Guarantee Exam: WA Life

When an insurer tries to discourage a policyholder from dropping his/her existing policy, this is called:

Conservation effort.

Insurance provides a means to

Transfer a loss.

According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT:

If an applicant is declined for an insurance policy, he or she has no right to know what was in the report.

Regulations regarding policy replacement of life insurance protect the interest of which of the following?

Policy purchasers

If a retirement plan or annuity is "qualified", this means

it satisfies IRS requirements for favorable tax treatment.

Which of the following is NOT a standard exclusion life insurance policies?

Disability

Insurance producers always represent the:

Insurance Company

an insurance company that is owned by the policyholders is called a

mutual insurance

Which of the following statements is true regarding advertising that the Insurance Guaranty Association would ensure payment of benefits in the event of insurer insolvency?

It is an unfair trade practice to mention the Association in advertisements.

a transaction where new life insurance is purchased, and as part of the transaction, existing life insurance is surrendered:

replacement

Which of the following is NOT a type of hazard?

Exposure

decreasing term insurance is often used to:

cover a mortgage

When group insurance is provided by an employer, what is the minimum number of employees that must be covered on the date of the issue?

2

An applicant may challenge information discovered as a result of an investigative consumer report under which of the following acts?

Fair Credit Reporting Act

If an insurance company issues a policy even though some questions were unanswered, when can the insurer get the answers to those questions?

Never, the insurer has waived its right to those answers by issuing the policy

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?

The estate of the primary beneficiary and the contingent beneficiary split benefits equally. ??

After careful examination of a policy, Insured A decided that the policy wasn't what he was looking for. He returned the policy to the insurer within 10 days of the policy delivery. Which of the following is true?

The insurer will refund any premiums paid into the policy.

Life insurance can provide which of the following?

survivor protection

An insured has a life insurance policy in the amount of $250,000 naming his wife as a beneficiary. Upon his death, his beneficiary decides not to receive the death benefit for some time. When she finally receives the death benefit check, it's in the amount of $250,030. Is any portion of the proceeds that the beneficiary receives taxable?

Yes, proceeds in the excess of face amount are taxable as interest.

Producer licenses are valid from the initial licensing or reinstatement period until:

The last day of the licensee's birth month plus 2 years.

How many days is the free-look period in most life insurance polices?

10 days

Within how many business days must an insurance producer reply to an inquiry of the Commissioner relative to the business of insurance?

15

a whole life policy that will generate immediate cash value:

single premium policy

Which of the following is a provision found in life insurance policies?

Reinstatement

Which of the following is true of level term insurance?

It is temporary protection.

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is:

Taxed as ordinary income.

An insured has a life policy in the amount of $250,000 naming his wife as beneficiary. Upon his death, his beneficiary decides not to receive the death benefit for some time. When she finally receives the death benefit check, it's in the amount of $250,530. Is any portion of the proceeds that the beneficiary receives taxable?

Yes, proceeds in excess of face amount are taxable as interest.

In the event an annuitant dies during the accumulation period, and there is a beneficiary named in the annuity, annuity benefits would be paid to the

Named beneficiary

The purpose of the Fair Credit Reporting Act is to:

Protect consumers against the circulation of inaccurate or obsolete personal or financial information.

The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the:

Insuring clause

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 licensed life agent wrote a policy that covers the life of his brother. Since the policy owner was related, the agent refunded his brother the commission earned on his policy. This action would be considered:

Rebating

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

The home office underwriter.

How are policy loans calculated?

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

What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?

Not affect the amount payable to the beneficiary.

Who is the annuity owner?

The person who purchases the annuity.

Which portion of a non-qualified annuity payment is taxable?

Interest earned on principal.

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?

Misrepresentation

In order for an insurer to legally transact insurance, it must obtain which of the following?

Certificate of Authority

What type of an interest rate is guaranteed in universal life policies?

Adjustable interest rate

Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)?

An MEC must always pass the 7-pay test.

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

Attending Physician's Statement (APS)

A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years?

7 years

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?

3 days

A whole life insurance policy must contain some cash value that may be borrowed by the policy owner after it has been in force for

3 years

In life insurance underwriting, all of the following are true regarding HIV testing EXCEPT:

The person may be denied coverage based solely on the presence of HIV.

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of:

Defamation

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

Immediately

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 the policyowner select?

Joint and Survivor

Which of the following statements is CORRECT regarding associations?

All of the above?

An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed?

Twisting

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

reports may be sent to anyone who asks for them

Guaranteeing future dividends is considered to be an unfair or deceptive act known as

Misrepresentation

Which of the following would be exempt from the policy replacement regulations for insurers?

Mutual Company Policies

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

Fixed Amount

Which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy?

They are received tax free

In life insurance, which of the following is NOT required to have an insurable interest in the insured?

The beneficiary

Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to

6 months

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of

Defamation

Which of the following is NOT a standard exclusion in life insurance policies?

Disability

A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?

Family Term

A transaction where new life insurance is purchased, and as part of the transaction, existing life insurance is lapsed or surrendered, is know as:

Replacement