Life and health
In Oregon, how long does a producer have to notify the Director of a change in location or name?
30 days
How many policies are necessary to cover a cross purchase (buy/sell agreement) between 3 people?
6
What is the penalty for excessive contributions to an IRA?
6%
How many eligible employees must be included in a contributory plan?
75%
Lisa and Lena own a shop together. They are partners in their business of 2 years. Lisa is a designer; Lena is a seamstress. Lisa worries Lena will become disabled and be unable to sew, so she inquires about purchasing insurance to be able to buy out Lena's half of the business if she becomes disabled. What does an agent tell them about a disability buy-sell plan?
A disability buy-sell plan protects the insured in case of disability. It allows the policy-owner to buy out the partner's interest in the business, and the benefits are tax free.
The term "illustration" in a life insurance policy refers to
A presentation of non- guaranteed elements of a policy
The two types of assignments are
Absolute and collateral.
At age 30, Tom wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit Tom's needs?
Adjustable Life
How is express authority conveyed onto an agent?
Agent's contract
An insurer invests the money it receives from premiums paid by its insureds. Which of the following is true regarding the interest earned on these investments?
It is used to lower premiums
Which of the following applies to the ten-day free look privilege?
It permits the policy owner to reject the policy with a full refund of premium.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It provides a higher monthly benefit than a pure life annuity
If a retirement plan or annuity is "qualified", this means
It satisfies all requirements of the Internal Revenue Service for favorable tax treatment.
Which statement is NOT true, regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
Norm and Vera own a permanent policy which covers both of their lives and pays the face amount of the policy only upon the death of the first. Norm and Vera own a
Joint Life Policy.
Which of the following statements would best describe the difference between life settlements and accelerated death benefits?
Life settlements are funded by a third party, and Accelerated Death benefits are provided by the insurer that issued the original policy.
Mary wants both protection and savings and is willing to pay premiums until retirement at age 65. The policy she will choose is
Limited pay whole life insurance.
Mary, the primary beneficiary of her husband's life policy, found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option to be used?
Mary
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable.
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 direct rollover or trustee-to-trustee transfer from one pension trustee to another pension trustee is
Not subject to the 20% withholding tax.
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease.
Which of the following statements is most correct concerning irrevocable beneficiaries?
They can be changed only with the written consent of that beneficiary.
Under what circumstances may a life insurance agent deliver a policy that is dated up to six months before the application was taken?
To allow the insured to remain in a more favorable rate class.
What is the purpose of the buyer's guide?
To ensure that people who purchase variable life insurance and annuities understand certain basic features of these types of contracts.
All of the following are uses for an annuity except:
To pay a business when a key employee retires.
How much controlled business in a calendar year is considered to be an unlawful rebate?
Twice the amount of the premiums for other health and/or life business.
The suitability rules are designed to protect consumers from:
Unfair trade practices and producer misconduct
When advertisements are used, all of the following are true EXCEPT
When covering benefits payable, it is acceptable for certain illustrations to be slightly misleading.
When an insurance company plans to seek and use information obtained from investigators, they must first provide the applicant with:
A Disclosure Authorization Notice
Regarding the primary differences between a traditional IRA and a Roth IRA, which of the following statements is not accurate?
A Roth IRA grows tax deferred.
As of January 1, 2009 Oregon will now perform all of the following checks on applicants for insurance licenses, EXCEPT
A credit history check.
The oldest type of insurance company structure is called:
A fraternal benefit society.
When Jeremiah applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by
A paramedic or examining physician at the insurer's expense.
Concerning insurance, the definition of a fiduciary is
A person who is responsible for handling insurance premiums for the insurer
The equity in an equity index annuity is linked to
An index like Standard & Poors 500.
Who can make a fully deductible contribution to their IRA?
An individual covered by an employer-sponsored plan whose earned income is below a required limit
All of the following statements concerning Waiver of Premium riders are correct EXCEPT
An insured who has recovered from a disabling injury will be required to repay the insurer for any premiums that were waived.
Which of the following is not true of Disability Buy-Sell coverage?
Benefits are considered taxable income to the business.
Which of the following would be a specific advantage life insurance has over other types of insurance?
It performs the function of cash accumulation.
Tanya wants to buy a life insurance policy that has a cash value element. Which type should she buy?
Whole Life Insurance
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?
Withdrawn amounts are taxed on a last-in-first-out basis.
Jack purchased a $100,000 Joint Life policy that covered his life and the life of his wife, Jill. Eight years later, Jack died in an automobile accident. How much will Jill receive from the policy?
$100,000
What is the shortest possible elimination period for group short-term disability benefits provided by an employer?
0 days
How much of the premium is paid by employees participating in a non-contributory plan?
0%
An insurance company forwards fixed annuity premiums to their general account, where the money is invested conservatively. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. How much will the insurer pay?
3%
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?
Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit
A 56-year-old annuitant decides to withdraw all the money from the annuity before he retires. Which of the following is correct?
An age-based penalty will be imposed for withdrawing the annuity
Which of the following applicants could the insurer charge a higher rate and not be charged with unfair discrimination?
An applicant that is a female.
Which of the following statements is true, concerning the alteration of optional policy provisions?
An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder.
Deferred Compensation Funding refers to:
Any employer retirement or savings plan that is not a qualified plan.
Which of the following is NOT true about an insurance consultant in the State of Oregon?
Any insurance adjuster may be considered a consultant.
The Director regulates insurance rates through detailed rate reviews. The Director will prohibit insurance rates that are
Any of the above.
All of the following are true of the federal tax advantages of a qualified plan, EXCEPT
At distribution, all amounts received by the employee are free of taxes.
The risk management technique that is used to prevent a specific loss by not exposing yourself to that activity is called
Avoidance.
Mr. Raines is the recipient of an Accidental Death and Dismemberment (AD&D) policy purchased by his employer. The policy pays triple indemnity in case of accidental death. If Mr. Raines died 2 months after an accident, as a result of an accident stipulated in the policy, how will the benefits paid be taxed?
Benefits received are considered income tax free.
Under which non-forfeiture option does the company pay the surrender value and have no further obligations to the policy-owner?
Cash surrender
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the
Company
In reference to fixed annuities, what comprises most of a life insurance company's general account?
Conservative investments like bonds
Which of the following situations will incur a 10% penalty for an early withdrawal from an IRA?
Contract holder is 55 1/2.
Which of the following describes the tax advantage of a qualified retirement plan?
Contributions and earnings of the plan are exempt from the employee�s taxable income.
When a life insurance policy is cancelled and the insured has selected the extended term insurance option, the cash value will be used to purchase term insurance that has a face amount
Equal to the original policy for as long a period of time that the cash values will purchase.
What is the advantage of having a qualified annuity?
Favorable tax treatment
If a beneficiary wanted a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what option would a beneficiary select?
Fixed period
Key person life insurance does NOT reimburse a company for which of the following?
For increased pension liability resulting from a key person's death.
What is the maximum period that an insurer would pay benefits in accordance with a Waiver of Premium rider?
For the duration of the disability or the contract, depending on which ends first
Life insurance death proceeds are
Generally not taxed as income
A projection of insurance needs that is based upon the capitalization of an applicant's future earnings is
Human life value approach.
When making a sales presentation for life insurance, you are required to do all of the following EXCEPT:
Inform the prospect of your role in advising and representing the client
When acting within the scope of their contract, the actions taken by an agent/producer will be assumed to be the acts of the
Insurer.
Which of the following best describes annually renewable term insurance?
It is a level term insurance.
What is the main purpose of the Seven-pay Test?
It is a test to determine a life insurance policy is funded properly and therefore qualifies for the favorable tax treatment that is provided to life insurance policies.
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Rita is a resident producer in Washington and a non-resident producer in Oregon. She got married last week and moved into a new home. What must she now do in order to comply with the state rules of Oregon?
Notify the DOI within 30 days
Cosmo has an individual life insurance policy with a face amount of $15,000. He pays a premium each month. What kind of policy did Cosmo purchase?
Ordinary Life
Which of the following is consideration on the part of an insured?
Premium Payment and application
The purpose of insurance regulation is to
Promote the public welfare.
Which of the following is true about license reinstatement?
Reinstatement fees may be double the unpaid renewal fee
Which of the following is true about license reinstatement?
Reinstatement fees may be double the unpaid renewal fee.
A replacing insurance company that uses a producer is required to do all of the following EXCEPT:
Require the producer to keep records at his or her place of business for 3 years and to make them available upon request.
An insurance policy that only requires a payment of premium at its inception and no further premiums contributions, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100, is called
Single premium whole life
Producers are required to post a Personal Information Privacy Practices notice that includes all of the following EXCEPT:
That personal information that is collected by the producer may never be disclosed without authorization
Which of the following is NOT true about a group annuity?
The annuity must be purchased by a group, but could be owned by an individual.
All of the following statements are true about credit life insurance EXCEPT:
The creditor is the owner and the insured.
Bob owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
Which of the following is not true about joint life insurance?
The death benefits can be written on a first to die or second to die basis, depending on the needs of the insureds.
What method is used to determine the taxable portion of each annuity payment?
The exclusion ratio
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown up children. Assuming that he had never changed the beneficiary, the policy proceeds will go to
The insured's estate.
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic
Which of the following best describes what the "annuity period" is?
The period of time during which accumulated money is converted into income payments
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
If a policy is rated-up, which of the following is true?
The premium increases
An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years
The premium will increase because the insured will be 5 years older than when the policy was originally purchased.
A group of 15 skydivers meet at a seminar and begin talking about life insurance during a break. Because it is expensive to get individual life insurance, they decide to band together to form a small group so that they will be eligible. They apply for small group life insurance and are rejected. Why
The purpose of the group was to purchase life insurance.
Which state has jurisdiction over a group policy that covers individuals that reside in more than one state?
The state in which the policy was delivered.
What are GMWBs and GMIBs?
The two most common types of living benefit riders for annuity contracts
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment.
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
How are fixed annuity premiums invested?
They are deposited into the insurance company's general account.