Life Insurance for ExamFX second set

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Max fine for violating insurance code

$25,000

Max agent licensing fee

$50

Time the results of a licensing exam are valid

12 months

An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?

90

After license renewal date for agents to pay fees and complete Continued Education before license expires

90 days

All of the following are nonforfeiture options EXCEPT A.) Extended Term B.) Reduced paid-up C.) interest only D.) Non-qualified IRA

C.) Interest only

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured , and to whom the benefits will be paid.

Insuring clause

What document must be provided when replacing a policy?

Notice regarding replacement

Nonforfeiture options must offer one of the three choices. What are the three choices ?

Reduced paid-up, Extended-term, shortened benefit period

In the executive bonus plan, who is the owner and who pays the premium?

The executive

The usage of words or symbols that are similar to what entity is forbidden?

The federal government

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have at least completed secondary education

regulations regarding replacement apply to which type of policy?

renewable

regulations regarding replacement apply to ?

renewable term

statements of an applicant on an application are called

representations

a rated policy is issue to which risk class

substandard

An agent discovers his new client was from a referral, the only thing he/she can do is ?

thank them

regarding credit life insurance who is responsible for reporting termination of debt to the creditor?

the creditor

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence

how long do you have after receiving a request from the commissioner to hold a hearing

10 days

Amount of Administration, attorney or CPA experience required before applying to be a commissioner?

5 years

What percentage of Continued Education has to be in a classroom?

50%

The minimum number of credits for partially insured status for Social Security Benefits is ?

6 hours

Max duration of a temp license issued per person

6 months

How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer?

60 days

According to the state nonforfeiture law, insurers must offer one of the following nonforfeiture options EXCEPT A.) Reduction of premium B.) REduced paid-up C.)Extended Term D.) Shortened benefit period

A.) Reduction of premium

What is another term for an authorized insurer?

Admitted

Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insureds death? A.) The wife of the deceased insured B.) The former wife of the deceased insured C.) A minor son of the insured D.) A business partner of the insured

C.) A minor son of the insured

An insurance professional advises a client regarding the benefits of her life insurance policy, in exchange for a fee. What is she called?

Counselor

All of the following are true EXCEPT A.) Annuity earnings are tax deferred B.) They must be approved by the IRS C.) Withdrawals are taxed D.) Employer contributions are not tax deductible

D.) Employer contributions are not tax deductible

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will purchase

In insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the insurance company to apply the dividends to increase the death benefit. What is this referred to as?

Paid-up additions

An insured purchased a life policy in 2010 and died in 2020. She misstated info on her policy. What will the insurance company do?

Pay the full benefit (because it's after 2 years of the application)

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

Reduced- paid up

According the state nonforfeiture law for life insurance policies, insurers must offer ?

Reduction of premium

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

Which type of retirement account does not require the owner to start taking distributions at age 72?

Roth IRA

fixed annuities guarantee what?

a fixed rate of return

An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely

adjust the premium

applicants with fluctuating income may benefit the most by purchasing which policy?

adjustable whole life

who must be licensed as an insurance producer?

anyone who solicits insurance and receives commissions from insurance transactions

Employer contributions made to a qualified plan

are subject to vesting requirements

Contracts that are prepared by one party and submitted to another party on a take-it or leave-it basis are?

contracts of adhesion

What is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

cost comparison methods

the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is?

credit life

what is another name for interest sensitive whole life insurance?

current assumption life

the term "fixed" in a fixed annuity refers to the?

death benefit

The insured chose his wife as his beneficiary and chose the life income settlement option. What will the insurance company not take into account?

his age at his death

Name some unfair trade practices that insurance agents should avoid at all costs.

misrepresentation, rebating, defamation, unfair discrimination

Commissioner must conduct annual exams of authorized insurers

o or before every 5 years

During replacement of life insurance, a replacing insurer must do what?

obtain a list of all life insurance policies that will be replaced

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner. What dividend option could she use?

paid-up option

Temporary licenses may NOT be renewed.

true

The accumulation at interest option is taxable

true

The application given to a prospective insure is NOT a consideration in an insurance policy

true

The minimum interest rate on an Equity Index policy is often based on the S&P 500.

true

dividends received by the owner of a mutual policy are NOT taxable

true

dividends received by the owner of a stock in a company are taxable

true

examples of third party ownership include key person and partnership insurance, as well as a policy written on the life of a child or spouse.

true

The main difference between immediate and deferred annuities is?

when the income payments begin

Upon the submission of a death claim, the insurer must pay the policy within what timeframe?

2 months

Commissioners term of office

2 years

duration of reporting period

2 years

An agent completed a CE course in 2019. Until what year must the agent keep the records of completion?

2023 (record keeping is required 4 years)

CE (continued education) to be completed during each reporting period

24 hours

During any calendar year, how much total volume of a licensed agents business must come from business other than controlled business?

25%

cease and desist was issued. How many days does the agent have to make the request

30

How long an agent has to request a hearing after receiving a cease and desist order

30 days

How long is the Grace period in extended policies

31 Days

How long must a producer keep continuing education records?

4 years

Equity indexed annuities do NOT earn lower interest rates.

true

IRA's can be funded with annuities but not with whole life policies.

true

If a policy lapses, the insured has 60 days to select a nonforfeiture option

true

It is the face amount that decreases on a decreasing term policy, not the premium

true

Taxation of qualified and nonqualified plans during accumulation is the same

true

extended term is the automatic nonforfeiture option chosen by the insurer

true

if the beneficiary selects the interest option, the taxable interest payments will vary, but the beneficiary can withdraw the principal at any time.

true

in the cash surrender nonforfeiture option, funds exceeding the premium paid are taxable as ordinary income

true

regarding credit life insurance, benefits are paid to the borrowers beneficiary

true

the paid up nonforfeiture option may be taken anytime there is a cash value

true

Someone who works 400 hours per year would NOT qualify for Keogh

true. a person has to work 1,000 hours.

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, taxed on growth only

An insurer must acknowledge notice of a claim within how many days?

15 days

min required age for licensing

18

Min requirement for ethics training

2 hours

An insurance company is domiciled in one state and transacts in another, what is the best term for this?

foreign

In Texas, the commissioner of insurance is appointed by?

the governor

Whom do insurance agents represent?

the insurer

A "fixed period" payout does not guarantee payments for life of the beneficiary

true

A certificate of Authority is issued to group insurance participants

true

A participating policy can Pay Dividends to the Policy holder

true

An annuitant cannot outlive the income from an annuity

true

Being an insurance agent will NOT directly help to become an Insurance commissioner

true

Borrowed money from the cash value is NOT taxable

true

An absolute guarantee of truth on an application is called

warranty

The paid up addition option uses the dividend for?

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

All of the following are mandatory life insurance policy provisions EXCEPT A.) Grace period B.) Policy backdating C.) Misstatement of age D.) Incontestability

B.) Policy backdating

An individual covered under a group life insurance policy may convert to any of the following EXCEPT A.) Level term B.) Universal life C.) Variable universal life D.) Whole life

A.) Level term

The automatic premium loan provision is activated when?

At the end of the GRACE period

A universal life policy has a. choice of 2 options. Option A and option B

True


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