EXAMFX LIFE AND HEALTH EXAM NEWEST
ACTUAL EXAM COMPLETE 500 QUESTIONS AND
CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+
1. What is the maximum civil penalty for violating the Superintendent's cease and desist
order?
(Choose from the following options)
1. $1,000
2. $5,000
3. $10,000
4. $15,000 - ANSWER3. $10,000
2. Which option is being utilized when the insurer accumulates dividends at interest and
then uses the accumulated dividends, plus interest, and the policy cash value to pay the
policy up early?
(Choose from the following options)
1. Paid-up additions
2. Dividend Accumulation option
3. Paid-up option
4. Accumulation at Interest - ANSWER1. Paid-up additions
3. An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel
his policy and exercise the extended term option for the policy's cash value, which is
currently $20,000. What would be the face amount of the new term policy?
(Choose from the following options)
1. $20,000
2. $25,000
3. $50,000
4. The face amount will be determined by the insurer. - ANSWER$50,000
The face of the term policy would be the same as the face amount provided under the
whole life policy.
,4. After a back injury, an insured is disabled for a year. His insurance policy carries a
Disability Income Benefit rider. Which of the following benefits will he receive?
(Choose from the following options)
1. Payments for life
2. Yearly premium waiver and income
3. Monthly premium waiver and monthly income
4. Percentage of medical costs paid by the insurer - ANSWERMonthly premium waiver
and monthly income
The Disability Income Benefit rider waives the policy premiums, just like the Waiver of
Premium rider. Unlike the Waiver of Premium rider, it also allows the insured to receive a
weekly or monthly income during the disability period.
5. A father owns a life insurance policy on his 15-year-old daughter. The policy contains
the optional Payor Benefit rider. If the father becomes disabled, what will happen to the
life insurance premiums?
(Choose from the following options)
1. The premiums will become tax deductible until the insured's 18th birthday.
2. Since it is the policyowner, and not the insured, who has become disabled, the life
insurance policy will not be affected.
3. The insured will have to pay premiums for 6 months. If at the end of this period the
father is still disabled, the insured will be refunded the premiums.
4. The insured's premiums will be waived until she is 21. - ANSWERd) The insured's
premiums will be waived until she is 21.
If the payor (usually a parent or guardian) becomes disabled for at least 6 months or
dies, the insurer will waive the premiums until the minor reaches a certain age, such as
21.
6. Are insurance company underwriters allowed to discriminate?
(Choose from the following options)
1. Yes, but not unfairly
2. No, higher risks pay higher premium
3. No, discrimination is an unfair practice
4. Yes, but only for gender - ANSWER1. Yes, but not unfairly
7. Which of the following is an example of a producer's fiduciary duty?
(Choose from the following options)
1. An obligation to state every known fact about the policy the producer is selling.
2. A duty to base all transactions upon the principle of Utmost Good Faith.
3. The obligation to tell the truth to the best of one's knowledge
4. The trust that a client places in the producer in regard to handling premiums. -
ANSWERd) The trust that a client places in the producer in regard to handling premiums.
An agent acts in a fiduciary capacity, based upon trust and confidence, when handling
the financial affairs of their customers, including the handling of premiums.
,8. Which of the following provisions in annuity contracts allow the owner to surrender
the annuity if interest rates drop to a specified level?
(Choose from the following options)
1. Annuitization
2. Bail-out
3. Surrender
4. Nonforfeiture - ANSWERb) Bail-out
Some annuity contracts contain a bail-out provision. This provision allows the owner to
surrender the annuity without charge if interest rates drop a specified amount within a
certain timeframe.
9. An insurance policy that only requires a payment of premium at its inception, provides
insurance protection for the life of the insured, and matures at the insured's age 100 is
called
(Choose from the following options)
1. Modified Endowment Contract (MEC).
2. Level term life.
3. Graded premium whole life.
4. Single premium whole life. - ANSWERd) Single premium whole life.
Single premium whole life requires the entire premium to be paid in one lump sum at the
policy's inception.
10. All of the following are true regarding a decreasing term policy EXCEPT
(Choose from the following options)
1. The death benefit is $0 at the end of the policy term.
2. The contract pays only in the event of death during the term and there is no cash
value.
3. The face amount steadily declines throughout the duration of the contract.
4. The payable premium amount steadily declines throughout the duration of the
contract. - ANSWERd) The payable premium amount steadily declines throughout the
duration of the contract.
Premiums remain level with a decreasing term policy; only the face amount decreases.
11. An insured purchased a 10-year level term life policy that is guaranteed renewable
and convertible. What happens at the end of the 10-year term?
(Choose from the following options)
1. The insured must provide evidence of insurability to renew the policy.
2. The insured may only convert the policy to another term policy.
3. The insured may renew the policy for another 10 years at the same premium rate.
4. The insured may renew the policy for another 10 years, but at a higher premium rate. -
ANSWERd) The insured may renew the policy for another 10 years, but at a higher
premium rate.
Policies that are guaranteed renewable and convertible may be renewed, without
evidence of insurability, for another like term, or may be converted to permanent
insurance, without evidence of insurability.
, 12. Your client wants both protection and savings from the insurance, and is willing to
pay premiums until retirement at age 65. What would be the right policy for this client?
(Choose from the following options)
1. Interest-sensitive whole life
2. Life annuity with period certain
3. Increasing term
4. Limited pay whole life - ANSWERd) Limited pay whole life
Premium payments will cease at her age 65, but coverage will continue to her death or
age 100.
13. An insurance producer who by contract is bound to write insurance for only one
company is classified as a/an
(Choose from the following options)
1. Solicitor.
2. Broker.
3. Independent producer.
4. Captive agent. - ANSWERd) Captive agent.
A captive/exclusive agent has agreed, by contract, to produce insurance business only
for the insurer they are contracted with.
14. Concerning Juvenile Life insurance, which of the following statements is
INCORRECT?
(Choose from the following options)
1. It can be a limited premium payment policy.
2. Juvenile Life is classified as any life insurance written on the life of a minor.
3. Juvenile Life is classified as any life insurance purchased by a minor.
4. Usually a parent or guardian is the applicant for insurance on the life of a minor. -
ANSWERc) Juvenile Life is classified as any life insurance purchased by a minor.
Juvenile Life insures the life of a minor. It does not need to be purchased by a minor.
15. An annuitant dies before the effective date of a purchased annuity. Assuming that the
annuitant's wife is the beneficiary, what will occur?
(Choose from the following options)
1. The interest will continue to accumulate tax deferred.
2. The interest will become immediately taxable.
3. The premiums will increase.
4. The premiums will decrease. - ANSWER1. The interest will continue to accumulate tax
deferred.
16. An individual is purchasing a permanent life insurance policy with a face value of
$25,000. While this is all the insurance that he can afford at this time, he wants to be sure
that additional coverage will be available in the future. Which of the following options
should be included in the policy?
(Choose from the following options)
1. Guaranteed insurability option
