Life Insurance - Exam Simulation - Wrong Answers to Study 2

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

5 years.

An applicant who lives in a state in which a producer is not licensed travels to the state in which the producer is licensed to apply for a policy. This is considered to be

Legal.

What is a required advance notice for a hearing held by the Commissioner of Insurance?

10 days

Concerning insurance, the definition of a fiduciary is

A producer/broker who handles insurer funds in a trust capacity.

If a company has a Simplified Employee Pension plan, what type of plan is it?

A qualified plan for a small business

A failure to report insurance fraud to the Commissioner is considered a/an

Misdemeanor.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

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

How long must an insurer's advertisement be kept on file?

4 years

Contracts that are prepared by one party and submitted to the other party on a "take it or leave it" basis are classified as

Contracts of adhesion

An 80-year-old man wants to take out a loan to buy a new house. What will protect the lender from the possibility of the man dying before the debt is paid?

Credit life insurance

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

The policyowner is entitled to policy loans

Which is true about a spouse term rider?

The rider is usually level term insurance

What term is used for replacing insurance policies for the sole purpose of making commissions?

Churning

All of the following are examples of third-party ownership of a life insurance policy EXCEPT a) When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. b) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. c) An insured couple purchases a life insurance policy insuring the life of their grandson. d) A company purchases a life insurance policy on their manager, who is an important part of the operation.

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

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

An unfair trade practice.

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

Paid-up additions

When replacement is involved, a producer must do all of the following EXCEPT a) File a comparison memorandum with the existing insurer. b) Receive a confirmation from the existing insurer. c) Give the policyholder a memorandum comparing the existing and new policies. d) File a comparison memorandum with the company the producer represents.

Receive a confirmation from the existing insurer.

An insured committed suicide one year after his life insurance policy was issued. The insurer will

Refund the premiums paid

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

All of the following would be different between qualified and nonqualified retirement plans EXCEPT a) IRS approval requirements b) Taxation on accumulation c) Taxation of withdrawals d) Taxation of contributions

Taxation on accumulation

All of the following statements about equity index annuities are correct EXCEPT a) They invest on a more aggressive basis aiming for higher returns. b) The annuitant receives a fixed amount of return. c) They have a guaranteed minimum interest rate. d) The interest rate is tied to an index such as the Standard & Poor's 500.

The annuitant receives a fixed amount of return.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

The full death benefit

All of the following are true regarding a decreasing term policy EXCEPT a) The contract pays only in the event of death during the term and there is no cash value. b) The face amount steadily declines throughout the duration of the contract. c) The payable premium amount steadily declines throughout the duration of the contract. d) It has a lower premium than level term.

The payable premium amount steadily declines throughout the duration of the contract.

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability.

Which of the following policy components contains the company's promise to pay?

Insuring clause