life insurance

How many hours of training is a producer required to take before soliciting annuity products? a)4 hours b)8 hours c)15 hours d)There are no special requirements.

4 hours

Producers in Arizona may do all of the following EXCEPT a)Forward applications to their companies. b)Bind coverage for their clients. c)Represent more than one insurance company. d)Receive applications from prospective insureds.

Bind coverage for their clients

Which of the following statements concerning buy-sell agreements is true? a)Benefits received are considered income taxable. b)Buy-sell agreements pay in the event of a medical emergency. c)Buy-sell agreements are normally funded with a life insurance policy. d)Premiums paid are deductible as a business expense.

Buy-sell agreements are normally funded with a life insurance policy

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to a)Require a yearly medical examination. b)Lower its insurability standards. c)Refuse to issue the policy. d)Charge a higher premium.

Charge a higher premium.

Which of the following is true regarding taxation of dividends in participating policies? a)Dividends are taxable only after a certain amount is accumulated annually. b)Dividends are taxable in some life insurance policies and nontaxable in others. c)Dividends are considered income for tax purposes. d)Dividends are not taxable.

Dividends are not taxable.

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

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 application b)The date of medical exam c)The date of policy delivery d)The date of issue

The date of medical exam

When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed? a)Forwarded to an investor b)Each contract's separate account c)The annuity owner's account d)The insurance company's general account

The insurance company's general account

If an insurance policy does NOT have the proper countersignature, a)The policy will still be considered valid. b)The policy will have a 60-day waiting period before going into effect. c)The insurer must issue a new policy. d)The insurer must receive the Director's approval on the policy.

The policy will still be considered valid

The 30 day payment of claims requirement applies to which of the following persons? a)A state worker filing a personal injury claim b)A person providing insurance for retirees c)A Medicare supplement policyowner d)A processing agent for a foreign insurer

a state worker filing a personal injury claim

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

absolute and collateral

Who can make changes to the policy once it is in effect? a)An executive officer of the insurer b)The insured c)The policyowner d)The agent

an executive officer of the insurer

All of the following are duties and responsibilities of producers at the time of application EXCEPT a)Change any incorrect statement on the application by personally initialing next to the corrected statement. b)Explain the nature and type of any receipt the producer is giving to the applicant. c)Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. d)Check to make sure that there are no unanswered questions on the application.

change any incorrect statement on the application by personally initialing next to the corrected statement

Every office that transacts surplus lines insurance must have on staff a person who a)Is licensed as a surplus lines broker. b)Serves as a liaison between the office and the Director. c)Lobbies for favorable tax treatment by the state. d)Updates all terms of insurance according to state law.

is licensed as a surplus lines broker

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

permanent

The producer or broker must keep at the place of business the usual and customary records pertaining to insurance transactions for at least a)Two years. b)Three years. c)Five years. d)One year.

three years

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a)Universal Life - Option B b)Equity Indexed Universal Life c)Variable Universal Life d)Universal Life - Option A

universal life- option A

Property and casualty producers can usually do something for their clients that life and health producers cannot provide. What is this service? a)Solicit applications b)Add riders c)All producers have the same powers. d)Bind coverage

bind coverage

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Payor rider. b)Other-insured rider. c)Change of insured rider. d)Juvenile rider.

other-insured rider

Another name for a substandard risk classification is a)Controlled. b)Declined. c)Elevated. d)Rated.

rated

A producer's insurance license was due for renewal but she failed to pay the required license renewal fee. Seven months later, the producer decided to pay her renewal fee. How much can she expect to pay in addition to the renewal fee? a)$0 b)$100 c)$200 d)$350

$100

Producers are required to keep records of insurance transactions for what time period? a)1 year b)3 years c)5 years d)10 years

3 years

Which of the following is NOT the consideration in a policy? a)The promise to pay covered losses b)The application given to a prospective insured c)Something of value exchanged between parties d)The premium amount paid at the time of application

The application given to a prospective insured

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

The coverage period

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

The policy is owned by the company

A Universal Life Insurance policy is best described as a/an a)Variable Life with a cash value account. b)Whole Life policy with two premiums: target and minimum. c)Flexible Premium Variable Life policy. d)Annually Renewable Term policy with a cash value account.

annually renewable term policy with a cash value account

If a married woman wishes to transact insurance under the name her maiden name, what must she do in order to be legal? a)She is not allowed to conduct insurance business under a name other than her own. b)Sign all papers with her real name and her assumed business name. c)File papers with the Director stating she will be operating under an assumed business name. d)Legally change her name back to her maiden name.

file papers with the director stating she will be operating under an assumed business name

A Universal Life insurance policy has two types of interest rates that are called a)Guaranteed and Current. b)Option A and Option B. c)Fixed and Variable. d)Minimum and Target.

guaranteed and current

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a)Assumed b)Express c)Implied d)Apparent

implied

#29. What is the major difference between a stock company and a mutual company? a)Types of policies issued b)Ownership c)Amount of benefits d)Number of producers

ownership

A policyowner has a $10,000 term life policy. He paid his annual premium on February 1. He fails to renew the policy and dies on February 28 of the following year. Accounting for the $200 of earned premium, how much will the beneficiary receive from the policyowner's insurance company? a)$10,000 b)$9,800 c)$200 d)$0

$9,800

Who might receive dividends from a mutual insurer? a)Subscribers b)Stockholders c)Agents d)Policyholders

policyholders

How long is the grace period on a group life insurance policy? a)31 days b)10 days c)14 days d)30 days

31 days

A licensed producer is granted an inactive license during military service. He is in active duty for 365 days. For how long will the time period for submission of the license renewal fee be extended? a)365 days b)180 days c)90 days d)30 days

365 days

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

The policy is owned by the company

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

The policyowner must sign a delivery receipt

Which of the following is NOT true of Section 1035 Policy Exchanges? a)It is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy. b)Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days. c)It requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy. d)It is an IRS Code which permits like kind exchanges of property.

any exchange made under section 1035 of the internal revenue code must be completed within 30 days

Which of the following statements about the reinstatement provision is true? a)It permits reinstatement within 10 years after a policy has lapsed. b)It provides for reinstatement of a policy regardless of the insured's health. c)It guarantees the reinstatement of a policy that has been surrendered for cash. d)It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

it requires the policyowner to pay all overdue premiums with interest before the policy is reinstated

Which type of insurance is based on mutual agreements among subscribers? a)Reinsurance b)Reciprocal insurance c)Mutual insurance d)Limited liability

reciprocal insurance

If a producer waits more than 1 year to renew a license after it has expired, what is the producer required to do to be licensed again? a)Pay a late fee of $100 b)Submit a license renewal application to the Director c)Become appointed by an insurer d)Retake a licensing exam

retake a licensing exam

The death protection component of Universal Life Insurance is always a)Whole Life b)Adjustable Life c)Decreasing Term d)Annually Renewable Term

annually renewable term

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? a)Company is the owner, but the executive pays the premium. b)Board of directors is the owner, and the board of directors pays the premium. c)Company is the owner, and the company pays the premium. d)Executive is the owner, and the executive pays the premium.

executive is the owner, and executive pays the premium

An insured has a Level Term Life Insurance policy that is guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insured to renew the policy and a)Change the type of insurance without evidence of insurability. b)Pay a lower renewal premium by proving insurability. c)Change the type of insurance by proving insurability. d)Pay a lower renewal premium without evidence of insurability.

pay a lower renewal premium by proving insurability

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy? a)Permanent b)An annuity c)A Modified Endowment Contact d)Term

permanent

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a)Premiums are not tax deductible as a business expense. b)Premiums are tax deductible by the key employee. c)Premiums are tax deductible as a business expense. d)Premiums are taxable to the employee.

premiums are not tax deductible as a business expense

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a)Automatically pay the policy proceeds. b)Pay the policy proceeds only if it would have issued the policy. c)Pay the policy proceeds up to an established limit. d)Not pay the policy proceeds under any circumstances.

pay the policy proceeds only if it would have issued the policy

Which of the following is a characteristic of a Reciprocal Insurance Exchange? a)Normally write all lines of insurance b)Stock holders share in any profits c)Issues nonassessable policies d)The chief administrator of the insurer is called an "attorney-in-fact".

The chief administrator of the insurer is called an "attorney-in-fact"

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

express authority

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? a)Aleatory b)Waiver c)Estoppel d)Subrogation

waiver

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as a)Utmost good faith. b)Reasonable expectations. c)A warranty. d)Implied warranty.

Utmost good faith

Which of the following policies must comply with the signature regulation for insurance policies? a)Policies issued by vending machine b)Bid bonds issued by any surety insurer c)Insurance of ocean marine risks d)An insured's initial policy with an insurer

an insured initial policy with an insurer

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)Express b)Implied c)Assumed d)Apparent

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

apparent authority

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

premium amounts and surrender values

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? a)Reasonable expectations b)Cease and desist c)Nonforfeiture d)Indemnity

reasonable expectations

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

reduced paid-up

An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have? a)Credit life b)Ordinary life c)Franchise life d)Industrial life

industrial life

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a)Statewide predetermined annual interest rate b)Insurer's guaranteed minimum rate of interest c)Investment performance of the company d)Investment performance of the insured

insurer's guaranteed minimum rate of interest

An insured owns a term policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describes this scenario? a)Preferred premium reduction b)Contract review c)Revision of consideration d)Re-entry

re-entry

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? a)Because the insured is currently not a drug user, his policy will not be affected. b)The policy will not be affected. c)The policy will be voided. d)The insurer will sue the insured for committing fraud.

The policy will not be affected

In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this? a)The right to revoke the policy b)The right to raise premiums as a result of court rulings c)The right to determine the wording of a policy d)The right to refute the rulings

The right to determine the wording of a policy

Which of the following best describes annually renewable term insurance? a)Neither the premium nor the death benefit is affected by the insured's age. b)It provides an annually increasing death benefit. c)It is level term insurance. d)It requires proof of insurability at each renewal.

it is level term insurance

What documentation grants express authority to an agent? a)Agent's insurance license b)Fiduciary contract c)State provisions d)Agent's contract with the principal

Agents Contract With the Principle

Which of the following is true regarding a risk retention group? a)It is a benefit society formed to provide insurance for members of an affiliated lodge. b)It is a company owned by the stockholders that provides nonparticipating policies. c)It is a liability insurance company owned by its members. d)It provides support for underwriters and is not an insurance company.

it is a liability insurance company owned by its members

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance? a)Gender b)Occupation c)Marital status d)Medical background

medical background

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a)The Entire Contract Provision b)The Consideration Clause c)Assignment Rights d)Owner's Rights

owners rights

Which of the following could be considered an adjuster? a)Paid claim investigators b)Licensed attorneys-at-law c)Salaried employees of insurers d)Employees of political subdivisions

paid claim investigators

An insured committed suicide one year after his life insurance policy was issued. The insurer will a)Pay the policy's cash value. b)Pay the full death benefit to the beneficiary. c)Pay nothing. d)Refund the premiums paid.

refund the premiums paid