NV XCEL Exam

NV Life & Health insurance guaranty association (A) Assists in underwriting large policies (B) is funded by producers through their commissions (C) is financed by US treasury (D) is funded by insurance companies through assessments

Is funded by insurance companies through assessments

Credit life insurance is

Issued on a debtor to cover outstanding balances on installment loans

Quarterly premium payments increase the annual cost of insurance because (A) interest to the insurer is increased while administrative costs are decreased (B) mortality costs are greater (C) insurer risk exposure is greater (D) interest to the insurer is decreased while the administrative costs are increased

Interest to the insurer is decreased while the administrative costs are increased (the higher the frequency of payments, the higher the premiums)

Which type of life insurance beneficiary requires their consent when a change of beneficiary is attempted by policyowner?

Irrevocable beneficiary

Which statement regarding third-party ownership of a life insurance policy is true? (A) It is used extensively in estate-planning as well as business circumstances (B) Policy cannot be assigned once issued (C) It is illegal in most states (D) Beneficiary is required to be irrevocable

It is used extensively in estate-planning as well as business circumstances

Which plan is intended to be used by a sole proprietor and the employees of that business? (A) Individual Retirement Account (B) Keogh Plan (C) SEP Plan (D) SIMPLE Plan

Keogh Plan

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? (A) Adjustable (B) Level (C) Decreasing (D) Increasing

Level (Pays same benefit amount if death occurs at any point during term)

In NV, who is authorized to transact insurance sales for an insurance company? (A) Licensed producers (B) Accountants (C) Underwriters (D) Administrators

Licensed producers

Which of these are NOT an example of a Nonforfeiture option? (A) Life income (B) Extended Term (C) Cash Surrender (D) Reduced Paid-up

Life income

Which of these is NOT considered to be a right given to a policyowner? (A) Modify a provision in insurance contract (B) Assignment of ownership (C) Surrendering policy's cash value (D) Change beneficiary, if revocable

Modify a provision in insurance contract

What must be signed by both the producer and applicant when an existing life insurance policy is being reissued with a reduction in cash value? (A) Replacement receipt (B) Notice Regarding Replacement (C) Buyer's Summary (D) Policy Guide

Notice Regarding Replacement

A ___ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities

Variable

Which of the following annuities pay benefits based on units rather than specific dollar amounts? (A) Flexible annuity (B) Single premium annuity (C) Variable annuity (D) Deferred annuity

Variable annuity

In NV, a ___ insurance company is one formed under the laws of a state outside of NV

Foreign

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? (A) Fixed Period (B) Fixed Variable (C) Fixed Deferred (D) Fixed Immediate

Fixed Deferred

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? (A) Return of premiums paid (B) Face amount plus interest (C) $20,000 death benefit (D) Cash value plus interest

$20,000 death benefit

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a (A) $125k individual whole life policy (B) $25k modified whole life policy (C) $25k individual whole life policy (D) $25k individual term life policy

$25k individual whole life policy

What is the maximum fine that can be imposed by the commissioner to a producer who violates an insurance law? (A) $500 per violation (B) $1,000 per violation (C) $250 per violation (D) No limit to the fine

$500 per violation

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? (A) Total premiums paid minus any policy loans (B) Nothing (C) $100k (D) $50k

$50k

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? (A) Cash value accumulatiuon of both 20-pay life and straight life depend on the insurer's financial rating (B) 20-pay life and straight life accumulate cash value at the same rate (C) 20-pay life accumulates cash value faster than straight life (D) straight life accumulates faster than limited-pay life

20-pay life accumulates cash value faster than straight life

How long must every insurance producer maintain all records, books, and documents related to each insurance transaction?

3 years

A producer must complete __ hours of continuation education every 3 years.

30 (30 hours every 3 years)

When an employee is terminated, how long does this employee have to convert group life coverage to an individual plan? (A) 30 days (B) 60 days (C) 31 days (D) 90 days

31 days

Which of these is an element of a Variable Life policy? (A) No investment risk to the policyowner (B) A fixed, level premium (C) Insurer assumes the investment risk (D) Rate of returns are guaranteed

A fixed, level premium

What is NV's definition of Life insurance replacement? (A) A transaction in which coverage on an existing policy is increased (B) A transaction in which a policyowner reinstates a lapsed policy (C) A transaction in which group life coverage is converted to an individual policy (D) A transaction in which a new policy is bought and an old policy is terminated

A transaction in which a new policy is bought and an old policy is terminated

What is a responsibility of the Commissioner? (A) Administering insurance laws (B) Establishing sales quotas (C) Endorsing insurers (D) Incarcerating producers

Administering insurance laws

All of the following are examples of insurance advertisement EXCEPT (A) A newspaper notice announcing free insurance advice (B) An employer newsletter announcing the availability of coverage for employees (C) A direct mail brochure announcing specific insurance plans (D) A tv spot announcing an insurance company's new product

An employer newsletter announcing the availability of coverage for employees

An incomplete life insurance app submitted to an insurer will result in which of these actions?

App will be returned to the writing agent

traditional individual retirement annuity (IRA) distributions must start by

April 1st of the year following the year the participant attains age 70 1/2

Which of following is a req to attain a nonres producer license? (A) Pass special exam for nonres producers (B) Be licensed as producer in producer's state of domicile (C) Own real estate in NV (D) Maintain a specific sales quota in res state

Be licensed as producer in producer's state of domicile

What is considered to be a characteristic of an immediate annuity? (A) Benefit payments start within one payment period of purchase (B) Normally tied to a specific equity or stock index (C) Periodical contributions begin immediately (D) Benefit payments start within 5 years of initial purchase

Benefit payments start within one payment period of purchase

Which of these is NOT considered to be a cost connected with an individual's death? (A) Tax liability (B) Funeral expense (C)Probate cists (D) Business expenses

Business expenses

Which of the following does Social Security NOT provide benefits for? (A) Retirement (B) Disability (C) Dismemberment (D) Survivorship

Dismemberment

A Whole Life Insurance Policy endows when the (A) Premium paid equals the death benefit (B) Cash value plus dividends equal the death benefit (C) Death proceeds are paid (D) Cash value equals the death benefit

Cash value equals the death benefit

Which statement about a whole life policy is correct? (A) Bene may be changed only w/consent of premium payor (B) Premiums are flexible (C) Cash value may be borrowed against (D) Death benefit can usually be adjusted

Cash value may be borrowed against

Which of the following is an ex of defamation? (A) Circulating brochures falsely denouncing financial condition of an insurer (B) Making statements that encourage purchase of term life insurance over whole life (C) Issuing pamphlets containing false info about term life (D) Publishing a newsletter that makes reference to reputable brokers in area

Circulating brochures falsely denouncing financial condition of an insurer

On August 6, D submitted an app for a $50k Life insurance policy and did not pay the initial premium. On August 18, D went to his doc complaining of chest pains and some tests were given by doc. The life policy was delivered by producer on August 20 and D explains what had recently taken place with the doc. What action should the producer then take? (A) Collect initial premium along w/ a signed health statement (B) Explain to applicant the policy is no longer in effect due to change in health condition (C) Collect initial premium (D) Collect initial premium and leave a binding receipt

Collect initial premium along with a signed health statement

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? (A) Have customer fill out app & send it to his office for him to sign, then send it off to insurance company (B) complete app & review info w/customer prior to obtaining customer's sig, then send app off to insurance company (C) Complete app over phone w/customer, sign app for customer, then send app off to insurance company (D) Have customer sign a blank app, then take app back to office to complete prior to sending it off to insurance company

Complete app & review info w/customer brior to obtaining customer's sig, then send app off to insurance company

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? (A) Conditional (B) Contingent (C) Initial premium (D) Binding

Conditional

Which of these require an offer, acceptance, and consideration?

Contract

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? (A) Entire contract (B)Nonforfeiture options (C) Conversion (D) Owner's rights

Conversion

Which of the following features of a group term life policy enables an individual to leave the group and continue their insurance w/o providing evidence of insurability?

Conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? (A) Incontestable period (B) Conversion provision (C) Extended term option (D) 1035 Exchange

Conversion provision

A family income policy is a combo of Whole Life and (A) Increasing Term (B) Level Term (C) Decreasing Term (D) Deposit Term

Decreasing Term

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? (A) Endowment (B) Modified Whole Life (C) Decreasing Term (D) 20-Pay Life

Decreasing Term

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? (A) Distribution is subject to a tax penalty (B) Distribution is subject to capital gains tax (C) Distribution is subject to federal income tax withholding (D) Distribution is subject to ordinary income tax

Distribution is subject to federal income tax withholding (Participant must complete a rollover to another qualified plan within 60 days or distribution is considered a nonqualified distribution and is subject to taxes and penalties. A plan sponsor must withhold 20% of distribution for federal taxes on a rollover. Once rollover takes place to the new custodian, remainder of distribution is released)

An insurance ocmpany formed under NV laws is referred to as a

Domestic company

Under a trustee group life policy, who would be eligible for a certificate of coverage? (A) Employer (B) Labor union (C) Employee (D) Corporation

Employee

Which of these statements is INCORRECT regarding federal income tax treatment of life insurance? (A) Proceeds are received tax-free if there is a named beneficiary (B) Cash dividends are normally not taxed (C) Premiums are normally not tax deductible (D) Entire cash surrender value is taxable

Entire cash surrender value is taxable (Interest gained is taxable)

When an individual is planning to protect their family w/life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve? (A) Establishes investment risk level acceptable to individual (B) Takes into account present value of future income earned by breadwinner (C) Places a dollar value on life of individual (D) Establishes needs of individual & dependents

Establishes needs of individual & dependents

Which of the following is an important underwriting principle of group life insurance? (A) Everyone must be covered in the group (B) Physical exams are required (C) Employer must pay for the entire premium (D) Group must be formed for purpose of getting affordable insurance

Everyone must be covered in the group

Which of these provisions is NOT required in life insurance policies? (A) Grace period (B) Free look (C) Entire contract (D) Extended term

Extended term

What action should a producer take if the initial premium is NOT submitted with the application? (A) Keep the application until premium is paid (B) Forward application to insurer without initial premium (C) Forward application to insurer after giving applicant a conditional receipt (D) Forward application to insurer after giving applicant a binding receipt

Forward application to insurer without initial premium

Which of the following is a nonprofit organization that exists solely for benefit of its members & operates on a lodge system?

Fraternal benefit societies (nonprofit corp/society/order that have rep form of gov & are organized through lodge system)

What is considered a valid reason for small businesses to insure the lives of its major shareholders? (A) To pay for final expenses (B) Fund a buy-sell agreement (C) To provide an income for the surviving dependents (D) Reduce the company's tax liability

Fund a buy-sell agreement (in the event of the death of a major shareholder in a business)

Which requirement must be met for an association to be eligible for a group life plan? (A) Group must have at least 10 members (B) Group was formed for the purpose of acquiring insurance (C) Group was formed for a purpose other than acquiring insurance (D) Group must establish a President

Group was formed for a purpose other than acquiring insurance

all of these are powers of the commissioner EXCEPT (A) Incarcerate a producer (B) Enforce insurance laws (C) Issue subpoenas (D) hold hearings

Incarcerate a producer

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? (A) Inflation protection (B) Income for a fixed period stated in the contract (C) Income that cannot be outlived by the owner (D) Tax-free income

Income that cannot be outlived by the owner

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? (A) attending physician's report (B) agent's report (C) MIB report (D) inspection report

Inspection report

A renewable term policy is renewable at the option of the (A) company (B) owner (C) insured (D) assignee

Insured

In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT (A) Insured (B) Owner (C) Payor (D) Applicant

Insured

A ___ is a person/company that underwrites an insurance risk and issues an insurance contract

Insurer

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? (A) P will still receive declared dividends (B) P cannot assign ownership of the policy while premiums are being waived (C) P cannot borrow against the policy's cash value while disabled (D) P will have to pay income taxes on the amount of premiums waived

P will still receive declared dividends (As if insured were still making payments themselves)

Which action will a life insurance company most likely take if an insured dies & it is discovered that insured's age was misstated on the app?

Pay an amount premiums would have purchased at insured's actual age

Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against?

People that smoke

J is an insurance agent who maintains premiums in a fiduciary account. Which of the following expenses may NOT be paid using funds withdrawn from this account? (A) Premiums due to insurers (B) Return premiums due to insureds (C) Personal medical expenses (D) Commissions due to other licensees

Personal medical expenses

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? (A) Portion of death proceeds are taxable to bene (B) Portion of premiums paid for by employer may be a tax deduction (C) Portion of death proceeds are taxable to estate (D) Portion of premiums paid for by employee may be a tax deduction

Portion of premiums paid by employer may be a tax deduction (In a contributory plan for its share of premium costs)

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? (A) Number of dependents (B) Primary Insurance Amount (C) State of residence (D) Total taxes paid into FICA

Primary insurance amount (PIA)

An individual who has a contract w/an insurance company to represent it is called a (A) producer (B) director (C) administrator (D) representative

Producer

Who signs a "Notice Regarding Replacement" form when an application is taken for a new life insurance policy that replaces an existing one? (A) Beneficiary (B) Applicant only (C) Producer only (D) Producer and applicant

Producer and applicant

All of these are considered sources of underwriting information about an applicant EXCEPT (A) Inspection report (B) Rating services (C) Credit Report (D) Medical Information Bureau

Rating services

Which of these provisions require proof of insurability after a policy has lapsed? (A) Reinstatement (B) Consideration (C) Insuring (D) Conversion

Reinstatement

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? (A) Geographical location (B) Marital status (C) Source of income (D) Risk classification

Risk classification

Which of these actions by a licensee would NOT likely result in license suspension or revocation? (A) Willfully submitting false insurance applications (B) Maliciously aligning another insurance company's financial status (C) Sharing commission with another similarly-licensed producer (D) Knowingly accepting insurance business from an unlicensed individual

Sharing a commission with another similarly-licensed producer

What is Old Age and Survivors Health Insurance (OASDHI) also known as?

Social Security

What is a warranty?

Statement guaranteed to be true

What type of policy covers 2 people & pays upon death of last insured?

Survivorship

Who would be liable for an insurance claim on a policy sold by a Nevada producer and issued by an insurance company NOT authorized to conduct business in Nevada? (A) The Commissioner (B) The producer (C) The insurer (D) The Guaranty Association

The producer

All of these are considered to be a benefit under Social Security, EXCEPT for (A) survivorship (B) retirement (C) disability (D) unemployment

Unemployment (along with dismemberment)

S is a life insurance policyowner and enters into a written agreement to receive immediate cash in exchange for the sale and transfer of her life insurance policy. This agreement is referred to as a(n) (A) Cash conversion (B) 1035 exchange (C) Viatical Settlement (D) Equity Cash Arrangement

Viatical Settlement

A life insurance policyowner may sell their policy to a ___ in order to receive a percentage of the policy's face value

Viatical settlement provider

When is the face amount of a Whole Life policy paid?

When insured dies or at policy's maturity date, whichever happens first

A Return of Premium life insurance policy is: (A) Whole life and Increasing term (B) a Nonforfeiture option (C) interest-sensitive (D) Variable life

Whole life and Increasing term (Whole life insurance with a death benefit rider of increasing term insurance equal to amount of premiums paid. If insured dies within period of term, beneficiary will receive face amount plus value of all paid premiums)

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase? (A) Joint policy (B) Joint survivor policy (C) Whole life policy with a guaranteed insurab9ility option (D) Whole life policy with other insured rider

Whole life policy with other insured rider

According to NV's rules on disclosure, a life insurance applicant is expected to be provided with

a Buyer's Guide and Policy Summary

How long does the coverage normally remain on a limited-pay life policy? (A) age 65 (B) age 100 (C) at the discretion of the insurer (D) when premium payments stop

age 100

To be eligible for Social Security disability benefits, an employee must be unable to perform: (A) any occupation that the employee is qualified & willing to do (B) their current occupation (C) any occupation that reflects employee's education level (D) any occupation

any occupation

In a qualified retirement plan, the yearly contributions to an employee's account (A) are restricted to maximum levels set by IRS (B) are not tax-deductible (C) are restricted to minimum levels set by IRS (D) must be matched dollar-for-dollar by the employer

are restricted to maximum levels set by IRS

When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?

at future dates specified in the contract with no evidence of insurability required

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be (A) converted to an individual permanent policy at a group rate (B) continued at an individual rate (C) converted to an individual permanent policy at an individual rate (D) continued at a group rate

converted to an individual permanent policy at an individual rate

The most important factor to consider when determining whether to convert term insurance at insured's attained age or insured's original age is (A) amount of coverage being converted (B) Who will be beneficiary (C) health of the insured (D) cost

cost

NV's 10-day free-look period for life insurance policies begins at the (A) date of delivery (B) date of application (C) date of approval (D) date of physical exam

date of delivery

The commissioner may hold hearings (A) when approved by the NAIC (B) for any reason deemed necessary (C) only if there is a complaint filed (D) only when a felony is involved

for any reason deemed necessary

A foreign insurance company doing business in NV

is a company that was formed under the laws of another state

In NV, an element of an insurance transaction would be (A) setting up the sales appointment (B) issuing an insurance contract (C) determining how much coverage is needed (D) ordering an MIB report

issuing an insurance contract

Defamation occurs when an agent makes a false statement intended to (A) replace an existing insurance policy w/another (B) malign another insurer (C) restrict fair trade (D) misrepresent the provisions of an insurance policy

malign another insurer

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives (A) the contract surrender value at that time (B) no refund of money (C) reimbursement of all expenses deducted from the contract value (D) all premiums paid up to the date of termination

the contract surrender value at that time

A noncontributory group term life plan is characterized by (A) cost of plan is shared by both employer & employee (B) both employer and employee must provide evidence of insurability (C) the entire cost of the plan is paid for by the employer (D) the entire cost of the plan is paid for by the employee

the entire cost of the plan is paid for by the employer

T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert (A) to an individual policy with a higher amount of coverage (B) to an individual policy, only if employer pays premiums (C) to an individual policy, only by providing evidence of insurability (D) to an individual policy upon employment termination

to an individual policy upon employment termination

An example of an unfair claims settlement practice is (A) requiring a time limit for submitting a claim (B) making it mandatory that proof of loss be provided for each claim (C) turning down a claim without providing the basis of denial (D) paying a claim in a timely matter

turning down a claim without providing the basis of denial