Xcel Solutions IN Life Insurance Final Exam
The free - look period for life insurance policies issued in Indiana is days .
-10
How many days is a temporary producer's license valid ?
180
What year was the McCarran - Ferguson Act enacted ?
1945
Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated :
1970 - Fair Credit Reporting Act
A newly licensed producer must complete 24 hours of continuing education every ___ years .
2
Producers must complete ______ hours of continuing education every two years to keep their license active .
24
In Indiana , what is the maximum percentage of controlled business a producer may write in a twelve month period ?
25 %
A producer must notify the Commissioner within _______ days of a felony conviction
30
ABC Insurance Company fails to pay death proceeds after satisfactory proof of loss was submitted ABC must then begin paying interest on the death proceeds after_______ days of receiving proof of loss .
30
What is Indiana's definition of Life insurance replacement ?
A transaction in which a new policy is bought and an old policy is terminated
Which provision is NOT a requirement in a group life policy ?
Accidental
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a ( n ) :
Accidental Death and Dismemberment rider ( AD & D )
Which of the following is an example of false advertising ?
An insurance company publishing misleading information about its policy's provisions
What does a certificate of authority allow ?
An insurance company to conduct insurance business in Indiana
What does the insuring agreement in a Life insurance contract establish ?
An insurer's basic promise
With whom may a producer share commissions with ?
Anyone the producer deems appropriate
Any changes made on an insurance application requires the initials of whom ?
Applicant
Which of the following is a requirement to attain a nonresident producer license in Indiana ?
Be licensed as a producer in the producer's state of domicile
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take ?
Claim will be denied
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period ?
Claims are denied under the Suicide clause of the policy
As a condition for a loan , a bank requires the borrower to purchase credit insurance from a specific company What is the bank guilty of ?
Coercion
On August 6 , D submitted an application for a $ 50,000 Life Insurance policy and did not pay the initial premium . On August 18 , D went to his doctor complaining of chest pains and some tests were given by the doctor The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor . What action should the producer then take ?
Collect initial premium and leave a binding receipt
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 thatcoverage begins immediately if the application is approved . What kind of receipt was used ?
Conditional
Insurance policies are offered on a " take it or leave it " basis , which make them :
Contracts of Adhesion
Which of the following is NOT a situation that involves life insurance policy replacement ?
Converting a term policy to a permanent policy with the same insurer
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary Under the Common Disaster clause , if K and her husband are both killed in an automobile accident , where would the death proceeds be directed ?
Daughter
How often must the Commissioner examine each domestic insurance company ?
Every 5 years
How often must an insurance producer's license in Indiana be renewed ?
Every two years .
What does a Face Amount Plus Cash Value Policy pay upon the insured's death ?
Face amount plus the policy's cash value
An insurance applicant MUST be informed of an investigation regarding his / her reputation and character according to the :
Fair Credit Reporting Act
What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained ?
Fair Credit Reporting Act
Taking receipt of premiums and holding them for the insurance company is an example of :
Fiduciary responsibility
Which of the following is a requirement to be eligible for a group life policy in Indiana ?
Group must be formed for a purpose other than obtaining insurance
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment ( AD & D ) policy ?
If the primary beneficiary dies before the insured
A 55 year old recently received a $ 30,000 distribution from a previous employer's 401k plan , minus $ 6,000 withholding . Which federal taxes apply if none of the funds were rolled over ?
Income taxes plus a 10 % penalty tax on $ 30,000
T , age 70 , withdraws cash from a profit - sharing plan and purchases a Straight Life Annuity . What will this transaction provide ?
Income that cannot be outlived by the owner
Who makes the legally enforceable promises in a unilateral insurance policy ?
Insurance company
Variable annuities may invest premiums in each of the following , EXCEPT :
Insurer's corporate business account
In a Life insurance contract , an insurance company's promise to pay stated benefits is called the :
Insuring clause
A policyowner's rights are limited under which beneficiary designation ?
Irrevocable
What type of life policy covers two lives and pays the face amount after the first one dies ?
Joint Life Policy
K's whole life insurance policy lapsed two months ago due to nonpayment . She would now like to reinstate the policy . All of these statements are correct about the policy's reinstatement EXCEPT
K must provide evidence of insurability
Which of the following provides funding for the Indiana Life and Health Insurance Guaranty Association ?
Member company assessments
A policyowner is allowed to pay premiums more than once a year under which provision ?
Mode of Premium
During a life insurance sales transaction , which of the following forms must be completed by a producer if the customer has existing life insurance coverage that is being replaced ?
Notice Regarding Replacement of Life Insurance or Annuity
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2 ?
Ordinary income tax and a 10 % tax penalty for early withdrawal
Which statement is TRUE in regards to a policy loan ?
Past - due interest on a policy loan is added to the total debt
A ( n ) _________ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary .
Revocable
J would like to maintain the right to change beneficiaries . Which beneficiary designation should be used ?
Revocable
Which of the following is NOT considered rebating ?
Sharing commissions with a producer licensed in the same line of business
K has inherited a large sum of money . K purchases an annuity with this sum on July 1 , and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives . Which type of annuity did K purchase ?
Single Premium Immediate Joint with Survivor Annuity
Which of the following types of permanent life insurance policies offers the highest initial cash value ?
Single premium
Why must an insurance applicant answer all questions on the application ?
Statements and representations are considered guarantees
A policy of adhesion can only be modified by whom ?
The insurance company
What is the basic function of an annuity ?
The systematic liquidation of accumulated funds
Why would the Insurance Commissioner issue a temporary license ?
To allow the personal representative of a deceased producer to provide service to existing policyowners
J is a producer who has induced an insured through misrepresentation to surrender an existing insurance policy . What is J guilty of ?
Twisting
K purchased a Life insurance policy in 1986 which paid 10 % interest in the early years of the policy. Twenty years after the purchase , she received a notice from the insurer stating that the policy will soon terminate unless a much - higher premium is paid because of falling interest rates . This type of policy is known as a ( n )___________ life policy .
Universal
In order to sell a ( n )_________ Life policy , a producer is required to register with the Financial Industry Regulatory Authority ( FINRA ) .
Variable
When a misrepresentation on a life insurance policy application is discovered , what action may an insurance company take ?
Void the policy only if it is discovered during the Contestable period and proven to be material
When is the face amount of a Whole Life policy paid ?
When the insured dies or at the policy's maturity date , whichever happens first
A ( n ) _________ insurance company is one formed in a country other than the United States .
alien
To be eligible for Social Security disability benefits , an employee must be unable to perform :
any occupation
An applicant's medical information received from the Medical Information Bureau ( MIB ) may be furnished to the :
applicant's physician
Indiana's 10 - day free - look period for life insurance policies begins on the :
date of delivery
A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned , cost of insurance , and the
expense charges
In Indiana , an insurer licensed to conduct business in Indiana , but domiciled in Texas , is called a ( n )
foreign company
The Life and Health Insurance Guaranty Association is :
funded by admitted insurance companies through assessments
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
In life insurance , the needs approach is used mostly to establish :
how much life insurance a client should apply for
the approp A life insurance policy would be considered a wagering contract WITHOUT
insurable interest
Quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
The Accidental Death and Dismemberment ( AD & D ) provision in a life insurance policy would pay additional benefits if the insured :
is blinded in an accident
Which of these is NOT considered to be an element of an insurance contract ?
negotiating
P is a producer who is licensed in Indiana , but a resident of Michigan . In Indiana , P is considered to be a ( n ) producer .
nonresident
P is a producer who is licensed in Indiana , but a resident of Michigan . In Indiana , P is considered to be a ( n ) __________ producer .
nonresident .
T is an insurance license applicant who intends to primarily engage in insurance transactions on himself and his family . If the Insurance Department is made aware of this , T will most likely
not be issued a license
A licensed business entity acting as an insurance producer MUST
notify the Department of Insurance of any fictitious name used
When a policy pays dividends to its policyholders , it is said to be
participating
Who elects the governing body of a mutual insurance company ?
policyholders
An existing life insurance policy is being replaced by a new one . A notice of replacement must be provided by the _______ to be signed by the applicant .
producer
An individual who in any manner sells , solicits , or negotiates insurance on behalf of insurance companies for compensation is an insurance :
producer
According to Indiana law , group life insurance conversion privileges must NOT :
require evidence of insurability .
An example of rebating would be :
returning a portion of a premium as inducement to purchase insurance
Life insurance replacement regulation protects the interests of
the policyowner
An individual who purchases a Life annuity is given protection against :
the risk of living longer than expected
Stranger - Owned Life Insurance ( STOLI ) is when a person purchases life insurance only to sell to a ( n ) :
third - party with no insurable interest
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 :
to an individual policy upon employment termination
A producer inducing an insured to lapse , forfeit , or surrender insurance through misrepresentation is committing the illegal act of :
twisting
that lead to the termination of an existing insurance policy so that a new policy with another insurer A producer who makes misleading statements can be taken out has committed :
twisting
Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period . This conversion period
varies according to the contract
Select the appropriate The part of a life insurance policy guaranteed to be true is called a ( n ) :
warranty
Which of the following is NOT a required provision in group life policies ?
• Right to Loan
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 ?
$ 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 :
$ 25,000 individual whole life policy
An individual working part - time has an annual income of $ 25,000 . If this individual has an IRA , what isthe maximum deductible IRA contribution allowable ?
$ 6,000
What benefit does the Payor clause on a Juvenile Life policy provide ?
Premiums are waived if payor becomes disabled
K is the insured and P is the sole beneficiary on a life insurance policy . Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision , which of these statements is true ?
Proceeds will be payable to K's estate if P dies within a specified time
When an existing life insurance policy is terminated so that a new life insurance policy can be purchased , this transaction is referred to as
Replacement