Life silmulation exam

An insurer who willfully violates a single provision of an unfair trade practice regulation may be fined

$30,000

As part of the continuing education (CE) requirement, what is the minimum number of hours of CE specific to annuities that must be completed for each license renewal period?

4

For how many years must a producer keep supporting documentation of his or her continuing education completion?

5 years following license continuation

All the following are Nonforfeiture options EXCEPT

Interest only

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is an MEC.

Which option is being utilized when the insurer accumulates dividends at the interest and then uses the accumulated dividends plus interest and the policy cash value to pay the policy up early?

Paid-up option

The interest earned on policy dividends is

Taxable

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option.

The beneficiary will only receive payments of the interest earned on the death benefit.

Under an employer-sponsored group plan, if the insurance on a person covered under the policy ceases because of termination of employment, which of the following is true?

The certificate owner is entitled to convert coverage to an individual policy without evidence of insurability.

According to the entire contact provision what document must be made part of the insurance policy

a copy of the original application for insurance

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

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

the death benefit will be smaller

which of the following is incorrect concerning a noncontributory group plan?

the employees receive individual policies

the minimum number of credits required for partially insured status for social security disability benefits is

6 credits

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusions clause

Notwithstanding any other provision of law, each insurer admitted to transact the business of life insurance in this state must pay interest on the death benefits

From the date of the death

Which is true about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income

What document describes the specific information about a policy?

Policy summary

Which of the following is a risk classification used by underwriters for life insurance?

Standard

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor Protection

Which of the following is called a "second-to-die" policy?

Survivorship life

Children's rider attached to whole life policies are usually issued as what type of insurance?

Term

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Unilateral

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%

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

Waiver of premium- allows waives the premium if the insured owner has been totally disabled for a predetermined period

Which of the following is a statement that is guaranteed to be true, and if untrue may breach an insurance contract?

Warranty

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. which is true concerning the policy premium?

it will likely be higher because the applicant is a substandard risk

A domestic insurer issuing variable contracts must

separate accounts

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

reduced paid-up

Which rider when attached to permanent life insurance policy provides an amount of insurance on every family member

Family term rider

twin brothers are starting a new business. they know it will take years to build the business to the point that they can pay off 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

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time.

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

A full death benefit

When an annuity is written, whose life expectancy is taken into account?

Annuitant

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would life a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)..

Equity Indexed Annuity

The requirement that producers must account for all insurance funds collected, and not commingle those funds with their own is known as

Fiduciary responsibility.

What is another name for substandard risk classification?

Rated

Which one of the following is not one of the three basic types of coverage's that are available, based on how the face amount changes during the policy term?

Renewable

Which of the following best details the underwriting process for life insurance?

Selection, classification, and rating of risks

all of the following statements about equity index annuities are correct EXCEPT

The annuitant receives a fixed amount of return

Who is a third-party owner?

A policyowner who is not the insured

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

A) Universal life

Which of the following is the closest term to an authorized insurer?

Admitted

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

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

The full premium was submitted with the application for life insurance, & the policy was issued 2 weeks later as requested. When does the policy coverage become effective?

As off the application date.

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

Producers in Colorado who intend to sell annuities are required to do which of the following?

Complete an initial 4-hour annuity training course

If a beneficiary wanted a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what option would a beneficiary select?

Fixed period

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

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 show in the policy at issue time. The policy is a?

Interest-sensitive Whole Life

In the state of Colorado, an unfair trade practice of defamation is considered a/an

Misdemeanor.

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice regarding replacement

the dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

One year term option

A rider attached to a life insurance policy that provides coverage on the insureds family members is called the:

Other-insured rider.

Under Colorado's Unfair Claims Practices regulations, when denying a claim an insurer must do all of the following EXCEPT

Pay a claim that occurs after the grace period has ended.

All of the following are true regarding insurance policy loans EXCEPT

Policy loan can be made on policies that do not accumulate cash value.

Which of the following will be included in a policy summary?

Premium amounts and surrender values

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

Who has the right to assign incidents of ownership under a group life insurance policy?

The individual insured

Which of the following is true regarding the premium in term policies?

The premium is level

which is true about a spouse term rider

The rider is usually level term insurance

All of the following are required to be included in life insurance illustrations, EXCEPT:

They must be part of the contract

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?

Buyer's Guide

A key person insurance policy can pay for which of the following?

Costs of training a replacement

Whenever the Commissioner issues a cease and desist order, how will that order be delivered to the person in violation?

By certified mail

What license or licenses are required to sell variable annuities?

both a life insurance license and a securities license

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?

a debtor has an insurable interest in the life of a lender

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is...

fully insured

If a life policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

guaranteed insurability rider