Life Exam
Any surplus premiums are payable to the insured in cash may be applied to other dividend options as provided by the policy, beginning no later than the year of the policy.
3rd
Which of the following documents delivered tot he policy owner included information about premium amounts, cash values, surrender values and death benefits for specific policy years?
A policy summary
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
Both Universal Life and Variable Universal Life have a
Flexible premium
In life insurance policies, cash value increases
Grow tax deferred
In insurance transactions, fiduciary responsibility means
Handling insurer funds in a trust capacity
A life insurance policy has a legal purpose if both of which of the following elements exist?
Insurable interest and consent
If the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policyowner
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?
Return the application tot he applicant for completion.
Children's riders attached to the whole life policies are usually issued as what type of insurer
Term
Which of the following manages the Delaware Life and Health Insurance Guaranty association ?
The Board of Directors
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 insureds premiums will be waived until she is 21
If a policy includes a free-look period of at least 10 days, the Buyer's guide may be delivered to the applicant
With he policy.
The premiums paid by the employer in a business life insurance policy are
tax deductible by the employer
The interest earned on policy dividends is
taxable
Which of the following best describes annually renewable term insurance?
It is level term insurance.
Which of the following statements is true concerning the Accidental Death Rider?
It will pay double or triple the face amount
Who may accept a finders fee from an insurer for a life policy
Licensed life insurance producers
An insurer is on the verge of bankruptcy and can no longer pay the claims to the insureds. Which of the following will make sure the insureds receive their money?
The Delaware life and health Insurance Guaranty Association
Ann misstates her age on her insurance application, stating that she is 8 years older than she actually is. Which of the following is true?
The amount of benefit will be adjusted according to what the premium would have purchased at the correct age
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicants knowledge
The fair credit reporting act
Regulates consumer reports
What is the maximum, civil penalty that may be assessed for each willful violation of the insurance code?
$10,000
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
According to the standard nonforfieture law, how long does an insurer have to notify the insured if a policy owner defaults on a loan as to the cash surrender value?
60 days
If the owner of a whole life policy is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
A full death benefit
A straight life policy has what type of premium?
A level annual premium for the life of the insured
Which of the following persons is required to hold a producer license?
A person who negotiates insurance contracts
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
When an annuity is written, whose life expectancy is taken into account?
Annitant
Which of the following is TRUE about the 10-day free-look period in a Life insurance policy?
It begins when the policies delivered
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan
Traditional IRA contributions are
Tax deductible
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice
All other factors being equal, the least expensive first-year premium payment is found in
Annually Renewable term
Which type of authority is based on the actions, words, or deeds of the principal?
Apparent
What must be attached to an insurance policy in order to create an entire contract
Application
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
Conditional
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
All of the following are considered prohibited business practices EXCEPT
Convincing an applicant to choose a certain policy
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
Insuring clause
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
All of the following are true of an annuity owner EXCEPT
The owner must be the party to receive benefits.
What is the purpose of a disclosure letter?
To protect the consumer
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information?
Application
The full premium was submitted with the applications for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions clause
What does "level" refer to in level term insurance?
Face amount
Which policy component decreases in decreasing term insurance?
Face amount
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
Which authority is not stated in a producer's contract but is required for the producer to conduct business?
Implied
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
The Insurance Commission has the authority to do all of the following EXCEPT
Rewrite insurance laws at any time
Which of the following policies would be classified as a traditional level premium contract?
Straight life
Which of the following information will be stated in the consideration clause of a life insurance policy?
The amount of the premium payment
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
In a life settlement contract, whom does the life settlement broker represent?
The owner
f an insurance premium is paid by the policyowner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true?
The policy will not lapse since payment to the agent is the same as a payment to the insurer
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with the Notice Regarding Replacement
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?
Unilateral
If it is determined that a violation was committed, the Director may suspend a producer's license for
Up to 12 months
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
Viatical settlement
What is the name of the insured who enters into a vatical settlement?
Viator
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
Waiver of premium
If an applicant for a life insurance policy ad person to be insured by the policy are two different people, the underwriter would be concerned about
Whether an insurable interest exists between the individuals
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
A business owner trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral assignment
Which of the following covers the life and disability of a debtor during the time a loan is outstanding?
Credit life
What type of insurance is known as consumer credit insurance?
Credit life and health
A producer agent 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 statements concerning dividends are true EXCEPT
Dividend amounts are guaranteed in the policy.
A policy that has which of the following features would NOT be considered a prohibited policy?
Dividends on participating policies
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 value will purchase
Insurance is a contract by which one seeks to protect another from
Loss.
Mindy has been involved in a conflict with her insurance producer. She wants to know what her producer. She wants to know what her producer has the authority to do. She reviews her producer's contract and other resources and cannot find the authority in question. Which of be low is true?
Mindy's producer may or may not have out of turn. Some authorities are not written
What is the term for how frequently a policy owner is required to pay the policy premium?
Mode
Which Universal life option has a gradually increasing cash value and a level death benefit?
Option A
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex and occupation of each individual certificate holder.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
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
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life
Which of the following statements is correct concerning credit life insurance?
Credit life covers the life of a debtor during the time a loan is outstanding
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of
Coercion
The application combined with the policy forms the
Entire contract
Which of the following mandatory provisions provides for a person who pays their premium after the due date?
Grace period
For what purpose must licensees keep all records covering issued policy information?
Inspection by the Commissioner.
The term "insurance consultant" may be used interchangeably with the following terms?
Insurance Producer
All advertisements, regardless of their source of creation, are the responsibility of the
Insurer
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
On its advertisement, company claims that is has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation
In lieu of an examination of any foreign or alien insurer licensed in Delaware, the Commissioner may accept an examination report prepared by the insurance department for the company's domestic stat, as long as its insurance department is accredited under which organization?
National Association of Insurance Commissioners (NAIC)
Can the amount of credit life on a debtor exceed the amount the amount owed to the creditor?
No; the amount of credit life cannot exceed the amount owed to the creditor
Do life and health producers have authority to bind coverage?
No; the underwriting process must occur before a policy can be issued.
When is it permissible for an insurance producer to make recommendations for the termination or surrender of existing insurance?
Only if the producer has reasonable grounds to believe it is int he clients best interest.
If a producer attempts to sell insurance or urges a person to apply for a particular type of insurance, what is the producer doing?
Soliciting
The maximum interest rate that can be charged on a policy loan is
8%
How often can the Commissioner examine the accounts and records pertaining to an insurance agent?
As often as deemed appropriate
Which is a representative of 1 or more insurance companies, and must be appointed by each company they represent?
Individual licensee
Another term for the code of ethics for producers is
Market conduct
Which of the following terms can be defined as a person in an occupation requiring an advanced level of training, knowledge, or skill?
Professional
Which of the following does a producer have the authority to do?
Receive an application
Who does the agent represent?
insurer
A 40-year old man buys a whole life policy and names his wife the as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown up children. Assuming he never changed the beneficiary, the policy proceeds will go to
the insureds estate.
For which of the following is the life and health Guaranty Association liable?
The association is liable, at most, for the lesser of all of the above benefits
The Insurance commissioner is
Chosen by qualified electors for the state and commissioned by the governor.
Two individuals are in the same risk and age class; yet they are charged different rates for their insurance policies due to an insignificant factor. what is this called?
Discrimination
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
What is the maximum death benefit that eh Delaware LIFe and Health Insurance Guaranty Association will pay for heath insurance benefits for any one individual?
$100,000
How long is the incontestability period for group life policies?
2 years
How long must a licensee keep records on file, available for inspection by the Commissioner?
3 years
How long does a licensee have to notify the Commissioner of any change in address?
30 days
If the Commissioner chooses to issue a fine to a licensee, instead of revoking or suspending the license, how long does the licensee have to pay the fine?
30 days
After a loan is requested off a life insurance policy, how long does an insurer have to disperse funds?
6 months
Which of the following fulfills the fiduciary relationship between a person and brokerage, authorizing the brokerage to act as the producer?
Agency
Which statement is Not true of an individuals applying for a nonresident insurance license in Delaware?
All applicants must take the state-specific test
which of the following must be included with a group certificate of credit life insurance
All of the above
Which of the following is an example of a producer being involved in a unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchases the insurance policy today
If a claim is submitted during the grace period of an annuity contract, which of the following will occur?
The amount of payment due, plus interest, will be subtracted from the benefit paid
What happens when an insurer fails to notify the ousted under a group plant that they have become eligible to convert to an individual policy within the allotted 15 days?
The insured is entitled to another 15 days.
Which of the following is true regarding compensation for the LIF and Health Insurance Guarantee Association's Board of Directors?
They must be reimbursed for the incurred expenses
An insured A has never shopped for life insurance and would like to obtain literature describing policy types and concerns that he should consider as he reviews each one. Which of the following would best meet A's needs?
Buyers guide
When a producer is soliciting life insurance, what must he or she provide to the prospective insured?
Buyers guide
In order for an insurer to be authorized to transact insurance, it will need to obtain a
Certificate of authority
What is the term used for the practice of changing old policies with new ones for the purpose of receiving commissions?
Churning
In group life insurance, which of the following is true regarding coverage for family members or dependents?
Coverage may be limited or excluded based on evidence of insurability
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium.
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 prior to the child reaching the maximum coverage age.
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change.
The death benefit can be increase by providing evidence of insurability.
An employee is insured under employer's group life plan. If she terminates her group coverage, which of the following statements are INCORRECT?
The insured may choose to convert to term or permanent individual coverage.
What is true about a spouse term rider?
the rider is usually level term insurance.
