Exam

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to

10 years

Which of the following authorities is responsible for determining whether an insurer is financially stable enough to safely conduct business

2&3

If a producer changes his or her residential address, the commissioner must be notified of the change within how many days?

30

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) Plan (TSA)

Under which of the following circumstances would an insurer pay accelerated benefits

An insured is diagnosed with cancer and needs help paying for her medical treatment

When must insurable interest exist in a life insurance policy?

At the time of application

Which of the following authorities is responsible for determining whether an insurer is financially stable enough to safely conduct business?

Department of insurance

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT

Erase the incorrect answer and record the correct answer.

An agent selling variable annuities must be registered with

FINRA

The type of term insurance that provides increasing death benefits as the insured ages is called

Increasing Term

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Which of the following best describes a bail- out provision

It allows the owner to surrender the annuity without a charge.

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

Which of the following is not true regarding policy loans?

Money borrowed from the cash value is taxable.

Which of the following allows the insurer to relieve a minor insured from premium payments if the minors parents have died or become disabled?

Payor benefit

Who might receive dividends from a mutual insurer?

Policyholders

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

The policy owner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

Reduction of premium

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all the premiums paid. Which rider is attached to the policy?

Return of premium

All of the following are considered unfair trade practices in the business or insurance EXCEPT

Sharing commissions

Which of the following determines the length of time that benefits will be received under a fixed amount settlement option?

Size of each installment

The advantage of qualified plans to employers is

Tax-deductible contributions

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½. When money is withdrawn from the annuity during the accumulation phase, the amounts are taxed on a last in first out basis (LIFO). Therefore, all withdrawals will be taxable until the owner's cost basis is reached.

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of a 20% withholding tax.

Which of the following is true regarding variable annuities?

The annuitant assumes the risks on investment

Which of the following is not true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

Which of the following statements about group life is correct?

The cost of coverage is based on the ratio of men and women in the group.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data.

Which of the following are generally NOT considered when underwriting group insurance??

The insureds' medical history

Which of the following is true regarding a market value adjusted annuity

The owner is guaranteed a fixed interest rate for a specific period of time.

All of the following are general requirements of a qualified plan except

The plan must provide an offset for social security benefits.

Which of the following best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime

If a producer changes his residential address who must he/she notify?

This change will need to be reported to the Commissioner.

Which of the following is the best reason to purchase life insurance rather than an annuity?

To create an estate

The waiver of cost of insurance rider is found in what type of insurance?

Universal Life

Which of the following policies would have IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

Which of the following types of policies allows for a flexible premium and a variable investment component?

Variable universal life insurance

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

When would life insurance policy proceeds be included in the insured's taxable estate?

When there is an incident of ownership at the time of death

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority.

All of the following information about a customer must be used in determining annuity suitability EXCEPT

beneficiary's age

Which of the following would be the beneficiary in credit life insurance?

creditor

Units with the same or similar exposure to loss are referred to as

homogeneous

Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Utah?

nonresident producer

All of the following types of distributions are considered exceptions to the early distribution rule and, therefore, are not subject to the penalty tax EXCEPT

participant's decision

What is the primary purpose of a 401k plan?

retirement

Which of the following is a risk classification used by underwriters for life insurance?

standard

For the purpose of insurance, risk is defined as

the uncertainty or chance of loss

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

50% tax on the amount not distributed as required

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income

In an annuity, the accumulated money is converted into a stream of income during which time period?

Annuitization period

Which of the following is TRUE about a class designation?

Beneficiaries are not identified by name

Which of the following can surrender a deferred annuity contract

Only the annuity owner

Traditional IRA contributions are tax deductible based on which of the following?

Owner's income

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments

When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information?

application

A policy owner fails to pay the premium on his whole life after the grace period passes but the policy remains in force. This is due to the?

automatic premium loan

Stranger-originated life insurance policies are in direct opposition to the principle of

insurable interest

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

lump sum

Which of the following types of insurers is owned by stockholders?

stock

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

It is a life contingency option.

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?

The cash value will be paid to the annuitant's estate.

Which of the following terms is used to name the nontaxed return of unused premiums?

dividend

Which of the following is true, regarding a waiver of a surrender charge on an annuity contract?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

In insurance, an offer is usually made when

An applicant submits an application to the insurer

An insured has a life insurance policy with a face amount of 2,000. He pays a premium each week to the agent who sold the policy. What kind of policy does the insured have?

Industrial life