Life Insurance Concepts Quiz

Life Insurance & Annuities

• Renewable Term insurance options can include Level Term policies.
• Immediate annuities start benefit payments within one payment period after purchase.
• The Consideration clause involves a completed application and the initial premium.
• Modified Whole Life is not classified as interest-sensitive.
• A contract consists of an offer, acceptance, and consideration.
• A Return of Premium rider pays beneficiaries more than the policy’s face value at the insured's death.
• Renewal of a Renewable Term policy is based on the insured's attained age.
• Whole Life policies can have additional coverage through a Decreasing Term rider.
• Dividends from life insurance policies are issued by the insurer.
• Policy owners need to provide proof of insurability when increasing an Adjustable Life policy's face amount.

Types of Insurance Products

• Credit Life insurance is limited to the amount of the associated loan.
• The free-look provision allows a policy review period that starts upon receipt of the policy.
• Universal Life policies allow visibility of interest earned, expense charges, and cost of insurance, hence termed "unbundled."
• Family Maintenance policies provide a monthly income for 30 years, followed by a lump sum benefit.
• Producers' spouses can be primary beneficiaries if insurable interest exists.
• IRA rollover contributions have no dollar limits.

Taxation & Benefits

• Incorrect assumptions include the taxation of the entire cash surrender value of life insurance.
• A Life Annuity with Period Certain guarantees income for the owner's lifetime and pays remaining amounts to beneficiaries if the owner dies prematurely.
• An informal agreement becomes binding when consideration is exchanged.
• 10 Year Convertible Term policies are the most likely to contain a renewability feature.
• Life insurance contracts become effective when the policy is delivered and the initial premium is collected.

Nonforfeiture Options & Retirement Accounts

• The Extended Term nonforfeiture option typically provides the highest death benefit.
• If the IRA owner dies before distributions are made, the surviving spouse can roll over the account into their own IRA.
• Whole Life insurance pays the face value upon the insured's death or upon reaching age 100.
• Variable Life products necessitate both a Life Insurance license and a Securities license.

Policy Features & Conditions

• The reinstatement of a life policy allows premiums to be calculated based on the insured's younger age.
• A face amount adjustment typically does not occur through policy dividends in Adjustable Life policies.
• Split-dollar plans enable employer contributions for employee life insurance policies with beneficiary selection.
• Variable Life policies allow investments in diverse financial products including equities.
• Social Security is commonly known as Old Age and Survivors Health Insurance (OASDHI).

Miscellaneous Insurance Knowledge

• Coverage depends on the insurer's underwriting policies after the application is complete and the premium is paid.
• Term riders can cover children under a parent's life policy.
• Rear-end loaded life policies deduct surrender charges at discontinuation.
• Reinstatement requires proof of insurability if a policy has lapsed.
• Conditional receipts indicate immediate coverage commencement upon application approval.
• Credit life insurance is generally issued as term policies.
• Life insurance premiums consist of mortality and expense costs, excluding morbidity rates.
• The Primary Insurance Amount (PIA) determines Social Security retirement benefits.
• Straight Life Annuities provide lifelong income that cannot be outlived.

Additional Considerations

• Cost of Living riders increase death benefits overtime.
• Modified Whole Life policies start with fixed premiums for five years before increasing.
• Violations of cease and desist orders can lead to fines up to $500.
• Roth IRA distributions are typically tax-free.
• The Life Income settlement option pays an annuitant a fixed amount with no residual for beneficiaries.
• Decreasing term policies have adjusted death benefits based on specified periods.
• Corporate executives are not eligible for commissions from insurance sales.
• Selling Variable Life requires registration with National Association of Securities Dealers (NASD).
• Wagering contracts in life insurance lack validity without insurable interest.
• Policy dividends are subject to taxation on accumulated interest.
• An insuring agreement promises a specified payment to a beneficiary upon the insured's death.
• Group life insurance policies are mostly structured as annually renewable term policies.
• Representations on applications are deemed true to the applicant's best knowledge.
• Benefits under Social Security exclude unemployment assistance.
• Paying premiums more frequently increases overall costs.

Test your knowledge on key concepts in life insurance. This quiz covers topics like renewable term insurance, immediate annuities, and important clauses in policies. Perfect for those studying for exams in life insurance and financial planning.