beneficiary
*A beneficiary change is subject to underwriting procedures Correct Answer: *The
policyowner can change the beneficiary
(A policyowner may change a beneficiary at any time. However, consent may be needed by the
current beneficiary if designated as irrevocable.)
A policyowner would like to change the beneficiary on a Life insurance policy and make the
change permanent. Which type of designation would fulfill this need?
*Revocable
*Contingent
*Irrevocable
*Primary Correct Answer: *Irrevocable
(An irrevocable designation may not be changed without the written consent of the beneficiary.)
Which statement is true regarding a minor beneficiary?
*Normally, the death proceeds are required to be held in trust until the beneficiary reaches the
age of 21
*Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
*The minor must pay the debts of the insured's estate before receiving any of the proceeds
*The minor is entitled to receive the death proceeds immediately Correct Answer: *Normally, a
guardian is required to be appointed in the Beneficiary clause of the contract
(In most cases, insurers require that a guardian be appointed in the Beneficiary clause of the
policy or that a guardian be designated in the will.)
What is the underlying concept regarding level premiums?
*Level premiums build cash value quicker in the early years
*The early years are charged more than what is needed
*The early years are charged less than what is needed
*Level premiums can only be paid annually Correct Answer: *The early years are charged
more than what is needed
(The concept of level premiums charges more than needed in early years.)
A policyowner is able to choose the frequency of premium payments through what policy
feature?
, *Consideration
*Payor benefit
*Premium Mode
*Assignment provision Correct Answer: (Premium Mode is the feature that allows the
policyowner to select the timing of premium payment, such as monthly, quarterly, annually etc.)
A policyowner is allowed to pay premiums more than once a year under which provision?
*Insuring
*Consideration
*Payor
*Mode of Premium Correct Answer: *Mode of Premium
(The Mode of Premium provision permits an insured to pay premiums more than once every
year.)
A life insurance application must be signed by all of these EXCEPT
*the policyowner
*the agent
*the insured (if an adult)
*beneficiary Correct Answer: *beneficiary
()
Any changes made on an insurance application requires the initials of whom?
*Insured
*Agent
*Applicant
*Beneficiary Correct Answer: *Applicant
(When an applicant makes a mistake in the information given to an agent in completing the
application, the applicant can have the agent correct the information, but the applicant must
initial the correction.)
T applies for a life insurance policy and is told by the producer that the insurer is bound to the
coverage as of the date of the application or medical examination, whichever is later, provided
that T is an acceptable risk. What item is given to T?
*Binding receipt
*Conditional receipt
*Warranty receipt
*Backdated receipt Correct Answer: *Conditional receipt
, (A conditional receipt binds the insurer to coverage as of the date of the application or medical
exam, provided the proposed insured is determined to be an acceptable risk.)
M completes an application for life insurance but does not pay the initial premium. All of these
actions must occur before M's policy goes into effect EXCEPT
*policy is delivered
*free-look period has expired
*insurance company issues policy
*initial premium is collected Correct Answer: *free-look period has expired
(In this situation, the policy will go into effect after all these actions occur EXCEPT the
expiration of the free-look period.)
A noncontributory group term life plan is characterized by
*the entire cost of the plan is paid for by the employer
*the entire cost of the plan is paid for by the employee
*the cost of the plan is shared by both employer and employee
*both employer and employee must provide evidence of insurability Correct Answer: *the
entire cost of the plan is paid for by the employer
(When an employer provides noncontributory group term life insurance, the employer pays the
entire cost of the plan.)
Who is NOT required to sign a life insurance application?
*Adult insured
*Policyowner
*Agent
*Beneficiary Correct Answer: *Beneficiary
(All of the following individuals must sign a life insurance application EXCEPT the beneficiary.)
What action should a producer take if the initial premium is NOT submitted with the
application?
*Keep the application until premium is paid
*Forward the application to the insurer after giving the applicant a binding receipt
*Forward the application to the insurer without the initial premium
*Forward the application to the insurer after giving the applicant a conditional receipt Correct
Answer: *Forward the application to the insurer without the initial premium
(In this situation, the producer should submit the application to the insurance company without
the premium. However, if a premium is not paid with the application, the policy will not become
valid until the initial premium is collected.)
What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is
made?
*Irrevocable beneficiary
*Tertiary beneficiary
*Primary beneficiary
*Revocable beneficiary Correct Answer: *Irrevocable beneficiary
(An irrevocable designation may not be changed without the written consent of the beneficiary.)
When can a policyowner change a revocable beneficiary?
*Anytime
*After the consent of the current beneficiary
*Never
*Only if primary beneficiary dies Correct Answer: *Anytime
(With a revocable beneficiary designation, the policyowner may change the beneficiary at any
time without notifying or getting permission from the beneficiary.)
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as
beneficiary. M has the right to change the beneficiary designation at anytime. What type of
beneficiary is his son?
*Tertiary
*Irrevocable
*Revocable
*Contingent Correct Answer: *Revocable
(With a revocable beneficiary designation, the policyowner may change the beneficiary at any
time without notifying or getting permission from the beneficiary.)
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and
Dismemberment (AD&D) policy?
*If the primary beneficiary is a minor at the time of the insured's death
*If the primary beneficiary dies before the insured
*If the insured died of accidental causes
*If the insured died of natural causes Correct Answer: *If the primary beneficiary dies before
the insured
(A contingent beneficiary will receive the policy proceeds if the primary beneficiary dies before
the insured's death.)
,Which statement regarding the Change of Beneficiary provision is true?
*The beneficiary can only be changed with the consent of the insurer
*The policyowner can change the beneficiary
*The insured can change the beneficiary
*A beneficiary change is subject to underwriting procedures Correct Answer: *The
policyowner can change the beneficiary
(A policyowner may change a beneficiary at any time. However, consent may be needed by the
current beneficiary if designated as irrevocable.)
A policyowner would like to change the beneficiary on a Life insurance policy and make the
change permanent. Which type of designation would fulfill this need?
*Revocable
*Contingent
*Irrevocable
*Primary Correct Answer: *Irrevocable
(An irrevocable designation may not be changed without the written consent of the beneficiary.)
Which statement is true regarding a minor beneficiary?
*Normally, the death proceeds are required to be held in trust until the beneficiary reaches the
age of 21
*Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
*The minor must pay the debts of the insured's estate before receiving any of the proceeds
*The minor is entitled to receive the death proceeds immediately Correct Answer: *Normally, a
guardian is required to be appointed in the Beneficiary clause of the contract
(In most cases, insurers require that a guardian be appointed in the Beneficiary clause of the
policy or that a guardian be designated in the will.)
What is the underlying concept regarding level premiums?
*Level premiums build cash value quicker in the early years
*The early years are charged more than what is needed
*The early years are charged less than what is needed
*Level premiums can only be paid annually Correct Answer: *The early years are charged
more than what is needed
(The concept of level premiums charges more than needed in early years.)
A policyowner is able to choose the frequency of premium payments through what policy
feature?
, *Consideration
*Payor benefit
*Premium Mode
*Assignment provision Correct Answer: (Premium Mode is the feature that allows the
policyowner to select the timing of premium payment, such as monthly, quarterly, annually etc.)
A policyowner is allowed to pay premiums more than once a year under which provision?
*Insuring
*Consideration
*Payor
*Mode of Premium Correct Answer: *Mode of Premium
(The Mode of Premium provision permits an insured to pay premiums more than once every
year.)
A life insurance application must be signed by all of these EXCEPT
*the policyowner
*the agent
*the insured (if an adult)
*beneficiary Correct Answer: *beneficiary
()
Any changes made on an insurance application requires the initials of whom?
*Insured
*Agent
*Applicant
*Beneficiary Correct Answer: *Applicant
(When an applicant makes a mistake in the information given to an agent in completing the
application, the applicant can have the agent correct the information, but the applicant must
initial the correction.)
T applies for a life insurance policy and is told by the producer that the insurer is bound to the
coverage as of the date of the application or medical examination, whichever is later, provided
that T is an acceptable risk. What item is given to T?
*Binding receipt
*Conditional receipt
*Warranty receipt
*Backdated receipt Correct Answer: *Conditional receipt
, (A conditional receipt binds the insurer to coverage as of the date of the application or medical
exam, provided the proposed insured is determined to be an acceptable risk.)
M completes an application for life insurance but does not pay the initial premium. All of these
actions must occur before M's policy goes into effect EXCEPT
*policy is delivered
*free-look period has expired
*insurance company issues policy
*initial premium is collected Correct Answer: *free-look period has expired
(In this situation, the policy will go into effect after all these actions occur EXCEPT the
expiration of the free-look period.)
A noncontributory group term life plan is characterized by
*the entire cost of the plan is paid for by the employer
*the entire cost of the plan is paid for by the employee
*the cost of the plan is shared by both employer and employee
*both employer and employee must provide evidence of insurability Correct Answer: *the
entire cost of the plan is paid for by the employer
(When an employer provides noncontributory group term life insurance, the employer pays the
entire cost of the plan.)
Who is NOT required to sign a life insurance application?
*Adult insured
*Policyowner
*Agent
*Beneficiary Correct Answer: *Beneficiary
(All of the following individuals must sign a life insurance application EXCEPT the beneficiary.)
What action should a producer take if the initial premium is NOT submitted with the
application?
*Keep the application until premium is paid
*Forward the application to the insurer after giving the applicant a binding receipt
*Forward the application to the insurer without the initial premium
*Forward the application to the insurer after giving the applicant a conditional receipt Correct
Answer: *Forward the application to the insurer without the initial premium
(In this situation, the producer should submit the application to the insurance company without
the premium. However, if a premium is not paid with the application, the policy will not become
valid until the initial premium is collected.)
