Life insurance exam practice

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor.

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign

The maximum penalty that may be assessed for a single nonwillful violation of the Insurance Code is

$1,000.

If an agent changes his residence address, within how many days must the agent notify the Commissioner of the change?

30 days

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

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

Which of the following best describes annually renewable term insurance?

It is level term insurance.

Which of the following would be considered an illegal inducement to purchase insurance?

Confirming future dividends in a life insurance proposal

Producers in Georgia will be deemed to be using their license primarily to write controlled business if, during any calendar year,

Controlled business accounts for more than 25% of the agent's business.

Which of the following is NOT an example of a valid insurable interest?

Debtor in the life of the creditor

All of the following statements regarding continuing education requirements in this state are true EXCEPT

Producers may repeat the same courses to meet the required CE hours for a licensing period.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

100

Insurers must keep files of all advertisements used in Georgia for the minimum of how many years?

4

A willful violation of an agent's fiduciary responsibility that involved funds exceeding $1,000 will be considered

A felony.

Whenever agents submit applications to insurers, they must also submit statements disclosing whether or not replacement is involved. Who must sign these statements?

Applicant and agent

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT

Erase the incorrect answer and record the correct answer.

All of the following are dividend options EXCEPT

Fixed-period installments.

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?

If the father is disabled for more than 6 months

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceased the insured

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people.

All of the following would be eligible to establish a Keogh retirement plan EXCEPT

The president and employee of a family corporation.

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract.

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer.

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

Charge a higher premium.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

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

Elected to office

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount

State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT

Inviting prospective clients to the grand opening of the company's new office.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life expectancy

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

The entire contract is made up of all of the following EXCEPT

The buyer's guide.

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21.

If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?

The loan amounts are deducted from the death benefit.

Which of the following best defines the "owner" as it pertains to life settlement contracts?

The policyowner of the life insurance policy

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

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

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

A domestic insurer issuing variable contracts must establish one or more

Separate accounts.

Which is true about a spouse term rider?

The rider is usually level term insurance.

Which of the following best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

$3,000

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of

Defamation

Which of the following best describes an insurance company that has been formed under the laws of this state?

Domestic

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?

False advertising

What is the term for how frequently a policyowner is required to pay the policy premium?

Mode

Who elects the Commissioner of Insurance to office?

Registered voters

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 is the purpose of key person insurance?

To lessen the risk of financial loss because of the death of a key employee

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. The insurer is hoping that this advertising will help to eliminate the competition and therefore create a monopoly. Which of the following best describes this act?

Illegal

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today

When a policy is replaced, replacing insurers must maintain a replacement register regarding that policy until the conclusion of the next regular examination by the Insurance Department or for

3 years.

The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is

A nonqualified annuity plan.

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

Certificate of Authority

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual

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

Option A

Which of the following is an example of liquidity in a life insurance contract?

The cash value available to the policyowner

An agent commingled $500 of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a

Misdemeanor

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

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must a)

Respond to the consumer's complaint.

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

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 policy summary

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

Life income joint and survivor settlement option guarantees

Income for 2 or more recipients until they die.

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Viatical settlement