WA Life Insurance Study Exam Questions With answers. Rated A. 2022/2023. 100% verified passing.

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Which of these is NOT considered to be a common life insurance nonforfeiture option? a) Cash surrender b) Extended term insurance c) Reduced paid-up insurance d) Life income annuity - ✔✔d) Life in... come annuity All of the following riders can increase the death benefit amount EXCEPT a) Cost of living b) Waiver of Premium c) Accidental Death Rider d) Guaranteed Insurability - ✔✔b) Waiver of Premium Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE? a) Net death benefit will be reduced if the loan is not repaid b) No interest will be charged on loan balance c) Term life policies are the only type of insurance that allows policy loans d) A loan can be taken out for up to the face amount of the policy - ✔✔a) Net death benefit will be reduced if the loan is not repaid James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? a) The original face amount will be paid to the beneficiary b) The policy will be voided with no death benefits paid c) The death benefit paid will be what the premium would have purchased at the correct age d) The amount of premiums paid will be returned with interest - ✔✔c) The death benefit paid will be what the premium would have purchased at the correct age Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? a) Waiver of Premium b) Juvenile Waiver c) Guaranteed Insurability d) Payor benefit - ✔✔d) Payor benefit Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? a) Interest only b) Reduced paid-up insurance c) Extended term insurance d) Cash surrender - ✔✔a) Interest only All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT a) Extended Term Insurance b) Cash Surrender c) Reducation of Premium d) Reduced Paid-Up Insurance - ✔✔c) Reduction of Premium Life insurance policies will normally pay for losses arising from a) commercial aviation b) war c) suicide d) hazardous jobs - ✔✔a) commercial aviation If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies? a) No death benefit is owed because of the misstatement of age b) The full original death benefit listed on the policy c) A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age d) The original death benefit listed on the policy minus any outstanding loans and interest - ✔✔c) A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age If an insured dies during the grace period with no premiums paid a) the policy would be payable, minus the premium amount b) the policy would be payable only after the beneficiary makes past due premium payment c) all past premiums will be refunded with interest d) the claim would be denied - ✔✔a) the policy would be payable, minus the premium amount All of these are common exclusions to a life insurance policy EXCEPT a) accidental death b) military service c) aviation d) hazardous occupations - ✔✔a) accidental death A life insurance policyowner does NOT have the right to a) change of beneficiary b) select a beneficiary c) take out a policy loan d) revoke an absolute assignment - ✔✔d) revoke an absolute assignment A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n) a) automatic premium loan b) nonforfeiture option c) collateral assignment d) irrevocable assignment - ✔✔c) collateral assignment A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n) a) waiver of premium rider b) payor rider c) automatic premium loan rider d) juvenile waiver rider - ✔✔b) payor rider What is an insurer required to do when faced with an error made under the Misstatement of Age provision? a) Cancel the policy b) Pay age-corrected benefits c) Pay full benefits as stated in the policy d) Bill the policyowner for back premiums - ✔✔b) Pay age-corrected benefits The two major actions required for a policyholder to comply with the Reinstatement Clause are a) provide evidence of insurability, agree to a new incontestable period b) provide evidence of insurability, pay past due premiums c) pay past due premiums, agree to a new incontestable period d) pay past due premiums, agree to a reduction in coverage - ✔✔b) provide evidence of insurability, pay past due premiums Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds a) will no longer provide insurance protection b) will go to Mike's estates c) will be provided by probate d) will not be paid until the last brother dies - ✔✔a) will no longer provide insurance protection All of these are standard exclusions found in a life insurance policy EXCEPT a) hazardous occupations b) aviation c) disability d) war - ✔✔c) disability An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? a) Incontestable period b) Probation period c) Reinstatement period d) Grace period - ✔✔d) Grace Period Which of these is NOT considered to be a risk factor in life insurance underwriting? a) Number of children b) Health history c) Hobbies d) Occupation - ✔✔a) Number of children How are survivorship life insurance policies helpful in estate planning? a) Provide funds to help fund retirement b) Provide funds to help pay taxes c) Provide funds for funeral expenses d) Provide tax deductions for premium payments - ✔✔b) Provide funds to help pay taxes The free-look provision gives the policyowner a) the right to return the policy for a partial refund within a specified number of days b) the right to contest the terms of the policy c) the right to change a policy provision d) the right to return the policy for a full refund within a specified number of days - ✔✔d) the right to return the policy for a full refund within a specified number of days Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies? a) Standard risk b) Preferred risk c) Unacceptable risk d) Substandard risk - ✔✔d) Substandard risk Preferred risk policies with reduced premiums are issued by insurance companies because the insured has a) a higher face amount than average b) a better ability to pay premiums over a long period of time c) worse than average mortality or morbidity experience d) better than average mortality or morbidity experience - ✔✔d) better than average mortality or morbidity experience Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? a) A waiver of premium b) A replacement form c) A good health statement d) An exclusion - ✔✔c) A good health statement Which of these is NOT a characteristic of the Accelerated Death Benefit option? a) The face amount and policy premium are not affected by the payment b) Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness c) There may be a dollar limit on the maximum benefit d) The benefit can be offered as a rider at a specific extra cost or may be at no cost - ✔✔d) The benefit can be offered as a rider at a specific extra cost or may be at no cost Which of the following would be a valid reason why a policy premium would be higher than the standard premium? a) The insurer is not a member of the MIB b) The agent quoted the wrong price c) The insured does not have the necessary financial reserves d) The insured does not meet established underwriting requirements - ✔✔d) The insured does not meet established underwriting requirements What does the word "level" in Level Term describe? a) The period of coverage b) The face amount c) The premium payments d) The cash value - ✔✔b) The face amount Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined? a) Adverse calculation b) Underwriting c) Risk classification d) Acturarial determination - ✔✔b) Underwriting All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPT a) Agent's report b) Medical Information Bureau (MIB) c) Inspection reports d) National Association of Insurance Underwriters - ✔✔d) National Association of Insurance Underwriters Which of the following signatures is not required on an individual insurance application? a) Producer b) Applicant c) Insured d) Insurer - ✔✔d) Insurer An error was made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply? a) Marital status b) Age c) Address d) Income - ✔✔b) Age What is the purpose of the Medical Information Bureau (MIB)? a) To accept or decline insurance applicants b) To set the premium rates for insurers c) To help underwriters evaluate risk d) To perform physical examinations on applicants - ✔✔c) To help underwriters evaluate risk Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires, a) he has the option of resuming the original policy and paying the same premium b) the coverage can be extended with a lump sum payment c) all remaining cash values are paid to the policyowner d) the protection ends - ✔✔d) The protection ends Which of these would be the best example of a limited pay life insurance policy? a) Whole life policy that pays out its cash value over a 20 year period b) Whole life policy with premiums paid up after 20 years c) Term life policy that returns cash value after 20 years d) Term life policy with premiums paid up after 20 years - ✔✔b) Whole life policy with premiums paid up after 20 years Statements made by an insurance applicant on an application are considered to be a) irrevocable b) warranties c) representations d) guarantees - ✔✔c) representations A whole life insurance policy accumulates cash value that becomes a) the policy loan value which the insured may borrow against b) the death benefit c) the source of funding for administration fees d) a source of funding a term rider to the policy - ✔✔a) the policy loan value which the insured may borrow against Which type of policy combines the flexibility of a universal life policy with investment choices? a) Adjustable universal life policy b) Flexible universal life policy c) Variable universal life policy d) Modified universal life policy - ✔✔c) Variable universal life policy All of these are considered key factors in underwriting life insurance EXCEPT a) Tobacco use b) Health history c) Age d) Marital Status - ✔✔d) Marital status All of these are valid options for an Adjustable Life Policy EXCEPT a) The policy's premium can be increased or decreased b) The policy's death benefit can be increased or decreased c) A nonforfeiture option can be used to increase the death benefit d) The policy's protection period can be modified - ✔✔c) A nonforfeiture option can be used to increase the death benefit A field underwriter's main task is a) assign a risk classification to the insured b) report medical information to the Medical Information Bureau (MIB) c) to ensure an applicant's medical information is accurate and complete d) to approve or decline an applicant - ✔✔c) to ensure an applicant's medical information is accurate and complete All of these are typically sources of underwriting information for life or health insurance EXCEPT a) Consumer reports b) Medical Information Bureau (MIB) reports c) Disclosure authorization response d) Attending physcian's statement (APS) - ✔✔c) Disclosure authorization response An insurer has a right to screen applicants for HIV in which of the following ways? a) Blood test for HIV b) Inquiring about risky sexual behavior c) Inquiring about sexual orientation d) Automatically declining an application due to sexual orientation - ✔✔a) Blood test for HIV The type of policy which pays on the death of the last person is called a) joint life b) survivorship life c) dual life d) shared life - ✔✔b) survivorship life A spouse and child can be added to the primary insured's coverage as what kind of rider? a) Dependent term b) Guaranteed insurability c) Primary term d) Family term - ✔✔d) Family term Which of these is considered to be a document that describes the critical segments of a life insurance policy? a) Buyer's guide b) Policy summary c) Consumer report d) Buyer's summary - ✔✔b) Policy summary When does a life insurance policy typically become effective? a) When the policy is issued b) When initial premium is collected and policy is issued c) When the application is completed and signed d) When the completed application is signed and initial premium is collected - ✔✔b) When initial premium is collected and policy is issued Which of the following does a life insurance policy summary normally include? a) The policy's cash value b) Agent's report c) Policyowner's MIB report d) Stated beneficiary - ✔✔a) The policy's cash value Which policy feature makes a universal life policy different from a whole life policy? a) A fixed cash value b) A flexible premium schedule c) A fixed death benefit d) The ability to take out a policy loan - ✔✔b) A flexible premium schedule What would happen if a life insurance applicant is given a conditional receipt from an insurance agent and then dies the next day? a) Claim will be denied by insurer b) Claim will be paid if money was received by the insurance company c) Claim will be paid if underwriter has received the application d) Claim will be paid if application is approved - ✔✔d) Claim will be paid if application is approved What happens to the coverage under a children's term rider when that child reaches a certain specified age? a) Coverage decreases automatically b) Coverage increases automatically c) Coverage remains as long as proof of insurability is provided d) Coverage is eliminated - ✔✔d) Coverage is eliminated Which of the following would be considered an underwriting duty of an agent? a) Requesting medical information from the Medical Information Bureau (MIB) b) Completing all applications and collecting initial premiums c) Accepting or declining an application d) Assigning a risk classification - ✔✔b) Completing all applications and collecting initial premiums Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)? a) Loan against the cash value b) Policy withdrawal c) Policy dividend d) Death benefit - ✔✔d) Death benefit What is involved when a life insurance policy has been backdated? a) Setting a policy's effective date prior to a preexisting condition b) Redating a policy after it has been issued c) Reinstating a lapsed policy d) Making the policy effective on an earlier date than the present - ✔✔d) Making the policy effective on an earlier date than the present A Modified Endowment Contract (MEC) is best described as a) A life insurance contract which accumulates cash values higher than the IRS will allow b) An annuity contract which was converted from a life insurance contract c) A modified life contract which enjoys all the tax advantages of whole life insurance d) A life insurance contract where all withdrawals prior to age 65 are subject to a 10% penalty - ✔✔a) A life insurance contract which accumulates cash values higher than the IRS will allow What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death? a) Dual Life Insurance b) Joint Life Insurance c) Last Survivor Life Insurance d) Shared Life Insurance - ✔✔c) Last Survivor Life Insurance Underwriters can acquire information from all of the following sources EXCEPT a) Medical Information Bureau (MIB) b) consumer reports c) attending physician's statements d) genetic testing - ✔✔d) genetic testing What is an insurance policy's grace period? a) Period of time after the initial premium is paid and before the policy is issued b) Period of time it takes for a policy's underwriting to complete c) Period of time after a policy is issued and before it is delivered to policyowner d) Period of time after the premium is due but the policy remains in force - ✔✔d) Period of time after the premium is due but the policy remains in force An individual most likely will have an insurable interest in insuring a person's life if a) an economic interest exists for the continuance of the insured's life b) a financial interest exists at the time of insured's death c) there is any blood relationship with the insured d) a business relationship exists - ✔✔a) an economic interest exists for the continuance of the insured's life How many months can a life insurance policy normally be backdated from the date of application? a) 3 b) 6 c) 9 d) 12 - ✔✔b) 6 What is the name of the provision which states that a copy of the application must be attached to the policy when issued? a) Policy summary b) Buyer's guide c) Entire Contract d) Entire policy - ✔✔c) Entire Contract An applicant's character and personal habits can be obtained for underwriting purposes from which source? a) Investigative consumer report b) Attending physician's statement c) Medical Information Bureau (MIB) d) Credit report - ✔✔a) Investigative consumer report An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of a) rebating b) coercion c) fraud d) twisting - ✔✔c) fraud Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause? a) protection clause b) creditor clause c) spendthrift trust clause d) beneficiary trust clause - ✔✔c) spendthrift trust clause Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident? a) primary beneficiary's estate b) contingent beneficiary c) insured's estate d) children of the insured - ✔✔b) contingent beneficiary What is created after policy proceeds are obtained in a lump sum and then immediately invested? a) Viatical settlement b) Emergency fund c) Lump Sum Fund d) Estate - ✔✔d) Estate Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary? a) interest only b) dividends only c) extended interest d) fixed period - ✔✔a) Interest only An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if a) the insured outlived the beneficiary b) the beneficiary outlived the insured c) no beneficiary was ever named d) the insured and beneficiary died at the same time - ✔✔a) the insured outlived the beneficiary What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured? a) Policy dividend b) Specified amount of money c) Policy's cash value d) Funeral expense fund - ✔✔b) Specified amount of money The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n) a) sickness b) suicide c) accident d) war - ✔✔c) accident How is the cost of a policy affected when a policyowner pays premiums more frequently? a) Not affected b) Increases c) Decreases d) Depends on the type of coverage - ✔✔b) Increases Which of these is considered to be a Living Benefit option in a life insurance policy? a) Reinstatement b) Waiver of premium c) Accelerated death benefit d) Payor benefit - ✔✔c) Accelerated death benefit The premium payment mode that results in the highest overall cost would be a) monthly b) quarterly c) semi-annual d) annual - ✔✔a) monthly Which of these is affected by the frequency of an insurance policy's premium payments? a) Settlement options b) Cash value c) Death benefit d) Cost - ✔✔d) Cost The premium payment mode that results in the least overall cost would be a) monthly b) quarterly c) semi-annual d) annual - ✔✔d) annual The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid a) minus indebtedness and with interest b) during the last 12 months c) minus indebtedness and without interest d) during the last 6 months - ✔✔c) minus indebtedness and without interest Mortality is calculated by using a large risk pool of a) hobbies and time b) people and time c) family history and geographical area d) insurance companies and agents - ✔✔b) people and time A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? a) Reduction of premium dividend option b) Extended term option c) Paid-up option d) Cash dividend option - ✔✔a) Reduction of premium dividend option Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequence? a) Section 1040 exchange b) Section 1035 exchange c) Nonforfeiture Option d) Spendthrift Opyion - ✔✔a) Section 1035 exchange Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death? a) Active b) Status c) Results d) Leave - ✔✔c) Results What is the primary feature of a viatical settlement? a) No interest on policy loans b) Reduced death benefit prepayment c) Longer contestable period d) Lower premiums - ✔✔b) Reduced death benefit prepayment Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them? a) Life annuity certain b) Secure life annuity c) Irrevocable survivor annuity d) Guaranteed life annuity - ✔✔a) Life annuity certain Which of these factors help determine an insured's life insurance premium? a) insured's salary b) marital status c) place of residence d) avocation (hobby) - ✔✔d) avocation (hobby) When does an immediate annuity begin making payments? a) After multiple premiums have been paid b) After the first premium has been paid c) After policy has been active for one year d) After the incontestable period - ✔✔b) After the first premium Which market index is normally associated with an indexed annuity's rate of return? a) NAIC b) SEC c) S & P 500 d) A & P 300 - ✔✔c) S & P 500 What is the primary purpose of a rating service company such as A.M Best? a) Determine which insurer offers the best rates b) Determine which insurer offers the best policies c) Determine financial strength of an insurance company d) Determine which agent to use locally - ✔✔c) Determine financial strength of an insurance company Which of these is considered a major tax advantage of life insurance? a) Tax credits are available for life insurance premiums paid b) Annual earnings are tax free c) Premiums are tax deductible by an employee if paid for by an employer d) Income tax is typically not owed on proceeds paid directly to a beneficiary - ✔✔d) Income tax is typically not owed on proceeds paid directly to a beneficiary What is considered the primary reason for buying life insurance? a) Provide death benefits b) Provide money for retirement c) Provide living benefits d) Provide money for college - ✔✔a) Provide death benefits What is the nonforfeiture value of an annuity before annuitization? a) All premiums paid b) All premiums paid plus interest c) All premiums paid minus any withdrawals and surrender charges d) All premiums paid, plus interest, minus any withdrawals and surrender charges - ✔✔d) All premiums paid, plus interest, minus any withdrawals and surrender charges If the annuitant dies before the annuity start date, a) the benefits will be given tax-free only to a stated beneficiary b) nothing is given to the beneficiary c) the premiums paid will be given to the beneficiary d) the premiums paid plus interest earned will be given to the beneficiary - ✔✔d) the premiums paid plus interest earned will be given to the beneficiary A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called a) A self-derived plan b) A multiple-employer plan c) A blanket plan d) A self-funded plan - ✔✔d) A self-funded plan The taxable portion of each annuity payment is calculated using which method? a) Exclusion ratio b) Taxable ratio c) Cost Basis d) Tax Basis - ✔✔a) Exclusion ratio A nonparticipating policy will a) provide a return of premium b) provide tax advantages c) not pay dividends d) give policyowners special privileges - ✔✔c) not pay dividends Which of these statements regarding the annuitant is CORRECT? a) The contract can only be assigned by the annuitant b) The annuitant is the only individual who can surrender the contract c) The annuitant must also be the beneficiary d) The annuitant's life expectancy determines the annuity payments - ✔✔d) The annuitant's life expectancy determines the annuity payments During the accumulation period, who can surrender an annuity? a) Payor b) Annuitant c) Beneficiary d) Policyowner - ✔✔d) Policyowner What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? a) nonparticipating life insurance policy b) participating life insurance policy c) divisible surplus life insurance policy d) straight life insurance policy - ✔✔b) participating life insurance policy An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments? a) 1 month b) 6 months c) 12 months d) 24 months - ✔✔a) 1 month Why are dividends from a mutual insurer not subject to taxation? a) Because insurance premiums are tax-deductible b) Because dividends are already subject to capital gains c) Because dividends are payable directly to the policyholder d) Because dividends are considered to be a return of premium - ✔✔d) Because dividends are considered to be a return [Show More]

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