Guarantee Exam (2)

When term insurance is added to the main policy to enhance the policy or provide added benefit or coverage, it is called

Term rider- term riders are used when an insured adds term insurance to the main policy to modify or enhance the policy

What happens to the face amount of a whole life policy is the insured reaches the age of 100?

The face amount is paid to the insured- whole life insurance provides protection for the entire lifetime of the insured. If the insured lives to the age of 100, the company pays the face amount of the policy to the policyowner (usually the insured)

Within how long of completing an approved prelicensing education must a candidate submit a licensing applicatin?

2 years

an insurer decides to terminate the appointment of one of its producers and notified the commissioner 29 days after the fact. On the 9th day after the decision, the producer violates a regulation of the Insurance Code, and a policy owner wants to hold the insurer legally responsible. Which is true?

The insurer will be held legally responsible- If an insurer cancels an agency contract, it must notify the commissioner in writing within 15 days. Failure to do so will imply that an agency contract still exists. In this case, the commissioner was notified after the 15-day limit.

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 insureds death is called the

insuring clause

In which scenarios will the life insurance proceeds by protected from the creditors?

When the benefits are not paid out to the insured or any person affecting the insurance-the proceeds of a life insurance policy are to be received by the beneficiary, assignee/payee of the policy against the creditors, and representative of the insured unless the beneficiary is the insured, the admin of the insured, r any person affecting the insurance.

Cash value guarantees in a whole life policy are called

nonforfeiture values- because permanent life policies have cash values, there are certain guarantees that are built into a policy that cannot be forfeited by the policy owner. These guarantees, knowns as NFvalues, are required by the state law to be included in the policy. A table showing nonF values, must be included in the policy for a min of 20 years, the p/o has options as to how to exercise nonF values.

In credit life insurance, who is responsible for paying the policy premiums?

Borrower only....creditor = owner and beneficiary, borrower= pays premium

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the next policy will

continue to increase- the new policy continues to build its own CV nd remain in force until the insured's death/maturity.

The commissioner investigates claims filed against a licensee and finds that the licensee has chronically violated several insurance regulations. The commissioner decides to hold a hearing, what is the min amount of notice the licensee must give for the hearing?

10 days- when the commissioner believes that an insurance rule or regulation has been violated, he/she has the right to call a disciplinary hearing. The person or company charged must be given 10 days written notice of the hearing date/time.

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?

Joint & survivor- payments will continue until the death of the last beneficiary

All of the following are true regarding the waiver cost of insurance EXCEPT?

the rider expires when the insured reaches 60- the waiver cost of insurance rider, also know as the waiver of monthly deductions rider, waives the cost of insurance and other expenses in the event the insured becomes disables. Any premium necessary t the accumulation of cash values cannot be waived.

What type of interest rate is guaranteed in universal life policies?

Contract interest rate- the insurer guaranteed a contract interest rate. A current interest interest rate is not guaranteed in the contract and may be higher because of current market conditions.

Which of the following is true of the taxation of cash values for business life insurance policy?

Cash values grow tax deferred- the CV of a business owned life insurance policy or an employer provided policy accumulates on a tax deferred basis and is taxed in the same manner as an individually owned policy.

An insurance company that is owned by the policyholders is called a

mutual insurer- mutual companies are owned by the policyowners and issue participating policies.

An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is in effect and has not lapsed. What policy provision allowed for this?

Grace period- grace period is a mandatory provision found in all life insurance policies that provides coverage for a period of time after the premium becomes past due.