Life Exam
Life Settlement
A policyowner who no longer needs a policy sells to a third party for more than its cash value. This type of transaction is called a/n
$60,000 and a third-degree misdemeanor
An individual acted as an exclusive general agent even though she was not licensed to do so. Since this offense occurred over a period of 60 days, what is the maximum penalty she faces?
$5,000
What is the maximum civil penalty per violation of the regulations of the Insurance Code that define acts that are subject to fines, or license suspension or revocation>
Reciprocal Insurers
What type of insurer uses a formal sharing agreement?
Reciprocal insurers
What type of insurer uses a formal sharing agreement?
Contract interest rate
What type of interest rate is guaranteed in universal life policies?
Extended Term
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
whole life without proof of insurability
When an insured terminates the membership in the insured group, the insured can convert to:
Both partial cash surrender and policy loan
Which distributions from a MEC would be taxable as income at the time received to the extent that the cash value of the contract immediately before the payment exceeds the investment in the contract?
It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary
Which of the following best describes life annuity with period certain option?
It provides the highest monthly benefits
Which of the following best describes pure life annuity?
Number of beneficiaries
Which of the following is NOT a component of an insurance policy premium?
Disability
Which of the following is NOT a standard exclusion in life insurance policies?
It is temporary protection
Which of the following is TRUE of level term insurance?
Fixed annuities do not provide protection against inflation
Which of the following is a correct statement about annuities?
One party accepts the exact terms of the other party's offer
Which statement best describes agreements as it relates to insurance contracts?
Joint and Survivor
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?
Proof of licensing or a letter of clearance from the previous home state
A licensee who has moved to PA from out of state must provide which of the following before becoming licensed as a resident in this state?
Payor Benefit
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?
Decreasing Term
A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
Continue to increase
A whole life policy is surrendered for a reduced paid up policy. The cash value in the new policy will
A policy is reissued with a reduction in cash value
According to life insurance replacement regulations, which of the following would be an example of policy replacement
A policy is reissued with a reduction in cash value
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
Either term insurance or permanent insurance
An adjustable life policy can assume the form of
Not tax deductible
Contributions to Roth IRA's are
not tax deductible
Contributions to Roth IRAs are
Cover a mortgage
Decreasing Term insurance is often used to
Legal and not against public policy
For a contract to be enforceable by law, the purpose of the contract must be
Misrepresentation
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
The policy's cash value minus unpaid loans and accrued interest
How are policy loans calculated?
1 month
How long is the grace period for an individual life insurance policy?
Prior to performance of the test
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?
$2,500
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
Pay the death benefit to the estate of the insured
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
The face value of the policy is payable to the beneficiary upon the death of the insured.
Life insurance creates an immediate estate. Which of the following best explains this statement?
10 Working Days
Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured?
6 months
Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period up to
Loss of the breadwinner's income
The Human Life Value Approach to determining life insurance needs is based upon which of the following ideas?
Governor
The commisioner of insurance is appointed by which authority:
Deny any payment of death benefit
The owner of a whole life policy with an accidental death rider dies by suicide after having the policy for 18 months. What is the insurance company's course of action?
Insurable Interest
To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss.
The insured
With adjustable life, the owner can change all of the following EXCEPT
Variable Universal Life
An insured's flexible premium is invested into a separate account. What type of insurance product did he purchase?
3 Days
An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?
At the insured's age 100
In whole life insurance, when is the policy cash value scheduled to equal the face amount?
Reduce the death benefit
What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?
The face amount is paid to the insured
What happens to the face amount of a whole life policy if the insured reaches the age of 100?
To compensate the company for loss of investment value
What is the purpose of the surrender charge in a deferred annuity?
Extended term
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Whole life without proof of insurability
When an insured terminates membership in the insured group, the insured can convert to
An MEC must always pass the 7-pay test
Which of the following statements is INCORRECT concerning MECs?
Being Permanently Disabled
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Insured's income
All of the following are considerations under the needs approach for life insurance EXCEPT
The insureds each own their own contract
All of the following are true of group life insurance EXCEPT
The premium is based on the age of each insured
All of the following are true of the Survivorship Life policy EXCEPT
Reports may be sent to anyone
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT
The policy face amount remains level throughout the life of the policy
All of the following statements about indexed whole life insurance are correct EXCEPT
Being permanently disabled
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Applicants who may require a larger death benefit in the future should buy convertible term insurance
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs?
Term
Which type of insurance policies provide pure life insurance protection without a savings element?
Policy dividends issued by mutual companies are guaranteed and not taxable
All of the following statements about mutual insurance companies are correct EXCEPT