XCEL Solutions Life Insurance Final Exam

Which of these is an element of a Single Premium annuity?

Lump-sum payment

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

Mandatory income tax withholding on the transfer amount

A producer license may be suspended or revoked if the producer is found to be engaging in

Misrepresentation

A policyowner is allowed to pay premiums more than once a year under which provision?

Mode of Premium

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

Ordinary income tax and 10% tax penalty for early withdrawals

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider

Which of the following is an example of a nonforfeiture option?

Reduced Paid-Up Option

In Colorado, all of the following are considered unfair trade practices except

Replacement

Interest on Life Insurance Proceeds is

Required if the claim was not paid within 30 days of the date insurer received the claim

Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.

Settlement

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and

The initial premium

What advantage does the renewability feature give to term policy?

The insured may extend the coverage period

Which of the following statements is true regarding the replacement of a life insurance policy in Colorado?

The replacing insurer must maintain copies of all records regarding replacement for at least 5 years

An insurer cannot deny a claim unless

There is a reasonable explanation of the claim

Life and health insurance policies are

Unilateral contracts

Which of the following Life insurance policies combine term insurance with an investment element?

Universal Life

In order to sell a (n)____ Life policy, a producer is required to register with financial Industry Regulatory Authority (FINRA).

Variable

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

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

Upon request, when must the Colorado Supplement to the Summary of Benefits and Coverage Form be provided?

Within 7 business days

The commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances EXCEPT

Writing controlled business

When may the Commissioner conduct an examination of an insurance company?

as often as deemed necessary

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

A producer who violates a cease and desist order may, after a hearing, be fined up to

$500

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

Which of the following does Social Security NOT provide benefits for?

Dismemberment

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

Does NOT have to make any further payments

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?

Endowment at age 70

In a life insurance policy, which feature states that the policy will not cover certain risks?

Exclusion

P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the

Fair Credit Reporting Act

Which of the following offers an insurance applicant the right to review the contract and receive a full refund?

Free-look period

Ultimately, who is responsible for producer-generated advertisment?

Insurer

A life insurance arrangement which circumvents insurable interest statutes is called:

Investor-Originated Life Insurance

Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?

Irrevocable beneficiary

What type of life policy covers two lives and pays the face amount after the first one dies?

Joint Life Policy

Under the suicide clause, a life insurance claim cannot be denied due to suicide after a period of ___ from the policy's effective date.

1 year

In Colorado, a life insurance applicant has ___ days after policy delivery for a full refund of premium if not satisfied for any reason

15

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster that Straight Life

J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

20-pay Life

Renewing a producer's license requires __ hours of continued education every 2 years.

24

An insurer that terminates a producer's appointment must inform the Commissioner within how many days?

30

A producer must remit premiums to the insurer within ___ days after receipt.

45

Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?

5

The incontestable clause allows an insurer to:

contest a claim during the Contestable Period

Which of the following is an example of defamation?

A brochure including an untrue statement regarding a competitor's ability to pay claims

Which of the following statements regarding the Notice Regarding Replacement of Life Insurance is CORRECT?

A copy of the notice must be signed by the applicant and submitted with the application

Which of the following potential insurance sales would be subject to replacement regulations?

A new policy that causes an existing life insurance policy to be surrendered

Which of the following is CORRECT regarding a producer's fiduciary responsibility with client funds?

A producer may never commingle personal funds with funds paid by or to a client

Before a life insurance policy is issued, which of these components of the contract is required?

A signed application by the prospect

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policy owner, C is the insured, and ABC is the beneficiary

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment clause

What does the insuring agreement in a Life insurance contract establish?

An insurer's basic promise

Any changes made on an insurance application requires the initials of whom?

Applicant

How does the Commissioner attain this position?

Appointed by the Governor

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

According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud EXCEPT

Certificates of authority

Which of the following documents are not required to mention the Colorado Fraud Statute

Certificates of authority

Which rider provides coverage for a child under a parent's life insurance policy?

Child Term Rider

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

Collateral Assignment

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company

Which of the following is NOT a problem when existing life insurance is replaced with new coverage?

Comprehensive coverage may increase under the new policy

Which of the following consists of an offer, acceptance, and consideration?

Contract

What type of group insurance plan involves employees sharing the cost?

Contributory Plan

D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST

Correct the information and have the prospect initial the change

The combination of Whole Life and _____ Term Insurance is referred to as a Family Income Policy

Decreasing

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing term policy

Circulation of a maliciously critical statement about an insurer's financial condition meant to damage the insurer's reputation or business is called

Defamation

Which of the following is an example of a misrepresentation?

Describing a universal life policy as a security

When recommending the purchase or exchange of an annuity, a producer must determine the suitability of the purchase by performing all of the following EXCEPT

Determining the marital status of the applicant

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

what is considered a valid reason for small businesses to insure the lives of its major shareholders?

Fund a buy-sell agreement

Which of the following may be used in the advertisement of life insurance or annuities?

Guaranteed

Paying insurance premiums on a more frequent basis will cause the policy to have

Higher premiums

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?

Inability of the insured to perform more than 2 Activities of Daily Living (ADLs)

A life insurance policy would be considered a wagering contract WITHOUT:

Insurable interest

Employer noncontributory group life policies must allow for all of the following EXCEPT

Insured can determine the benefit amount

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the:

Policy proceeds

On a life insurance policy, who is qualified to change the beneficiary designation?

Policyowner

A policyowner is able to choose the frequency of premium payments through what policy feature?

Premium Mode

Which of the following is required for a life insurance Lapse Notice?

Reason stated why the policy will laspe

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

Which of the following are Equity Indexed annuities typically invested in?

S&P 500

When a life insurance underwriter is determining insurability, it is illegal to base these decisions on

Sexual Orientation

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT

Signed HIPAA disclosure

Which of the following types of permanent life insurance policies offers the highest initial cash value?

Single Premium

Colorado's replacement rules apply to all of the following types of insurance EXCEPT

Single premium whole life

What type of life policy covers two people and pays upon the death of the last insured?

Survivorship

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

Unilateral

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

If an annuity application was not taken in person, an insurer must provide the applicant a Buyer's Guide

Within 5 business days of the insurer receiving the application

Variable Whole Life Insurance can be described as

both an insurance and securities product

Dividends paid from a life insurance policy are

issued by the insurer

If an applicant for an annuity refuses to provide suitability information the producer should

obtain the consumer's signed statement documenting his or her refusal to provide suitability information

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:

probability of making timely premium payments

If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a

separate insurance trust account

The advantage of reinstating an original life policy is

the premiums are based on a younger age

P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?

An immediate annuity

Which type of contract liquidates an estate through recurrent payments?

Annuity

Who is NOT required to sign a life insurance application?

Beneficiary

When may the commissioner issue an emergency cease and desist order?

If there is suspicion of an unauthorized person engaging in insurance business without being licensed

The type of annuity that can be purchased with one monetary deposit is called a(n):

Immediate annuity

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if the payor becomes disabled

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies?

Proceeds will go to the contingent beneficiary

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

Risk classification

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Term Life

What kind of life insurance product covers children under their parent's policy?

Term Rider

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

The investment gains from a Universal Life Policy usually go toward

The cash value

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be:

converted to an individual permanent policy at an individual rate

All of the following penalties apply to anyone giving intentional false testimony during an insurance examination EXCEPT

guilty of a felony

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

A license is deemed to be used for controlled business if during any 12-month period

the licensee's total premiums on controlled business exceeded the total premiums on all other businesses

Under a Graded Premium Whole Life policy,

the premium increases each year during the early years of the contract and remains the same after that time

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing Term Rider

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Life Annuity with Period Certain

Which of the following is a duty of the commissioner?

Reviewing and approving license applications

A(n) ______ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary

Revocable

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

Revocable