Test de práctica de seguros de vida

• A. At the time of the claim only
• B. At both the time of the application and the time of the claim
• C. At the time the policy is applied for
• D. At the time the first premium is invoiced

Respuesta: C. At the time the policy is applied for

In life insurance the insurable interest has to exist when the policy is applied for and issued. It does not have to still exist at death, so a policy that was valid when issued is still paid after, for example, a business partnership dissolves. That is the opposite of property insurance, where the interest must exist at the time of the loss. The reason for the rule is to keep people from buying policies on strangers, which would turn a protection contract into a wager on a death. Spouses, parents and children, and business partners with a financial stake are the usual examples of a valid interest.

• A. Increasing term
• B. Decreasing term
• C. Whole life paid up at age 65
• D. Level term renewable to age 100

Respuesta: B. Decreasing term

Decreasing term has a death benefit that drops over the policy period, usually on a schedule that tracks the declining balance of a loan. The premium normally stays level while the benefit falls, which is why it costs less than a level term policy of the starting amount. Term insurance pays only if death occurs inside the stated period and builds no cash value. Whole life and long renewable term cost more because they cover a need the couple does not have here, which is a benefit that never shrinks.

• A. A cash value that grows tax deferred
• B. Lifetime protection as long as the policy stays in force
• C. A death benefit paid to a named beneficiary
• D. Flexible premiums and an adjustable death benefit

Respuesta: D. Flexible premiums and an adjustable death benefit

Universal life unbundles the policy into a term insurance charge, expense charges and a cash account that earns interest, and it lets the owner change the premium and, within limits, the death benefit. Traditional whole life has fixed premiums, a fixed death benefit and a guaranteed schedule of cash values. Tax deferred cash value, lifetime coverage and a beneficiary payout are shared by both kinds of permanent insurance. Flexibility cuts both ways, because a universal policy can lapse if the owner pays too little for the cash account to cover the monthly charges.

• A. The policy owner, and securities registration as well
• B. The insurer, and nothing beyond the insurance license
• C. The insurer, and a real estate license
• D. The policy owner, and nothing beyond the insurance license

Respuesta: A. The policy owner, and securities registration as well

Variable products put the cash value in subaccounts chosen by the owner, so the owner takes the investment gain or loss and the cash value is not guaranteed. Because the product has a securities component, it is sold with a prospectus and the producer must also hold the securities registration the regulators require, in addition to the state insurance license. Exactly which securities license applies is a matter for the regulators and your sponsoring firm. Fixed products work the other way round, because the insurer guarantees an interest rate and carries the investment risk.

• A. Cash surrender
• B. Reduced paid-up insurance
• C. Extended term insurance
• D. A policy loan for the full cash value

Respuesta: C. Extended term insurance

Nonforfeiture options exist so that a policy owner who stops paying does not lose the value already built up. The three are cash surrender, reduced paid-up insurance and extended term insurance. Extended term keeps the full original face amount in force for as long as the cash value can buy at the insured's attained age, and it is the usual default when the owner does not choose, though the contract states what applies. Reduced paid-up buys a smaller amount of whole life for life, and cash surrender ends the coverage and pays the cash value.

• A. Guaranteed insurability rider
• B. Waiver of premium rider
• C. Accidental death rider
• D. Cost of living rider

Respuesta: B. Waiver of premium rider

A waiver of premium rider stops the premiums during a qualifying disability, usually after a waiting period, while the policy and its cash value stay fully in force. A guaranteed insurability rider lets the owner buy more coverage at set future dates without new medical evidence. An accidental death rider pays an extra amount if death results from an accident. A cost of living rider adjusts the coverage to follow inflation. Riders are contract changes bought for an extra premium, and each one has its own definitions and exclusions.

• A. It limits the insurer's right to void the policy for misstatements in the application once the contestable period has passed
• B. It stops the insurer from ever denying a claim for any reason
• C. It prevents the owner from changing the beneficiary
• D. It guarantees the premium cannot rise during the first year

Respuesta: A. It limits the insurer's right to void the policy for misstatements in the application once the contestable period has passed

During the contestable period, which state law and the policy fix and which is commonly two years, the insurer may investigate and rescind for a material misrepresentation in the application. After that window the policy generally cannot be contested for those statements. The clause does not stop the insurer from refusing a claim for other reasons that remain valid, such as a lapse for unpaid premiums, and it does not protect against fraud in every state. Check how your state words the rule and what the policy exclusions say.

• A. Coverage is guaranteed from the day the producer signs the application, whatever the health history
• B. Coverage is bound as of the date of the application or the medical exam, whichever is later, if the applicant proves insurable as applied for
• C. The policy is issued only after the applicant makes a second payment
• D. The insurer cannot decline the application

Respuesta: B. Coverage is bound as of the date of the application or the medical exam, whichever is later, if the applicant proves insurable as applied for

A conditional receipt gives temporary coverage that depends on a condition: the insurer would have issued the policy as applied for at standard rates. If the applicant dies before the policy is delivered, the insurer checks whether that condition was met, and coverage then reaches back to the date stated in the receipt, commonly the later of the application and the medical exam. A receipt without an advance payment generally does not bind coverage until delivery. The exact wording is in the receipt, so read it as the contract.

• A. The time after a disability begins before benefits become payable
• B. The maximum length of time benefits can be paid
• C. The time after policy issue before any claim is accepted
• D. The portion of each claim the insured pays after the benefit starts

Respuesta: A. The time after a disability begins before benefits become payable

The elimination period works like a time deductible: benefits do not start until the insured has been disabled for that long. A longer period lowers the premium, because the insurer pays fewer short claims. The benefit period is how long payments last once they start. A probationary period is a separate waiting time at the start of the contract during which certain sickness claims are not covered. Disability income replaces part of earned income, so the exam tends to pair it with definitions of disability and how much income the insured can replace.

Marca todas las que correspondan.

• A. Lump sum
• B. Interest only
• C. Reduced paid-up insurance
• D. Life income
• E. Extended term insurance
• F. Cash surrender

Respuesta: A. Lump sum, B. Interest only, D. Life income

Settlement options deal with how death proceeds are paid out: a lump sum, interest only with the principal held for later, installments over a fixed period or in a fixed amount, and a life income that pays for the beneficiary's lifetime. Reduced paid-up, extended term and cash surrender are the three nonforfeiture options, which apply to a living owner who stops paying premiums. This pair is a standard exam trap, so remember the timing: settlement options come after a death and nonforfeiture options come after a lapse.

Marca todas las que correspondan.

• A. An annuity is designed to protect against outliving your income, where life insurance protects against dying early
• B. In a variable annuity the contract owner bears the investment risk
• C. Annuitization turns the accumulated value into a stream of income payments
• D. A straight life annuity continues to pay the heirs for 20 years after the annuitant dies
• E. Fixed annuity values fall whenever the stock market falls

Respuesta: A. An annuity is designed to protect against outliving your income, where life insurance protects against dying early, B. In a variable annuity the contract owner bears the investment risk, C. Annuitization turns the accumulated value into a stream of income payments

An annuity has two phases, accumulation, when money goes in and earnings are generally tax deferred under federal rules, and the payout phase, when annuitization converts the value to income. In a fixed annuity the insurer guarantees interest and carries the risk. In a variable annuity the owner picks subaccounts and carries the market risk, which is why it needs securities registration to sell. A straight life option pays only while the annuitant lives. A period certain option is what guarantees payments to a beneficiary for a stated number of years. Tax treatment is a federal and state matter, and nothing here is tax advice.

Marca todas las que correspondan.

• A. A contingent beneficiary is paid only if the primary beneficiary has died before the insured
• B. The owner can change a revocable beneficiary without the beneficiary's consent
• C. Changing an irrevocable beneficiary generally requires the beneficiary's written consent
• D. An insurer typically pays a minor child directly without any guardian or trust
• E. The beneficiary is the person whose life is insured

Respuesta: A. A contingent beneficiary is paid only if the primary beneficiary has died before the insured, B. The owner can change a revocable beneficiary without the beneficiary's consent, C. Changing an irrevocable beneficiary generally requires the beneficiary's written consent

The three roles are separate: the owner controls the contract, the insured is the life covered and the beneficiary receives the proceeds. A revocable designation can be changed by the owner alone. An irrevocable one gives the beneficiary a vested right, so changing it needs their consent. A contingent beneficiary only takes if the primary cannot. A minor generally cannot receive and manage a large sum directly, so the proceeds usually go to a court appointed guardian, or the owner names a trust or a custodian under state law. Who counts as a lawful beneficiary is decided by state law.

A whole life policy has a $200,000 death benefit. The owner has an outstanding policy loan of $15,000 with $1,000 of unpaid interest when the insured dies. The insurer pays the beneficiary _____.

Opciones para el hueco 1: $185,000, $184,000, $200,000, $216,000

Respuesta: $184,000

Any loan balance plus unpaid interest is deducted from the proceeds at death, so $200,000 minus $16,000 is $184,000. Borrowing against a policy does not reduce its coverage while the insured lives, and the insurer charges interest on the loan, but the unpaid amount comes out of the claim. If loans and interest grow beyond the cash value, the policy can lapse, which also has tax consequences that belong with a tax professional.

An applicant understated age. The premium paid was $400 a year, but the premium for the true age is $500 a year. The face amount is $100,000. Under the misstatement of age provision, the insurer pays _____.

Opciones para el hueco 1: $100,000, $90,000, $80,000, $75,000

Respuesta: $80,000

The provision does not void the policy. It adjusts the benefit to what the premium actually paid would have bought at the true age: $100,000 times $400 over $500 is $80,000. If the age had been overstated, the premium paid would have been too high and the insurer would refund the excess or raise the benefit. The provision is why an age error alone is usually not grounds to cancel coverage.

Under federal tax rules, a life insurance policy funded faster than the seven-pay test allows is treated as a _____. Money taken out of it during the insured's life is generally taxed _____.

Opciones para el hueco 1: term conversion, modified endowment contract, split-dollar plan, paid-up addition

Opciones para el hueco 2: basis first, gain last, only at the insured's death, gain first, basis last, at no point

Respuesta: modified endowment contract, gain first, basis last

A policy that fails the seven-pay test becomes a modified endowment contract, or MEC. It keeps the income tax free death benefit, but loans and withdrawals are generally taxed gain first, and a distribution before age 59 and a half can carry a 10 percent additional tax on the gain. A regular permanent policy usually lets withdrawals up to basis come out first. Exams ask for the concept and the order, and the details belong with a tax professional, since this is not tax advice.