Xcel Solutions West Virginia Insurance Part 2

All of the following are elements of an insurance policy EXCEPT

other insurance

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

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

A group life insurance policy insured may assign up to ______ of the insured's coverage.

100%

The Insurance Commissioner must give at least ______ days notice prior to holding a hearing regarding a producer's license.

15

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

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

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?

20-Pay Life accumulates cash value faster than Straight Life

A labor union must have at LEAST ______ members to be issued a group life policy.

25

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?

3

How long may an insurer defer granting a policy loan after receiving the loan application?

6 months

Which of the following BEST describes a conditional insurance contract?

A contract that requires certain conditions or acts by the insured individual

Which of the following statements about noncontributory employee group life insurance is FALSE?

A minimum number of employees is required to participate

Which of the following is an example of the insured's consideration?

A paid premium

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 policyowner, C is the insured, and ABC is the beneficiary

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as

Aleatory

Sis covered by a whole life policy. Which insurance product can cover his children?

Child term rider

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called:

An instalment Refund annuity

An example of false advertising would be

An insurer exaggerating its dividends in a magazine advertisement

Which premium schedule results in the lowest cost to the policyowner?

Annual

The deeds and actions of a producer indicate what kind of authority?

Apparent

______ is the authority given to a producer to transact business on behalf of the insurer.

Appointment

What action can a policyowner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

What is implied authority defined as?

Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties

Which of these is NOT a valid reason for the Insurance Commissioner to deny a producer's license renewal?

Bankruptcy

Insurable interest does NOT occur in which of the following relationships?

Business owner and business client

Which statement about a whole life policy is correct?

Cash value may be borrowed against

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

In West Virginia, which of the following is considered an Unfair Trade Practice?

Coercion

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium".

Consideration clause

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

Which of these actions does NOT constitute life insurance policy replacement?

Convert term coverage to a whole life policy

_______ is NOT an element of a valid contract.

Countersignature

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

Credit life insurance is typically issued with which of the following types of coverage?

Decreasing Term

A Family Income Policy is a combination of Whole Life and

Decreasing Term insurance

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

Individuals in West Virginia are personally invited to apply for life insurance on the basis of the offer. This type of solicitation made by the insurer is called

Direct response

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

Dismemberment

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

Entire Contract Provision

How often must an insurance producer's license in West Virginia be renewed?

Every two years

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

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

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

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?

Fixed Deferred

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

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

Fund a buy-sell agreement

How does the West Virginia Insurance Commissioner attain office?

Gubernatorial appointment

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

Who approves continuing education courses in West Virginia?

Insurance Commissioner and the Board of Insurance Agent Education

Who is responsible for assembling the policy forms for insureds?

Insurance carriers

During an insurance transaction, who does the producer represent?

Insurer

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:

Interest Only

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

Irrevocable beneficiary

What is the purpose of a Policy Summary?

It highlights the critical parts of the policy issued

Which contract element is insurable interest a component of?

Legal purpose

Which of these are NOT an example of a Nonforfeiture option?

Life Income

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life Income

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

Lump-sum payment

Which of these factors do NOT play a role in the underwriting of a life insurance policy?

Marital status

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

Mode of Premium

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is:

Modified Premium Life

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

8.23.21 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?

Notice Regarding Replacement

Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT?

O The income from the TSA is received income tax-free

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

O Void the policy only if it is discovered during the Contestable period and proven to be material

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

OExclusion

All of these statements concerning Settlement Options are true, EXCEPT:

Only the beneficiary may select

What makes an insurance policy a unilateral contract?

Only the insurer is legally bound

Pis an employee covered under his employer's Group Life policy for $25,000. He quits after 1 year on the job. Which statement about his conversion options is NÓT true?

P can convert to a $25,000 Term policy

A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?

Paid-Up Additional Insurance

All of the following statements are true regarding a policy's Grace period, EXCEPT:

Past due premiums are waived

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?

Payor provision

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:

Policy Loan provision

Which of these describe a participating life insurance policy?

Policyowners are entitied to receive dividends

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

Premiums are waived if payor becomes disabled

A Medical Information Report (MIB) report may disclose which of the following:

Prior use of marjuana

Kis 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

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

Risk classification

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a:

Risk retention group

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

Signed HIPAA disclosure

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

Term rider

Which of these life insurance riders allows the applicant to have excess coverage?

Term rider

Which of the following statements is correct about the Insurance Commissioner's authority to examine the business records of a producer?

The Commissioner may examine them whenever it's deemed necessary

Why would the Insurance Commissioner examine the records of an insurance company?

To determine the solvency of the company

Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds?

Tom

What type of reinsurance contract involves two companies automatically sharing their risk exposure?

Treaty

_________ can be defined as "making an unfair comparison of two insurance policies".

Twisting

Which of the following is a characteristic of a variable annuity?

Underlying equity investments

At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?

Upon completion of the application

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

Which of the following policies combines investment choices with a form of Term coverage?

Variable Universal Life

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Waiver of Premium

When must insurable interest be present in order for a life insurance policy to be valid?

When the application is made

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

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:

a fraternal benefit society

According to life insurance contract law, insurable interest exists

at the time of application

A person who is insured within a group contract will be given a:

certificate

All of the following are elements of an insurance policy EXCEPT

claim forms

One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is

closely regulated and requires full disclosure

Intentional withholding of material facts that would affect an insurance policy's validity is called a(n)

concealment

In an insurance contract, the element that shows each party is giving something of value is called

consideration

In order for a contract to be valid, it must

contain an offer and acceptance

The incontestable clause allows an insurer to:

contest a claim during the contestable period

When the principal gives the agent authority in writing, it's referred to as

express authority

The West Virginia Life and Health Insurance Guaranty Association is

funded by insurance companies through assessments

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority?

implied

Ambiguities in an insurance policy are always resolved in favor of the

insured

A license may be denied, suspended, or revoked if the licensee

is found guilty of misrepresentation

A stock insurance company

is owned exclusively by its shareholders

Defamation occurs when a producer makes a false statement intended to

malign another insurer

An insurance applicant made a fraudulent statement on the application for the purpose of obtaining money benefits from an insurer. The applicant is guilty of

misrepresentation

An example of rebating would be

offering a client something of value not stated in the contract in exchange for their business

Who elects the governing body of a mutual insurance company?

policyholders

According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and it's

promises made

A producer has influenced an existing policyowner to convert an existing whole life policy to Reduced Paid-up insurance. The producer then sells the policyowner a new universal life policy. This transaction is called a(n):

replacement

The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called:

reserves

An example of rebating would be

returning a portion of a premium as inducement to purchase insurance

In order to terminate a producer's appointment, the insurer MUST

send notice of the termination to the Commissioner

In an insurance contract, the applicant's "consideration" is the

statements made in the application and the premium

The premiums paid by an employer for his employee's group life insurance are usually considered to be:

tax-deductible to the employer

The Consideration clause of an insurance contract includes:

the schedule and amount of premium payments

Under a contract of adhesion,

the terms must be accepted or rejected in full

Legal purpose is a term used in contract law meaning

there must be legal reasons for entering into the contract

The reason for backdating a policy is

to decrease the Contestable period

B the producer sold an insurance contract to a client. B has engaged in

transacting insurance

ABC Insurance Company failed to accept a valid Proof of Loss statement. This is considered to be a(n)

unfair claims practice

In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered

unilateral

The part of a life insurance policy guaranteed to be true is called a(n):

warranty