Chapter 14 - Iowa Life Laws

Insured's Life Expectancy: at least 18 but less than 25 months = minimum % less outstanding loans to viator

60%

Insured's Life Expectancy: at least 12 but less than 18 months = minimum % less outstanding loans to viator

65%

Insured's Life Expectancy: at least 6 but less than 12 months = minimum % less outstanding loans to viator

70%

Insured's Life Expectancy: less than 6 months = minimum % less outstanding loans to viator

80%

A Replacing Insurer must: A Begin a new incontestability period on each new contract B Include the replacing policy's illustration with the Notice C Notify any existing insurer within 15 days of an intended replacement D Keep a copy of the replacement application for 5 years or until the Department's next examination, whichever is earlier

B

A violation of replacement requirements is: A Fraud B An unfair trade practice C Punishable by fine or suspension D Misrepresentation

B

A violation of replacement requirements is: A Misrepresentation B An unfair trade practice C Punishable by fine or suspension D Fraud

B

Advertisements for life insurance and annuities must disclose all of the following, except: A Policy limits on variable benefits B How guaranteed and non-guaranteed benefits work together C That money has time value D That dividends are not guaranteed

B

A basic illustration must include all of the following, except: A The assumed premium payment and benefit payout dates B The page number and total number of pages on each page C A statement that actual performance may vary if non-guaranteed elements are illustrated D Be presented in summary form

D

An illustration must include which of the following? A A definition of any chosen riders B The target premium C The date of the appointment D The policy or product generic name

D

Which of the following correctly state the minimum percentage of the policy's face value (minus outstanding loans) for a viator who's life expectancy is 2 years? A 80% B 70% C 65% D 60%

D

Insured's Life Expectancy: 25 months or more = minimum % less outstanding loans to viator

Policy cash surrender value

Standards for Supplemental Illustrations include all of the following, except: A The correct premium B Show non-guaranteed elements no more favorably than the Basic Illustration C State that non-guaranteed elements are not guaranteed D No reference to the Basic Illustration

D

A producer who is licensed for life and health insurance lines may add property and casualty insurance by: A Making an application, paying the fee, and passing the exam for property and casualty insurance B Terminating the life and health license and applying for the property and casualty license C Notifying the department of insurance D Paying a fee and taking continuing education for property and casualty insurance

A

Advertisements for life insurance and annuities may NOT: A Imply that benefits become paid-up without an explanation B Discuss policy limits on variable benefits C Use guaranteed interest rates in projecting policy values D Mention time value of money

A

For Group Life Insurance eligibility, the 25-member minimum does NOT apply to: A School or fraternal associations B Groups where the employer pays 100% of the premiums C Teachers' or lawyers' associations D Groups with no employer contributions toward premiums

A

For annuity exchanges, replacements or annuitization to be suitable, the consumer must be informed of all of the various features of the recommended annuity, except: A The producer's compensation B Applicable fees and charges for riders C Any new surrender period and surrender charge D Any potential tax penalties

A

The Commissioner of Insurance is required to examine every admitted insurer in the state a minimum of once every: A 5 years B 2 years C 7 years D 1 year

A

Which of the following rules applies to suitability in annuity transactions? A Suitability requirements for recommendations are deemed to be met if they comply with FINRA rules B Insurers and producers must keep records of annuity recommendations for 5 years C Before purchasing an annuity, the client must successfully complete a one-time 4-hour course on annuities D Before selling an annuity, the client must state reasons in writing why the annuity is suitable

A

With respect to continuing education (CE), a licensed producer may: A Earn no more than 18 hours of CE credit per CE term in self-study (other than courses that are part of a nationally recognized professional designation program) B Get credit for time spent in coursework for a nationally recognized professional designation program and for the examination administered for that designation C Earn no more than 18 hours of CE credit per CE term in instructor-led courses D Use excess hours (i.e., more than 36 hours in a CE term) to meet the CE requirement in the CE term that immediately follows the term in which they were earned

A

The Iowa Life and Health Insurance Guaranty Association protects insureds and annuitants from insurance company financial impairment or insolvency in all of the following circumstances, except: A Payments under a disability policy B Payments under a federally insured pension plan C A life insurance claim D A health insurance claim

B

Which of the following constitutes grounds for suspending a producer's license? A Paying the cost of investigating a violation of the insurance code B Receipt of a Certificate of Noncompliance from the Child Support Recovery Unit C Fully disclosing a policy's terms and conditions to a policyowner D Compliance with a Summary Cease and Desist Order

B

Which of the following statements regarding the duties of insurers is NOT correct? A Each insurer must inform producers of replacement requirements B Keep copies of all applications submissions for 5 years C Ensure that sales materials are complete and accurate D Determine the suitability of reported replacements

B

Group policies in Iowa must: A Be partially or completely paid by the employer in the case of a disability income plan B Cover at least 25 members in the case of a volunteer fire company C Be issued to a labor union covering at least 10 members on the issue date D Be issued to a lawyers' association having a participation requirement of 85%

C

Anyone who acts as a viatical settlement provider or broker without a proper license and who violates Iowa's viatical settlement law resulting in a loss of more than $10,000 is: A Guilty of a class D felony B Subject to civil penalties C Subject to license revocation and fines D Guilty of a class C felony

D

In advertising for health insurance, the phrase 'this policy will help to fill some of the gaps that Medicare and your present insurance leave out' can be used only: A If there is documented evidence to support it B If the advertisement does not mention a specific carrier C If the advertisement is preapproved by the Commissioner D It can never be used

D

Which of the following statements is NOT a required provision for a group policy to be delivered in Iowa? A A payment of claims provision B A 2-year incontestability period C A provision for adjusting a misstatement of age D No requirement of individual insurability

D

Prior to or at the time of a contract, the viator must: A Provide the settlement provider a written acknowledgement that any chronic illness began after the policy issue date B Be given the date he can expect payment C Sign a rescission statement in case he/she changes his/her mind D Give oral consent to a viatical settlement contract

A

The Life Insurance Illustrations Model Regulation excludes all of the following coverages, except: A Second-to-die insurance B Credit life insurance C Variable life insurance D Life insurance with face amounts of less than $10,000

A

A basic illustration must include all of the following, except: A Be presented in summary form B The assumed premium payment and benefit payout dates C A statement that actual performance may vary if non-guaranteed elements are illustrated D The page number and total number of pages on each page

A

Before a contract can be entered into, all of the following must be obtained by the settlement provider, except: A A financial statement from the investor(s) B A written statement from an attending physician that the insured is of sound mind C A signed consent to release medical records to the settlement provider or broker and the insurance company D A written statement attesting to the fact that the insured has not been coerced into entering into a viatical settlement contract

A

Before entering into a viatical settlement contract, a viatical settlement provider must obtain: A Written acknowledgement by the viator that he/she is terminally or chronically ill and that the illness was diagnosed after the policy was issued B Verification of coverage from the insurer that issued the policy C A document in which an attending physician consents to the release of medical records to the viatical settlement provider or broker and to the insurance company that issued the policy D Written statement from the viator that he/she is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract

A

Life licensed producers are deemed to meet the licensing requirement to operate as viatical settlement brokers if they: A Have been licensed for at least 1 year prior to operating as viatical settlement brokers B Have errors and omissions insurance for a minimum amount of $250,000 C Pay the Commissioner a fee of $150 within 30 days from the first day of operating as a viatical settlement broker D Separately apply for a license as a viatical settlement broker

A

The insurer must be notified by a settlement broker or provider if a policyholder has entered into a viatical settlement within: A Any time prior to and 5 years after policy issue B The first year after the agreement C 5 years after the agreement D Prior to signing any agreement

A

To be delivered in Iowa, a group life policy must be any of the following, except: A A creditor policy insuring debt, that covers at least 50 new persons under the policy each year B A medical assistance policy issued to the Department of Human Services C Any policy issued to an Iowa resident under a group policy D A policy issued to and paid at least partially by a labor union that covers at least 10 members on the issue date

A

To operate as a viatical settlement provider or broker, which of the following statements is TRUE? A A producer must first obtain a license from the Commissioner B Producer must hold errors and omission coverage for at least $1 million C A producer is not required to notify the Commissioner, but can act as a provider or broker based on his current license to sell insurance D Prior licensing as a resident or nonresident producer does not meet viatical licensing regulations

A

Before a contract can be entered into, all of the following must be obtained by the settlement provider, except: A A written statement from an attending physician that the insured is of sound mind B A financial statement from the investor(s) C A written statement attesting to the fact that the insured has not been coerced into entering into a viatical settlement contract D A signed consent to release medical records to the settlement provider or broker and the insurance company

B

In order for an annuity recommendation to be suitable: A It should not be used in a qualified plan B It should be made in compliance with FINRA's Conduct Rules C A producer should make sure funds are available D It should offer portfolio management strategies

B

Interest due on death proceeds by an insurer must be: A Based on the policy loan rate B Calculated from the date the proof of death was received C Paid immediately D Paid in a lump sum regardless of beneficiary election

B

It is the duty of the Producer to: A Inform the existing insurer of any replacement B Give the applicant the original notice of replacement, if applicable C Ignore any existing coverage when completing an application D Give the applicant copies of all sales material used

B

Once documents have been executed, the viatical settlement provider must give written notice to the insurer within ______ days. A 15 days B 20 days C 60 days D 30 days

B

Required producer training for annuity products does NOT include which of the following topics? A Appropriate sales practices B Medicaid eligibility strategies C Identifying the various parties to an annuity D Income taxation of qualified and nonqualified annuities

B

Standards for Basic Illustrations must identify which of the following? A 7-pay test premium B Guaranteed elements before non-guaranteed elements C Benefits as either guaranteed or non-guaranteed D Premium payments as premium outlay or premium deposits

B

A Contract Form or Disclosure Statement must: A Be approved by the settlement provider B Be filled out completely C Be approved by the Commissioner D Be used at any time

C

A Replacing Insurer must: A Notify any existing insurer within 15 days of an intended replacement B Begin a new incontestability period on each new contract C Include the replacing policy's illustration with the Notice D Keep a copy of the replacement application for 5 years or until the Department's next examination, whichever is earlier

C

A violation of replacement requirements is: A Fraud B Misrepresentation C An unfair trade practice D Punishable by fine or suspension

C

Advertisements for life insurance and annuities may NOT: A Mention time value of money B Use guaranteed interest rates in projecting policy values C Imply that benefits become paid-up without an explanation D Discuss policy limits on variable benefits

C

Before a contract can be entered into, all of the following must be obtained by the settlement provider, except: A A written statement from an attending physician that the insured is of sound mind B A signed consent to release medical records to the settlement provider or broker and the insurance company C A financial statement from the investor(s) D A written statement attesting to the fact that the insured has not been coerced into entering into a viatical settlement contract

C

For reporting requirements, which of the following does NOT need to be retained for 5 years? A All checks, drafts and other evidence related to the payment or release of funds B Applications from the date of the proposal, or execution of the contract, whichever is later C The aggregate face amount and life settlement proceeds D All proposed, offered or executed contracts

C

Interest due on death proceeds by an insurer must be: A Based on the policy loan rate B Paid immediately C Calculated from the date the proof of death was received D Paid in a lump sum regardless of beneficiary election

C

The Life Insurance Illustrations Model Regulation defines the Currently Payable Scale as: A The scale of guaranteed cash values compared to premiums currently payable B The scale of guaranteed cash values compared to premiums currently payable C A scale of non-guaranteed elements in effect or becoming effective within 95 days D The disclosure of the producer's current payable commission schedule

C

The right to convert group coverage to an individual policy because of termination of employment or membership or because of termination of the policy (in the case of anyone insured for at least 5 years) must be exercised within: A 1 days of the termination date B 10 days of the termination date C 31 days of the termination date D 15 days of the termination date

C

Viatical settlement brokers are required to make all of the following disclosures to viators at the time all parties sign the application for the viatical settlement contract, except: A There are possible alternatives to viatical settlement contracts, including any accelerated death benefits offered under the viator's policy B Some or all of the proceeds could be taxed and assistance should be sought from a professional tax advisor C The viator has a right to rescind the contract for 10 days after receiving the proceeds D Proceeds could be subject to the claims of creditors

C

Viatical settlement brokers can lose their licenses for all of the following reasons, except: A Using a viatical settlement contract form that has not been approved by the Commissioner B Failing to honor a viatical settlement contract C Transferring a viaticated policy to a viatical settlement purchaser D Exhibiting a pattern of unreasonable payments to viators

C

Which of the following statements is an exemption to the replacement rules? A New life insurance paid in part by the insured's employer B A qualified deferred annuity C A life insurance contract replacing its own conditional receipt D Non-convertible, nonrenewable term life expiring in 10 years or less

C

An insurance policy may be viaticated within 5 years of the policy issue date if any of the following apply, except: A The viator is terminally or chronically ill B The viator becomes physically or mentally disabled so that a physician determines that the disability prevents the viator from maintaining full-time employment C The policy was issued upon the exercise of conversion rights of a previous group or individual policy and the total time of coverage under both policies is at least 5 years D The viator's dependent children are in college

D

In order for a life insurance recommendation to be suitable: A The applicant must be insurable B It must offer a lifetime guarantee C The producer must earn a competitive commission D The producer must believe the recommendation suits its recipient

D

Producers are prohibited from doing all of the following, except: A Exerting undue influence over a person to induce a purchase B Charging fees without a client's written authorization C Charging a fee for services as a producer D Accepting a loan from anyone who was a client in the past 3 years

D

Prohibited rebating refers to: A Misstating a policy's benefits, terms, or conditions, including the policy's dividend history or true nature B Making false or fraudulent statements on an application for insurance C Inducing a policyowner to lapse, forfeit, exchange, convert, or surrender a policy D Offering a client, or allowing to be offered, money or anything else of value that is not stated in the policy to get the client to buy the policy

D

Viatical settlement brokers are required to make all of the following disclosures to viators at the time all parties sign the application for the viatical settlement contract, except: A There are possible alternatives to viatical settlement contracts, including any accelerated death benefits offered under the viator's policy B Proceeds could be subject to the claims of creditors C Some or all of the proceeds could be taxed and assistance should be sought from a professional tax advisor D The viator has a right to rescind the contract for 10 days after receiving the proceeds

D

Which of the following advertisements is most likely to be proper? A An ad that partially compares the insurer's policy with those of competitors B An ad that offers a special introductory offer without stating that the special will not be available later C A critique of other insurers' business D A testimonial that indicates any relationship between the endorser and the insurer

D

Which of the following describes a valid way for a licensed producer to extend his/her authority? A A property and casualty producer may get variable products authority by passing the commercial lines exam B A producer licensed in life insurance may get an excess and surplus lines license by passing the commercial lines exam C A producer licensed in personal lines may get life and health authority by passing the variable products exam D A producer licensed in personal lines may get property and casualty authority by passing the commercial lines exam

D