Exam simulator pt 1
An agent must complete __ biennial continuing education credit hours to maintain his/her license
24
The underwriting process involves all of these, EXCEPT for
Credit Report
A variable insurance policy
Does not guarantee a return on its investment accounts
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?
Key person insurance
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
Which of these is NOT considered to be right given to a policy
Modify a provision in the insurance contract
Which of these is NOT an element of Life insurance premiums?
Morbidity rate
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
None
Which statement is true regarding a minor beneficiary
Normally, a guardian is required to be appointed in the beneficiary clause of the contract
T would like to he assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase
Ten-Year Endowment
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?
Term life
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):
third-party with no insurable interest
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
_____ of personal life insurance premiums is usually deductible for federal income tax purposes.
0%
Which of the following types of Term Life policies most likely contains a renewability feature
10 Year Convertible Term
G purchased a Family income policy at age 40. The policy has a 20 year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with
Extended Term
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?
F
What does a Face amount Plus Cash Value Policy pay upon the insured's death
Face Amount plus the policy's cash value
A life insurance application may be rejected on the basis of all of these factors except
Gender
A Nonforfeiture clause gives the policyowner
Guaranteed values even if the policy has lapsed
Which of these is NOT a reason for purchasing life insurance on the life of a minor
If both parents were to die, it would provide death benefits to the child
When must insurable interest exist for a life insurance contract to be vaild
Inception of the contract
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 $24,000
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 actions require a policyholder to provide proof of insurability in an adjustable life policy?
Increases face amount
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection report
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
Insurable interest in the proposed insured
An agent who solicits applications for life insurance in North Carolina is considered to represent the
Insurance Company
Who does an insurance broker in North Carolina represent
Insured
Who has the option to renewable term policy?
Insured
what does a insurance broker in North Carolina represent
Insured
all of these statements about the waiver if premium provision are correct, EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
What type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner
Irrevocable beneficiary
A license may be denied, suspended, or revoked if the licensee
Is founded guilty of misrepresentation
What is the purpose of a Policy Summary
It highlights the critical parts of the policy issued
Which statement regarding third-party ownership of a life insurance policy is true
It is used extensively in estate-planning as well as business circumstances
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy on January 15. The producer delivered the policy on January 26 and collected the first premium. when did the coverage become effective
January 26
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
The Life and Health Insurance Guaranty Association in North Carolina has regulations that apply ONLY to
Life and Health policies issued by companies authorized in North Carolina
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)
Living Benefit
Which of these is NOT relevant when determining the amount of personal life insurance needed
Local unemployment rate
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
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability
P will still receive declared dividends
Insurance policies are considered aleatory contracts because
Performance is conditioned upon a future occurence
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
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?
Portion of the premiums paid for by the employer may be a tax deduction
A policyowner is able to choose the frequency of premium payments through what policy feature
Premium Mode
The law doesn't prohibit a lender from refusing to accept a binder as evidence of insurance, as long as the refusal is
Reasonable
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
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
Return of premium rider
An agent inducing an insured to lapse, forfeit, or surrender insurance through misrepresentation is committing the illegal act of
Twisting
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this
Unilateral
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 ____ life policy
Universal
S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be
Universal Life
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
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
Variable whole life insurance can be described as
both an insurance and securities product
All individuals covered under a group contract will receive a(n)
certificate
A(n)__________Contained in a life insurance policy states that the policy will not cover certain risks
exclusion
An example of an unfair claims practice would be
failing to effectuate prompt, fair, and equitable settlements of a claim
A Limited-Pay Life policy has
premium payments limited to a specified number of years
What is the Suicide provision designed to do
safeguard the insurer from an applicant who is contemplating suicide
The amount of coverage on a group credit life policy is limited to
the insured's total loan value
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
The free-look provision begins
upon receipt of the policy by the policy owner
Within ____ years a life policy can be reinstated upon meeting company requirements
5
All are true statements regarding the underwriting process, EXCEPT:
AIDS and HIV virus exams can be conducted in a discriminatory fashion
A policyowner may generate taxable income from which of the following Dividend Options?
Accumulation at Interest
L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatements of age provision, the insurer will
Adjust the death benefit to a reduced amount
An agent who sells insurance policies for an unauthorized insurer in North Carolina may be personally liable for
All claims from policies sold by the agent
The consideration clause in a life insurance contract contains what pertinent information
Amount of premium payments and when they are due
The amount of monthly disability benefits payable under social security is affected by which of the following factors?
Amount of the benefits available from other sources
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid
At the time of application
Who is NOT required to sign a life insurance application
Beneficiary
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
A key employee policy is taken out by company X on its vice president. Ten years later, this employee leaves company X and begins working for company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed
Company X
T is employed by an amusement park from June through September, working 50 hours per week. the amusement par's Group Policy would
Consider T NOT eligible for the insurance because as a seasonal employee, T does not meet the definition of "employee" under North Carolina law
Which of the following consists of an offer, acceptance , and consideration
Contract
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability
Convertible
Which of the following types of insurance is exempt from the Rules Governing life insurance and annuity Replacements
Credit Life
Under a trustee group life policy, who would be eligible for a certificate of coverage?
Employee
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
How often must an insurance agent's license be renewed?
Every 2 years
A ____ beneficiary may be changed by the policy owner without the consent of the beneficiary.
Revocable
Which of the following are equity-indexed annuities typically invested in
S&P 500
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 lump sum payment
Settlement
Which of the following types of permanent life insurance policies offers the highest initial cash value
Single premium
What is Old Age and Survivors Health Insurance (OASDHI) Also known as
Social Security
Which of the following BEST describes a warranty
Statement guaranteed to be true
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life Annuity
What is the underlying concept regarding level premiums
The early years are changed more than what is needed
Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?
The initial premium was NOT submitted with the application
What advantage does the renewability feature give to a term policy
The insured may extend the coverage period
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premiums can be lowered or raised, based on investment performance
An agent completes an application with a client for a $50,000 Life insurance policy. At what point is the LATEST policy Summary and buyers Guide must be given to the applicant
Upon policy delivery
A ____ life policy offers the owner investment in products such as money-market funds, long term bonds and equities
Variable
A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)
Variable Universal Life policy
S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own
Variable Whole life
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
