Life part 3

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? a) 1 b) 3 c) 5 d) 10

C) 5

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will a) Issue the policy anyway and pay the face value to the beneficiary. b) Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. c) Return the premium to Y's estate, since it has no obligation to pay the death claim. d) Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued.

A) Issue the policy anyway and pay the face value to the beneficiary

On March 1st, a temporary license was granted to an applicant for a permanent producer license. On March 31st, the applicant received the permanent license. When will the temporary license terminate? a) March 31 b) April 15 c) May 15 d) August 31

A) March 31

After an insurance company examination, the Commissioner or the examiner appointed by the Commissioner must file a written report of the examination within a) 10 days. b) 30 days. c) 60 days. d) 90 days.

C) 60 days

What is a required grace period for life insurance policies issued in this state? a) 10 days b) 15 days c) 1 month d) 3 months

C) 1 month

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) Reinstatement b) Reduced paid-up option c) Automatic premium loan d) Extended term

C) Automatic premium loan

Which of the following statements is correct regarding a whole life policy? a) Cash values are not guaranteed. b) The policy premium is based on the attained age. c) The death benefit may increase or decrease during the policy period. d) The policyowner is entitled to policy loans.

D) The policy owner is entitled to policy loans

To legally transact insurance in this state, an insurer must obtain which of the following? a) Business entity license b) Certificate of Insurance c) Certificate of Authority d) Power of Attorney

C) Certificate of Authority

What are the 2 types of losses? a) Pure and speculative b) Insurable and uninsurable c) Direct and consequential d) Open peril and named peril

C) Direct and consequential

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a) The Entire Contract Provision b) The Consideration Clause c) Assignment Rights d) Owner's Rights

D) Owners Rights

What is the major difference between a stock company and a mutual company? a) Amount of death benefit b) Number of producers c) Types of whole life policies d) Ownership

D) Ownership

All of the following would be considered rebating EXCEPT a) An agent offers tickets to a baseball game as an inducement to buy insurance. b) An agent misrepresents policy benefits to convince a policyowner to replace policies. c) An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. d) An agent offers to share his commission with a policyholder.

B) An agent misrepresents policy benefits to convince a policyowner to replace policies

If an employee whose group coverage has terminated applies for an individual policy during the 60-day election period but dies before the individual policy's effective date, the insurer will pay a) A pro-rated portion of the death benefit. b) The full amount of the death benefit of the requested conversion policy. c) Nothing. d) The amount that represents the premium payment that was submitted with the request for an individual policy.

B) The full amount of the death benefit of the requested conversion policy

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? a) False advertising b) Rebating c) Twisting d) Switching

C) Twisting

Which policy component decreases in decreasing term insurance? a) Face amount b) Cash value c) Dividend d) Premium

A) Face amount

If a retirement plan or annuity is "qualified," this means a) It is approved by the IRS. b) It has a penalty for early withdrawal. c) It accepts after-tax contributions. d) It is noncancellable.

A) it is approved by the IRS

Which of the following is NOT true regarding a Certificate of Authority? a) It is issued to group insurance participants. b) It may be necessary for transacting business in a specific state. c) It is equivalent to an insurance license. d) It is issued by the state department of insurance.

A) it is issued to group insurance participants

What are the two components of a universal policy? a) Separate account and policy loans b) Insurance and cash account c) Insurance and investments d) Mortality cost and interest

B) Insurance and cash account

Who can request changes in premium payments, face value, loans, and policy plans? a) Producer b) Policyowner c) Contingent beneficiary d) Beneficiary

B) Policyowner

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.

D) Rebating

Nonforfeiture values guarantee which of the following for the policyowner? a) That the dividends will be paid annually b) That the death benefit will be paid in a lump sum c) That the policy premiums will never increase d) That the cash value will not be lost

D) That the cash value will not be lost

Group life insurance policies must permit covered employees to continue coverage for themselves and dependents for a specified period of time if their group coverage is terminated for any of the following reasons EXCEPT a) Termination because of misconduct on the part of the employee. b) Termination because of a slow-down in the business. c) Termination because of illness. d) Reduction of hours so the employee is no longer classified as full-time.

A) Termination because of mis conduct on the part of the employee

Which of the following would provide an underwriter with information concerning an applicant's health history? a) The inspection report b) The Medical Information Bureau c) A medical examination d) The agent's report

B) The medical information Bureau

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a) Adhesion b) Consideration c) Good faith

B) Consideration

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? a) Cash option b) Reduction of premium c) Paid-up addition d) Accumulation at interest

B) Reduction of premium

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 a) Incontestability clause. b) Reinstatement clause. c) Insuring clause. d) Misstatement of Age clause.

a) Incontestability clause

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called a) Accelerated benefit rider. b) Living need rider. c) Payor rider. d) Cost of living rider.

D) Cost of living rider

Which of the following riders would NOT cause the Death Benefit to increase? a) Guaranteed Insurability Rider b) Cost of Living Rider c) Accidental Death Rider d) Payor Benefit Rider

D) Payor Benefit Rider

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 a) Conditions. b) Consideration. c) Legal purpose. d) Offer and acceptance.

A) Conditions

Which of the following provisions states what must be included for an insurance contract to be considered complete? a) Entire contract b) Payment of claims c) Insuring clause d) Consideration

A) Entire contract

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) a) Executive bonus. b) Key person policy. c) Fraternal association. d) Aleatory contract.

A) Executive bonus

The Ownership provision entitles the policyowner to do all of the following EXCEPT a) Set premium rates. b) Receive a policy loan. c) Assign the policy. d) Designate a beneficiary.

A) Set premium rates

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? a) Stock company b) Reciprocal association c) Fraternal benefit society d) Mutual company

C) Fraternal benefit society

Which of the following types of groups are formed when several similar or related small companies join forces to create a large pool of people that the insurer will accept as a group? a) Contributory groups b) Consolidated Omnibus Reconciliation Associations c) Multiple-employer trusts d) Blanket insurance groups

C) Multiple-employer trusts

Which of the following is NOT true regarding the annuitant? a) The annuitant receives the annuity benefits. b) The annuitant must be a natural person. c) The annuitant cannot be the same person as the annuity owner. d) The annuitant's life expectancy is taken into consideration for the annuity.

C) The annuitant cannot be the same person as the annuity owner

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? a) Both principal and interest b) Neither principal nor interest c) Principal only d) Interest only

D) Interest only