Life Insurance Exam FX

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of

Misrepresentation.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit sharing plan

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of

Rebating.

Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?

Renewable

When a policy is being replaced, the replacing company notifies the

Replacement company.

If the Commissioner is not able to serve due to disability, resignation, or death, which of the following will happen?

The Chief Deputy Commissioner will serve as the Commissioner until the next election.

What authority is responsible for examining the operations of insurance companies in this state?

The Commissioner

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

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?

The date of medical exam

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?

The insurer

Which of the following statements is correct regarding a whole life policy?

The policyowner is entitled to policy loans.

An insured has chosen the Joint and 2/3 Survivor settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

An application for life insurance usually requires the agent to ask if the proposed insurance policy will replace an existing life insurance policy. All of the following are purposes for obtaining this information EXCEPT

To ensure that at least three companies are involved so the policyowner gets competitive prices.

The paid-up addition option uses the dividend

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

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal life

When a policy is replaced, replacing insurers must maintain a replacement register regarding that policy for

3 years.

Authorized insurance companies are examined by the Commissioner at least once every

5 years.

In order for an insurer's certificate of authority to remain in effect, the insurer must maintain a surplus equal to how much of paid-in capital stock?

50%

For how long is an insurance company allowed to defer policy loan requests?

6 months

If an individual licensed as an agent was employed by the Commissioner as a bona fide full-time employee, upon termination of employment, the individual may reinstate their license within how many days?

90 days

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

A STOLI policy.

If the owner of a whole life policy who 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

All of the following would be excluded from the regulation on life insurance solicitation EXCEPT

A term life policy

Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?

An annuity

Who can make a fully deductible contribution to a traditional IRA?

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

Which of the following premium payment modes will incur the lowest overall payment?

Annual

Which of the following products will protect an individual from outliving their money?

Annuity

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT

Applicant's past income.

Which of the following is NOT true regarding an annuity certain?

Benefits stop at the annuitant's death.

The violation of a cease and desist order may result in a fine of

$10,000.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?

$50,000

In this state, what is the maximum fine for transacting insurance without a license?

$1,000

Which of the following components must a life insurance policy have to allow policy loans?

Cash value

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate of Authority

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?

Deferred

The term "conservation effort" refers to

Discouraging policyholders from replacing existing policies.

How is the Commissioner of Insurance selected to be the chief officer of the Department of Insurance?

Elected to office

All of the following statements are true regarding tax-qualified annuities EXCEPT

Employer contributions are not tax deductible.

Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR-10 (Keogh Plan).

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

What is the function of a Certificate of Authority?

It allows an insurer to transact insurance in Georgia.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?

It does not guarantee that the entire principal amount will be paid out.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?

Long-term care