UTAH LIFE INSURANCE TEST

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UTAH LIFE INSURANCE TEST

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

-Format: Multiple-choice / Flashcard

Question 1: Annuities

Answer:

10% tax penalty on deferred annuities when withdrawal before age 59 1/2

Question 2: Policy Loan

Answer:

An insured may also borrow a portion of the cash value in this form. But it must be paid back (with interest) in order to restore policy values.

Question 3: Guaranteed Insurability option

Answer:

Every 3 years or so, you can add more insurance to your policy without having to go through the health process. Some let you do it on special dates like birth of child or marriage.

Question 4: Whole Life Insurance

Answer:

Gets its name from the fact that the policy is designed to provide coverage for the whole of life (usually up to age 100, although some mortality tables have been adjusted to age 120).

Question 5: Notice to Applicant

Answer:

Notifies the applicant that a report will be ordered concerning their past credit history and any other life or health insurance for which they have previously applied.

Question 6: Consumer Reports

Answer:

Information on a person's credit, character, reputation, or habits.

Question 7: Reduced pain up insurance option

Answer:

Allows the insured to use his cash value to pay one big premium for the entire life policy so he doesn't have to pay anymore. It usually drops the face amount of the policy.

Question 8: Fixed Amount option

Answer:

This allows the Beneficiary to receive a fixed amount until the face amount and interest runs out. So instead of a period of years, like 10 per say, they just decide how much they want each month.

Question 9: Unfair Discrimination

Answer:

It is illegal to unfairly discriminate between individuals of the same class and equal life expectancy in the rates, dividends, benefits, or terms of any life or life annuity contract. Unfairly discriminate between neighborhoods within a municipality and of essentially the same hazard. Use sexual orientation in the underwriting process or in the determination of insurability.

Question 10: Variable Universal Life

Answer:

This product blends a combination of the variable and universal life insurance concepts. The policy has elements of variable life insurance because it is backed by equity investments.

Question 11: Incontestability Clause

Answer:

States that after a specified period of time, (two years), the insurer may not dispute or contest the validity of the contract or the statements. After the contract has been in effect for a specific length of time, the insurance company agrees not to challenge any statements made by the applicant on the application.

Question 12: Insurer must respond to claimant communications within how many days?

Answer:

15 days

Question 13: Per Capita

Answer:

Means per person, or by the head. Policy proceeds are paid only to the named beneficiaries who are living.

Question 14: McCarran Ferguson Act

Answer:

The fed govt had the right to regulate the business of insurance but only to the extent that such business is not regulated by state law (which most are) They did this with the intent of not having to regulate them against the provisions of the fed antitrust laws.

Question 15: Advantages and Uses of Term Insurance

Answer:

One of the most common uses is to provide a substantial amount of coverage at a minimum cost.

Question 16: Dividends

Answer:

Participating policies - Policy that pay dividends Nonparticipating policies - policies that do not pay dividends.

Question 17: Tax considerations (cash surrender value)

Answer:

If you surrender a policy for its cash value, the amount that exceeds what you paid in premiums is taxed. If you surrender an amount from your cash value that does not exceed what you have already paid in premiums then that money is NOT taxable.

Question 18: Family income policies

Answer:

Not commonly sold, but sometimes appear on state license exams. combines whole life insurance with decreasing term coverage. Provides an income to be paid upon the death of the bread winner.

Question 19: Premium collection

Answer:

Producer is encouraged to collect the insitial premium with the application. The coverage is not effective until the policy is delivered and the initial premium has been paid.

Question 20: Fixed Period Option

Answer:

Allows the policy to be paid over a certain amount of years for a fixed period of time and interest rate.longer period of payout, the higher return on interest.

Question 21: Per Stirpes

Answer:

Means by the root or by the way of branches. A per stirpes distribution means that a beneficiary's share of a policy's proceeds will be passed down in equal shares should they predecease the insured.

Question 22: Medical Information Bureau

Answer:

Reports issued by the MIB are another source of information which may aid the underwriter in determining whether or not to accept a risk. This is a non-profit trade association that maintains medical information on applicants for life or health insurance. Applicants or are denied coverage due to information in an MIB report must be given explanations and an opportunity to challenge information about their medical history that may be inaccurate.

Question 23: Non forfeiture Value

Answer:

The cash value in the policy belongs to the policyowner. If the PO wishes, some or all of the cash value may be withdrawn from the policy. Any withdrawal of cash value will reduce both the Face Value of the policy and the amount of cash value available.

Question 24: Mortgage Redemption policy or rider

Answer:

decreasing term insurance. Benefit amount of the term element is intended to be sufficient to pay off the unpaid remainder of the mortgage loan if the insured dies before paying it off.