Insurance Exam
c)SEC registration.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT a)A securities license. b)A life insurance license. c)SEC registration. d)FINRA registration.
c)Insurer.
All advertisements are the responsibility of the a)Advertising agency. b)Department of Insurance. c)Insurer. d)Soliciting agent.
d)Attained age.
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 a)Experience Rating. b)Group rate. c)Insurer's scheduled rate. d)Attained age.
c)Joint Life Policy
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? a)Second-to-Die b)Family Income Policy c)Joint Life Policy d)Survivorship Life Policy
b)Guaranteed insurability option
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Nonforfeiture options b)Guaranteed insurability option c)Dividend options d)Guaranteed renewable option
d)Are subject to vesting requirements.
Employer contributions made to a qualified plan a)May discriminate in favor of highly paid employees. b)Are after-tax contributions. c)Are taxed annually as salary. d)Are subject to vesting requirements.
a)Solvent.
Every insurance company in the state of New York must file annually with the office of the Superintendent to show that it is a)Solvent. b)Admitted. c)Certified. d)Authorized.
d)Income for 2 or more recipients until they die.
Life income joint and survivor settlement option guarantees a)Payment of interest on death proceeds. b)Payout of the entire death benefit. c)Equal payments to all recipients. d)Income for 2 or more recipients until they die.
d)Any form of life insurance
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? a)Term insurance only b)Permanent insurance only c)Universal life insurance only d)Any form of life insurance
b)Death benefit
Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type? a)Nonforfeiture values b)Death benefit c)Premium d)Cash value
c)Taxable.
The interest earned on policy dividends is a)Tax deductible. b)40% taxable, similar to a capital gain. c)Taxable. d)Nontaxable.
c)50%
The law states that an insurer is allowed to pay the entire Death Benefit to the insured if they qualify to use the Accelerated Death Benefit Rider; however, most insurers limit the amount of the Death Benefit paid to a)75% b)30% c)50% d)60%
d)On the agent's birthday every odd-numbered year
An insurance agent was born in 1983. He obtained his New York insurance license in 2014. When will the agent's license expire? a)January 1st every even-numbered year b)Every year on the license issue date c)Every 2 years on the license issue date d)On the agent's birthday every odd-numbered year
a)The owner
In a life settlement contract, who does the life settlement broker represent? a)The owner b)The insurer c)The beneficiary d)The life settlement intermediary
a)Unilateral
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?a)Unilateral b)Unidirectional c)Aleatory d)Conditional
c)Premium always remains level.
In term policies, what happens to the premium throughout the term of the policy? a)Premium gradually decreases. b)Premium fluctuates. c)Premium always remains level. d)Premium gradually increases.
b)Premiums.
All of the following are examples of risk retention EXCEPT a)Self insurance. b)Premiums. c)Deductibles. d)Copayments.
d)Attending Physician Statement
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? a)A complete medical record b)Sworn health affidavit from the applicant c)Statement of Continued Good Health d)Attending Physician Statement
c)Rated.
Another name for a substandard risk classification is a)Declined. b)Elevated. c)Rated. d)Controlled.
c)$9,800
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? a)$0 b)$200 c)$9,800 d)$10,000
d)At least 3 years
If compensation is authorized, it must be made in writing, including the amount of compensation and signed by the person to be charged. How long must a copy of this record be kept? a)At least 5 years b)At least 1 year c)At least 2 years d)At least 3 years
c)The beneficiary.
In a group life insurance policy, the employer may select all of the following EXCEPT a)The amount of insurance. b)The premium payor. c)The beneficiary. d)The type of insurance.
b)Suitability.
Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called a)Underwriting. b)Suitability. c)Client protection. d)Approval.
c)Policyowner
Which of the following individuals must have insurable interest in the insured? a)Underwriter b)Producer c)Policyowner d)Beneficiary
b)Tax deductible.
Traditional IRA contributions are a)Partially tax deductible depending on the income level. b)Tax deductible. c)Deducted based on the income level. d)Never tax deductible.
b)An individual not covered by an employer-sponsored plan who has earned income
Who can make a fully deductible contribution to a traditional IRA? a)A person whose contributions are funded by a return on investment b)An individual not covered by an employer-sponsored plan who has earned income c)Anybody: all IRA contributions are fully deductible regardless of income level d)Someone making contributions to an educational IRA
b)Annually Renewable Term policy with a cash value account.
A Universal Life Insurance policy is best described as a/an a)Flexible Premium Variable Life policy. b)Annually Renewable Term policy with a cash value account. c)Variable Life with a cash value account. d)Whole Life policy with two premiums: target and minimum.
d)The benefit is received tax free.
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 subject to the exclusionary rule. b)IRS has no jurisdiction. c)The benefit is received as taxable income. d)The benefit is received tax free.
a)Survivor protection
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a)Survivor protection b)Life planning c)Survivorship insurance d)Juvenile protection provision
b)Taxation on accumulation
All of the following would be different between qualified and nonqualified retirement plans EXCEPT a)IRS approval requirements b)Taxation on accumulation c)Taxation of withdrawals d)Taxation of contributions
d)120 days.
If a person has been found liable for a civil penalty in a hearing, that ruling can be entered as a judgment and enforced after a)45 days. b)60 days. c)90 days. d)120 days.
a)Settlement option.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a)Settlement option. b)Nontaxable exchange. c)Nonforfeiture option. d)Rollover.
d)Waiver of premium.
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a)Guaranteed insurability. b)Waiver of cost of insurance. c)Payor benefit. d)Waiver of premium.
c)Option A
Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Term insurance b)Option B c)Option A d)Juvenile life
a)It may last for the lifetime of the annuitant.
Which of the following is TRUE regarding the annuity period? a)It may last for the lifetime of the annuitant. b)During this period of time the annuity payments grow interest tax deferred. c)It is also referred to as the accumulation period. d)It is the period of time during which the annuitant makes premium payments into the annuity.
c)The annuitant assumes the risks on investment.
Which of the following is TRUE regarding variable annuities? a)The company guarantees a minimum interest rate. b)A person selling variable annuities is required to have only a life agent's license. c)The annuitant assumes the risks on investment. d)The funds are invested in the company's general account.
a)Annuity certain
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated? a)Annuity certain b)Fixed annuity c)Refund life d)Variable annuity
c)Cybersecurity Policy
Which of the following is an approved written document that identifies procedures in place to keep the insurer's Information System safe? a)Privacy Disclosure b)Consumer Report c)Cybersecurity Policy d)Certificate of Coverage
b)Premiums are not tax deductible as a business expense.
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a)Premiums are taxable to the employee. b)Premiums are not tax deductible as a business expense. c)Premiums are tax deductible by the key employee. d)Premiums are tax deductible as a business expense.
b)Admitted
Which of the following is the closest term to an authorized insurer? a)Legal b)Admitted c)Certified d)Licensed
d)Defamation
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a)Undercutting b)Twisting c)Slandering d)Defamation
a)A firm who acts on behalf of the insurer
An independent adjuster may include which of the following? a)A firm who acts on behalf of the insurer b)Officer, director or regular salaried employee of an insurer c)Adjustment bureau or association owned by the insurers d)Attorney at law
d)Debtor in creditor
Which of the following is NOT an example of insurable interest? a)Business partners in each other b)Employer in employee c)Child in parent d)Debtor in creditor
d)Beneficiaries are not identified by name.
Which of the following is TRUE about a class designation? a)Beneficiaries must be part of the insured's immediate family. b)It is not allowed. c)It determines the succession of beneficiaries. d)Beneficiaries are not identified by name.
a)Single Life
Which settlement option provides a single beneficiary with income for the rest of his/her life? a)Single Life b)Fixed Amount c)Lump Sum d)Retained Assets
a)Join during the open enrollment period
An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do? a)Join during the open enrollment period b)Provide medical records to the insurer c)Sign a statement of continued good health d)Nothing: proof of insurability is never required in group policies
d)Direct response marketing
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? a)Independent agency marketing b)Illegal c)Insurance telemarketing d)Direct response marketing
d)Universal life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Variable life b)Decreasing term c)Straight whole life d)Universal life
a)Single Premium
Which type of life insurance policy generates immediate cash value? a)Single Premium b)Level Term c)Decreasing Term d)Continuous Premium
a)The date of medical exam
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a)The date of medical exam b)The date of policy delivery c)The date of issue d)The date of application
c)$100,000
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?a)Nothing b)$50,000 c)$100,000 d)$200,000
c)Reinstatement provision
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? a)Incontestable clause b)Grace period c)Reinstatement provision d)Waiver of premium provision
c)Must be informed of the source of the report.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a)Must be advised that a copy of the report is available to anyone who requests it. b)May sue the reporting agency in order to get inaccurate data corrected. c)Must be informed of the source of the report. d)Are entitled to obtain a copy of the report from the party who ordered it.
d)Policyowner
Which of the following has the right to convert the existing term coverage to permanent insurance?a)Insurer b)Beneficiary c)Producer d)Policyowner
b)Apparent
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? a)Assumed b)Apparent c)Express d)Implied
a)$50,000
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits? a)$50,000 b)$62,500 c)$75,000 d)Nothing
c)It is a percentage of the cash value and decreases over time.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? a)It is a flat fee determined by the annuity owner when the annuity is purchased. b)It will increase as the accumulation period increases. c)It is a percentage of the cash value and decreases over time. d)It is always 7% of the cash value
a)Reduction of premium
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? a)Reduction of premium b)Paid-up addition c)Accumulation at interest d)Cash option
b)Interest only option
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?a)Fixed amount option b)Interest only option c)Life income with period certain d)Joint and survivor
b)The annuitant must be a natural person.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a)The contract can be issued without an annuitant. b)The annuitant must be a natural person. c)A corporation can be an annuitant as long as it is also the owner. d)A corporation can be an annuitant as long as the beneficiary is a natural person.
b)Nothing; the payments will cease.
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive a)The remainder of the principal. b)Nothing; the payments will cease. c)Guaranteed minimum benefit. d)The amount paid into the annuity.
d)Purchase a single premium policy for a reduced face amount.
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a)Purchase a term rider to attach to the policy. b)Pay back all premiums owed plus interest. c)Receive payments for a fixed amount. d)Purchase a single premium policy for a reduced face amount.
c)At the time of application
When must the Buyer's Guide be delivered to the proposed insured? a)At the time the first premium is paid b)At the time the appointment is set for the first presentation c)At the time of application d)At policy delivery
d)The rider is usually level term insurance.
Which is true about a spouse term rider? a)Coverage is allowed for an unlimited time. b)The rider is decreasing term insurance. c)Coverage is allowed up to age 75. d)The rider is usually level term insurance.
b)Notice Regarding Replacement
Which of the following documents must be provided to the policyowner or applicant during policy replacement? a)Policy illustrations b)Notice Regarding Replacement c)Disclosure Authorization Form d)Buyer's Guide and Policy Summary
b)Those who have been insured under the plan for at least 5 years
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? a)Those who have no history of claims b)Those who have been insured under the plan for at least 5 years c)Those who have worked in the company for at least 3 years d)Those who have dependents
a)Reciprocal
Which of the following insurance options would be considered a risk-sharing arrangement? a)Reciprocal b)Stock c)Mutual d)Surplus lines
d)A whole life insurance policy is exchanged for a term insurance policy.
Which of the following is NOT an allowable 1035 exchange? a)A whole life insurance policy is exchanged for a Universal life insurance policy. b)An annuity is exchanged for another annuity. c)A life insurance policy is exchanged for an annuity. d)A whole life insurance policy is exchanged for a term insurance policy.
b)Payments stop after the first death among the annuitants.
Which of the following is NOT true about a joint and survivor annuity benefit option? a)The surviving annuitant may receive reduced payments. b)Payments stop after the first death among the annuitants. c)A period certain option may be included. d)This option guarantees income for two or more recipients.
d)It is issued to group insurance participants.
Which of the following is NOT true regarding a Certificate of Authority? a)It may be necessary for transacting business in a specific state. b)It is equivalent to an insurance license. c)It is issued by the state department of insurance. d)It is issued to group insurance participants.
d)It needs IRS approval.
Which of the following is NOT true regarding a nonqualified retirement plan? a)Contributions are not currently tax deductible. b)It can discriminate in benefits and selecting participants. c)Earnings grow tax deferred .d)It needs IRS approval.
b)It does not guarantee that the entire principal amount will be paid out.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?a)Payments can be made in installments and as a single cash refund. b)It does not guarantee that the entire principal amount will be paid out. c)It is a life contingency option. d)The beneficiary receives the remainder of the principal amount upon the annuitant's death.
c)The annuitant cannot be the same person as the annuity owner.
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.
d)Creditor is the policyowner.
Which of the following is TRUE about credit life insurance? a)Debtor is the annuitant. b)Creditor is the insured. c)Debtor is the policy beneficiary. d)Creditor is the policyowner.
b)It is a period during which the payments into the annuity grow tax deferred.
Which of the following is TRUE regarding the accumulation period of an annuity? a)It is limited to 10 years. b)It is a period during which the payments into the annuity grow tax deferred. c)It is also referred to as the annuity period. d)It is a period of time during which the beneficiary receives income
d)It provides income the beneficiary cannot outlive.
Which of the following is true regarding a single life settlement option? a)Payments continue until the entire principal is exhausted. b)Proceeds are paid out in a lump sum. c)It provides income for a specified period of time. d)It provides income the beneficiary cannot outlive.
a)The policyowner is entitled to policy loans.
Which of the following statements is correct regarding a whole life policy? a)The policyowner is entitled to policy loans. b)Cash values are not guaranteed. c)The policy premium is based on the attained age. d)The death benefit may increase or decrease during the policy period.
c)Decreasing term
Which of the following types of insurance policies is most commonly used in credit life insurance? a)Whole life b)Equity indexed life c)Decreasing term d)Increasing term
c)Universal life
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? a)Variable life b)Adjustable life c)Universal life d)Flexible life
d)Creating an estate
Which of the following will NOT be an appropriate use of a deferred annuity? a)Accumulating retirement funds b)Accumulating funds in an IRA c)Funding a child's college education d)Creating an estate
d)Premium amounts and surrender values
Which of the following will be included in a policy summary? a)Copies of illustrations and application b)Comparisons with similar policies c)Primary and secondary beneficiary designations d)Premium amounts and surrender values
a)3 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? a)3 days b)5 days c)10 days d)14 days
d)Extended Term
Which nonforfeiture option has the highest amount of insurance protection? a)Conversion b)Decreasing Term c)Reduced Paid-up d)Extended Term
d)Yes. The Superintendent has the power to make an investigation within this state or outside of the state.
Can the Superintendent investigate fraudulent claims if they occurred outside of the resident's state according to the Insurance Fraud Prevention Act? a)Yes, but only if it is a violation of another state's insurance law. b)No. Because insurance is regulated by the state, all claims must occur within state boundaries. c)No. If fraudulent acts are believed to have been committed, the Superintendent must notify the state's Superintendent or Commissioner. It will then become a federal matter. d)Yes. The Superintendent has the power to make an investigation within this state or outside of the state.
c)The amount of contributions made by the employer is determined by an actuarial formula.
Which of the following characteristics applies to defined benefit plans but not defined contribution plans? a)Employers can choose not to make contributions for a particular year. b)They are subject to the rules of ERISA. c)The amount of contributions made by the employer is determined by an actuarial formula. d)They are qualified plans.
d)A policy summary
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? a)A notice regarding replacement b)A privacy notice c)A buyer's guide d)A policy summary
b)To purchase a smaller amount of the same type of insurance as the original policy.
The paid-up addition option uses the dividend a)To accumulate additional savings for retirement. b)To purchase a smaller amount of the same type of insurance as the original policy. c)To purchase a one-year term insurance in the amount of the cash value. d)To reduce the next year's premium.
c)Installments for a fixed period
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)Installment refund b)Cash refund c)Installments for a fixed period d)Installments for a fixed amount
d)One-sided: only one party makes an enforceable promise.
What is a definition of a unilateral contract? a)Two or more parties go into a contract understanding there may be an unequal exchange of value. b)One author: the company wrote the contract; the insured must accept it as written. c)If one party makes a condition, the other party can counteroffer. d)One-sided: only one party makes an enforceable promise.
c)The original age is used for premium determination
What is the advantage of reinstating a policy instead of applying for a new one? a)The face amount can be increased b)The cash values have gained interest while the policy was lapsed c)The original age is used for premium determination d)Proof of insurability is not required
d)$2,500
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?a)$1,000 b)$100 per violation c)Revocation of license d)$2,500
c)It is intended to provide coverage on a date prior to the policy issue.
What is the purpose of a conditional receipt? a)It serves as proof that the applicant has been determined insurable. b)It is given only to applicants who fully prepay the premium. c)It is intended to provide coverage on a date prior to the policy issue. d)It guarantees that a policy will be issued in the amount applied for.
d)6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months
b)Increasing Term
What type of insurance would be used for a Return of Premium rider? a)Annually Renewable Term b)Increasing Term c)Level Term d)Decreasing Term
a)It is reduced to the amount of what the cash value would buy as a single premium.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a)It is reduced to the amount of what the cash value would buy as a single premium. b)It is increased when extra premiums are paid. c)It decreases over the term of the policy. d)It remains the same as the original policy, regardless of any differences in value.
