Final Exam- Iowa Life Only

Which statement is true regarding a minor beneficiary?

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies?

Proceeds will go to the contingent beneficiary

Which of the following is example of a nonforfeiture option?

Reduce Paid-Up option

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

Reinstatement

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

Risk classification

Post-tax dollar contributions are found in

Roth IRA investments

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

An individual covered under a Group Life insurance policy is considered to be a(n)

certificate holder

T the producer is trying to dissuade a policyowner from replacing an existing insurance policy. This action by T is called

conservation

The combination of Whole Life and ____ Term insurance is referred to as a Family Income Policy

decreasing

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

exclusion

All of these are characteristics of an Adjustable Life policy EXCEPT

face amount can be adjusted using policy dividends

In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT

insured

When an employee terminated, how long does this employee have to convert group life coverage to an individual plan?

31 days

The commissioner of insurance is the chief officer of the Iowa Insurance Division and is appointed by the Governor for a ____ year term.

4

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

What does the Iowa Life and Health Insurance Guaranty Association provide?

Claim payments of admitted, insolvent insurance companies

The type of annuity that can be purchased with one monetary deposit is called a(n)

Immediate annuity

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners receive credited interest tied to the fluctuations of the linked index

B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?

Interest only

Which of these arrangements allows one to bypass insurable interest laws?

Investor-Originated Life Insurance

What is the purpose of policy summary?

It highlights the critical parts of the policy issued

k is an insured under a life insurance policy owned by a third party. Which of these statements is true?

K has no ownership rights

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key Person Life Policy

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level term

Convincing a prospective insured to buy an insurance policy based on exaggerations is called

Misrepresentation

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to

P only

Which statement is TRUE regards to a policy loan?

Past-due interest on a policy loan is added to the total debt

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan provision

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will be fully refunded

On a life insurance policy, who is qualified to change the beneficiary designation?

Policyowner

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

An unintentional violation of Iowa insurance law could lead a producer to a fine up to ____ per violation

$1,000

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

What is the maximum fine for willfully violating the unfair trade practice law of iowa

$5,000

A non-contributory plan requires _____ participation to all eligible employees.

100%

An insurance company is required to send forms for filing proof of loss to claimant within __ days after company receives notice of a claim.

15

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policyowner, C is the insured, and ABC is the beneficiary

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment clause

A policy may generate taxable income from which of the following Dividend options?

Accumulation at Interest

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance Policy

the payments on Qs annuity are no less than $250 quarterly, which of the following annuities does Q own?

Flexible Installment Deferred

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the premium

Which of the following BEST describes a warranty?

Statement guaranteed to be true

K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?

Straight life

Obtaining information from the applicant to determine whether an insurance or annuity product is appropriate is called

Suitability

A variable Annuity has which of the following characteristics?

Underlying equity investments

At what point does an informal agreement become a binding contract?

When consideration is provided by one of the parties to the contract

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

a noncontributory group term life plan is characterized by:

the entire cost of the plan is paid for by the employer

Life insurance replacement regulations protect the interests of

the policy owner

Stanger - Owned life insurance (STOLI) is when a person purchases life insurance only to sell to a(n)

third-party with no insurable interest

T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert

to an individual policy upon employment termination

ABC Insurance Company failed to accept a valid proof of loss statement. This considered to be a(n)

unfair claims practice

What type of contract liquidates an estate through recurrent payments?

annuity

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance

J is a producer who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this producer be found guilty of?

coercion

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

collateral assignment

Which of these is requirement to obtaining a resident insurance producer license in this state?

complete a pre-licensing examination

Which of the following consists of an offer, acceptance, and consideration?

contract

What is the purpose of the USA Patriot Act

detect and deter terrorism

What is one of the roles of commissioner?

enforce state insurance laws

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

A stock insurance company

is owned exclusively by its shareholders

An example of rebating would be

offering a client something of value not stated in the contract in exchange for their business

A life policyowner may sell their policy to a(n) ___ in order to receive a percentage of the policys face value.

viatical settlement provider

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)

Accidental Death and Dismemberment rider (AD&D)

Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?

5 months

At what time must a policy owner have insurable interest on the insured in order for the life policy to be valid?

At the time of application

The purpose of the _____ Period clause is to avoid an unintentional lapse of a life insurance policy.

Grace

Which of the following is a standard provision of the conversion privileges in a Group Life policy?

Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis

On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?

January 26

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to K's estate if P dies within a specified time

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium

Which of the following is TRUE is the owner of the IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouses IRA

What advantage does the renewability feature give the term policy?

The insured may extend the coverage period

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, bonds

A foreign insurance company doing business in Iowa

is a company that was formed under the laws of another state

The _________ must provide an insured with proper disclosure concerning the replacement of a life insurance policy.

producer

The Cash value in a(n) _____ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

universal

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary

Life insurance that covers an insureds whole life with level premiums paid over a limited time is called

Limited-Pay Life

K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?

Paid-Up Additional Insurance

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?

Conditional receipt

Which of these policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing term

S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?

Full benefits are payable under the Master contract

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

The gross premium is higher on a monthly payment mode as compared to being paid annually

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insurable interest in the proposed insured