January

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the fac; amount of the new term policy? a) $20.000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.

$50,000

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a) Interest only b) Fixed period c) Life with period certain d) Fixed amount

Fixed period

Which is TRUE about the cash surrender nonforfeiture option? a) The policy remains active for some time after the policyholder opts for cash surrender. b) The policyholder receives the original cash value of the policy. c) Funds exceeding the premium paid are taxable as ordinary income. d) After the cash surrender, the insured is covered for a grace period of one month.

Funds exceeding the premium paid are taxable as ordinary income.

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a) Full premium refund without any charges b) Guaranteed surrender value c) No payments d) Annuity dividends

Guaranteed surrender value

All of the following are licensing requirements for a business entity, EXCEPT a) Having all employees complete continuing education courses once every 2 years. b) Demonstrating general fitness, competence, and reliability. c) Maintaining on staff at least 1 licensed person in good standing. d) Applying for a license in the same lines of authority as held by licensed designees.

Having all employees complete continuing education courses once every 2 years.

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? a) Needs approach b) Blackout approach c) Lump-sum approach d) Human life value approach (HLVA)

Human life value approach (HLVA)

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) a) Medical examination. b) Attending Physician Statement. c) Inspection report. d) Medical Information Bureau report.

Inspection report.

During partial withdrawal from a universal life policy, which portion will be taxed? a) Cash value b) Principal c) Loan d) Interest

Interest

Which of the following does a producer NOT have the authority to do? a) Negotiate contracts of insurance b) Issue policies c) Deliver policies d) Solicit insurance contracts

Issue policies

Which of the following is TRUE of a qualified plan? a) It has a tax benefit for both employer and employee. b) It does not need to have a vesting schedule. c) It may discriminate in favor of highly paid employees. d) It may allow unlimited contributions.

It has a tax benefit for both employer and employee.

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.

It may last for the lifetime of the annuitant.

What must happen when an individual policy or annuity has been personally delivered to the policyowner? a) The producer must go over the policy with the policyowner. b) A notary public must witness the exchange. c) The policyowner must sign a delivery receipt. d) The policyowner must pay the annual premium in full.

The policyowner must sign a delivery receipt.

Which of the following best defines target premium in a universal life policy? a) The maximum amount the policyowner may pay on a policy b) The minimum amount to make sure Ine policy is annually renewable c) The corridor of insurance d) The recommended amount to keep the policy in force throughout its lifetime

The recommended amount to keep the policy in force throughout its lifetime

Which is generally true regarding insureds who have been classified as preferred risks? a) They can borrow higher amounts off of their policies. b) They can decide when to pay their monthly premiums. c) They keep a higher percentage of any interest earned on their policies. d) Their premiums are lower.

Their premiums are lower.

All of the following are requirements for life insurance illustrations EXCEPT a) They may only be used as approved. b) They must identify nonguaranteed values. c) They must differentiate between guaranteed and projected amounts. d) They must be part of the contract.

They must be part of the contract.

Which of the following is NOT a characteristic of variable annuities? a) The contract owner bears the investment risk. b) Benefits are dependent on the performance of securities. c) The cash value is adjusted for inflation. d) They offer guaranteed stock performance.

They offer guaranteed stock performance.

Which of the following is NOT a goal of risk retention? a) To minimize the insured's level of liability inthe 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

To minimize the insured's level of liability inthe event of loss

The paid-up addition option uses the dividend a) To purchase a one-year term insurance in the amount of the cash value. b) To reduce the next year's premium. c) To accumulate additional savings for retirement. d) To purchase a smaller amount of the same type of insurance as the original policy.

To purchase a smaller amount of the same type of insurance as the original policy.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a) Upon conversion, the premium for the permanent policy will be based upon attained age. b) Upon conversion, the death benefit of the permanent policy will be reduced by 50%. c) Evidence of insurability is not required. d) Most term policies contain a convertibility option.

Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

Who effectuates viatical settlement contracts? a) Physicians b) Viatical settlement brokers c) Viatical settlement providers d) Lending institutions

Viatical settlement providers

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Concealment b) Indemnity c) Representation d) Warranty

Warranty

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as statedon the application. What will the company do? a) Pay the full death benefit and refund excess premium b) Pay a reduced death benefit c) Pay the full death benefit d) Pay nothing; there was a misrepresentation on the application

Pay a reduced death benefit

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? a) Jumping Juvenile b) Juvenile Premium Provision c) Waiver of Premium d) Payor Benefit

Payor Benefit

Which of the following riders would NOT cause the Death Benefit to increase? a) Cost of Living Rider b) Accidental Death Rider c) Payor Benefit Rider d) Guaranteed Insurability Rider

Payor Benefit Rider

An applicant wants to buy a policy that has a cash value element. Which type should she buy? a) Investment b) Term c) Permanent d) Stock

Permanent

Which nonforfeiture option provides coverage for the longest period of time? a) Extended term b) Paid-up option c) Accumulated at interest d) Reduced paid-up

Reduced paid-up

The policyowner pays for her life insuranc) 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) Cash option b) Reduction of premium c) Paid-up addition d) Accumulation at interest

Reduction of premium

Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called a) Approval. b) Underwriting. c) Suitability. d) Client protection.

Suitability.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a) The policyholder has the right to withdraw the accumulations at any time. b) The interest is not taxable since it remains inside the insurance policy. c) The annual dividend is retained by the company. d) The interest is credited at a rate specified by the policy.

The interest is not taxable since it remains inside the insurance policy.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) The policy is owned by the company. b) Any type of insurance policy may be used. p c) The employer pays a bonus to a selected employee to fund the policy. d) It is considered a nonqualified employee benefit.

The policy is owned by the company.

Insurers must notify the Commissioner's office as to whether or not a life insurance policy will be marketed with illustrations. Certification of that notification must be provided annually within how many days of the anniversary of the original certification? a) 10 days b) 30 days c) 60 days d) 90 days

30 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 5 days b) 7 days c) 10 days d) 3 days

5 days

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

6 months

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a) A debtor has an insurable interest in the life of a lender. b) Business partners have an insurable interest in each other. c) A married person has an insurable interest in their spouse. d) An individual has an insurable interest in their own life.

A debtor has an insurable interest in the life of a lender.

All of the following could own group life insurance EXCEPT a) A group needing low-cost life insurance. b) A group sponsored by an employer. c) An alumni group. d) A debtor group.

A group needing low-cost life insurance.

The two types of assignments are a) Complete and partial. b) Complete and proportionate. c) Absolute and collateral! d) Absolute and partial.

Absolute and collateral!

A producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the commission will the producer receive? a) All b) Half c) Quarter d) None

All

In insurance, an offer is usually made when a) An applicant submits an application to the insurer. b) The insurer approves the application and receives the initial premium. c) The agent hands the policy to the policyholder. d) An agent explains a policy to a potential applicant.

An applicant submits an application to the insurer.

Under which of the following circumstances would an insurer pay accelerated benefits? a) A couple is nearing retirement and needs a steady stream of income b) An insured is looking for a way to put her daughter through college. c) A couple wants to build a house and would like to make a larger down payment. d) An insured is diagnosed with cancer and needs help paying for her medical treatment.

An insured is diagnosed with cancer and needs help paying for her medical treatment.

The LEAST expensive first-year premium is found in which of the following policies? a) Annually Renewable Term b) Increasing Term c) Decreasing Term d) Level Term

Annually Renewable Term

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a) An offer of employment. b) Stocks, securities, or bonds. c) An offer to share in commissions generated by the sale d) Dividends from a mutual insurer.

Dividends from a mutual insurer.

The authority granted to an agent through the agent's contract is referred to as a) Absolute authority. b) Express authority. c) Apparent authority. d) Implied authority.

Express authority

With regards to premium rates, which of the following statements is NOT true? a) Pennsylvania is a "prior approval' state in that premiums rates must be filed with the Insurance Department and approved by the Commissioner. b) After a premium rate is filed, the insurer must wait 30 days or until approval is received from the Commissioner before using the new rate. c) If a premium rate is disapproved, the Commissioner must hold a hearing if requested by the insurer. d) The Commissioner sets all insurance premium rates used in Pennsylvania.

The Commissioner sets all insurance premium rates used in Pennsylvania.

All of the following statements about equity index annuities are correct EXCEPT a) The interest rate is tied to an index such as the Standard & Poor's 500. b) They invest on a more aggressive basis aiming for higher returns. c) The annuitant receives a fixed amount of return. d) They have a guaranteed minimum interest rate.

The annuitant receives a fixed amount of return.

Which of the following statements about group life is correct? a) The group sponsor receives a Certificate of Insurance. b) The policy can be converted to an individual term insurance policy. c) The cost of coverage is based on the ratio of men and women in the group. d) The premiums are higher than in an individual policy because there is no medical exam.

The cost of coverage is based on the ratio of men and women in the group.

An Adjustable Life policyowner can change which of the following policy features? a) The coverage period b) The mortality expense c) The investment account d) The insured

The coverage period

Are insurance company underwriters allowed to discriminate? a) Yes, but not unfairly b) No, higher risks pay higher premium c) No, discrimination is an unfair practice d) Yes, but only for gender

Yes, but not unfairly