FINAL LIFE EXAM
Quarterly premium payments increase the annual cost of insurance because
Interest to the insurer is decreased while the administrative costs are increased
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
Life Income
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value
Life Settlement contract
The Accelerated Death Benefit provision in a life insurance policy is also known as a:
Living Benefit
Defamation occurs when a producer makes a false statement intended to
Malign another insurer
Which of the following is NOT a valid reason for an insurer to contest a life insurance policy during the policy's first two years of existence?
Misstatement of age
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Which of these is NOT an element of Life insurance premiums?
Morbidity Rate
Which of the following statements is correct about accelerated death benefits?
Mush have a terminal illness to qualify
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
None
Individual Retirement Account (IRA), rollover contributions are:
Not limited by dollar amount
A life insurance policyowner would like to take out a policy loan against the cash value in his whole life policy. The interest rate applied to this loan may vary over time. This is referred to as a
Variable
Which of these characteristics is consistent with a straight life policy
Premiums are payable for as long as there is insurance coverage in force
When is the face amount paid under a Joint Life and Survivor policy
Upon death of the last insured
A producer completes an application with a client for a 50,00 Life Insurance policy. At what point is the LATEST a Policy Summary and Buyers Guide must be given to the applicant?
Upon policy Delivery
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
$50,000 minus any outstanding policy loans
Premature IRA distributions are assessed a penalty tax of
10%
If an employer decides to cancel a group life insurance plan, it must give at least
15 days notice to the employees prior to the date of cancellation or discontinuation
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 purposes
An employee with 25,000 group term life coverage was recently fired. This employees group coverage may be converted to a :
25,00 individual whole life policy
When an employee is terminated, how long does this employee have to convert group life coverage to an individual plan?
31 days
one becomes eligible for social security benefits after having been disabled for
5 Months
A domestic insurer kicesed to conduct bsueinss inConecciut ,us thabve theri bookd anf treov examined by the commisionat least once every
5 yhears
A life policy loan in Connecticut cannot charge a rate of interest higher than
8%
Additional coverage can be added to a Whole Life policy by adding a(n)
A decreasing term rider
Which of the following statements about noncontributory employee group life insurance is False?
A minimum number of employees is required to particapate
Which of these is NOT a reason for a business to buy key person life insurance?
A pension deficiency if the key employee dies
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Accidental Death and Dismemberment (AD &D) rider
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory
Q is the insured for a $25,000 life insurance policy. Q dies October 15. Q's beneficiary receives a check for $25,108 on December 15. Why did Q's beneficiary receive an amount higher than the policy's face amount?
An insurer must pay interest on proceeds held beginning on the date of death
Which type of contract liquidates an estate through recurrent payments?
Annuity
What is the initial source of underwriting for an insurance policy
Application containing statements from the insured
Traditional individual retirement annuity (IRA) distributions must start by
April 1st of the year following the year the participant attains age 70-1/2
What action can a policyowner take if an application for a bank loan requires collateral?
Assign policy ownership to the bank
Which of these is NOT a duty of a producer?
Authorize payment of certain claims
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Which of these is NOT a nonforfeiture provision contained in a life insurance policy
Automatic Premium Loan
All of the following are considered to be typical characteristic describing the nature of an insurance contract, EXCEPT
Bilateral
T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?
Conditional receipt
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
Conversion
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
A brochure that includes an untrue statement regarding a competitor's ability to pay claims is an example of which of the following Unfair Trade Practices?
Defamation
Which of these is NOT a legitimate insurance company
Domestic and Foreign
A__contained in a life insurance policy state that the policy will NOT cover certain risks
Exclusion
All of these are characteristics of an Adjustable Life policy, Except
Face amount can be adjusted using policy dividends
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
what is considered a valid reason for a small businesses to insure the lives of its major shareholders?
Fund a buy sell agreement
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?
If the primary beneficiary dies before the insured
The type of annuity that can be purchased with one monetary deposit is called a(n)
Immediate annuity
When must insurable interest exist for a life insurance contract to be valid ?
Inception of the contract
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index.
Which of these actions should a producer take when submitting an insurance application to an insurer
Inform insurer of relevant information not included on the application
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
Which of the following is protected under the Broker Transactions Guaranty Fund
Insured
Which of the following is protected under the Brokered Transactions Guaranty Fund?
Insured
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)
Insuring Agreement
All of the following statements are true regarding a policys 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
What is the purpose of the Insurance Guaranty Association?
Pays authorized claims for liquidated life and health insurers
Insurance policies are considered aleatory contracts because
Performance is conditioned upon a future occurrence
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
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
Reinstatement provision
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
Risk Classification
What does a 401(k) plan generally provide its participants?
Salary deferral contributions
What is Old Age and Survivors Health Insurance also known as?
Social Security
The investment gains from a Universal Life Policy usually go toward
The Cash Value
To secure authority for soliciting insurance products in the State of Connecticut, an insurance company must secure a certificate of authority from
The Connecticut Insurance Commissioner
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:
The cost
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
The amount of coverage on a group credit life policy is limited to
The insureds total loan value
Life insurance replacement regulation protects the interests of
The policyowner
A level premium indicates:
The premium is fixed for the entire duration of the contract
Why does Connecticut require insurers to maintain a minimum level of assests?
To demonstrate insurer solvency?
Life Insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation?
USA Patriot Act
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.
At what point does an informal agreement become a binding contract?
When consideration is provided by one of the parties to the contract
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
Which of these products does standard nonforfeiture law apply to?
Whole Life Policies
The Commissioner of Insurance may NOT suspend or revoke a producers license until
a hearing is conducted and an order issued
In a qualifed retirement plan, the yearly contributions to an eployees account
are resterited to maxium set by trhe IRS
An underwriter determines that a life insurance applicants risk should be reclassified due to a health issue. This policy may be issued with a
extra premium
Dividends paid from a
issued by the insurer
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
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
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
What type of reinsurance contract involves two companies automatically sharing their risk exposure
treaty
All of these are considered to be a benefit under Social Security, EXCEPT for:
unemployment
Life and health insurance polices are:
unilateral contracts
A term life insurance policy matures
upon the insureds death during the term of the policy
Reinsurance is
used by insurance companies to share risks
Which of these products does standard nonforfeiture law apply to ?
whole life policies
