Xcel Solutions IN Life Insurance Final Exam
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
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
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
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
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
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
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
In order to sell a ( n )_________ Life policy , a producer is required to register with the Financial Industry Regulatory Authority ( FINRA ) .
Variable
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
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
In life insurance , the needs approach is used mostly to establish :
how much life insurance a client should apply for
Which of these is NOT considered to be an element of an insurance contract ?
negotiating
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 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
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
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
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
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 .
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
Life insurance replacement regulation protects the interests of
the policyowner
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
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
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
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
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
The free - look period for life insurance policies issued in Indiana is days .
-10
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 %
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
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
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
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
Which statement is TRUE in regards to a policy loan ?
Past - due interest on a policy loan is added to the total debt
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
A ( n ) _________ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary .
Revocable
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
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
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
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
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
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
