Heath Insurance Exam review
What is the maximum annual billing for an insurer ?
1% of net premiums earned
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
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified?
15 days
No individual life insurance policy may be contested after it has been in force for how many years?
2 years
After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within
20 days
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
An insurer decided to renew a life policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified?
60 days
Is the commissioner issues an order and the person who is the object of the order demands a hearing within 30 days, within how many days must the hearing be held?
60 days
Which of the following would be considered a violation of Life insurance Advertising regulations? A) Calling an insurance policy an investment plan B) Not guaranteeing dividends C) Making oral sales presentations D) Informing the applicant the sole subject of the sale is insurance
A) Calling an insurance policy an investment plan
Which if the following is TRUE about nonforfeiture values? A) They are required by state law to be included in the policy B) They are optional provisions C) A table showing nonforfeiture values for the next 10 years must be included in the policy D) Policy owners do not have the authority to decide how to exercise nonforfeiture values
A) The are required by state law to be included in the policy
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then.. A) The benefit is received tax free B) The benefit is subject to the exclusionary rule C) IRS has no jurisdiction D) The benefit is received as taxable income
A) The benefit is received tax free
Which of the following determines the cash value of a variable life policy ? A) The performance of the policy portfolio B) The company's general account C) The policy's guarantees D) The Premium mode
A) The performance of the policy portfolio
Which of the following is NOT a goal of risk retention? A) To minimize the insured's level of liability in the event of loss B) To reduce expenses and improve cash flow C) To increase control of claim reserving and claims settlements D) To fund losses that cannot be insured
A) To minimize the insured's level of liability in the event of loss
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
Which of the following in NOT an allowable 1035 exchange? A) A life insurance policy is exchanged for an annuity B) A Whole life insurance policy is exchanged for a term insurance policy C) A whole life insurance policy is exchanged for a Universal life insurance policy D) An annuity is exchanged for another annuity
B) A Whole life insurance policy is exchanged for a term insurance policy
Every producer must maintain a place of business in this state that is.. A) That is approved by the department B) Accessible to the public C) With the exception of the resident license D) And maintain an approval rating of 60%
B) Accessible to the public
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCPET the applicant's A) Prior Insurance B) Ancestry C) Credit History D) Habits
B) Ancestry
The LEAST expensive first - year premium if found in which of the following policies? A) Level Term B) Annually Renewable Term C) Increasing Term ' D) Decreasing Term
B) Annually Renewable Term
All of the following statements concerning dividends are true EXCEPT A) Favorable investment results generate higher dividends B) Divided amounts are guaranteed in the policies C) Lower insurance company costs generate higher dividends D) They stem from favorable underwriting experience
B) Dividend amounts are guaranteed in the policies
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? A) Cash refund B) Installments for a fixed period C) Installments for a fixed amount D) Installment refund
B) Installments for a fixed period
Which of the following is true regarding the spendthrift clause in life insurance policies? A) It is the same as irrevocable settlement clause B) It can protect the policy proceeds from creditors of the beneficiary C) It allows the beneficiary to select a different settlement option D) It is only used when the beneficiary is a minor.
B) It can protect the policy proceeds from creditors of the beneficiary
All the the following are considered unfair trade practices in the business of insurance EXCEPT.. A) Defamation B) Sharing Commissions C) Boycott D) Rebating
B) Sharing Commissions Sharing Commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices.
Which of the following is the best reason to purchase life insurance rather an annuities A) To liquidate a sum of money over a lifetime B) To create an estate C) To liquidate a sum of money over a period of years D) To create regular income payments
B) To create an estate
Which of the following is NOT fundable by annuities? A) A person's retirement B) Estate liquidation C) Death benefits D) Cash accumulation for any reason
C) Death Benefits
Which of the following are true regarding taxation of dividends in participating policies ? A) Dividends are taxable in some life insurance policies and nontaxable in others B) Dividends are considered income for tax purposes C) Dividends are not taxable D) Dividends are taxable only after a certain amount is accumulated annually
C) Dividends are not taxable
All of the following are characteristics of group life insurance EXCEPT A) Individuals covered under the policy receive a certificate of insurance B) Certificate holders may covert coverage to an individual policy without evidence of insurability C) Premiums are determined by the age, sex and occupation of each individual certificate holder D) Amount fo coverage is determined according to nondiscriminatory rules
C) Premiums are determined by the age, sex and occupation of each individual certificate holder
Which of the following is NOT true regarding the annuitant ? A) The annuitant receives the annuity benefits B) The annuitant must be a natural person C) The annuitant cannot be the same person as the annuity owner D) The annuitant's life expectancy is taken into consideration for the annuity
C) The annuitant cannot be the same person as the annuity owner
The the president of the company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true ? A) A corporation can be annuitant as long as the beneficiary is a natural person B) The contract can be issued without an annuitant C) The annuitant must be a natural person D) A corporation can be annuitant as long as it is also the owner
C) The annuitant must be a natural person
A tax-sheltered annuity is a special tax-favored retirement plan available to
Certain groups of employees only
During replacement of life insurance, a replacing insurer must do which of the following? A) Guarantee a replacement for each existing policy B) Designate a new producer for a replaced policy C) Send a copy of the Notice Regarding Replacement to the Department of Insurance D) Obtain a list of all life insurance policies that will be replaced
D) Obtain a list of all life insurance policies that will be replaced
Which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy? A) The Entire Contract Provision B) The consideration clause C) Assignment Rights D) Owner's rights
D) Owner's rights
A license applicants trustworthiness and competence will be determined by all of the following except A) Misrepresentations in the application process B) Criminal record C) Regulatory actions D) Personal testimonies from previous co-workers and managers
D) Personal testimonies from previous co-workers and managers
An agent is selling a client a Variable Life Insurance policy and as an inducement shows the client a projection based upon shares or dividends paid on a similar policy. This is
Misrepresentation
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Another name for a substandard risk classification is
Rated
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
What happens to the policy coverage during the grace period?
The insured is covered as he/she was before the grace period
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years, but at a higher premium rate.
A father owns a life insurance policy on his 15-year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premium will be waived until she is 21
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will b transferred from one plan administrator to another and what is the tax consequence of a direct transfer?
$10,000, no tax consequence
Life settlements sold in Wisconsin must allow for the recession of the contract within
30 days
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase.
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for the particular class, the insured group must become
Larger
Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?
No later than 1 year from the time of purchase
A Producer is helping a married couple determine the financial needs of their children in the event one or both die prematurely. This is personal use of life insurance known as
Survivor Protection
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy ?
The employer is the owner and beneficiary
An insurance company receives an application with some information missing and issues the policy anyway. What is the called?
Waiver In insurance policies, a waiver is giving up one's known right or privilege.
Under what circumstances may an irrevocable beneficiary be changed?
With written consent of the beneficiary