Exam 2
Arrera careful examination oraDolcyinsureda decided thatthe policy was nonathe was ocking or seretired he noicy to the insuror withina davs or the policy delivery. Which of the following is true ?
The insurer will refund any premiums paid into the policy.
What is the purpose of the surrender charge in a deferred annuity?'
To compensate the company for loss of investment value
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's raceWhat practice does this describe?
Unfair discrimination
What happens to the face amount of a whole life policy if the insure a reaches the age of 100?
he race amount is paid to the insured
Among the applicants in the same class and life expectancy, which of the following factors can be used to determine premium rates?
occupation
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
pay the death benefit to the estate of the insured
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
purchase of a new home
Which of the following are characteristics of term life insurance?
temporary protection, renewability, no cash value
Insurance provides a means to
transfer loss
What is the purpose of the insurability provision in group life policies?
To allow the insurer to require proof of insurability from individual applicants
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement?
level
Which of the following is guaranteed under a variable whole life insurance policy?
minimum death benefit
Which of the following is NOT a component of an insurance policy premium?
number of beneficiaries
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as
twisting
Which of the following best describes life annuity with period certain option?
It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary
Life Insurance can provide which of the following?
Survivor protection
Which of the following statements is CORRECT regarding the Commissioner of Insurance in this state?
The commissioner is elected to the office
How are policy loans calculated?
The policy's cash value minus unpaid loans and accrued interest
During policy solicitation , an insurer exaggerates the financial condition of one of its competitors , and makes it sounds worse than it is. This is an example of an unfair trade practice of
defamation
For an insurance contract, the principle of utmost good faith means
each party relies upon the truthfulness of the other
How often are insurers required to renew agents' appointments?
every 2 years
When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true?
Joint Life has a lower premium than the total of the two individual policies.
Dividends received on participating life insurance policies are
Not taxable because they are a return of unused premiums.
Who is responsible for verifying that an insurer is authorized to sell insurance policies in this state ?
Soliciting producer
What happens to the face amount of a whole life policy if the insured reaches the age of 100.
The face amount is paid to the insured
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
Slippery floors, reckless driving, or providing false information are examples of
hazards
An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive
$70,000
During policy replacement, the policyowner is entitled to a free-look period of how many days?
20 days
How long must insurers maintain a copy of each disclosure document used in insurance transactions?
3 years
How long must insurers maintain a copy of each disclosure document used in insurance transactions?
5 years
An agent is hand delivering an insurance policy to a policyownerWhat must the agent obtain to complete the transaction?
A signed delivery receipt
Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)?
An MEC must always pass the 7-pay test.
Insurers CANNOT transact insurance in this state without a
Certificate Authority
Which of the following losses would likely be covered under the Accidental Death rider?
Death caused by a head-on collision
A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
Decreasing term
An adjustable life policy can assume the form of
Either term insurance or permanent insurance.
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate conservation
Which of the following could reduce the amount of the death benefit?
Failure to repay a policy loan
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family term
If a person issues an insurance contract from an unauthorized insurer. that person may be
Held personally liable for any claim.
In a life insurance application, all of the following signatures will be required EXCEPT
Home office underwriter
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the
Insuring clause
Which of the following best describes pure life annuity?
It provides the highest monthly benefits
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
Agents may be found suilty of defamation if they make false statements that are intended tc
Maliciously criticize another insurance company.
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
Dividends received on articipating life insurance policies are
Not taxable because they are a return of unused premiums.
Which dividend option will increase the death benefit?
Paid-up additions
Regulations regarding policy replacement of life insurance protect the interest of which of the following?
Policy purchasers
The purpose of the Fair Credit Reporting Act is to
Protect consumers against the circulation of inaccurate or obsolete personal or financial information.
A licensed life agent wrote a policy that covers the life of his brother. Since the policyowner was related, the agent refunded his brother the commission earned on this policy. This action would be considered
Rebating
What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?
Reduce the death benefit
The family term rider incorporates
Spouse term and children's term
All of the following are consideration in an insurance policy EXCEPT
The cash value in the policy
All of the following are consideration in an insurance policy EXCEPT
The cash value in the policy.
All of the following are true about key-person insurance EXCEPT
The death benefit is taxable to the business
With Adiustable Life. the owner can change all of the following EXCEPT
The insured
After a careful examination of a policy, Insured A decided that the policy wasn't what he was looking for. He returned the policy to the insurer within 10 days of the policy delivery. Which of the following is true?
The insurer will refund any premiums paid into the policy.
Which of the following would NO be eligible for coverage under key person?
The owner of a shop
Who is the annuity owner?
The person who purchases the annuity
Which of the following types of insurance is investment based, has a level fixed premium. and a nonguaranteed cash value?
Variable whole life
A loss resulting from which of the following would qualify for the accidental death rider coverage?
an automobile accident
a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT
cash surrender values
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?
insurance application
Which of the following individuals would be a likely candidate to purchase a deferred annuity?
Someone who wants to grow retirement funds tax deferred
Before an insurer may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet
Solvency requirements
All of the following are unfair claims settlement practices EXCEPT
Suggesting negotiations in settling the claim
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy?
An accidental death rider
married couple wants to include the entire family in their whole life polic under one rider ich of the following riders will helo them achieve that goal?
Family term
At what point would an automatic premium loan be generated?
Following the grace period
Which portion of a nonqualified annuity payment is taxable?
Interest earned on principal
As an insurer's field underwriter, a producer has all of the following responsibilities EXCEPT
Issuing policies on behalf of the insurer