Life Insurance
An insurance producer licensed in life and/or health must complete 12 hours of continuing education courses every
2 years
Beneficiary
A person who receives the benefits of an insurance policy
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
Interest-sensitive Whole Life.
Which of the following is a risk classification used by underwriters for life insurance?a)Normal b)Excellent c)Standard d)Poor
Standard
What is HIPAA?
federal law protecting privacy of health insurance information
Lapse
policy termination due to nonpayment of premium
An insurer must have _______________________ to pull the applicants credit report
pre- authorization
A life insurance ________________ is the company's field underwriter
producer
It is the __________ responsibility to explain the policy provisions, riders, and exclusions to the policy owners and/ or insured
producers
Insurable Interest
something of value that, if lost, would cause you financial harm
Policy Owner
the person entitled to exercise the rights and privileges in the policy
How long does an agent have to notify the Commissioner if he or she has a change of address?
30 days
What is the maximum monetary fine for a nonwillful violation of insurance statutes regarding unfair trade practices?
$1000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
Lyle has a $10,000 term life policy. He paid the $200 annual premium on February 1. Lyle fails to renew the policy and dies on February 28 of the following year. Minus interest, how much will the beneficiary receive from Lyle's insurance company?
$9,800
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
To legally transact insurance in this state, an insurer must obtain which of the following? a)Certificate of Insurance b)Certificate of Authority c)Power of Attorney d)Business entity license
Certificate of Authority
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 a)Misrepresentation. b)Discrimination. c)Nothing, unless the remarks were in writing d)Defamation.
Defamation
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?a)Alien b)Domestic c)Unauthorized d)Foreign
Foriegn
No premium =
No coverage
Adhesion
One party prepare the contract; the other party must accept as is
A transaction where new life insurance is purchased, and as part of the transaction, existing life insurance is lapsed or surrendered, is known as
Replacement
Who determines the final rating classification?
The underwriter
Which of the following is NOT one of the main accounts of the Kansas Life and Health Insurance Guaranty Association?
Variable products
Warranty
absolutely true statement
Conditional receipt
used only when the applicant submits a prepaid application
An insurer has committed 3 advertising violations. What would be the maximum monetary penalty?
$3,000
The USA patriot act requires financial institutions to report wire transfers that exceed ____________.
$3,000
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?a)Children's rider b)Additional insured rider c)Family term rider d)Spouse rider
Family term rider
Which is TRUE about the cash surrender nonforfeiture option? a)After the cash surrender, the insured is covered for a grace period of 1 month. b)The policy remains active for some time after the policyholder opts for cash surrender. c)The policyholder receives the original cash value of the policy. d)Funds exceeding the premium paid are taxable as ordinary income.
Funds exceeding the premium paid are taxable as ordinary income.
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
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as a)Twisting. b)False advertising. c)Coercion. d)Rebating.
Rebating
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
Which of the following best details the underwriting process for life insurance? a)Issuance of policies b)Reporting and rejection of risks c)Selection, classification, and rating of risks d)Solicitation, negotiation and sale of policies
Selection, classification, and rating of risks
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a)Signed waiver of premium. b)Statement of good health. c)Payment of premium. d)Delivery receipt.
Signed waiver of premium.
J is trying to become a licensed producer in this state. Unfortunately, he has failed his examination on the first try. How many times can J retake the exam before he has to wait 6 months?
2
Which of the following is NOT a possible punishment for a violation of general provisions of the Kansas Insurance Code? a)Suspension of license b)Cease and desist order c)A maximum fine of $10,000 for a willful violation d)A monetary fine up to $1,000 if a violation is nonwillful
A maximum fine of $10,000 for a willful violation
Replacement
A practice of terminating an existing policy or letting it lapse, and obtaining a new one.
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
Aleatory
During a hearing, what is the Commissioner allowed to do? a)Subpoena witnesses b)Cross-examine witnesses c)Receive documentary evidence d)All of the above
All of the above
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
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
Authorized.
Aleatory example
Bob purchases $75K whole life policy in Jan, his premium is $100 a month, after 2 payments he is killed in a skiing accident. Bob beneficiary will get $75K
Which of the following best describes fixed-period settlement option? a)The death benefit must be paid out in a lump sum within a certain time period. b)Income is guaranteed for the life of the beneficiary. c)Both the principal and interest will be liquidated over a selected period of time. d)Only the principal amount will be paid out within a specified period of time.
Both the principal and interest will be liquidated over a selected period of time.
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion.
An incomplete application is usually returned; however, should the underwriter approve it as is, ____________.
Coverage begins
The Commissioner of Insurance is
Elected by popular vote
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.
All of the following actions can be described as twisting EXCEPT a)Making an incomplete comparison between the existing and proposed policies b)Explaining to client the advantages of permanent insurance over term and suggesting changing policies c)Misrepresenting the terms and conditions of the existing policy to make the new one more attractive d)Embellishing the terms of the proposed policy in order to convince the insured to switch
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
What does "level" refer to in level term insurance?
Face amount
The automatic premium loan provision is activated at the end of the
Grace period
What provision in a life or health insurance policy extends coverage beyond the premium due date?
Grace period
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Nonforfeiture options b)Guaranteed insurability option c)Dividend options d)Guaranteed renewable option
Guaranteed insurability option
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider.
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.
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
What is the other term for the cash payment settlement option?
Lump Sum
What is the other term for the cash payment settlement option? a)Principal amount b)Face amount c)Proceeds d)Lump sum
Lump sum
Insurers cannot refuse coverage solely on the basis of adverse information on an _____________.
MIB report
Which of the following is NOT a requirement in order to be a nonresident licensee? a)Submit a copy of his/her application for the resident license b)Maintain a physical address in each state the licensee transacts insurance c)Be in good standing in the resident license state d)Submit the proper application fee
Maintain a physical address in each state the licensee transacts insurance
What is not an allowable underwriting factor in life insurance?
Marital status
MIB
Medical Information Bureau
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider.
An agent is unable to meet the continuing education requirement to renew his license due to military service. Which of the following is true? a)Continuing education is not required for military personnel. b)The agent must retake a licensing examination. c)The agent's license will be terminated.d)The agent may request a waiver from the Commissioner.
The agent may request a waiver from the Commissioner.
Death Benefit
The amount paid upon the death of the insured in a life insurance policy
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free.
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to
The contingent beneficiary.
Although the producer must sign all of the conditions and the application, he or she is not a party to what?
The contract
Conditional receipts means the applicant may be covered as early as when?
The date of the application
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
The employer is the owner and beneficiary.
Which of the following best describes what the annuity period is? a)The period of time from the effective date of the contract to the date of its termination b)The period of time during which accumulated money is converted into income payments c)The period of time from the accumulation period to the annuitization period d)The period of time during which money is accumulated in an annuity
The period of time during which accumulated money is converted into income payments
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)Any type of insurance policy may be used. b)The employer pays a bonus to a selected employee to fund the policy. c)It is considered a nonqualified employee benefit. d)The policy is owned by the company.
The policy is owned by the company.
Which of the following is TRUE regarding the premium in term policies? a)Decreasing term policy will have a decreasing premium. b)The premium is level. c)Only level term policy has a level premium. d)The premium in term policies is not based on the insured's age.
The premium is level.
Which of the following best defines target premium in a universal life policy? a)The minimum amount to make sure the policy is annually renewable b)The corridor of insurance c)The recommended amount to keep the policy in force throughout its lifetime d)The maximum amount the policyowner may pay on a policy
The recommended amount to keep the policy in force throughout its lifetime
Which of the following is NOT true of life settlements? a)They could be used for a key person coverage. b)They could be sold for an amount greater than the current cash value. c)They involve insurance policies with large face amounts. d)The seller must be terminally ill.
The seller must be terminally ill.
The regulation of the insurance industry primarily rests with
The state
An insured has chosen joint and 2/3 survivor as the 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.
Aleatory
Uneven exchange of values
Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits? a)Viaticals use mortality tables, but Accelerated Death benefits are determined by morbidity. b)Viaticals are funded by a third party, and Accelerated Death benefits are provided by the insurer that issued the original policy. c)Viaticals are provided by the insurer that issued the original policy, and Accelerated Death benefits are funded by a third party.
Viaticals are provided by the insurer that issued the original policy, and Accelerated Death benefits are funded by a third party.
Protected health info includes
health data, name, address, SSN, and birth date
Life Settlement
selling an existing life insurance policy
What is the maximum health benefit that the Kansas Life and Health Insurance Guaranty Association will pay for health insurance benefits for any one individual?
$100,000
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
What percentage of a company's employees must take part in a noncontributory group life plan?
100%
How long is the Commissioner's term of office?
4 years
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
An applicant for a resident producer license in Kansas has failed his licensing examination 3 times. When will the applicant be allowed to retake the exam?
6 months after the last attempt
Who is a third-party owner?
A policyowner who is not the insured
When advertising a product, an insurer cannot use words or symbols that would be associated which what type of agency? a)Federal government b)State government c)Stock d)A & B
A&B
What type of licensee represents the insurance company?
Agent
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? a)Split dollar agreement b)Buy-sell agreement c)Profit and loss agreement d)Key person agreement
Buy-Sell agreement
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash Option
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
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term Policy.
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the
Entire contract.
Which of the following provides specific information about the products that are being considered and must be left with a prospective insured at the time of application? a)Explanation of Benefits b)Index of Provisions c)Buyer's Guide d)Policy Summary
Policy summary
Which of the following will be included in a policy summary? a)Copies of illustrations and application b)Comparisons with similar policies c)Primary and secondary beneficiary designations d)Premium amounts and surrender values
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
Premium receipt
Which type of life insurance policy generates immediate cash value? a)Continuous Premium b)Single Premium c)Level Term d)Decreasing Term
Single Premium
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.
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
Which of the following is INCORRECT concerning a noncontributory group plan? a)The employer pays 100% of the premiums. b)The employees receive individual policies. c)They help to reduce adverse selection against the insurer. d)They require 100% employee participation.
The employees receive individual policies.
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years, but at a higher premium rate.
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to
The insured's estate
Which of the following is true regarding compensation for the Life and Health Insurance Guaranty Association's Board of Directors? a)They receive commissions from member insurers. b)They are entitled to a one-time stipend. c)They are compensated for their services. d)They may be reimbursed for the incurred expenses.
They may be reimbursed for the incurred expenses.
All of the following are requirements for life insurance illustrations EXCEPT a)They may only be used as approved. b)They must identify nonguaranteed values. c)They must differentiate between guaranteed and projected amounts. d)They must be part of the contract.
They must be part of the contract.
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a)Equity Indexed Universal Life b)Variable Universal Life c)Universal Life - Option A d)Universal Life - Option B
Universal Life - Option A
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
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?
$200,000
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 insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
Illegal
Variable Whole Life insurance is based on what type of premium?
Level fixed
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government.
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 name of the insured who enters into a viatical settlement?
Viator
Elements of a legal contract
agreement, consideration, competent parties, legal purpose
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?
$100,000
What is the minimum age requirement for nonresident agents in Kansas?
18
Within how many months must a person be expected to die from a sickness in order to be classified as terminally ill?
24
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
Life insurance policies that have cash value must provide for a maximum policy loan interest rate of no more than
8% per annum.
All the following are examples of violations of replacement EXCEPT a)Intentionally answering a question incorrectly. b)Advising an applicant to answer questions correctly. c)Any deceptive or misleading information. d)Failing to ask the applicant questions regarding replacement.
Advising an applicant to answer questions correctly.
Which of the following determines continuing education biennium due date?a)Agent's last name b)Agent's license number c)Agent's year of birth d)Agent's licensing year
Agents year of birth
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a)Policy Summary b)Illustrations c)Buyer's Guide d)Insurance Index
Buyers Guide
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered a)Twisting. b)Controlled business. c)Adverse selection. d)Discrimination.
Discrimination.
The purpose of the Life Insurance Guaranty Association is to
Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause.
Which of the following is true about the mandatory free-look period in a life insurance policy? a)It applies only to term life insurance policies. b)It is optional on all life insurance policies. c)It commences when the policy is delivered. d)It commences when the application is signed.
It commences when the policy is delivered.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
Which of the following is TRUE regarding the annuity period?
It may last for the lifetime of the annuitant.
Which of the following is true about the premium on the children's rider in a life insurance policy? a)It decreases when the oldest child reaches the age of 21. b)It increases when a newborn baby is added to the policy. c)It decreases when an adopted child is added to the policy. d)It remains the same no matter how many children are added to the policy.
It remains the same no matter how many children are added to the policy.
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 a)Concealment. b)Unfair claim practice. c)Rebating. d)Misrepresentation.
Misrepresentation.
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? a)Accumulation at Interest b)Paid-up additions c)Dividend Accumulation option d)Paid-up option
Paid up option
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy.
The ____________ must have insurable interest in the life of the insured
Policy owner
Which of the following means having an illness or sickness that can reasonably be expected to result in death in 24 months or less? a)Malignant illness b)Terminal illness c)Chronic illness d)Fatal illness
Terminal illness
What was designed to detect intentional money laundering and financing of terrorism?
The USA patriot act
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? a)Switching b)False advertising c)Rebating d)Twisting
Twisting
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Straight whole life b)Universal life c)Variable life
Universal Life
Which of the following terms is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract? a)Viatical settlement broker b)Viatical settlement effectuator c)Viatical settlement provider d)Viatical settlement purchaser
Viatical settlement provider
An insurance application is the key source underwrites use for the information about the ____________.
applicant
Insurable interest must exist at the time of
application
Insurers ____________ is the promise to pay for loses: insured's consideration is the premium and statements on the application
consideration
Any or all of the following could be imposed on a producer or an insurer for violating advertising and sales regulations EXCEPT a)Revocation of certificate of authority. b)Imprisonment. c)Suspension of license.d)Fines.
imprisonment.
Statements of an applicant on an insurance application are considered ______________ and not warranties
representations
Which of the following entities ultimately decides if an advertisement is complete and truthful? a)Kansas Guaranty Association b)Commissioner c)Consumer Protection Agency d)Federal Advertisement Review Board
Commissioner
All of the following are dividend options EXCEPT a)Reduction of premium. b)Paid-up additions. c)Fixed-period installments. d)Accumulated at interest
Fixed-period installments.
Which of the following statements is TRUE about a policy assignment? a)It authorizes an agent to modify the policy. b)It transfers rights of ownership from the owner to another person. c)It is the same as a beneficiary designation. d)It permits the beneficiary to designate the person to receive the benefits.
It transfers rights of ownership from the owner to another person.
Which two terms are associated directly with the premium? a)Fixed or variable b)Term or permanent c)Renewable or convertible d)Level or flexible
Level or flexible
Which of the following is another term for the accumulation period of an annuity? a)Premium period b)Liquidation period c)Annuity period d)Pay-in period
Pay in period
A woman has a life policy in force for $300,000. She is terminally ill. She wants to get an "advance" from her death benefit to help pay her mounting medical bills. She met some people who said they could advance her $100,000 if she would sign ownership over to them. Which of the following is true? a)She is changing from an increasing term policy to a decreasing term policy. b)She probably applied for Accelerated Payment. c)She cannot sign over a policy to a third party. d)She probably met with a Viatical Settlement Company.
She probably met with a Viatical Settlement Company.
Under which of the following circumstances would an insurer pay accelerated benefits? a)A couple is nearing retirement and needs a steady stream of income. b)An insured is looking for a way to put her daughter through college. c)A couple wants to build a house and would like to make a larger down payment. d)An insured is diagnosed with cancer and needs help paying for her medical treatment.
An insured is diagnosed with cancer and needs help paying for her medical treatment.
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
The term "illustration" in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT a)An insured couple purchases a life insurance policy insuring the life of their grandson. b)A company purchases a life insurance policy on their manager, who is an important part of the operation. c)When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. d)An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
All of the following are personal uses of life insurance EXCEPT a)Estate creation. b)Cash accumulation. c)Buy-sell agreement. d)Survivor protection.
Buy- sell agreement
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicant's knowledge.
A key person insurance policy can pay for which of the following?
Costs of training a replacement
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a)The contract can be issued without an annuitant. b)The annuitant must be a natural person. c)A corporation can be an annuitant as long as it is also the owner. d)A corporation can be an annuitant as long as the beneficiary is a natural person.
The annuitant must be a natural person.
An insured decides to replace his life insurance policy. The current agent must submit all of the following to the new agent EXCEPT a)The application. b)A copy of the replacement notice. c)The insured's first premium payment for the new policy. d)None of the above. The agent must submit all of these items.
The insured's first premium payment for the new policy.
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary.
Which statement is true about the proceeds of a life insurance policy? a)No proceeds can be paid to the lawful beneficiary unless he/she is at least 18 years old. b)The beneficiary must have an insurable interest in the insured. c)The lawful beneficiary receives the proceeds after all creditors of the estate have been paid. d)The lawful beneficiary is entitled to all policy benefits free from all claims of creditors or representatives of the insured's estate.
The lawful beneficiary is entitled to all policy benefits free from all claims of creditors or representatives of the insured's estate.
All of the following are true of key person insurance EXCEPT a)There is no limitation on the number of key employee plans in force at any one time. b)The employer is the owner, payor and beneficiary of the policy. c)The key employee is the insured. d)The plan is funded by permanent insurance only.
The plan is funded by permanent insurance only.
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy.
All of the following statements concerning dividends are true EXCEPT a)Lower insurance company costs generate higher dividends. b)They stem from favorable underwriting experience. c)Favorable investment results generate higher dividends. d)Dividend amounts are guaranteed in the policy. Dividends cannot be guaranteed.
Dividend amounts are guaranteed in the policy
Which of the following types of insurance policies would perform the function of cash accumulation? a)Term life b)Credit life c)Increasing term d)Whole life
Whole Life
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account.
Which of the following would be allowed in a life insurance contract in Kansas? a)Stating that the agent is representing the client b)Backdating a policy's issue date 6 months from the application date c)Deferring dividend payment for more than 5 years d)Canceling the policy if amount of loan is less than loan value
Backdating a policy's issue date 6 months from the application date
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? a)Insurance Index b)Policy Summary c)Illustrations d)Buyer's Guide
Buyers Guide
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit Rider
Which of the following individuals must have insurable interest in the insured? a)Underwriter b)Producer c)Policyowner d)Beneficiary
Policy Owner
HIPAA
Health Insurance Portability and Accountability Act
What effect do accelerated benefits have on the life policy's death benefit?
Reduce the death benefit
STOLI
Stranger- originated life insurance
_____________ may be accomplished by using a rate charge for a higher age, different sex, a flat fee, or a percentage adjustment to the manual rate
Supercharge
All the following statements are false regarding licensing EXCEPT a)Applicants must have a bachelor's or associate's degree. b)Applicants must take a prelicensing education course. c)Applicants must pass a state licensing exam. d)Applicants must be at least 21 years old.
Applicants must pass a state licensing exam.
The main difference between immediate and deferred annuities is
When the income payments begin.
When a producer is soliciting life insurance, what must he or she provide to the prospective insured? a)Summary of buyer's rights b)Buyer's guide c)Rates for guaranteed minimum dividends d)Premium estimates
Buyers Guide
STOLI
Buying a new policy on a stranger No insurable interest
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about
Whether an insurable interest exists between the individuals.
What is STOLI?
a life insurance arrangement in which a person with no relationship to the insured purchases a life policy on the insured lufe with the intent of selling the policy
Representations
are statements believed to be true
STOLIs _____________ the principle of insurable interests
violate
What is a definition of a unilateral contract?
One-sided: only one party makes an enforceable promise.
An insurance agent was born in 1978, and became licensed in 2013. What is the closest year by which the agent must complete his continuing education requirements?a)2014 b)2015 c)2016 d)2017
2016
All of the following would be events that could trigger Accelerated Benefits provision in a life insurance policy EXCEPT a)A condition that will confine the insured to an institution until death. b)A condition that will require the insured to have a major organ transplant. c)Terminal illness of the beneficiary. d)Terminal illness of the insured.
Terminal illness of the beneficiary
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? a)The policy will expire at the end of the 20-year period. b)At the end of 20 years, the policy's cash value will equal $100,000. c)The policy premiums will remain level for 20 years. d)If the insured dies before the policy expired, the beneficiary will receive $100,000.
At the end of 20 years, the policy's cash value will equal $100,000.
In which of the following situations would replacement rules apply? a)The new contract is with the same insurer and a conversion privilege is being exercised. b)The existing life insurance is a nonconvertible term policy with less than 10 years to expire. c)The solicitation is made by mail. d)The existing life insurance is converted into paid-up insurance.
The existing life insurance is converted into paid-up insurance.
Which of the following best describes the aleatory nature of an insurance contract? a)Only one of the parties being legally bound by the contract b)Ambiguities are interpreted in favor of the insured c)Policies are submitted to the insurer on a take-it-or-leave-it basis d)Exchange of unequal values
Exchange of unequal values
All insurance companies admitted to sell life and/or health insurance contracts in Kansas must as a condition to maintain their certificate of authority
Maintain membership in the Kansas Life and Health Insurance Guaranty Association.
Which of the following best describes the unfair trade practice of defamation?a)Assuming the name and identity of another person b)Issuing false advertising material c)Refusing to deal with other insurers d)Making derogatory oral statements about another insurer's financial condition
Making derogatory oral statements about another insurer's financial condition
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
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
According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT a)Tax delinquencies. b)Late payments. c)Failure to pay off a loan. d)Disputes regarding consumer report information.
Disputes regarding consumer report information.
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT a)Draw a line through the first answer, record the correct answer, and have the applicant initial the change. b)Note on the application the reason for the change. c)Destroy the application and complete a new one. d)Erase the incorrect answer and record the correct answer.
Erase the incorrect answer and record the correct answer.
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
Which is TRUE about the cash surrender nonforfeiture option? a)The policy remains active for some time after the policyholder opts for cash surrender. b)The policyholder receives the original cash value of the policy. c)Funds exceeding the premium paid are taxable as ordinary income. d)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.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium.
An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?
Pay the death benefit
If an employer decides to change its life insurance policy to a similar one with a different insurer, which of the following describes the extent that replacement regulations will be exercised?
Replacement regulations will not apply in this situation.
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy?
Return of premium
Which of the following manages the Kansas Life and Health Insurance Guaranty Association? a)The Commissioner b)Member Insurers c)The Board of Directors d)The State Department of Insurance
The Board of Directors
What is the purpose of the buyer's guide?
To allow the consumer to compare the costs of different policies
Which of the following is the best reason to purchase life insurance rather than annuities?
To create an estate
