Life Insurance Exam - Chuck Johnson

The insurer must maintain copies of Notice Regarding Replacement and the comparative information form, policy summary, and all sales materials until the next regular examination by the Department of Banking and Insurance or for at least...

5 years

The term "illustration" in a life insurance policy refers to a. Pictures accompanying a policy b. charts and graphs c. A presentation of nonguaranteed elements of a policy d. A depiction of policy benefits and guarantees

A presentation of nonguaranteed elements of a policy

This rider pays some multiple of the face amount if death is the result of an accident as defined in the policy. Death must usually occur within 90 days of such an accident. The benefit is normally two times (double indemnity) the face amount

Accidental Death Rider

A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it? a. Flexible b. Deferred c. Variable d. Immediate

Immediate - With an immediate annuity, distribution starts within 1 year of purchase

Solicitation rules would apply to which of the following types of coverage?

Whole life - Solicitation rules do not apply to annuities, credit life insurance, group policies, variable life insurance, or life insurance policies issued in connection with pension or welfare plans

A licensee violates an insurance regulation. A hearing is held, and the person is found guilty. If this is the person's first offense, the penalty is no more than

$5,000

An insurer must keep all sales materials for at least how long?

5 years

During policy replacement, the replacing insurer must notify existing insurer within what time period?

5 business days

If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days?

15

An insured replaces his current policy with one offered by another insurer. If he finds that he is unsatisfied with the new policy, within what period of time can he return it and receive a full refund?

30 days

If an insured requires an application in order to reinstate a policy, and if the insured requests reinstatement in writing, an application must be delivered to the insured within

30 days

To sell variable life insurance policies, an agent must receive all of the following EXCEPT a. A life insurance license b. A SEC registration c. A FINRA registration d. A securities license

A SEC registration

When an annuity is written, whose life expectancy is taken into account? a. Beneficiary b. Life expectancy is not a factor when writing an annuity c. Owner d. Annuitant

Annuitant

This provision, which is commonly added to contracts with cash value at no additional charge, prevents the unintentional lapse of a policy due to a nonpayment of the premium

Automatic Premium Loans

This rider allows children of the insured to be added to coverage for a limited period of time for a specified amount.

Children's Term Rider

Which of the following would be the beneficiary in credit life insurance?

Creditor

Under this Option, the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.

Extended Term Option

An agent selling variable annuities must be registered with a. Department of insurance b. The guaranty association c. SEC d. FINRA

FINRA

Misrepresenting an insurance policy as a share of stock is an example of which of the following?

False Advertising

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

This clause prevents an insurer from denying a claim due to statements in the application after the policy has been in force for 2 years, even if there has been a material misstatement of facts or concealment of a material fact

Incontestability Clause

What are the two components of a universal policy?

Insurance and cash account

Collateral Assignment

Involves a transfer of partial rights to another person. It is usually done in order to secure a loan or some other transaction. A collateral assignment is a partial and temporary assignment of some of the policy rights. Once the debt or loan is repaid, the assigned rights are returned to the policyowner

Absolute assignment

Involves transferring all rights of ownership to another person or entity. This is a permanent and total transfer of all the policy rights. The new policyowner does not need to have an insurable interest in the insured

Variable Life Insurance is based on what kind of premium? a. Decreasing b. Graded c. Level Fixed d. Increasing

Level Fixed

Because permanent life insurance policies have cash values, certain guarantees are built into the policy that cannot be forfeited by the policy owner. These guarantees are required by state law to be included in the policy

Nonforfeiture values

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement

This rider provides coverage for one or more family member other than the insured

Other insured rider

The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy. No new separate policies are issued; however, each of these small single premium payments will increase the death benefit of the original policy by whatever amount the dividend will buy

Paid-up Additions

Usually, the insurer first accumulates the dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early

Paid-up Option

This rider is primarily used with juvenile policies. If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

Payor Benefit Rider

Most commonly, the reduced option is written as "joint and 1/2 survivor? or "joint and 2/3 survivor" in which the surviving beneficiary receives 1/2 or 2/3 of what was received when both beneficiaries were alive

REMEMBER

Under this policy option, the policy cash value is used by the insurer as a single premium to purchase a completely paid-up permanent policy that has a reduced face amount from that of the former policy. The new reduced policy builds its own cash value and will remain in force until death or maturity.

Reduced Paid-up Insurance Option

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

The policy owner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

Reduction of Premium

The interest earned on policy dividends is a. Tax deductible b. 40% taxable, similar to a capital gain c. Taxable d. Nontaxable

Taxable

Nonforfeiture values guarantee which of the following for the policy owner?

That cash value will not be lost

The initial amount of credit life insurance may NOT exceed

The amount to be repaid under the contract

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

The coverage period

Which of the following statements about a life insurance policy would be allowed in an insurance advertisement?

This is a term life insurance policy - All ads must be truthful and not misleading. The policies must be identified as life insurance policies, and cannot be referred to as investment or savings plans.

What is the purpose of establishing the target premium for a universal life policy? a. To cover all policy expenses b. To keep the policy in force. c. To accumulate cash value faster d. To pay up the policy faster

To keep the policy in force.

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting - Twisting is a misrepresentation that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from one to another

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

Which of the following Life insurance policies would be considered interest sensitive? a. Increasing term b. Universal Life c. Adjustable life d. Whole life

Universal Life

This rider is found in Universal Life Insurance. In the event of disability of the insured, this rider waives the cost of the insurance and other expenses, but does not waive the cost of premiums necessary to accumulate cash values

Waiver of Cost of Insurance

This rider waives the premium for the policy if the insured becomes totally disabled. Most insurers impose a 6 month waiting period from the time of disability until the first premium is waived

Waiver or Premium

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as

coercion

If an insurer requires an application in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured

within 30 days of the insured's request

A producer was found guilty of a 3rd violation of the Insurance Code. What would be the monetary penalty he will have to pay? 1. $25,000 2. $5,000 3. $10,000 4. $15,000

$10,000

When must insurable interest exist in a life insurance policy?

At the time of application

All of the following statements are correct regarding Credit Life Insurance EXCEPT 1. Benefits are paid to the borrower's beneficiary. 2. The amount of insurance permissible is limited per borrower. 3. Premiums are usually paid by the borrower. 4. Benefits are paid to the creditor.

Benefits are paid to the borrower's beneficiary.

How is the Insurance Guaranty Association funded?

By its members - authorized insurers

In order for an insurer to legally transact insurance, it must obtain which of the following? (Choose from the following options) 1. Certificate of Authority 2. Power of Authority 3. Director's Decree 4. Authorization of Power

Certificate of Authority

All of the following are duties and responsibilities of producers at the time of application EXCEPT 1. Explain the nature and type of any receipt the producer is giving to the applicant. 2. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. 3. Check to make sure that there are no unanswered questions on the application. 4. Change any incorrect statement on the application by personally initialing next to the corrected statement.

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

What is the advantage of having a qualified annuity? (Choose from the following options) 1. Higher dividends 2. Favorable tax treatment 3. No filing with the IRS 4. Receiving a lump-sum settlement tax free

Favorable tax treatment

Which of the following will be included in a policy summary? 1. Comparisons with similar policies 2. Primary and secondary beneficiary designations 3. Premium amounts and surrender values 4. Copies of illustrations and application

Premium amounts and surrender values

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a 1. Warranty. 2. Premium receipt. 3. Statement of good health. 4. Backdated receipt.

Premium receipt.

All of the following are characteristics of group life insurance EXCEPT (Choose from the following options) 1. Certificate holders may convert coverage to an individual policy without evidence of insurability. 2. Premiums are determined by the age, sex and occupation of each individual certificate holder. 3. Amount of coverage is determined according to nondiscriminatory rules. 4. Individuals covered under the policy receive a certificate of insurance.

Premiums are determined by the age, sex and occupation of each individual certificate holder.

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? (Choose from the following options) 1. Proof of insurability is not required. 2. Medical exam 3. Her parents' federal income tax receipts 4. Medical exam and parents' medical history

Proof of insurability is not required.

The Federal Fair Credit Reporting Act a. Prevents money laundering b. Regulates consumer reports c. Protects customer privacy d. Regulates telemarketing

Regulates Consumer reports

Investigative Consumer Reports

The customer's associates, friends, and neighbors provide the report's data

The Paul vs. Virginia case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today?

The decision has changed. Insurance is considered to be interstate commerce, and is subject to regulation by the federal government.

What is the purpose of establishing the target premium for a universal life policy? a. To accumulate cash value faster b. To pay up the policy faster c. To cover all policy expenses d. To keep the policy in force

To keep the policy in force

If an applicant for a life insurance policy is found to be 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

If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days? a) 10 b) 15 c) 20 d) 30

15 - correct

If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days? 1. 10 2. 15 3. 20 4. 30

30

Licensees must notify the Department within how many days of any change of address? (Choose from the following options) 1. 10 2. 15 3. 20 4. 30

30

A "certification of license status" report can be run on any currently licensed New Jersey producer, but can only contain information on formal disciplinary actions taken within the past a) 6 months. b) 4 years. c) 7 years. d) 10 years.

4 years.

The company owes premium money to the insured. The insurer gave the funds to the producer to return to the insured. Within how many days must the producer pay the insured? 1. 5 2. 10 3. 14 4. 30

5

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement? (Choose from the following options) 1. Rebating 2. False financial statement 3. Defamation 4. Twisting

False financial statement

Both Universal Life and Variable Universal Life have a a. Decreasing premium b. Increasing premium c. Flexible premium d. Level fixed premium

Flexible premium

What required provision protects against unintentional lapse of the policy? (Choose from the following options) 1. Reinstatement 2. Grace period 3. Assignment 4. Payment of premiums

Grace period

Credit Life insurance 1. Has a maximum term for insurance of 20 years. 2. Insures the life of a debtor. 3. Is purchased on an installment basis. 4. Insures the life of a creditor.

Insures the life of a debtor.

All of the following are Nonforfeiture options EXCEPT 1. Reduced paid-up 2. Interest only 3. Cash surrender 4. Extended term

Interest only

Which of the following is not true about a group annuity? a. It can be qualified b. It can be tax deferred c. It can be owned by individual employees d. It can be noncontributory

It can be owned by individual employees

What is the main purpose of the Seven-pay Test? (Choose from the following options) 1. It guarantees interest minimum. 2. It determines if the insurance policy is an MEC. 3. It requires level premium payments for 7 years. 4. It ensures that the policy benefits are paid out in 7 years.

It determines if the insurance policy is an MEC.

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

Equity indexed annuities

seek higher returns

How many days does a producer have to remit the collected premiums to the insurer? a. 3 business days b. 5 business days c. 10 calendar days d. 30 calendar days

5 business days

Who is a third-party owner? 1. An irrevocable beneficiary 2. A policyowner who is not the insured 3. An insurer who issues a policy for two people 4. An employee in a group policy

A policyowner who is not the insured

This rider pays the principal (face amount) for accidental death, and pays a percentage of that amount, or a capital sum, for accidental dismemberment

Accidental Death and Dismemberment Rider

Which of the following is a duty of the Commissioner of insurance in this state? a. Amend rules and regulations b. Imprison Insurance Code violators c. Establish insurance rates d. Appoint individual producers

Amend rules and regulations

Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain? 1. Independent Group Contract 2. Single 3. Nonqualified 4. Individual

Individual

Insurance is regulated a) Only on the level of social medicine, which is on both state and federal levels. b) Mostly on a federal level. c) Mostly on a state level. d) Evenly between the state and federal levels.

Mostly on a state level.

Which of the following policies would be classified as a traditional level premium contract? a. Variable universal life b. Straight life c. Adjustable life d. Universal life

Straight life

Children's riders attached to whole life policies are usually issued as what type of insurance? 1. Adjustable life 2. Whole life 3. Term 4. Variable life

Term

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a. Unfair Trade Practices Law b. The Guaranty Association c. Consumer Privacy Act d. The Fair Credit Reporting Act

The Fair Credit Reporting Act

A candidate for a producer license passed his licensing exam 6 months ago but has not applied for a license yet. Which of the following is true? (Choose from the following options) 1. The candidate will need to apply for a license immediately. 2. The candidate has waited too long to apply for a license and must retake the examination. 3. The candidate does not need to apply for a license. After passing the exam, all required information is transmitted to the Insurance Department by the testing provider. 4. The candidate has 6 more months to apply for a license.

The candidate has 6 more months to apply for a license.

When would a 20-pay whole life policy endow? a. At the insured's age 65 b. After 20 payments c. In 20 years d. When the insured reaches age 100

When the insured reaches age 100

Periodic payments of accumulated funds best describes a. A universal life policy b. A group policy c. An annuity d. A survivorship life policy

An annuity

The paid-up addition option uses the dividend (Choose from the following options) 1. To accumulate additional savings for retirement. 2. To purchase a smaller amount of the same type of insurance as the original policy. 3. To purchase a one-year term insurance in the amount of the cash value. 4. To reduce the next year's premium.

To purchase a smaller amount of the same type of insurance as the original policy.

Which of the following products requires a securities license? a. Fixed annuity b. Equity Indexed annuity c. Deferred annuity d. Variable annuity

Variable annuity

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called 1. Waiver of cost of insurance. 2. Payor benefit. 3. Waiver of premium. 4. Guaranteed insurability.

Waiver of premium.

The death benefit under the Universal Life Option B a. Increases for the first few years of the policy, and then levels off b. remains level c. gradually increases each year by the amount that the cash value increases. d. decreases by the amount that the cash value increases

gradually increases each year by the amount that the cash value increases.

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? a. Agent's report b. Any federal report c. Consumer report d. Inspection report

Consumer Report

Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice? (Choose from the following options) 1. Rebating 2. False advertising 3. Defamation 4. Twisting

False advertising

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and Current

f a settlement option is not chosen by the beneficiary or policyowner, which option will be used?

Lump sum

Which of the following provides funding for the New Jersey Life and Health Guaranty Association? a. Fundraising B. Insolvent insurers c. Member insurers d. Tax payers

Member Insurers

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy? (Choose from the following options) 1. Payor benefit rider 2. Substitute insured rider 3. Term rider 4. Guaranteed insurability rider

Substitute insured rider

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? (Choose from the following options) 1. 100% participation of members is required in noncontributory plans. 2. Each member covered receives a policy. 3. Coverage cannot be converted when an individual leaves the group. 4. Premiums are determined by age, occupation, and individual underwriting.

100% participation of members is required in noncontributory plans.

Which of the following types of insurance would be written by a limited lines agent? a. Surplus lines insurance b. Term life insurance c. Credit Insurance d. Variable Life Insurance

Credit Insurance

What does "level" refer to in level term insurance? 1. Face amount 2. Premium 3. Cash value 4. Interest rate

Face amount

If an agent fails to obtain an applicant's signature on the application, the agent must a. sign the application, stating it was by the agent b. send the application to the insurer with a note explaining the absence of signature c. return the application to the applicant for a signature d. sign the application for the applicant

return the application to the applicant for a signature

An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of 1. Another insurance producer. 2. A client. 3. A financial institution. 4. The insurer.

A client.

According to the Entire Contract provision, a policy must contain (Choose from the following options) 1. Listing of the insured's former insurer(s) for incontestability provisions. 2. A copy of the original application for insurance. 3. A declarations page with a summary of insureds. 4. Buyer's guide to life insurance.

A copy of the original application for insurance.

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? a. A privacy notice b. A buyer's guide c. A policy summary d. A notice regarding replacement

A policy summary

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend? 1. A whole life policy 2. An endowment policy 3. A term policy 4. An annuity

An endowment policy

Who can make a fully deductible contribution to a traditional IRA? 1. A person whose contributions are funded by a return on investment 2. An individual not covered by an employer-sponsored plan who has earned income 3. Anybody: all IRA contributions are fully deductible regardless of income level 4. Someone making contributions to an educational IRA

An individual not covered by an employer-sponsored plan who has earned income

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered 1. A required disclosure. 2. A legal representation of the Association. 3. An unfair trade practice. 4. A misrepresentation.

An unfair trade practice.

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT (Choose from the following options) 1. Employee and employer contributions are not counted as income to the employee for income tax purposes. 2. At distribution, all amounts received by the employee are tax free. 3. Employer contributions are tax deductible as ordinary business expense. 4. Funds accumulate on a tax-deferred basis.

At distribution, all amounts received by the employee are tax free.

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? 1. Reinstatement 2. Reduced paid-up option 3. Automatic premium loan 4. Extended term

Automatic premium loan

A Certification of License Status must include all of the following information EXCEPT (Choose from the following options) 1. Licensee's date of birth 2. Types of insurance for which the licensee is authorized 3. License reference number 4. Number of years a licensee has been in the business

Number of years a licensee has been in the business

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a. 7 days b. 10 days c. 3 days d. 5 days

5 days

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? 1. As of the first of the month after the policy issue 2. As of the policy issue date 3. As of the application date 4. As of the policy delivery date

As of the application date

The accelerated benefits provision will provide for an early payment of the death benefit when the insured (Choose from the following options) 1. Has earned enough credits. 2. Becomes disabled. 3. Becomes terminally ill. 4. Needs to borrow money.

Becomes terminally ill.

Which of the following is true regarding the insurance amount in a credit life policy? (Choose from the following options) 1. Creditor may insure the debtor for an unlimited amount of coverage. 2. Allowable amount of coverage is determined by the State Insurance Commissioner. 3. The amount of coverage can be greater than the amount owed. 4. Creditor can only insure the debtor for the amount owed.

Creditor can only insure the debtor for the amount owed.

The term "fixed" in a fixed annuity refers to all of the following EXCEPT a. Death benefit b. Guaranteed rate of interest c. Equal annuity payments d. Amount and length of payments

Death benefit

Which of the following types of insurance policies is most commonly used in credit life insurance? 1. Equity indexed life 2. Decreasing term 3. Increasing term 4. Whole life

Decreasing term

All of the following are dividend options EXCEPT a) Fixed-period installments. b) Accumulated at interest c) Reduction of premium. d) Paid-up additions.

Fixed-period installments.

Which is TRUE about the cash surrender nonforfeiture option? (Choose from the following options) 1. The policy remains active for some time after the policyholder opts for cash surrender. 2. The policyholder receives the original cash value of the policy. 3. Funds exceeding the premium paid are taxable as ordinary income. 4. After the cash surrender, the insured is covered for a grace period of 1 month.

Funds exceeding the premium paid are taxable as ordinary income.

Which of the following entities established the Do-Not-Call Registry? (Choose from the following options) 1. The Consumer Protection Agency 2. The Federal Trade Commission 3. The Better Business Bureau 4. The NAIC

The Federal Trade Commission

All of the following entities regulate variable life policies EXCEPT a. The insurance department b. The Guaranty Association c. Federal Government d. The SEC

The Guaranty Association

Which of the following would provide an underwriter with information concerning an applicant's health history? a. The inspection report b. The Medical Information Bureau c. A medical examination d. The agent's report

The Medical Information Bureau

Which of the following determines the cash value of a variable life policy? a. The policy's guarantees b. The premium mode c. The performance of the policy portfolio d. the company's general account

The performance of the policy portfolio

Which is true about a spouse term rider? 1. The rider is decreasing term insurance. 2. Coverage is allowed up to age 75. 3. The rider is usually level term insurance. 4. Coverage is allowed for an unlimited time.

The rider is usually level term insurance.

Which of the following is NOT true regarding Equity Indexed Annuities? (Choose from the following options) 1. They have guaranteed minimum interest rates. 2. They are less risky than variable annuities. 3. They earn lower interest rates than fixed annuities. 4. The insurance company keeps a percentage of the returns.

They earn lower interest rates than fixed annuities.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? 1. Variable life 2. Decreasing term 3. Straight whole life 4. Universal life

Universal life

In a survivorship life policy, when does the insurer pay the death benefit? 1. Upon the last death 2. Upon the first death 3. Half at the first death, and half at the second death 4. If the insured survives to age 100

Upon the last death

What are the penalties for the first, second, and any subsequent violation of the New Jersey Fraud Prevention Act, respectively? a. $1,000; $5,000; $10,000 b. $10,000; $15,000; $20,000 c. $25,000; $50,000; $100,000 d. $5,000; $10,000; $15,000

d. $5,000; $10,000; $15,000

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

What was created to keep telemarketers from calling consumers who do not wish contacted? 1. Call Control Registry 2. National Do Not Call Registry 3. Confidential No Call Act 4. Freedom of Information Act

National Do Not Call Registry

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a. The insurer may deny coverage later, because of the information missing on the application. b. The policy will be interpreted as if the insurer waived its right to have an answer on the application. c. The policy will be interpreted as if the insured did not have an answer to the question. d. The policy will be void

The policy will be interpreted as if the insurer waived its right to have an answer on the application.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT (Choose from the following options) 1. Upon conversion, the death benefit of the permanent policy will be reduced by 50%. 2. Evidence of insurability is not required. 3. Most term policies contain a convertibility option. 4. Upon conversion, the premium for the permanent policy will be based upon attained age.

Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence? (Choose from the following options) 1. 7 am 2. 8 am 3. 9 am 4. Noon

8am - Permissible calling hours for telemarketers are between 8am and 9pm.

Which of the following is the basic source of information used by the company on the risk selection process? a. Agent's report b. Warranty c. Consumer Report d. Application

Application

Which of the following would NOT be considered an exception to the National Do Not Call List? 1. Calls based from outside of the United States 2. Calls for which the consumer has given prior written permission 3. Calls which are not commercial or do not include unsolicited advertisements 4. Calls by or on behalf of tax-exempt nonprofit organizations

Calls based from outside of the United States

The Department can run a report on a specific producer that lists his or her license information, current license status, and the types of insurance that he or she can transact. What is the name of this report?

Certification of license status report

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

Which of the following statements about a suicide clause in a life insurance policy is true? (Choose from the following options) 1. Suicide is covered as long as the policy is in force. 2. Suicide is excluded as long as the policy is in force. 3. Suicide is excluded for a specific period of years and covered thereafter. 4. Suicide is covered for a specific period of years and excluded thereafter.

Suicide is excluded for a specific period of years and covered thereafter.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? 1. Defamation 2. Illegal 3. A legal advertising strategy 4. Unfair Discrimination

Illegal

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering an a. Inspection report b. Medical Information Bureau report c. Medical examination d. Attending Physician Statement

Inspection Report

Why is an equity indexed annuity considered to be a fixed annuity? a. It is not tied to an index like the S&P 500 b. It has a guaranteed minimum interest rate c. It has modest investment potential d. It has a fixed rate of return

It has a guaranteed minimum interest rate

In which of the following situations is it legal to limit coverage based on marital status? (Choose from the following options) 1. It is never legal to limit coverage based on marital status. 2. Excessive number of divorces, as defined by the Insurance Code 3. Legal separation during the application process 4. Divorce within the last six months of applying for insurance

It is never legal to limit coverage based on marital status.

An applicant who receives a preferred risk classification qualifies for (Choose from the following options) 1. Lower premiums than a person who receives a standard risk. 2. Dividends payable for lack of claims. 3. Higher premiums than a person who receives a sub-standard risk. 4. Higher premiums than a person who receives a standard risk.

Lower premiums than a person who receives a standard risk.

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called 1. One-year term purchase. 2. Accumulation at interest. 3. Reduction of premiums. 4. Paid-up additions.

Paid-up additions

A participating insurance policy may do which of the following? a. Require 80% participation b. Pay dividends to the policyowner c. Provide group coverage d. Pay dividends to the stockholder

Pay dividends to the policyowner