Legal Aspect of Life Insurance Practice Test

These questions are part of the practice quiz. Start practicing

• The types of limitations on protected amounts of life insurance in state exemption statutes include which of the following?
• All the following must be met for ratification of unauthorized actions to be effective EXCEPT:
• Suppose Sam Greene named two sons as primary beneficiaries and no contingent beneficiaries, and Ira died leaving Ralph and Marie. If Ronald survived his father, in which case would Marie receive 25% of the proceeds when Sam's father died?
• In a policy with a collateral assignment, which statement is true?
• All the following statements concerning the incontestable clause are correct EXCEPT:
• Regarding death claims, insurance companies are more likely to scrutinize death claims that occur during the contestable period.
• Which statement about the incontestable clause is correct?
• Which statement about standard policy provisions is correct?
• Under the English rule, which statement describes the superior claim among multiple policy assignees?
• Which statement concerning a power of attorney is correct?
• All of the following can limit the ability to change a beneficiary EXCEPT
• Acceptance of a life insurance contract is manifested by delivery of the policy. Which option represents the moment of acceptance?
• If an insurer issues a contract in a state where it is not licensed to do business, which statement is correct?
• Who controls the payable proceeds of a life insurance policy when no designated beneficiary exists?
• The purpose of the delayed payment clause in a life insurance policy is to
• An insurance policy is classified as which type of property?
• Which statement best describes the role of medical personnel in underwriting decisions?
• Which has the highest political authoritativeness?
• Exoneration statutes in community property states primarily do which of the following?
• All of the following are aspects of a life insurance policy loan EXCEPT
• To collect policy proceeds as the owner-applicant, what must be true at the inception of the contract?
• Exoneration statutes: which statement is true?
• Under securities regulations, the prospectus for variable life products must be delivered at what time?
• Which of the following legal concepts is most similar to the doctrine of waiver?
• Which of the following constitutes the consideration for a life insurance policy?
• Which of the following is NOT a duty owed by an agent to a principal?
• Which statement defines a court of original jurisdiction?
• Which statement concerning contracts of adhesion and life insurance contracts is correct?
• When there is dissociation from ownership rights in a life insurance policy, the insured always has the right to do which of the following?
• Apparent authority in agency is primarily determined by what?
• All the following factors could increase the death benefit EXCEPT
• Under which of the following conditions is a life insurance policy in force beyond the contestable period valid?
• Which statement about ratification is the exception to the typical requirement that third-party consent is needed?
• Which of the following groups is not involved in determining underwriting decisions for life insurance applicants?
• Minors have all the following contracting capacities regarding life insurance EXCEPT
• In an irrevocable beneficiary designation, whose consent is required for policy loans?
• Which of the following statements concerning concealment is correct?
• All the following statements concerning the American Bankers Association (ABA) assignment form are correct EXCEPT:
• People coping with death often experience certain identifiable stages of emotions. In which of the following orders do these emotional stages generally occur?
• Which of the following statements concerning beneficiary designations in a life insurance policy is correct?
• What duty does a principal owe to agents?
• The test of materiality for a representation can be based on which of the following?
• What does the Latin term caveat emptor mean in the context of insurance and remedies?
• Under the community property system, a policy that started out as solely the separate property of one spouse may over time acquire the characteristics of community property.
• Insurers settling a death claim with a class beneficiary designation must do all of the following EXCEPT:
• Which of the following statements concerning property law is correct?
• In many jurisdictions, the presumption of death after disappearance requires how long absence from the normal place of residence?
• Which statement about agency authority is correct?
• Which statement concerning misrepresentations is correct?
• All of the following are forms of legislative law EXCEPT
• Life insurance agents must satisfy all of the following EXCEPT:
• Which statement concerning the Securities Act of 1933 and insurance products classified as securities is correct?
• If a beneficiary is acquitted in a criminal trial for killing the insured, is the payout guaranteed?
• Proceeds payable to the insured's executor or estate are includible in the insured's gross estate and thereby exposed to transfer costs and taxes.
• In life insurance policy assignments, which statement is true regarding insurable interest?
• If a policy loan is outstanding at the insured's death, what happens to the loan balance?
• In an interpleader action, what is a typical step taken by the insurer?
• What is the standard length of the grace period contained in insurance contracts?
• All the following are common reinstatement requirements EXCEPT
• If the applicant is the prospective insured, which of the following statements concerning the insurability-type conditional receipt is correct?
• The concept of per stirpes means:
• In general, is a third-party beneficiary named in a life insurance policy a party to the contract?
• A life insurance policy’s legal interest is described by which term?
• Which statement about duties of insurance producers is accurate?
• Regarding systems of property law in the United States, which statement is correct?
• Which statement about minor beneficiaries is NOT true?
• Which statement about an absolute assignment is correct?
• When there is dissociation from ownership rights, who has the authority to designate beneficiaries?
• All the following are common elements of an interpleader action by a life insurance company EXCEPT:
• Payment to the policyowner's own broker is deemed to be
• Which statement defines a conclusive presumption in insurance law?
• The test of materiality for a representation can be based on which of the following?
• Which functions are performed by a prospective policyowner in creating a life insurance contract? I. Payment of the initial premium II. Specification of the type of contract
• All the following statements concerning systems of property law in the United States are correct?
• The suicide provision is
• Which provision is not required in a life insurance policy?
• All of the following are common reinstatement requirements EXCEPT:
• After a life insurance policy's contestable period has expired, the policy's incontestable clause generally will bar which of the following? I. A suit for reformation to correct a clerical error II. A contest of the validity of the policy's disability benefit provision when the provision is not specifically excluded in the policy's incontestable clause
• Which statement about regulatory levels is true?
• The mailbox rule recognizes
• Which statement best describes the effect of the incontestable clause?
• Which statement about renewal premiums is correct?
• Which statement about the creation of a life insurance contract is correct?
• The Uniform Simultaneous Death Act
• What is a potential downside of using simplified language in policies?
• Which statement is NOT correct regarding Joe's receipt of Jack's life insurance proceeds after killing Jack?
• In general agency law, which statement is true about establishing an agency relationship?
• All the following are equitable remedies EXCEPT?
• Which statement best describes an aleatory contract?
• The federal government is the only body permitted to create treaties. Which entity is authorized to create treaties?
• A late remittance offer is
• All the following statements regarding probate outside the insured's probate estate EXCEPT:
• Life insurance law is derived predominantly from which source?
• Which of the following statements concerning an assignment of a life insurance policy procured by the insured is correct?
• Estoppel is defined as
• Which relationship does NOT support an insurable interest?
• A person's failure to share financial planning information could result in which outcome?
• During the 10-day free-look after policy delivery, the contract is effective.
• Among ownership rights in a life policy, which action is included?
• Which form of authority arises from the agent's role or past practice rather than from a written grant?
• All the following factors could increase the death benefit EXCEPT
• Which statement regarding the federal government's rights in collecting a tax lien when the owner owes federal income taxes is correct?
• Possession of an insurer's application blanks and receipt forms may establish which of the following?
• Which of the following family relationships is generally not considered to create an insurable interest?
• A life insurer may backdate a policy to treat the insured as younger. This statement is:
• If an agent signs a contract on behalf of a principal within the agent's authority, who is the party to the contract?
• Regarding the prospectus for variable life and variable universal life policies, which statement is not required?
• Which is always a party to a life insurance contract?
• If the beneficiary designation is revocable, the majority rule is that the policyowner can assign the life insurance policy
• Which definition of accidental death is most favorable to the consumer?
• All the following statements concerning general rules of agency law are correct EXCEPT:
• All the following statements concerning the contest of a life insurance policy within the meaning of the incontestable clause are correct EXCEPT
• When premiums are paid by automatic premium loans, which occurs?
• A life insurance policy is which type of contract?
• All the following statements about conflicts with an unlicensed or unauthorized insurer are correct EXCEPT:
• Which of the following statements concerning living wills is correct?
• Suppose a life insurance policy contains an incontestable clause that makes it incontestable after it has been in force during the lifetime of the insured for 2 years. If the insured dies during the first year of the contract, which of the following statements is correct?
• Which type of conditional receipt is likely to result in policy issue after the applicant for coverage has died?
• Which statement about adhesion contracts is true?
• In an irrevocable beneficiary designation, whose consent is required to change the beneficiary designation?
• Which statement about the life insurance policies of a decedent-insured is correct?
• State administrative bodies can do all of the following EXCEPT
• Which of the following is NOT a criterion to establish a presumption of death?
• All the following are required in order for a contract to exist EXCEPT
• For minor beneficiaries within 2 years of the age of majority, the insurer can pay interest only until majority. The insurer can then pay the full proceeds.
• All the following statements concerning general rules of agency law are correct EXCEPT
• Under the New York Rule, if a primary beneficiary dies, where does the share go?
• In a situation where a beneficiary's death claim is denied for lack of proof of death, which options are available to the beneficiary?
• Which statement about a contract of indemnity is true?
• All the following statements concerning waiver and estoppel are correct EXCEPT:
• In agency presumptions, possession of application blanks and receipt forms may create a presumption of agency, which can be overcome by which of the following?
• In most states, statements in the application are treated as representations rather than warranties.
• All the statements concerning the treatment of suicide in life insurance are correct EXCEPT:
• Which of the following is NOT considered part of a life insurance policy?
• Which of the following items acquired during a 20-year marriage is NOT community property?
• Which of the following are generally accepted methods of premium payments by a policyowner to an insurer EXCEPT?
• Which of the following statements concerning the law of agency is correct?
• When a policy application is accompanied by a check for the first premium but no conditional receipt is issued, what determines effective coverage?
• The application for a life insurance policy serves which of the following purposes?
• Any ambiguities in contracts of adhesion are which of the following?
• Which statement constitutes concealment in insurance law?
• A viatical settlement is
• All the following statements concerning producer communications to clients about the financial fitness of the insurer are correct EXCEPT:
• Which statements about reinstatement provisions are correct?
• Which form of agency authority is clearly granted by the insurer in writing or by contract?
• An illustration must be provided at the time of policy delivery.
• Which statements concerning the incontestable clause in life insurance contracts are correct?
• Which of the following is a remedy or legal solution for an action filed at law?
• Under the Uniform Simultaneous Death Act, if there is no sufficient evidence of nonsimultaneous death, the policy proceeds are distributed as if the insured survived the beneficiary.
• All the following information is contained on the face page of a life insurance contract EXCEPT:
• Most states permit suicide exclusions for up to how many years?
• Which statement is correct concerning a situation in which a beneficiary kills the insured?
• Which statement best defines a contest of a life insurance policy?
• Which statement about spendthrift statutes is correct?
• An agent can be liable to the principal for any loss or damage caused through any of the following acts EXCEPT?
• What is the most important reason for the prospective insured to sign the application for a policy procured by a person other than the insured?
• Ownership rights in a life insurance policy include all of the following EXCEPT?
• Which statement correctly describes the contest period?
• Which statements about the owner-applicant of a life insurance policy are correct?
• Which type of statute is concerned solely with protecting life insurance proceeds from the claims of the beneficiary's creditors?
• Who primarily determines the acceptability and classification of life insurance applicants?
• During divorce, which statement best describes the treatment of the cash value of a community property life insurance policy?
• The legal right of subrogation is used by which of the following?
• Medical condition waivers in life insurance are home office underwriting decisions but are not part of the contract.
• A life insurance contract is classified as which of the following?
• Which of the following statements concerning assumptions upon which insurance illustrations are based is correct?
• Which of the following statements best describes apparent authority?
• If an agent issues an unconditional premium receipt to an applicant for a check that is not paid when presented, what occurs?
• A springing power of attorney is characterized by:
• Which statement accurately describes when an item becomes real property in property law?
• Which statement describes how an life insurer may obtain an adjudication of its power to rescind a contract?
• If the intended insured dies before the policy is issued, which type of conditional receipt would prevent policy issuance?
• A typical late remittance extension by an insurer imposes all of the following conditions on the policyowner EXCEPT:
• The principal is presumed to know which of the following?
• Which of the following statements concerning the assignment of policy proceeds to a third party is correct? I. An assignment of proceeds is often done when the policy is used as collateral for a loan. II. A policyholder is restricted from assigning policy proceeds to a third party on a temporary basis.
• Which of the following is true of medical personnel who examine life insurance applicants?
• In a life insurance contract, who is typically obligated to perform the contract's primary promise?
• Which is NOT typically considered an equitable remedy sought by insurers in disputes over life insurance proceeds?
• In life insurance law, concealment is essentially nondisclosure.
• The basic purpose of the incontestable clause is to
• All of the following are approaches to the short-term survivorship of a beneficiary problem EXCEPT
• Which statement about an incontestable clause is true?
• If there is no designated beneficiary at the time of death, what determines who receives the payable proceeds of a life policy?
• Soliciting life insurance agents may have all the following agency authorities EXCEPT
• Under the Uniform Simultaneous Death Act, if the insured and the beneficiary have died and there is no evidence that they died nonsimultaneously, how are the policy proceeds distributed?
• Which statement about revocable and irrevocable beneficiaries is true?
• Intended anatomical gifts may be refused for which reasons?
• The share of a deceased primary beneficiary under a class designation for their children is preserved by which rule?
• Which statement best defines appellate jurisdiction?
• If a salesperson offers two products to a customer but one product provides a larger commission, the salesperson may be presented with which issue?
• Paul owns a small construction firm. David, his employee, signs contracts with customers on behalf of the company. Which of the following statements concerning David's capacity to be an agent for Paul is correct?
• Which of the following is required for a valid contract?
• Which event is generally considered an invasion-of-privacy tort under current law?
• Reinstatement after lapse of a life insurance policy requires which condition?
• Payment of the premium to a broker (agent of the policyowner) is deemed to be
• Which of the following statements is NOT part of The American College's Code of Ethics eight cannons?
• What is the lowest level court in the federal court system?
• Which statement about third-party beneficiaries is true?
• Regarding the reverse common-disaster clause, which statement is true?
• The no-lapse guarantee for a universal life insurance policy may terminate under which circumstance?
• A beneficiary who kills the insured will not be entitled to the death benefit if the killing
• All the following provisions are required in a cash-value life insurance policy EXCEPT which?
• All the following events terminate a power of attorney EXCEPT:
• All the following statements concerning the effect of marriage and divorce on the ownership of life insurance are generally correct EXCEPT:
• Which statement best describes beneficiaries' preference for settlement options versus lump sums?
• Premium payments by non-policyowners give the non-policyowners no additional rights in the policy unless they are the.
• Which statements concerning the prudent-insurer standard used to test the materiality of misrepresented facts are correct?
• All the following statements concerning renewal premium payments made to agents are correct EXCEPT
• Which of the following statements concerning legislation directed at life insurance is correct?
• Which of the following statements about the per stirpes concept is correct?
• Which statement about state statutes that confer the legal capacity on minors to enter into valid life insurance contracts on their own lives is correct?
• Rescission is all of the following EXCEPT
• States that prohibit accepting services for payment of insurance premiums cite which premise?
• Which rule holds that the assignee who is first to give notice to the insurer has priority to the proceeds, provided they had no notice of a prior assignment?
• A life insurance contract is generally:
• After the contestable period, the incontestable clause generally bars reformation to correct clerical errors.
• All the following were listed as the top ten ethical concerns by life insurance agents EXCEPT:
• Why are promissory notes rarely accepted for premium payments by insurers?
• The American legal system is based primarily on which tradition?
• What factor precludes the insurer from recovering proceeds paid under presumption of death if the insured later reappears?
• An irrevocable beneficiary designation has which consequence?
• A life insurance policy is which of the following?
• Which statement reflects how a policyowner typically handles minor beneficiaries?
• In conflict-of-laws analysis, which factor is used to determine applicable law?
• All the following statements concerning the treatment of minors as beneficiaries of life insurance policies are correct EXCEPT:
• Which of the following statements concerning primary beneficiaries is correct?
• Which statement is NOT correct regarding capacity in life insurance contracts?
• The choice of applicable laws in a conflict-of-laws situation may be influenced by all of the following EXCEPT
• Under an insurability-type conditional receipt, if the applicant is found insurable on the date of application and dies before the policy is acted upon, what is the result?
• In the 41 common law states of the United States, which statement is true about ownership in a life insurance policy?
• Which state has not adopted the Uniform Simultaneous Death Act?
• All of the following statements concerning a life insurance contract that is not supported by an insurable interest are correct EXCEPT:
• Adjusting the death benefit for misstatement of age could result in which of the following?
• In determining a presumption of death for life insurance benefits when the insured is missing, which criterion is NOT required in many jurisdictions?
• All the following terminate a power of attorney EXCEPT:
• Which statement about reinstatement provisions is correct?
• Who is a party to a life insurance contract?
• In contract law, which party has the duty of performance?
• The American rule regarding multiple assignees of the same insurance policy states which of the following?
• A change of beneficiary request will not be effective unless which is true?
• Which of the following is true in the nine community property states?
• Which of the following statements concerning life insurance contracts is correct?
• Which of the following statements concerning contracts is correct?
• Which of the following statements about representations in a contract is incorrect?
• All the following are emotions associated with grieving EXCEPT?
• In order for there to be a valid contract, which of the following must exist?
• Which statement about an insurer's liability for its agents is correct?
• The apparent authority of a soliciting agent generally
• Which pairing are at the same level in the hierarchy of legal authority?
• The federal regulations prohibit telemarketing calls during which time interval?
• Which statements concerning insurance contract presumptions are correct?
• All the following statements concerning third-party beneficiaries of a life insurance contract are correct EXCEPT:
• Which statement about the contestable period is incorrect?
• Under general rules, which statement about representations is correct?
• Which country is an example of a civil-law system?
• All the following statements concerning the term capacity are correct EXCEPT:
• Which statements concerning the backdating of life insurance policies are correct?
• All the following statements concerning collateral assignment of a life insurance policy are correct EXCEPT:
• In which of the following cases would an insurer generally be permitted by the courts to contest the validity of a life insurance contract?
• Which statement concerning the rules of law developed to settle disputes arising over multiple assignments of the same life insurance interest is correct?
• Paid-up additions, when dividends are used to purchase more coverage, have what effect?
• Divisible-surplus provision applies to which of the following?
• Which statement about contracts of adhesion is true?
• If no illustration is provided during the sale, when must the financial professional provide the illustration?
• Which of the following is NOT a level of duties owed by insurance producers to insureds?
• Which statements concerning exoneration statutes are correct?
• Which definition describes a contract drafted by one party that must be accepted or rejected by the other party as it is written?
• The goal of making policies easier for consumers to read conflicts with the goal of
• Which of the following constitutes community property in a typical community property state?
• Which of the following family relationships generally constitutes an insurable interest?