(Hard) Test 4

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

What is the maximum number of continuing education hours a producer is permitted to carry over from one renewal period to the next?

12

A licensed producer must inform the Commissioner of a change of name within

30 days.

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Which of the following will NOT be a violation of the Unfair Competition Law?

A bank requiring a borrower to insure the mortgaged property

If a death benefit from a life insurance policy is not paid out in a timely manner, when does the interest begin to accrue?

After 30 days from the date the benefit is due

All of the following would be considered rebating EXCEPT

An agent misrepresents policy benefits to convince a policyowner to replace policies.

A business entity may be licensed as an insurance producer if

An employee who holds a producer's license is designated as a compliance officer.

The death protection component of Universal Life Insurance is always

Annually Renewable Term

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

Annuitization period

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

If a complaint has been filed against a producer who has been implicated in an unfair trade practice, the Commissioner will hold a hearing. When must the producer be notified of the charges?

At least 5 days prior to hearing

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his

Attained age

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license

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

Both are properly licensed or the recipient is not involved with the sale of said insurance.

Which of the following would be considered a violation of Rule 13: Life Insurance Advertising?

Calling an insurance policy an investment plan.

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

Class designation

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

Which of the following would be considered an illegal inducement to purchase insurance?

Confirming future dividends in a life insurance proposal

Which of the following is NOT an essential element of an insurance contract?

Counteroffer

What characteristic makes whole life permanent protection?

Coverage until death or age 100

A producer must do all of the following when delivering a new policy to the insured EXCEPT

Disclose commissions earned from the sale of the policy.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Executive bonus

What does "level" refer to in level term insurance?

Face amount

All of the following are dividend options EXCEPT

Fixed-period installments

Which of the following can remove the Insurance Commissioner from office?

Governor

The automatic premium loan provision is activated at the end of the

Grace period

What provision in an insurance policy extends coverage beyond the premium due date?

Grace period

What required provision protects against unintentional lapse of the policy?

Grace period. The grace period is the period of time after the premium due date that the policyowner has to pay the premium before the policy lapses.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Illegal under any circumstances

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

Insurable interest

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT

Inviting prospective clients to the grand opening of the company's new office.

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits.

What is the purpose of a free-look period in insurance policies?

It allows the insured to reject the policy with a full refund.

Which of the following best describes the MIB?

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status.

Which of the following is NOT true regarding a nonqualified retirement plan?

It needs IRS approval

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

Variable Whole Life insurance is based on what type of premium?

Level fixed

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Limited-pay Life In limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.

Which of the following best describes the unfair trade practice of defamation?

Making derogatory oral statements about another insurer's financial condition.

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government.

According to the Life Insurance Advertising Rule 13, all of the following statements are correct EXCEPT

Only written presentations by the producers are considered advertising.

Which of the following conditions is NOT necessary for becoming a nonresident producer in Indiana?

Passing the proper examination

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policyowner

Who can request changes in premium payments, face value, loans, and policy plans?

Policyowner

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required.

The Life Insurance Solicitation Regulation, Rule 24, was promulgated to do the following:

Provide information regarding insurance products

Under Rule 24, Life Insurance Solicitation, producer's duties include all of the following EXCEPT

Providing the applicant with a signed copy of the Important Notice Regarding Replacement.

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

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 of the premiums paid. Which rider is attached to the policy?

Return of premium

Which of the following describes attachments made to policies that either add or modify coverage?

Riders

Insurance is the transfer of

Risk

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people.

Which of the following is called a "second-to-die" policy?

Survivorship life

What authority is responsible for examining the operations of insurance companies in this state?

The Commissioner

Which of the following is a legal representative of a specific insurance company?

The Producer

Which of the following information will be stated in the consideration clause of a life insurance policy?

The amount of premium payment

An insurer may disclose an applicant's AID/HIV test results to all of the following EXCEPT

The applicant's previous insurer.

You know that your client is currently insured under a life policy, but you are making a sale presentation to that client for a new life policy. You must provide the client with the Important Notice Regarding the Replacement of Life Insurance and a copy of the sale proposal under all of the following situations EXCEPT

The client is converting from an existing term policy to whole life.

Which of the following is true regarding a hearing upon the nonrenewal of a producer's license?

The hearing must be held within 30 days of the written demand.

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate

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 the "owner" as it pertains to life settlement contracts?

The policyowner of the life insurance policy.

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.

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution.

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

For what reason may a life insurance producer backdate a life insurance policy?

To avoid an increase in premium rate for the insured.

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

Which type of misrepresentation persuades an insured, to their detriment, to cancel, lapse, or switch policies from one to another?

Twisting

What kind of policy allows withdrawals or partial surrenders?

Universal Life

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

Universal Life - Option A

Insurance producers who willfully violate the Indiana Insurance Code are committing a Class C misdemeanor. What is the maximum punishment they may be subjected to?

Up to 60 days in jail.

Which of the following products requires a securities license?

Variable annuity

What is the name of the insured who enters into a viatical settlement?

Viator

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

When an insurer's underwriter approves coverage

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

The main difference between immediate and deferred annuities is

When the income payments begin.

Within what timeframe should an applicant or a producer request a hearing before the Commissioner regarding the notice of denial or nonrenewal of a license?

Within 63 days after the notice of denial is mailed

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.