Primerica Life Insurance Exam: Questions &
Answers
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, 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
(Ans- 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
(Ans- B. reduction
the insured’s change in lifestyle and habits would likely reduce the chances
of health problems<\/p>\n\n\n\n
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
(Ans- 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
(Ans- 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
(Ans- A. agents contract with the principal
the principal grants authority to an agent through the agent’s contract<\/p>\n\n\n\n
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
(Ans- 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
(Ans- 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
(Ans- A. handling insurer funds in a trust capacity<\/p>\n\n\n\n
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
(Ans- 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
(Ans- 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 (Ans- C. stock<\/p>\n\n\n\n
Life Insurance Exam: Questions &
Answers
The Commissioner conducts an examination of a domestic insurer and
believes that the costs of examination places an unreasonable financial
burden on the insurer. Which of the following will happen?
a. The federal government will absorb the full cost
b. The federal government will absorb part of the cost, and the state
government will absorb the rest of the cost
c. The costs will be reduced to the amount that the examinee can
reasonable pat; the rest will be paid by the federal government
d. The Commissioner’s office may pay all or part of the costs
(Ans- d. The Commissioner’s office may pay all or part of the costs
Forcing a client to buy insurance from a particular lender as a condition of
granting a loan is defined as
a. Defamation
b. Coercion
c. Rebating
D. Misleading advertising
(Ans- b. Coercion
An agent who includes a statement or omits a statement which, when taken
in context of the whole presentation, may tend to mislead or deceive the
persons addressed has committed
a. Twisting
b. Coercion
c. Misrepresentation
d. Defamation
(Ans- c. Misrepresentation<\/p>\n\n\n\n
If a consumer requests additional information concerning an investigative
consumer report, how long does the insurer or reporting agency have to
comply?
a. 7 days
b. 10 days
c. 3 days
d. 5 days
(Ans- d. 5 days
After the original hearing and a final order is issued, an aggrieved person
may request a re-hearing within
a. 30 days
b. 40 days
c. 15 days
d. 20 days
(Ans- 20 days
Which of the following is an example of a producer being involved in an
unfair trade practice of rebating?
a. Telling a client that his first premium will be waived if he purchases the
insurance policy today
b. Inducing the insured to drop a policy in favor of another one when it is
not the insured’s best interest
c. Charging a client a higher premium for the same policy as another client
in the same insuring class
d. Making deceptive statements about a competitor
(Ans- a. Telling a client that his first premium will be waived if he purchases
the insurance policy today
Which type of misrepresentation persuades an insured, to his or her
detriment, to cancel, lapse, or switch policies from one to another?
a. False advertising
b. Rebating
c. Twisting
d. Switching (Ans- c. Twisting<\/p>\n\n\n\n
An insurer can refuse, cancel or deny insurance coverage to a class of
risks based on which of the following?
a. Moral character
b. Physical condition or developmental disability
c. Sexual preference
d. None of the above
(Ans- d. None of the above
If a person does not comply with an order issued within 2 weeks after the
Commissioner has given notice, for each day that the violation continues,
the Commissioner may issue a fine of up to
a. $3,000
b. $5,000
c. $1,500
d. $2,000
(Ans- b. $5,000
Which of the following persons is NOT required to complete CE?
a. A property insurance intermediary with 40 years of continuous licensure
b. Any licensee over 65 with more than 25 years of continuous licensure
c. A limited lines intermediary with 40 years of continuous licensure
d. A life insurance intermediary with 18 years of continuous licensure
(Ans- c. A limited lines intermediary with 40 years of continuous licensure
An intermediary must notify the Commissioner of a change of residence
address within how many days of the change?
a. 20
b. 30
c. 5
d. 10
(Ans- b. 30<\/p>\n\n\n\n
A claim is not considered overdue if NOT paid within how many days after
the insurer receives written notice?
a. 30 days
b. 60 days
c. 90 days
d. 180 days
(Ans- a. 30 days
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
(Ans- b. The customer’s associates, friends, and neighbors provide the
report’s data
When the appointment of an individual agent is terminated, the insurer
must notify the Office of the Commissioner with appropriate forms within
how many days after the termination date?
a. 20
b. 30
c. 10
d. 15
(Ans- b. 30
All of the following are considered unfair trade practices in the business of
insurance EXCEPT
a. Rebating
b. Defamation
c. Sharing commissions
d. Boycott
(Ans- c. Sharing commissions<\/p>\n\n\n\n
Primerica Practice Test: Questions &
Answers
The receipt given to a life insurance applicant when the application is
completed and the initial premium is received is called a(n)
(Ans- conditional receipt
Statements in the application for insurance that are believed to be true to
the best of the applicant’s knowledge are called
(Ans- representations
An annuity is considered fixed when it does all of the following EXCEPT
(Ans- 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
(Ans- continuous premium (straight) life
The policy and a copy of the application, along with any riders and
amendments, is called the
(Ans- entire contract
Money borrowed from the policy’s cash value is
(Ans- not taxable<\/p>\n\n\n\n
Which of the following annuity products requires an agent to hold a
securities license?
(Ans- variable annuities
Which type of annuity settlement stops when the annuitant dies?
(Ans- life income annuity
At what age can a participant receive distributions from a qualified plan
without incurring a 10% penalty?
(Ans- 59.5
Which settlement option guarantees an income for 2 or more recipients for
as long as they live
(Ans- 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?
(Ans- buy-sell agreement
Which of the following would be considered a flexible premium policy?
(Ans- universal life
If an annuitant dies during the accumulation period, what will the
beneficiary receive?
(Ans- either the cash value or the premiums paid, whichever is greater<\/p>\n\n\n\n
Primerica Life Insurance License
Questions & Answers
Which law is the foundation of statistical prediction of loss upon which rates
for insurance are calculated?
A) Law of Group Evaluation
B) Law of Large Numbers
C) Law of Masses
D) Law of Averages
(Ans- B) Law of Large Numbers
A producer who fails to segregate premium monies from his own personal
funds is guilty of:
A) Theft
B) Commingling
C) Larceny
D) Embezzlement
(Ans- B) Commingling
In insurance, an offer is usually made when:
A) The completed application is submitted.
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.
(Ans- A) The completed application is submitted.
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, 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<\/p>\n\n\n\n
D) Stock
(Ans- A) Mutual
Which of the following insurance options would be considered a risksharing arrangement?
A) Stock
B) Mutual
C) Surplus Lines
D) Reciprocal
(Ans- D) Reciprocal
On a participating insurance policy issued by a mutual insurance company,
dividends paid to policy holders are:
A) Guaranteed
B) Not taxable since the IRS treats them as a return of a portion of the
premium paid.
C) Paid at a fixed rate every year.
D) Taxable as ordinary income.
(Ans- B) Not taxable since the IRS treats them as a return of a portion of
the premium paid.
If a court ordered payment for a loss that was not covered in the policy
even if it was clearly worded, it would be an example of which legal
concept?
A) Nonforfeiture
B) Indemnity
C) Reasonable expectations
D) Cease and desist
(Ans- C) Reasonable expectations<\/p>\n\n\n\n
Primerica life insurance state exam:
Questions & Answers
Deferred Annuity
(AnsAn annuity in which the income payments begin sometime after one year
from the date of purchase.deferred annuities can be funded with a single
lump sum payment so it is referred to as a single premium differed
annuities.
Human life values approach
(AnsCalculates 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
(Ans- 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
(Ans- Is the uncertainty or chance of a loss occurring.<\/p>\n\n\n\n
Primerica Life Insurance Questions &
Answers
Which will be included in a policy summary?
(Ans- Premium amounts and surrender values
Why should the producer personally deliver the policy when the first
premium has already been paid?
(Ans- To help the insured understand all aspects of the contract
An insurance contract requires that both the insured and the insurer meet
certain conditions in order for the contract to be enforceable. What contract
characteristic does this describe?
(Ans- Conditional
If a policy includes a free-look period of at least 10 days, the Buyer’s Guide
may be delivered to the applicant
(Ans- With the policy
If an applicant for a life insurance policy is found to be a substandard risk,
the insurance company is most likely to
(Ans- Charge a higher premium
Which of the following best details the underwriting process for life
insurance?
(Ans- Selection, classification, and rating of risks
Upon policy delivery, the producer may be required to obtain any of the
following EXCEPT
(Ans- Signed waiver of premium<\/p>\n\n\n\n
Which of the following is a risk classification used by underwriters for
insurance?
(Ans- Standard
Which of the following documents delivered to the policy owner includes
information about premium amounts, cash values, surrender values, and
death benefits for specific policy years?
(Ans- A policy summary
When both parties to a contract must perform certain duties and follow
rules of conduct to make the contract enforceable, the contract is
(Ans- Conditional
Representations are written or oral statements made by the applicant that
are
(Ans- Considered true to the best of the applicant’s knowledge
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
(Ans- Premium receipt
All of the following are duties and responsibilities of producers at the time of
application EXCEPT
(Ans- Change any incorrect statement on the application by personally
initialing next to the corrected statement (must be initialed by the applicant)
In insurance policies, the insured is not legally bound to any particular
action in the insurance contract, but the insurer is legally obligated to pay
losses covered by the policy. What contract element does this describe?
(Ans- Unilateral<\/p>\n\n\n\n
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?
(Ans- Consideration
Which of the following is TRUE regarding the premium in term policies?
(Ans- The premium is level
Which of the following terms best describe the coverage provided by term
policies, as compared to any other form of protection?
(Ans- Greatest
Which of the following types of insurance policies would provide the
greatest amount of protection for a temporary period during which an
insured will have limited financial resources?
(Ans- Term
A Return of Premium term life policy is written as what type of term
coverage?
(Ans- Increasing
All of the following are true regarding a decreasing term policy EXCEPT
(Ans- The payable premium amount steadily declines throughout the
duration of the contract
What does “level” refer to in level term insurance?
(Ans- Face amount
Which best describes annually renewable term insurance?
(Ans- It is level term insurance
What characteristic makes whole life permanent protection?
(Ans- Coverage until death or age 100<\/p>\n\n\n\n
Primerica Life Insurance Exam Question
401 k plan
(Ans- A qualified retirement plan in which the
employee can set aside a portion of their income
with pre-tax dollars.
Absolute Assignment v. Collateral
Assignment
(Ans- Absolute: A permanent and irrevocable transfer
of rights and\/or benefits by the policyowner.
Collateral: A temporary and\/or revocable transfer
of benefits by the policyowner.
Accelerated Death Benefit
(Ans- Policy provision that allows full or partial
payment of the policy’s death benefit before the
insured’s death if he\/she is terminally ill.
Accidental Death Benefit
(AnsAn extra cost rider that requires the insurance
company to pay an additional benefit in the event
that the insured dies within 90 days of an
accident as a direct result of the accident.
Accumulate at Interest
(AnsThe Dividend Option where the policyowner
leaves the dividends with the insurer to invest
and earn interest.<\/p>\n\n\n\n
Adhesion
(Ans- Since the insurer created all the documents of
the contract, any ambiguities in the contract will
be settled in favor of the insured. Since the
insurer wrote the contract they are stuck with it.
Adverse Selection
(Ans- The tendency for less favorable risks to seek or
continue insurance to a greater extent than more
favorable risks.
Agency Agreement or Agency Contract
(AnsA legal document containing the terms of the
agreement between the agent and the insurance
company. It clearly defines what an agent can
and cannot do, and how he\/she will be
compensated.
Agent Authorities
(AnsExpressed: Power or authority specifically
granted in writing to an agent by the insurance
company in their Agency Agreement. Apparent:
Power or authority that the public reasonably
assumes an agent has based upon his\/her
actions. Implied: Power or authority that is not
expressly granted by the company but that an
agent can assume or that are implied he\/she has
in order to transact insurance business.
Agent\/Producer
(Ans- Anyone who sells or aids in the selling of
insurance. Legally represents the company.<\/p>\n\n\n\n
Cash Settlement Option
(Ans- Upon maturity of an insurance policy the
beneficiary receives a lump-sum payment of the
entire policy proceeds due.
Agent’s Report
(Ans- A written report from the agent submitted to the
insurer along with the application disclosing what
the agent knows, observed, or learned about the
proposed insured’s risks.
Aleatory
(Ans- Unequal exchange of value. One party may
obtain a far greater value than the other under
the contract.
Annual Renewable Term
(AnsA Term Life Insurance contract which gives the
policyowner the option to renew the policy each
year without showing proof of insurability.
Premiums increase at each renewal.
Annuitant
(Ans- The person that buys an annuity; may or may not
be an annuity’s policyowner.
Annuity
(Ans- A contract\/policy that guarantees to pay income
for a specified period of time or for the life of the
annuitant. Designed to prevent people from
outliving their savings.<\/p>\n\n\n\n
Life Insurance Practice Exam: Questions
& Answers
jason is the insured in a 100,000 10 year long renewable term policy. Soon
after taking out the policy, he develops a serious heart condition. will he be
able to renew his policy?
(Ans- yes
which policy has the lowest annual premium?
(Ans- whole life
the primary purpose of an annuity is to
(Ans- provide income for an individuals retirement
under what circumstance would an insurance applicant be asked to submit
a signed statement of continued good health?
(Ans- when the initial premium is not submitted with the application
when a firm establishes a contributory group term life insurance contract,
what percentage test must be met for the participation?
(Ans- 75%
a lapsed policy may usually be reinstated\u2026
(Ans- within 3 years after the policy lapses
all of the following statements are true to the 10 day free look provision in a
life insurance policy
(AnsA. the 10 day free look period begins when the insured receives the
contract
B. an insured who returns the policy within the 10-day free look period will
receive a full refund of premiums paid
C. to get a refund, the policyholder must notify the insurer in writing<\/p>\n\n\n\n
amanda’s life insurance policy names her sister Joyce as irrevocable
beneficiary of the policy proceeds. this means that
(Ans- amanda can borrow against the policy’s cash value but only with
joyce permission.
The following statement concerning the Fair Credit Reporting Act is correct
(Ans- it requires the that the applicant for insurance coverage will be
informed if a consumer report is requested
The underwriting department of life insurance company acquires
information on an applicant for life insurance coverage from all of the
following sources\u2026
(AnsA. an agents report
B. the life insurance application
C. the medical information bureau
to cover the contingency of a family breadwinner’s death, all of the
following would be appropriate applications for a decreasing term insurance
policy..
(AnsA. to cover the families coverage
B. to cover families car insurance
C. to ensure the family’s home improvement loan is covered
Pearl takes out a 100,000 permanent insurance policy on her life, naming
her daughter, jaunita, as the beneficiary. Five years after the policy was
issued, pearl dies an juanita submits a claim to the insurer for the death
benefit. upon reviewing the claim, the insurer discovers the Pearl Had
understated her age by 15 years on the original application. the insurer
will..
(Ans- calculate the face amount that the premiums paid would have been
purchased at the correct age, and pay that (reduced amount)<\/p>\n","protected":false},"excerpt":{"rendered":"
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