Insurance MCQ

What provision describes the parts of the life insurance contract? A Insuring B Incontestability C Entire Contract D Consideration Answer: C

B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. How much will B have to pay to have coverage once again? A $200 B $1,800 C $2,200 D $2,000 Answer: C

K has a loan of $5,000 outstanding against her $25,000 traditional whole life policy. If K dies, how much will her beneficiaries receive? A $5,000 B $25,000 C $30,000 D $20,000 Answer: D

A partial withdrawal is permitted on which of the following policies? A Universal Life B Current Assumption Whole Life C Variable Whole Life D Whole Life Answer: A

Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies, then Claire dies, then Alice dies, so who receives the policy proceeds? A Claire B Alice's estate C The treasury of the state where Alice lives D Bill Answer: B

The provision which denies the beneficiary the right to commute, alienate, or assign his/her interest in the policy proceeds is: A The Insuring Clause B The Spendthrift Clause C The Common Disaster Clause D The Consideration Clause Answer: B

Failure to repay a loan or loan interest will void a life insurance policy: A After the insurer calls in the loan with 30 days advance notice B After the loan has been outstanding for more than 5 years C If interest rates increase by more than 3% in any 1 year D If the total amount due equals or exceeds the policy's cash values Answer: D

Which of the following is NOT a Dividend Option? A Paid in Cash B Reduced Paid-Up C Accumulate at Interest D Paid-Up Additions Answer: B

Ed purchased a policy naming his children as per capita beneficiaries. Upon his death the proceeds are paid to: A His surviving children, who will share the proceeds equally B His wife, then all children or their heirs C All beneficiaries, with any deceased beneficiary's share passed to his/her heirs equally D The estate of the insured, then passed down to the heirs Answer: A

Paul is the insured and policyowner. Paul named Danny and Kayla as co-primary beneficiaries of Paul's $400,000 policy. Danny and Kayla each have 3 children. Danny dies, then Paul dies, so Kayla is entitled to receive $____________. A $200,000 B $300,000 C $100,000 D $400,000 Answer: D

A Whole Life policyowner elects to use his dividends to pay off the policy sooner than originally planned. Which option allows this to occur? A Paid-Up Option B Paid-Up Additions Option C Cash Surrender Option D Premiums Reduction Option Answer: A

A life insurance policy lists the names of 3 people as primary beneficiaries. Other than listing the person's names, which of the following is the most important next step? A Include the beneficiary's middle name or initial B Make certain the names are listed in alphabetical order C Indicate what percentage of the death benefit each is entitled to receive D Specify the occupation of each beneficiary Answer: C

What is a material misstatement? A Responding to a height and weight question with measurements 1 inch taller and 5 pounds lighter than is actually the case B One that is beyond the applicant's knowledge and belief C Stating that the proposed insured is 34 when in fact he or she is 35 D One which would have caused the insurer to not issue the policy had it been known Answer: D

K has a $100,000 traditional whole life policy with $30,000 of cash values and a $10,000 loan outstanding. What is the maximum additional amount she could borrow from the policy at this time? A $40,000 B $20,000 C $30,000 D $60,000 Answer: B

What is the intent of the suicide clause? A To be able to pay out claims to beneficiaries whenever such a tragic event occurs B To pay out claims only if and when suicides are committed while sane C To discourage individuals from purchasing an insurance policy while contemplating suicide D To distinguish between sane and insane actions Answer: C

The insuring clause is found: A On the last page of the policy B On the first page of the policy C In front of a copy of the paramedical exam results D Right before the copy of the application Answer: B

The ________ decides which dividend option is in effect and can change his/her election at any time. A Insured B Beneficiary C Insurer D Policyowner Answer: D

An insured bought a whole life policy 15 years ago and it has accumulated a cash value of several hundred dollars. She named her spouse as the owner at the time of purchase. Who has the right to change beneficiaries and access the cash value? A The beneficiary B The insured C The insurer D The policyowner Answer: D

What will cause the time period of the fixed amount settlement option to be extended? A A stock market rally B A decrease in the insurer's expenses C Lower mortality D An increase in interest credited Answer: D

Maria's policy was issued with an incorrect age. She was actually older than what was listed in the policy. Which of the following will the insurer most likely do if she had died 5 years after policy issue, but prior to this discovery? A The insurer would bill the beneficiary for the underpayment in premiums B The insurer would have to pay out the full face amount since the policy is now beyond the contestable period C The insurer would pay out a reduced benefit in proportion to the underpayment of premium D The insurer would simply reduce the death benefit by the amount of the premium underpayment Answer: C