Colorado Life Only

An insurer who willfully violates a single provision of an unfair trade practice regulation may be fined

$30,000

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life if CORRECT?

100% participation of members is required in noncontributory plans

What is the minimum age for producer licensing in this state?

18 years old

After a client signs a disclosure statement regarding additional fees charged by a producer, the producer must keep a copy of the statement for at least

3 years from the date of completion of the services

How long is the grace period in group life insurance policies in this state?

31 days

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

According to the Entire Contract provision, a policy must contain

A copy of the original application for insurance

The Commissioner may revoke a producer license for all of the following reasons EXCEPT

Acting in a fiduciary capacity

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

Which of the following products will protect an individual from outliving their money?

Annuity

SIMPLE Plans require all of the following EXCEPT

At least 1,000 employees

When an application for an annuity contract is taken face-to-face with the consumer, the producer must give all required disclosure documents

At or before the time of application

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan

What license or licenses are required to sell variable annuities?

Both a life insurance and a securities license

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

Whenever the Commissioner issues a cease and desist order, how will that order be delivered to the person in violation?

By certified mail

Which of the following would be considered a violation of life insurance advertising regulations?

Calling a variable insurance policy an investment plan

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

Which of the following components must a life insurance policy have to allow policy loans?

Cash value

A banker is ready to close on a customer's loan. The bank's prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of

Coercion

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

Conditional

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

Which of the following would NOT be considered an unfair and deceptive practice?

Controlled business

What is another name for interest-sensitive whole life insurance?

Current assumption life

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT

Disclose commissions earned from the sale of the policy

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash value will purchase

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT

Erase the incorrect answer and record the correct answer

What does "level" refer to in level term insurance?

Face amount

Noncompliance with the regulation regarding fees charged by producers may result in which of the following penalties?

Fines and license suspension or revocation

When an employee terminates coverage under a group insurance policy, coverage continues in force

For 31 days

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Which of the following is a producer's fiduciary duty?

Handling premiums

When would a misrepresentation on an insurance application be considered fraud?

If it is intentional and material

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider, in which of the following scenarios will the rider waive the payment of premium?

If the father is disabled for more than 6 months

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100

If group life policies in this state, when may the insurer use suicide as a cause of death as a defense against paying a claim?

If the suicide occurs during the first year of coverage

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

An individual with a legal interest in the continued life of the insured defines the principle known as

Insurable interest

According to agency law, the producer always represents the

Insurance company

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

Interest only

If the Commissioner believes than an unauthorized person is engaging in the business of insurance in violation of the provisions of the Insurance Code, creating an immediate danger to the public safety, the Commissioner may

Issue an emergency cease and desist order

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

What is the purpose of a free-look period in insurance policies?

It allows the insured to reject the policy with a full refund

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

Which two terms are associated directly with the premium?

Level or flexible

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies

Which of the following best describes the unfair trade practice of defamation?

Making derogatory oral statements about another insurer's financial condition

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?

Medical background

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement

How often must insurance companies doing business in Colorado file financial statements with the Commissioner?

Once a year

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

Owner's Rights

According to the Colorado fraud statutes, every licensed insurance company doing business in Colorado is required to do all the following EXCEPT

Pay a fee to the state of Colorado to protect the insurer against fraud

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policyowner

Which of the following will be included in a policy summary?

Premium amounts and surrender values

A producer wants to start using an assumed name for his business. Which of the following is required prior to the use of the name?

Register the name with the Commissioner

The regulations regarding replacement apply to which of the following?

Renewable term

If an agent fails to obtain an applicant's signature on the application, the agent must

Return the application to the applicant for a signature

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

Group life insurance policies delivered in Colorado must contain all of the following provisions EXCEPT

Statements on the applicant are considered warranties

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim

Which of the following is called a "second-to-die" policy?

Survivorship life

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer

The advantage of qualified plans to employers is

Tax-deductible contributions

Which of the following when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

Term rider

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

Which of the following would provide an underwriter with information concerning an applicant's health history?

The Medical Information Bureau

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary

The annulant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value

If a company has transacted insurance in this state without a Certificate of Authority, which of the following is true of its obligations for the policies sold?

The company can still be liable for its policies in any court of this state

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

The death benefit will be smaller

Who is responsible for covering the expenses associated with the examination of domestic insurers?

The examined insurer

A friend helped an insurance producer sell an insurance policy. The producer can share the commission with the friend if

The friend is licensed in the same line of insurance

All of the following are prohibited by individuals when using senior-specific designations EXCEPT

The individual has earned the designation from a for-profit organization

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company

Who notifies the replacement company regarding the replacement of a policy?

The replacing company

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy

Which of the following statements is TRUE concerning irrevocable beneficiaries?

They can be changed only with the written consent of that beneficiary

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policymaker?

Third-party ownership

Believing a producer has violated provisions of the Insurance Code, the Commissioner will schedule a hearing

To allow the producer to show why penalties should not be assessed

An absolute assignment is a

Transfer of all ownership rights in a policy

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability