Oklahoma Life, Health, & Accident-Life Practice Exam #1

Which of the following is TRUE regarding dividends paid by a Mutual Insurer?
a. insurance producer select the dividends
b. dividends are guaranteed by the Life & Health Guarantee Association
c. dividends are the same as cash value
d. dividends are a refund of excess premium

Which of the following is correct?
A. applicant's total consideration is premium
B. statements made by the applicant are considered representation not warranties
C. agreement is not one of the elements of a contract
D.  negative information received from a Medical Information Bureau(MIB) by the insurer will be forwarded directly to the applicant upon request

Information that would affect an underwriter's decision to accept the application is called:
a. representation
b. warranty
c. material fact
d. misstatement of age

What life insurance policy has a level premium and a level face amount for the term of the contract?
a. decreasing term
b. ordinary life
c. modified whole life
d. universal life

Which of the following insurance policies could be renewed without the insured proving insurability?
a. decreasing term
b. credit life
c. 5-yr level term
d. credit disability

All of the follwoing are true, EXCEPT?
a. whole leife builds cash value
b. endowments build cash value faster than a whole life policy
c. term does not build cash value
d. insured must wait until the end of the term policy before converting to a permanent policy

Which of the following is TRUE?
a. entire contract clause permits an insurance company to delay an insured's claim based on home-office rules found in the policy contract
b. convertibility provision allows an insured to convert from whole life to term if the premium gets too high
c. decreasing term policy has a decreasing premium and a level death benefit
d. whole life policy is designed to provide a death benefit beyond retirement

All of the following are characteristics of the family policy, EXCEPT?
a. breadwinner is not the only insured
b. children may be added as they are born for additional premium
c. premium is the same regardless of the number of children
d. term coverage on the spouse can be converted to permanent insurance

Which of the following best describes what happens to the monthly amount of payment from an annuity when the life income period certain is selected?
a. monthly payment will be higher than joint and survivor
b. monthly payment will be higher than life income
c. annuitant receives the payments until the period certain is exhausted
d. annuitant receives the payment until exhausted and a refund is made to a contingent payee

Which type of annuity does NOT exist?

Which of the following should receive the highest amount of monthly lifetime income from a $200,000 single premium immediate annuity?
a. 65 year old
b. 55 year old
c. 45 year old
d. 35 year old

All of the following would be advantages for an employee covered by an employer's group insurance policy, EXCEPT?
a. fewer exclusions
b. fewer preexisting conditions
c. higher premiums
d. higher limits

Four years ago, Libby, a school teacher, purchased a 5-year R&C term policy in the amount of $250,000.  She has been selected by NASA to be the first school teacher to fly in space.  What can Libby's life insurance company do?
a. raise the premium
b. cancel the policy immediately
c. non renew her policy on the next anniversary
d. nothing

Which of the following policies would have an increase in premium every year?
a. single pay whole life
b. 5-year R&C
c. annually renewable term
d. endowments

Mabel misstates her age on a life application and dies within 6 months.  Which would describe the insurer's action?
a. deny because of the incontestable clause
b. deny because of the misstatement of age rule
c. pay the death claim in full
d. pay the death claim but adjust the amount of the death benefit

Which of the following is NOT true regarding the taxation of life insurance policies?
a. death benefits paid in a lump sum are subject to income tax
b. loans are income tax free
c. cash surrender amounts are taxable in certain situations
d. growth of cash value is not subject to taxation as long as the policy is in force.

If a policy owner wants to maintain complete control of a policy but name their spouse as the beneficiary, they would use which type of beneficiary designation?
a. irrevocable
b. per capita
c. contingent
d. revocable

All of the follwoing would qualify for special tax treatment using a 1035(a) tax-free exchange, EXCEPT?
a. life policy to annuity
b. life policy to a life policy
c. annuity to a life policy
d. annuity to an annuity

Kelly is applying for a $500,000 term life insurance policy and was given a conditioanl receipt by the producer at the time of application.  She is scheduled to take her physical exam with her doctor in 2 weeks.  Six days after receiving the conditional receipt, she dies.  Which of the following is true?
a. beneficiary will receive nothing
b. beneficiary will receive $500,000
c. beneficiary will receive a refund of premium without interest
d. beneficiary will receive a refund of premium with interest

Which occurrence could create a double payment?
a. guaranteed insurability
b. accidental death
c. premium waiver
d. return of premium

Which of the following is NOT true regarding a Participating Whole Life Policy written by a Mutual Insurance Company?
a. policy owner controls the policy
b. dividends are guaranteed
c. dividend options can be changed by the policy owner
d. dividends are tax free

A participating straight life policy contract written by a mutual insurance company will include all of the following information, EXCEPT?
a. copy of Part I of the application
b. predetermined interest rate
c. guaranteed dividend chart
d. guaranteed non-forfeiture values table

Regarding a Double Indemnity rider which of the following is true?
a. death must occur within 30 days of the accident
b. it pays double the cash value because of accidental death
c. pays double the death benefit resulting from an cause of death
d. pays double the death benefit resulting from an accidental cause of death

Which of the following best describes the Guaranteed Insurability Rider?
a. lump sum payment
b. double death benefit
c. waive the premium if the insured become uninsurable
d. insured may purchase more amounts of insurance without proving insurability

An Accidental Death & Dismemberment (AD&D) rider is:
a. additional benefit provided at no additional premium to the policy owner
b. only available for a limited number of years
c. pays a lump sum benefit for death or dismemberment
d. pays a monthly amount if the insured becomes disabled

Jane is applying for a $50,000 non-medical exam life insurance policy and gives the producer a premium check for which she receives a conditional receipt.  Jane dies three days later.  Which of the following is true?
a. will receive a refund of premium with interest
b. will receive a refund of premium without interest
c. Underwriter will continue to underwrite the case as if Jane were alive and pay the death claim if the policy is approved
d. Underwriter would immediately issue a $50,000 death claim check

An underwriter for life insurance would consider all of the following, EXCEPT?
A. nationality of the proposed insured
B. blood test
C. family history
D. age of the proposed insured

Which of the following events occurring in the tax year would create a taxable income?
a.beneficiary's receipt of the death benefit of a group life policy
b. policy owner's interest earnings credited in a fixed annuity
c. policy owner's receipt of a dividend from a participating life insurance policy
d. policy owner's receipt of the cash surrender value of a non-qualified annuity

After a life insurance policy has been in effect for a specific period of time, what policy provision prevents the insurer from denying coverage based on any error, concealment, or misstatement made by the insured?
a. insuring clause
b. incontestability
c. waiver
d. non-forfeiture

According to the Common Disaster Death Act, who is considered to have died first if the insured and primary beneficiary die simultaneously?
a. beneficiary
b. neither the insured or the beneficiary
c. insured
d. none of the above

The primary beneficiary on a life insurance policy is deceased.  Upon the death of the insured, the death benefit will:
a. paid to the contingent beneficiary
b. denied
c. paid to insured estate
d. primary beneficiary estate

Which of the following would be considered third party ownership?
a. group life policy on employee
b. insured's whole life policy
c. key person life insurance policy
d. insured term life policy

What is a modified endowment contract?
a. ruled illegal by the IRS in 1997
b. endows before age 100 and used for retirement
c. fails the seven-pay test; therefore, losing the tax deferred status of the cash value
d. endowment policy modified with accident death provision

The dividend paid on life insurance policies is:
a. policy owner's share of the insurance company's excess funds
b. insured's share of excess mortality costs
c. stockholder's share of the insurance company's profit
d. interest earned on a participating policy's cash value

When a person receives payment under an accelerate benefit, which of the following is true?
a. amount must be repaid with interest by the beneficiary
b. amount is deducted from the policy's death benefit
c. amount is deducted from the cash value
d. amount can be withdrawn for any reason

The dividend paid under a particiapting life insurance policy is:
a. bonus paid for promotional purpose
b. share of an insurance company's operating profit
c. policy reserve investment return
d. return of excess premium charges

When a straight life insurance policy owner no longer wants to pay the premiums, any cash value accumulations may be used to buy a lesser amount of the same type of insurance.  When this is done, the new policy would be known as:
a. reduced paid up
b. convertible insurance
c. extended insurance
d. additional insurance

William is not in good health and has $100,000 of group life insurance coverage under his employer's group life insurance policy.  Upon William's termination from employment, what law will permit William to continue the life insurance?
a. National Association of Insurance Commissioners (NAIC)
b. Oklahoma Medical Information Confidentiality Act
c. Oklahoma Fair Credit Act
d. Oklahoma Group Life Conversion

Five years ago, Abner purchased a $100,000 whole life policy with a double indemnity rider attached.  Abner commits suicide.  How much, if any, will the policy pay?
a. nothing, both whole life and double indemnity exclude death by suicide
b. whole life will pay $100,000 and the double indemnity will pay zero because suicide is not considered an accident
c. whole life will pay $100,000 and the double indemnity will pay $100,000 for a total of $200,000 because the death was accidental
d. whole life will pay $100,000 and the double indemnity will pay $200,000 for a total of $300,000

Scott is a male age 45 and in good health, he works out at the gym 3 days a week and smokes a cigar twice a week.
a. normal
b. preferred
c. standard
d. substandard

Bill purchased a $750,000 life insurand policy, 28 months ago, when he was employed as a corporate executive.  Bored with corporate life, he started anew career today as a stunt double.  If Bill was killed in an occupational accident, the insurance company would:
a. pay the full death benefit
b. pay a portion of the death benefit based on the "change of occupation" provision
c. contest the pay based on material misrepresentation on the application
d. void the policy and return all premiums plus interest

If life insurance is used to protect against premature death, what policy is used to protect against the risk of outliving your income?
a. endowment
b. annuity
c. premium waiver rider
d. guaranteed insurability rider

A "revocable" life insurance beneficiary is one:
a. can be changed with the knowledge of the beneficiary only
b. can only be changed by the beneficiary
c. cannot be changed
d. can be changed without the knowledge of the beneficiary

An accidental death benefit would pay in which of the following situations?
a. died while robbing a convience store
b. died while riding a go cart in heavy traffic
c. died while undergoing surgery for the removal of a tumor
d. died while on death row.

Regarding the premium payments of a universal life insurance policy, which of the following is NOT true?
a. premiums can be level
b. premiums can be increased
c. premiums skipped must be repaid
d. premiums can be decreased

If the death of the annuitant occurs during the accumulation period:
a. value of the annuity is excluded from the gross estate
b. value of the annuity is paid to the designated beneficiary
c. annuity proceeds remain with the insurer
d. value of the annuity is taxed at capital gains rates

Tanner is a participant under a group life policy, has $50,000 of life insurance coverage.  What is the name of the provision that will allow Tanner to receive an individual life insurance policy without evidence of insurability?
a. guaranteed issue
b. convertibility
c. non cancelable
d. renewable

A life annuity pays an income:
a. during the annuitant's lifetime with no refund upon his/her death
b guaranteed total amount either to the annuitant or the beneficiary
c. guaranteed to be equal to the purchase price of the annuity
d. joint annuitants until one dies, after which all payments stop

Jim Bob, a high school teacher, applied for an individual life insurance policy in the amount of $300,000.  All of the following are sources of underwriting information, EXCEPT?
a. application completed by the producer
b. Medical Information Bureau (MIB)
c. inspection reports completed by a private independent investigating firm
d. applicant's employer

Jane is applying for a $250,000 life insurance policy.  She has completed Part I of the application with the producer, paid the initial premium, and received a conditional receipt.  Part II of the application will be completed during the Paramedic Exam scheduled in 4 days.  Jane dies in an auto accident on the way to the Paramedic exam.  Which of the following is TRUE? 
a. refund of premium without interest
b. refund of premium with interest
c. $25,000 immediately
d. underwriter will continue to underwrite the case as if Jane were alive and pay the death benefit to the beneficiary if policy is approved