PEARSON VUE COMPREHENSIVE EXAM Questions
and Answers.
What are the personal uses of life insurance?
A. Insured protection, estate creation and cash accumulation
B. Survivor protection, estate creation and conservation, cash accumulation and liquidity
C. Cash accumulation, estate depletion and liquidity
D. Beneficiary protection, liquidity, estate creation, and cash accumulation - Correct
Answer B. Survivor protection, estate creation and conservation, cash accumulation and
liquidity
Upon the submission of a death claim under a life insurance policy, when should the
insurer pay the policy benefit?
A. Within 2 years pf the date of loss
B. On the next anniversary of the policy
C. After the estate of the insured has been settled
D. Immediately after receiving written proof of loss - Correct Answer D. Immediately
after receiving written proof of loss
Which of the following is the closet term to an "authorized" insurer?
A. Admitted
B. Certified
C. Legal
D. Licensed - Correct Answer A. Admitted
The policyowner wants to make sure that upon his death, the life policy will pay a
portion of the proceeds annually to his spouse, but their children when they reach a
certain age. Which settlement option should the policyowner choose?
A. Life income with period certain
B. Interest only option
C. Joint and survivor
D. Fixed amount option - Correct Answer B. Interest only option
When contributions to an immediate annuity are made with before-tax dollars, which of
the following is true of the distributions?
A. There are no distributions
B. Distributions are nontaxable
C. Distributions are taxable
D. Distributions can't begin prior to age 70 1/2 - Correct Answer C. Distributions are
taxable
Insurance is the transfer of
A. Risk
B. Peril
C. Hazard
,D. Loss - Correct Answer D.Loss
An insured purchases a policy in 2008 and died in 2013. The insurance company
discovers at that time that the insured concealed information during the application
process. What can they do?
A. Pay the death benefit
B. Pay a decreased death benefit
C. Refuse to pay the death benefit because of the fraud
D. Sue for the right to not pay the death benefit - Correct Answer A.Pay the death
benefit
Under the incontestability clause, once the policy has been in place for at least 2 years
then you can not deny any claims
An agent accepts the premium payment 35 days after it is due, telling the insured that
there will not be a problem keeping the policy in force. This is an example of what type
of agent authority?
A. Express
B. Assumed
C. Implied
D. Apparent - Correct Answer D.Apparent
Agent who accepts a premium after the due date appears to the client to have authority
to prevent the lapse but in fact he does not
An annuitant dies before the effective date of a purchased annuity. Assuming that the
annuitant's wife is the beneficiary , what will occur?
A. The interest will continue to accumulate tax deferred
B. Interest will become immediately taxable
C. Premiums will increase
D. Premiums will decrease - Correct Answer A.The interest will continue to accumulate
tax deferred
If contract holder dies before annuity date contracts interest is taxable. If the beneficiary
is a spouse then the interest is tax deferred
In a fixed annuity, which of the following is true regarding the guaranteed interest rate
on the investment?
A. The annuitant will only receive the guaranteed minimum specified in the contract
B. The annuitant will receive the lower of either the guaranteed minimum rate or current
rate
C. The annuitant will receive the higher of either the guaranteed minimum rate or
current rate
D. The annuitant will always receive the current interest rate - Correct Answer C. The
annuitant will receive the higher of either the guaranteed minimum rate or current rate
, An insured receives a monthly summary for his life insurance policy. He notices that the
cash value of his policy is significantly lower this month then it was last month. What
type of policy does the insured have?
A. Variable
B. Term
C. Securities
D. Stock - Correct Answer A.Variable
Which of the following riders would not cause the Death benefit to increase?
A. Guaranteed Insurability Rider
B. Payor Benefit Rider
C. Cost of Living Rider
D. Accidental Death Rider - Correct Answer B. Payor Benefit Rider
Which of the following is true for both equity indexed annuities and fixed annuities?
A. They invest on a conservative basis
B. Both tied to a equity index
C. Both are considered to be more risky than variable annuities
D. They have a guaranteed minimum interest rate - Correct Answer D.They have a
guaranteed minimum interest rate
Who can make a fully deductible contribution to a traditional IRA?
A. A person who contributions are funded by a return on investment
B. An individual not covered by an employer-sponsored plan who has earned income
C. Anybody: all IRA contributions are fully deductible regardless of income level
D. Someone making contributions to an educational IRA - Correct Answer B.An
individual not covered by an employer-sponsored plan who has earned income
Under which nonforfeiture option does the company pay the surrender value and have
no further obligations to the policyowner?
A. Reduced paid-up
B. Cash surrender
C. Paid-up options
D. Extended term - Correct Answer B.Cash surrender
Once the cash surrender value is paid the contract is over
Which of the following are generally not considered when underwriting group
insurance?
A. Nature of Group
B. Groups medical history
C. Groups past claim experience
D. Size of group - Correct Answer B.Groups medical history
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