Exam

Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is a cash value?

Automatic Premium Loan option

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Being permanently disabled

Which of the following is NOT an indicator of a competent party?

Business profession

Which of the following would be considered a peril?

Five

Which of the following is a correct statement about annuities?

Fixed annuities do not provide protection against inflation.

How will life insurance proceeds that are paid as a lump sum received by the beneficiary?

Free of federal income taxation

In order to sell long-term care (LTC) policies, a producer is required to fulfill all of the following EXCEPT

Have at least 4 years of experience in the insurance industry

During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is

Higher

Which of the following statements is TRUE regarding an Agent's Report during the policy application process?

It provides the agent's personal observations concerning the proposed insured

What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death?

Joint Life

Agents may be found guilty of defamation if they make a false statement that is intended to (29)

Maliciously criticize another insurance company

The reduction of the premium option uses the dividend to reduce

Next year's premium

An Equity Indexed Annuity will grow based upon

Performance of a recognized index

The frequency and the amount of the premium payment are known as what?

Premium mode

What is the difference between a straight life policy and a 20-pay whole life policy? (59)

Premium payment period

How do premiums in variable universal life policies vary from those in variable whole life policies?

Premiums are flexible

All of the following are true of annually renewable term insurance EXCEPT

Proof of insurability must be provided at each renewal

An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using?

Reduction

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT

Reports may be sent to anyone who requests one

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?

The change must be reported to the Director

How are policy loans calculated?

The policy's cash value minus unpaid loans and accrued interest

All of the following are true of the Survivorship Life policy EXCEPT

The premium is based on the age of each insured

Which of the following is TRUE regarding premium in a 10-year level premium policy?

The premium will remain level for 10 years

According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed? (95)

The primary beneficiary died before the insured

All of the following are true regarding the waiver of cost of insurance rider EXCEPT

The rider expires when the insured reaches age 60

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?

$2,500

What is the maximum fine for signing blank application forms by a producer?

$200

How many days is the free-look period in most life insurance policies? (20)

10 days

An IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed? (9)

10%

What is the penalty for withdrawing money from an annuity prior to age 59 1/2? (25)

10%

In a noncontributory group policy

100% of eligible employees must participate

How soon from a change of address must a nonresident producer notify the Department? (22)

30 days

There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age? (6)

59 1/2

The entire contract includes all of the following EXCEPT

A buyer's guide

The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called?

A collateral assignment

A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?

A percentage of the face amount of the policy

Which of the following best describes a rebate?

A producer returning part of her commission to her client, as an inducement to buy

An Agent is hand delivering an insurance policy to a policyowner. What must the agent obtain to complete the transaction?

A signed delivery receipt

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?

Accumulation period

Which of the following documents used in the underwriting process contains specific medical details about an applicant?

Attending Physician's Statement (APS)

Insurers CANNOT transact insurance in this state without a

Certificate of Authority

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?

Children's term rider

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will

Continue to increase

Decreasing Term Insurance is often used to

Cover a mortgage

A policyholder believes that his company is committing insurance fraud. Which of the following is the right authority for investigating this matter?

Director

For an insurance contract, the principle of utmost good faith means

Each party relies upon the truthfulness of the other

An adjustable life policy can assume the form of

Either term insurance or permanent insurance

Which type of authority is found in the agent's contract?

Express

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

A producer's license may be cancelled for noncompliance with continuing education requirements. Which of the following would constitute noncompliance? (34)

Failing to complete at least 8 credit hours in each line of authority

Premiums collected on behalf of the insurance company by an agent will be held in what capacity?

Fiduciary

Under what circumstances will the contingent beneficiary receive the death benefit?

If the primary beneficiary dies before the insured

If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?

Immediately

If the Director of Insurance determines that a producer has engaged in an unfair or deceptive act, the Director may do all of the following EXCEPT

Imprison the producer

Which of the following best describes the difference between joint life and joint and survivor annuity payment options?

In joint life option, the benefits stop after the first death

Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?

Insurance application

Which of the following statements describes one of the reasons individuals purchase life insurance?

It creates an immediate estate

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT

It does not have a guaranteed death benefit

Which of the following is TRUE of level term insurance?

It is temporary protection

If a retirement plan or annuity is qualified, this means

It satisfies IRS requirements for favorable tax treatment

When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true?

Joint Life has a lower premium than the total of the two individual policies

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?

Joint and survivor

An annuitant pays the annuity premium on the 14th of each month. Which best describes the arrangement ?

Level

The Human Life Value approach to determining Life insurance needs is based upon which of the following ideas? (84)

Loss of the breadwinner's income

cash value guarantees in a whole life policy are called

Nonforfeiture values

Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?

Occupation

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?

Paid-up additions

Which dividend option will increase the death benefit? (28)

Paid-up additions

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

Key person insurance can provide protection for all of the following economic losses to a business EXCEPT

Pay the death benefit to the estate of the insured

In order to sell, solicit, or negotiate insurance, an individual may be licensed as a

Producer

Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles

Standard

Life Insurance can provide which of the following?

Survivor protection

Which type of insurance policies provides pure life insurance protection without a savings element?

Term

Which of the following statements concerning the Medical Information Bureau is correct?

The Medical Information Bureau assists underwriters in evaluating and classifying risks

What is the cost of coverage based on for group life insurance?

The average age and the ratio of men to women

In a life insurance application, all of the following signatures will be required EXCEPT

The home office underwriter

With Adjustable Life, the owner can change all of the following EXCEPT (35)

The insured

All of the following of group life insurance EXCEPT? (8)

The insureds each own their own contract

Which of the following best depicts the law of large numbers?

The larger the pool of risks under study, the more accurate the predictions will be.

Which of the following is true regarding a joint life annuity?

The payments stop at the first death

An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as

Twisting

An aleatory contract is based on what kind of exchange?

Unequal exchange of value

Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?

Unfair discrimination

Considering the principles of liquidity, how would the policy owner use today's cash values in a life insurance policy?

Use it for emergency expenses

Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes

Waiver of premium rider

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability

In life insurance, producers are permitted to share or split commissions, providing that

Both are properly licensed for the line of insurance.

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out.

Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?

Buy-Sell Agreement

An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have?

Revocable

A whole life policy that will generate immediate cash value is a

Single premium policy