final study set

the non-economic factors a policy holder should look at include

- contestability clauses - suicide clauses - the health of the insured

agents duties to prospects

- disclosure - confidentiality - needs selling

requirements under NAIC life insurance model regulation

- each illustration must include narrative and numeric summaries of the illustrated policy - no illustration can contain the word vanish - each illustration must be self supporting

factors an agent should consider with replacement

- economic impact on client - clients peace of mind - clients insurance needs

ledger selling can lead to problems if

- guaranteed values are not distinguished from non-guaranteed values - prospects tend to think that the illustration is the policy - sales tend to focus on cash values rather than death benefits

twisting and churning involve

- illegal and unethical behavior - misrepresentations to policy owners - replacement of existing life insurance policies

administrative actions that an insurance department can take to punish agents

- imposing fines - censuring them - revoke license

assume that a producer must understand in order to accurately explain to prospects the meaning of nonguaranteed values shown in policy illustration include

- interest rates - current experience and persistency expectations - dividend distributions, crediting of returns - mortality and expense charges

which of the following are indications that a pension maximization proposal may not be appropriate for the client

- it only works to the clients benefit if aggressive current assumptions are sustained many years into the future - the client is already close to retirement age - the clients pension includes a cost of living benefit provision

the consequences of illegal replacement include

- loss of license - liability for damages in a law suit - imposition of fines

which of the following ethical situations can be addressed with accurate and appropriate disclosure

- the replacement of the existing insurance coverage - conflicts of interest - the content of policy illustrations being unclear

financial supermarkets have access to

- where an individual writes a check - results of medical procedures - amount of money in brokerage accounts

an applicant writes a check for an initial life insurance premium and gives it to the agent May 1. The agent sends the check to the company on May 2. The company receives the check on May 4 Under the laws of agency, when was the check to have been received

May 1

which of the following pieces of documentary evidence must be sent to the insurer of the coverage of the company

a copy of the sales proposal and the replacement policy summary

under GLBA

a customer is someone who has an on-going relationship with a financial institution

in a market based economy, a lack of disclosure of complete and accurate information to consumers leads to

a proliferation of businesses that produce mediocre products and services

when rebating is illegal, which one of the following factors may be used to determine the amount of availability of the rebate

a rebate schedule

life insurance sales representatives should generally refer to themselves as

agents

a replacement sale should begin with

an assessment of the clients needs

in policy illustrations, the term current experience can be defined as

an average of industry wide experience developed by the society of actuaries

which of the following statements is true regarding illegal activity

an illegal activity is also unethical

the interest rate that XYZ company credits to the policy owners cash values is pegged to the average rate being paid on an intermediate-term corporate bond. This is an example of

an indexed rate

which of the following is a prospect for a life insurance sale

an individual who needs a death benefit

which of the following statements is true regarding illegal activities

any illegal activity is also unethical

agents who are not licensed attorneys engaging in the unauthorized practice of law if they

apply general legal concepts to a clients specific situation

selflessness is defined as

both a concern for others and going beyond the minimum requirements of a given situation

agent john sells a policy without telling the client that the plan is life insurance

both illegal and unethical

an agent lies to a policy owner in order to induce the policyholder to drop an existing policy and buy a new one issued by the same company

churning

the phrase the illustration is the policy

consumers tend to rely on non-guaranteed values shown in policy illustration as if they were guaranteed

use of the contribution principle includes which of the following

determining the proportion of divisible surplus that should be distributed to various classes of policy owners

in policy illustrations, the term current experience can be defined

differently for different conpanies

which of the following does represent a breach of ethics

disclosing commissions when such disclosure is not required

agents have an obligation to offer an insurance company first right of refusal on the application if their contract provides for

exclusive representation

of the following category of factors that affect life insurance performace, over which do companies have the most control

expenses

in most states, the legal definition of replacement includes any sale in which the producer knows that a life insurance policy will never lapse

false

the legal definition of replacement in most states is quite narrow

false

the tax treatment of policy loans and surrender proceeds from a MEC is the same as treatment of loans and surrender proceeds from a life insurance policy

false

the practice of windowing involves

forging an individuals signature

which of the following would meet the legal definition of replacements in most states

glenda will purchase a new policy and allows an existing policy to lapse when next years premium on the existing policy becomes due

if an agent makes a misrepresentation unintentionally

he or she has committed an illegal act that may be subject to severe penalties

which of the following concerning policy illustration is untrue

illustration actuary must submit annual certifications only to the state insurance commissioner

administrative actions that state insurance departments can take include all but

impose prison sentences

predictions of future life insurance policy tend to be

inaccurate because even if investment experience and mortality experience could be known, actual performance would vary because of the human factor

the difference between twisting and churning is that twisting

involves policies with 2 insurance companies

the million dollar round table

is an organization composed of members who have met certain production and persistency objectives over the course of the year

the motivation behind the work of ethical producers

is knowing that they have helped their clients

ledger selling

is not ethical

a producer who violates a law of which he or she is unaware

is responsible for his or her behavior anyway

government intervention to assure proper disclosure to customers

is sometimes perceived as necessary in spite of iys drawbacks

all of the following are reasons that a life insurance policy is accorded favorable treatment under the tax code except

it enables businesses and individuals to escape taxation on accumulations so they have more spendable income

all of the following are advantages of using standardized disclosure materials except

it increases the agents potential liability for errors and ommissions

which of the following is an accurate statement about the principle of caveat emptor

it is not an appropriate principle in life insurance because life insurance is a complex product, the sale of which is built on trust, it is therefore important to give the buyer all relevant information

regarding a company's current experience, how recent must data be in order to be considered current

it must reflect current trends being projected into the future and it must reflect the companies experience over the last 5 years

basing the sale of a life insurance policy on the values shown in the policy illustration is known as

ledger selling

which of the following is not one of the ethical duties that they owe to prospects or clients

ledger selling

what is the educational tool designed to help producers better understand products and illustrations to answer more specific questions

life insurance illustration questionnaire

long term success in the life insurance business depends on

maintaining high standards of ethical behavior

twisting and churning are forms of replacement that involve influencing the policy owners decision through the use of

misrepresentation

which is not a reason for a client to buy more life insurance

money is available in an existing policy to fund the purchase

which of the following is not an economic factor to be considered

non-guaranteed values of both policies

albert takes a medical exam as part of his application for his life insurance policy, the company asks if he will allow for them to share his information. this is an example of

opt in

the method of crediting interest that blends various rates of return into a single current interest rate

portfolio method

the purpose of licensing requirements

protect both consumers and professionals in the licensed profession

which of the following would not violate an agents duty to keep information about their clients confidential

providing underwriting information to the company's home office

which of the following is not consistent with a needs based sales approach

quickly sizing up new prospects in terms of how much first year premium they will be persuaded to buy

where rebating is legal, which of the following factors may be used to determine the amount of availability of rebate

rebate schedule

caveat emptor, the principle of commerce that states let the buyer beware

should be replaced with a life insurance sale of cognosceat emptor, let the buyer know

the phrase " the illustration is the policy " means

that consumers tend to rely on non-guaranteed values shown in a policy illustration as if they were guaranteed

which of the following do consumers consider to be the most important relationship with a financial advisor

the ability to trust the advisor and know that they are ethical

conscientious field underwriters benefits which of the following parties

the agent the client the company

in the mind of the client, which of the following is not essential to the decision to purchase a life insurance policy

the agent must disclose commissions

who derives the most immediate economic benefit from a life insurance sale

the agent, because he earns a commission

in a replacement situation, it would be unethical to compare

the cash values of 2 policies without taking into account any surrender charges that might apply

from a ethical standpoint, a life insurance transaction must be based on

the clients needs

in a replacement situation between the existing policy and the replacement policy

the financial ratings for the company that issues the replacement will be higher

which of the following is not a violation of the use of RBC data

the financial writer publishes the RBC ratios of several lesser known companies in their column

to be strictly ethical,

the living benefits of life insurance should be discussed with a prospect only after the need for the death benefit has been established

which method of crediting interest tracks the closest with changes in prevailing interest rates

the new money method

the entity on whose behalf an agent acts

the principal

when a client asks a producer to fabricate information on the application

the producer should persuade the client that there is no need to fabricate

the producer who sells the replacement benefits from the sale, but is likely to have a negative impact on him or her if

the replacement was not in the clients best interests

if a producer deliberately fails to meet legal obligations for a replacement

the transaction is always unethical

in the role of field underwriter, in whose best interest are agents obligated to act

their company

which of the following is correct regarding unintentional misrepresentations

they are not fraudulent, but they are illegal

producers do not need to send out personal privacy notices and opt out notices unless

they plan to disclose non-public personal information about their clients to an entity other than the life insurance companies or its affiliates

in the case of replacement, standards of disclosure are provided

to ensure clients are privy to certain required information

funding a life insurance policy with a large premium in any of the policy's first 7 years might cause the policy to be treated as a MEC for tax purposes

true

the use of misrepresentation to replace policies issued by an insurer other than the one the agent represents

twisting

the use of misrepresentations to replace policies issued by an insurer other than the one the agent represents

twisting

looking the other way when you see someone doing something illegal in your agency is

unethical and possibly illegal

FSP

was previously the American Society of CLU and CHFC members must be credentialed or actively pursuing a financial service designation or degree their core values are relationships, ethics and education