FLORIDA 2-15 INSURANCE_INSURANCE FLORIDA 2-20

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FLORIDA 2-15 INSURANCE_INSURANCE FLORIDA 2-20

EXAM LATEST 2024-2025 TESTBANK QUESTIONS AND

CORRECT ANSWERS ALREADY GRADED A+

Mr. Williamson purchases a 5-year, $50,000 term policy with an option to renew. Which of the following statements about the policy's renewability is CORRECT?

• the premium for the renewal period will be the same as the initial period
• the premium for the renewal period will be higher that the initial premium
• the premium for the renewal period will be the same as the initial period, but a one-time

service charge will be assessed upon renewal.

• the premium for the renewal period will be lower than the initial period - ANSWER-the

premium for the renewal period will be higher than the initial premium

Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. When Joanna dies, the company ceases payment. This is an example of

• an installment refund annuity
• a joint and full survivor annuity
• a life annuity 1 / 4

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• a cash refund annuity - ANSWER-a joint and full survivor annuity

Each of the following statements about incontestable clause in a life insurance policy is correct

EXCEPT

• the clause gives people assurance that went their policies become claims, they will be paid

without delays or protests

• the incontestable clause means that after a certain period, an insurer cannot refuse to pay

the proceeds of a policy or void the contract

• incontestable clauses usually become effective two years from the issue date of the policy
• insurers can void a contract even after the specified period provided they can prove the

policy was purchased fraudulently - ANSWER-insurers can void a contract even after the specified period provided they can prove the policy was purchased fraudulently

All of the following statements correctly describe the purpose of Social Security EXCEPT

• to provide basic protection against financial problems accompanying death, disability, and

retirement

• to augment a sound personal insurance plan
• to provide a source of income for a meaningful standard of living 2 / 4

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• to protect workers, their spouses, and dependent children - ANSWER-to provide a source of

income for a meaningful standard of living

Ralph owns a $50,000 nonpar whole life policy. Its cash value has accumulated to $15,000, and he has paid a total of $9,500 in premiums. If he surrenders the policy for its cash value, how will it be taxed?

• Ralph will receive the $15,000 tax free
• Ralph will receive $5,500 tax free; the $9,500 balance is taxable as income
• Ralph will receive the $9,500 tax free; the $5,500 balance is taxable as income
• Ralph will receive the $15,000 as taxable income - ANSWER-Ralph will receive the $9,500 tax

free, the $5,500 balance is taxable as income

Which of the following would NOT apply when a life insurance policy is reinstated after a lapse?

• All back premiums must be paid
• All outstanding loans must be paid
• A new contestable period goes into effect
• A new suicide exclusion period goes into effect - ANSWER-a new suicide exclusion period

goes into effect

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4 Jane, age 35, has just purchased a 20-pay whole life policy. When she turns 55, she will

• receive the policy's face value benefit
• have a fully matured policy
• cease paying premiums
• no longer be covered by the policy - ANSWER-cease paying premiums

If a life insurance applicant is given a binding receipt, when does the applicant's coverage become effective?

• the date the policy is issued
• the date the applicant proves to be insurable
• the date the receipt is given
• the date the policy was delivered - ANSWER-the date the receipt is given

Who performs the function of risk selection in determining an individual's insurability for policy issue?

• Actuary
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