ILLINOIS LIFE INSURANCE EXAM

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ILLINOIS LIFE INSURANCE EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: What are the death benefit options in universal life policies?

Answer:

Option A is the level death benefit option and Option B is the increasing death benefit option

Question 2: What happens to an unpaid policy loan at insured's death?

Answer:

If there are outstanding loans at the time of the insured's death, the amount will be considered a debt to the policy and the death benefit will be reduced by the amount of indebtness

Question 3: Which type of life insurance is most commonly used for group plans?

Answer:

Annually renewable term- Group insurance is usually written for employee-employer groups

Question 4: In a life insurance policy, when must insurable interest exist?

Answer:

Insurable interest must exist between the policyowner and the insured at the time of application (or time of policy issue), but NOT at the time of loss

Question 5: Which riders increase the amount of the death benefit?

Answer:

Accident Death Rider - pays double or triple the amount of face value, Cost of Living Rider - automatically increases the amount of insurance based on an inflation index. Return of Premium - pays back all the premiums in addition to the death benefit

Question 6: What is the purpose of key person insurance?

Answer:

To minimize the risk of a financial loss because of the premature death of a key employee that has specialized knowledge, skills or business contacts Question 7: Name and describe at least 3 mandatory provisions in life policies issued in this state

Answer:

Entire contract, grace period, incontestability, misstatement of age, payment of benefits, policy loan, reinstatement, settlement of proceeds

Question 8: Annuities Certain

Answer:

short term annuities that limit the amounts paid to a certain fixed period or until a certain fixed amount is liquidated

Question 9: Field Underwriter

Answer:

Proper solicitation of applicants Helping prevent adverse selection Completing the application Obtaining the required signatures Collecting the initial premium and issuing the receipt if applicable Delivering the Policy Question 10: Under what conditions would it be illegal to receive compensation for an insurance transaction?

Answer:

If that person is required to be licensed but does not have a license Question 11: What are the main differences between a traditional IRA and a Roth IRA?

Answer:

Contributions to a traditional IRA are mad with pre-tax dollars, while contributions to a Roth IRA are made with after-tax dollars. Required minimum distributions (RMD) from a traditional IRA must begin at the age of 72. Both IRAs do not have RMD requirements

Question 12: What is a life settlement?

Answer:

A transaction in which the owner of a life insurance policy sells a life life insurance policy to a third party for some form of compensation, usually cash

Question 13: What is an accelerated benefit?

Answer:

A provision or rider allowing for the early payment of some portion of the policy's face amount if the insured suffers from a terminal illness or injury

Question 14: Substandard Risk

Answer:

An applicant or insured who has a higher than normal probability of loss, and who may be subject to an increased premium. Due to physical condition, personal or family history of disease, occupation, dangerous habits

Question 15: What are the 2 premium payment options in anuities?

Answer:

Single premium and periodic premiums Question 16: An annuity has 2 distinct periods. What are they called, and what happens during each?

Answer:

The accumulation period, also known as the pay-in period, is the period of time over which the annuitant makes payments (premiums) into an annuity. The annuity period, also referred to as the annuitization period, liquidation period, or payout period, is the time when money is distributed to the annuitant

Question 17: What is insurance?

Answer:

The transfer of the risk of loss from the individual or business entity to an insurance company Question 18: What is the difference between a revocable and irrevocable beneficiary?

Answer:

The policy owner may change a revocable beneficiary at any time. An irrevocable designation, however, may not be changed without written consent of the beneficiary

Question 19: How are dividends taxed in participating policies?

Answer:

Dividends are the return of unused premiums, so they are not considered income for tax purposes.However, if dividends are left with the insurer to accumulate interest, the interest earned on the dividend account is subject to taxation as ordinary income each year interest is earned

Question 20: Rebating

Answer:

Any inducement offered to the insured in the sale of insurance products that is not specified in the policy Question 21: If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

Answer:

A modified endowment contract It loses the benefits of a standard life contract

Question 22: Preferred Risks

Answer:

Individuals who meet certain requirements and qualify for lower premiums than the standard risk these applicants have a superior physical condition, lifestyle and habits

Question 23: The agent does NOT need to confirm this upon policy delivery

Answer:

Signed waiver of premium

Question 24: To whom may a temporary license be issued?

Answer:

To an applicant in the process of obtaining a producer license for 90 days or to the surviving spouse or court-appointed representative of a licensee who dies or becomes disabled; a member or employee of a business entity licensed as an insurance producer; or the designee of a licensee who enters into active military service for 180 days

Question 25: Which dividend option increases the death benefit?

Answer:

Paid-up additions increase the death benefit of the original policy by whatever amount the dividend will buy