Life Insurance Comprehensive Exam
I'm addition to the penalties imposed by a court, what is the maximum penalty the Commissioner can impose?
$5,000
In PA the viator in a viatical settlement transaction has the right to rescind the viatical settlement contract for ______ days after receipt of the proceeds
15
If an annuity is annuitized, then the _________ investment is recovered income tax-free over the income benefit payment period.
After-Tax
The cash received by the policyowner when he/she terminated a policy is known as what?
Cash Surrender Value
Permanent insurance is designed to provide coverage ________
For an entire lifetime
The term "mode" refers to the:
Frequency of premium payments
____ consists of groups of underwriters called Syndicates, each of which specialize in insuring a particular type of risk
Lloyds of London
ERISA (Employee Retirement Income Security Act) requires that qualified plans must:
Meet certain minimum standards
Which of the following policies cannot have a premium payment period of less than to age 100?
Ordinary Straight Whole Life
The continuing education laws of the Commonwealth of PA require that:
Producers must complete 24 hours of CE credit every 2 years
When the cash value account of a universal life policy reaches zero, the policyowner must make a premium payment or
The policy goes into the grace period
The LMC Partnership has 3 partners and is concerned about what would happen to their $300,000 business if one of the partners should die. If they consider a buy sell agreement, then each partner would have to buy a policy in the amount of $____ on the other partners
$50,000
In all cases in PA, the maximum time for an accelerated death benefit is ______ months
12
The PA Department of Insurance May issue a nontransferable temporary insurance license for up to _____ days to certain persons in specified circumstances
180
The PA Department of Insurance issues nontransferable producer licenses for a maximum of ______ years
2
What type of retirement plan is not required to have a vesting schedule, is not approved by the IRS, can discriminate in favor of highly compensated employees, and can benefit the employer?
A Non-qualified plan
If a medical exam is required as part of the underwriting process, who normally conducts the exam?
A physician or nurse
A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called ______
A policy summary
Which of the following individuals would need to be licensed as a producer under the laws of PA?
A salaried agency employee who solicits prospective buyers
All of the following statements regarding Viatical settlements in PA are correct, except:
A viatical settlement broker enters into a viatical settlement with a viator (A viatical settlement provide or enters into a viatical settlement with a viator. A viatical settlement broker negotiated viatical settlements between a viator and one of more viatical settlement providers)
Open enrollment periods are offered on a(n) ____ basis that allows individuals to enroll without evidence of insurability or to make changes
Annual
A licensee must provide clear and conspicuous notice that accurately reflects its privacy policies and practices to the licensee's customers, no later than when the licensee establishes a customer relationship, and ______ thereafter during the continuation of the customer relationship
Annually
A producer must be ____ by an insurer in order to act as a agent for that insurer
Appointed
Which provision allows an insurer to borrow from the cash value of a policy in order to pay premiums due and prevent a lapse in coverage?
Automatic Premium Loan
All of the following are nonforfeiture values, except:
Automatic premium loan
Which of the following provisions is NOT a standard provision
Backdating
All of the following statements regarding prerequisites for producer licensing are correct, except:
Business entities must complete prelicensing education requirements
By what means does the client acknowledge that an insurer may use services and information provided by third parties to gather information during the underwriting process?
By signing the application
When an insured decides to change her mode of premium payment from monthly to annually, the total premium would:
Decrease
Which of the following is a type of life insurance that provides an amount of coverage that diminishes while the policy is in effect and is most often used to pay an outstanding loan or mortgage balance upon the death of the insured?
Decreasing Term
Credit Life Insurance is usually what type?
Decreasing term
When a producer personally delivers a life insurance policy, they are responsible for doing which of the following?
Explain the policy benefits
Alice finds she no longer is able to pay premiums on her $50,000 Whole Life Policy, but needs that amount of protection for her family. Which Nonforfeiture Option provides this protection?
Extended Term
The nonforfeiture option that provides protection equal to the policy's face amount for a specified number of years and days is:
Extended Term
Producer W uses sales aids when describing policies to consumers. The sales aids falsely suggest that certain contracts are special offers and would result in special advantages for the buyers. Which unfair insurance practice does this describe?
False Advertising
What is the only way an annuity can pay out income tax free benefit payments?
Fund a Roth IRA and make a qualified distribution
Applicants must consent to be treated and be informed that testing for _____ May determine insurability.
HIV
During the application process, a mistake is made by the applicant in answering one of the health questions and needs to be corrected. What is the best way to go about this?
Have the applicant initial the change or start over with a completely new application
Which of the following correctly describes the effect of the Common Disaster Clause?
If an insured and primary beneficiary both are killed when the bus they are riding in goes over a cliff and if it cannot be determined who died first, the insured or primary beneficiary, the insured will be presumed to have survived the primary beneficiary so the contingent beneficiary will be able to receive the death proceeds
All illustrations used to sell policies in PA must meet which of the following standards?
Illustrations must separate and clearly identify guaranteed and non-guaranteed values
The Return of Premium Rider, the Return of Cash Value Rider, and the Cost of Living Rider all use which type of term insurance to accomplish their objective?
Increasing term
Debit life insurance is classified as which of the following?
Industrial or Home Service Life insurance
Annuities are classified in all of the following ways, except:
Issuer of the annuity [Annuity classifications are based on: method of premium payment (single, flexible, and periodic), funding (fixed vs. variable), when income benefits are payable (immediate vs. deferred), and the payout option selected (life only vs. annuity certain)]
Producers who maintain a premium trust account in PA:
May make voluntary deposits to maintain a minimum balance
Which of the following riders can be used to cover the life of an additional insured who is an unrated business partner?
Nonfamily Rider
The purpose of the Re-Entry Term option is to:
Obtain a new term policy at a lower rate
Which of the following is a standard industry practice for producers in order to prove that they delivered the policy mailed to them from the insurer?
Obtain a policy delivery receipt from the applicant whenever and wherever policy delivery takes place
If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance:
On his own life at certain specified ages without proof of insurability
Lucy uses her dividends to purchase single premium additional permanent benefits at her attained age. Which Dividend Option is Lucy exercising?
Paid-up Additions (Only Paid-up Additions, Paid-up Option and One-Year Term are dividend options. Reduced Paid-Up is a nonforfeiture option. Lucy wanted additional permanent benefits so she should choose Paid-up Additions.)
How can an annuity payout an income benefit income tax free?
Purchase the annuity within a Roth IRA account
In order for the life insurance policy's death benefit to remain income tax free to the beneficiary, the transfer of policy ownership must _____
Qualify for one of the exceptions
The face amount of an Ordinary Whole Life Policy ____ over the life of the policy
Remains the same
Which of the following policies would be deemed a MEC?
Single premium whole life
The Commissioner is able to impose which of the following penalties?
Suspend or revoke a license or Certificate of Authority
Which provision requires the application, the contract itself, and any riders to be attached to establish a complete contract?
The Entire Contract Provision
If the annuity policyowner and annuitant are the same person and the designated beneficiary is the annuitant's spouse, what happens if the annuitant dies during the accumulation phase?
The IRS code allows for the surviving spouse to become the new owners and tax deferral continues
All of the following are true regarding credit life, except:
The amount of coverage can exceed the debt
In which of the following circumstances is an annuity's tax deferral benefit lost?
The annuity owned by a corporation
When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place?
The applicant is making an offer to the insurer
All of the following regarding convertible term life insurance is true, except:
The conversion can take place at any time
Which of the following meets the criterion for being a natural group for group life insurance purposes?
The group was formed for a purpose other than for procuring or reducing the cost of insurance
What is the risk to the purchaser in a viatical settlement transaction?
The insured does not die within the time period anticipated
Which of the following scenarios will cause the value of a life insurance policy death benefit to be included in the insured's estate?
The insured is also the policyowner
Which of the following statements about Equity Indexed Life insurance is true?
The interest credited to the policy is based off of the performance of a stock market index like the S&P 500
Which of the following statements is correct regarding a Waiver of Premium Rider on a participating whole life policy?
The premiums are waived until either the insured recovers from the disability, the policy achieves paid-up status, or the insured dies.
A client forfeits their existing policy in order to replace it with a policy covering the same risk that was recommended by Producer J, who misrepresented the new policy to make it seem more appealing. Which unfair insurance practice is this?
Twisting
The insurer generally assumes the investment risk in all of the following annuities, except:
Variable
When does the annuities room period begin?
When the contract owner elects to convert the annuity into an income benefit payment
You can purchase a life insurance policy on all of the following persons, EXCEPT:
Your neighbor
The net amount of risk to the insurance company at the endowment date is:
Zero
K has a $100,000 traditional whole life policy with $30,000 of cash values and a $10,000 loan outstanding. What is the maximum additional amount she could borrow from the policy at this time?
$20,000
The time period within which to reinstate a lapsed life insurance policy in PA is _____ years
3
If the Commissioner has good reason to believe that any person is violating the law, they will be given _____ days' notice of a hearing, where they will have an opportunity to show cause why the Commissioner should not issue a Cease and Desist Order for the acts constituting a violation, and why administrative penalties should not be assessed.
30
Any time an agent's appointment is terminated, an insurer must notify the Commissioner within:
30 days
Insurance companies must update their Do Not Call list at least once every _____ days
31
Replacement annuity contracts in PA have a free look period of _____ days if entered into the same insurer
45
In PA, the Suitability of Annuties Act states that records must be retained for ____ years
5
If a life insurance policy does not pass the ____-pay test, it will be deemed a MEC.
7
All of the following are typically what key employee life insurance proceeds are used for, except to:
Close down the business
In a replacement transaction, all of the following are insurer duties and responsibilities, except:
Contact the client to assure that they understand the transaction
Because Marilyn made statements that were false and maliciously critical of her competitor's company and it's products while attempting to conserve several policies, she was fined for:
Defamation
Annuity income benefit payments are based on all of the following, except:
Education level
Which of the following products provides and immediate lump sum in the event of premature death?
Life insurance
An applicant inaccurately representing information on the application is guilty of:
Misrepresentation
Frank has a life insurance policy in which he chooses to have the dividends increase the death benefit. Which Dividend Option did he select?
Paid-up Additions (Paid-Up Additions purchases single premium additional permanent benefits at the insured's attained age. The additional insurance is added to the face amount and it generates cash values and dividends as if the paid up additional benefit was part of the policy)
The _____ has the right to change the premium mode
Policyowner
Beth owns a 20-Pay Life participating policy. She has decided that the dividends should be applied toward future premiums. Which Dividend Option did she choose?
Premium Reduction
All are correct statements concerning noncontributory group life, except:
Premiums are calculated by underwriting each individual in the group
The process of analyzing risk exposures and designing programs to handle them is known as:
Risk Management
______ is generally an option only for large corporations who may want to limit their risk up to a certain a dollar amount, then buy insurance above and beyond that amount
Self-insurance
If incorrect or unverifiable information is found on an applicant's Credit Report, the Fair Credit Reporting Act requires the reporting agency to:
Send the correct information to all parties who received a report within the prior 24 months
Which of the following best describes producer field underwriting?
Taking the time to probe beyond the stated questions on the application based upon the applicant's responses
The insurer's consideration is ____ while the applicant's consideration is _____.
Their promise to pay the claim / The application and premium payment
All of the following are true regarding changes or modifications to insurance policies, except:
They can be taken care of by the producer
A licensed insurance producer must also have a securities registration in order to sell which annuity product?
Variable
Which of the following policies requires a producer to have both a life and securities license to sell?
Variable Universal
Producer G delivers the required surrender comparison index to a life insurance purchaser and submits a certification of delivery. According to PA laws, how long is the insurer required to keep the producer's certification of delivery?
Until the next regular examination, which will be in 4 years.
The main purpose of the PA Insurance Guaranty Association is to:
Protect policyholders against failures of contractual obligations because of the insurer's impairment or insolvency
All of the following are acceptable conditions for payment of the accelerated death benefit of a life insurance policy in PA, except:
The insured suffers from a medical condition that would result in death in 24 months or less (The maximum time for an accelerated death benefit is 12 months)