Illinois Life Insurance Exam
Adhesion
"Take it or leave it"
What is the maximum fine for a violation of a cease and desist order?
$1,000
An insurer has collected $2,000 in commissions on recently issued long-term care policies. However, in the process of policy solicitation, the insurer has violated marketing regulations for long-term care insurance. What is the maximum penalty the insurer may face?
$10,000
What is the resident producer license fee payable once every 2 years?
$215
The Illinois Life and Guaranty Association is obligated to pay covered claims only if under the amount of...
$300,000
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
$50,000
At what annual rate does interest on life insurance proceeds accrue from the date of death of the insured?
10%
Mr. Smith purchases a 30-pay life insurance policy when he is 30 years of age. The cash value will equal the face amount of the policy at what age?
100
What percentage of a company's employees must take part in a noncontributory group life plan?
100%
The Director may refuse to issue a license if a licensee's aggregate amount of premium on controlled business exceeded their insurance business during...
2 calendar years immediately preceding the extension date of the license.
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years.
How many hours of pre-licensing education needs to be completed in Illinois for each line of authority?
20
What is the minimum number of study hours required of a candidate for a casualty producer's license?
20
Before each license renewal, an insurance producer must complete at least how many hours of continuing education?
24
Prior to renewal of a resident producer's license, how many hours of continuing education must the individual complete?
24 hours.
A producer receives notice that his license has been terminated. If the producer wants charges reviewed in court, within what time period can the charges be reviewed or challenged?
30 days
The Director informs a producer that its license has been terminated and immediately receives a request for the charges to be reviewed in court. Within what maximum number of days must the hearing be held?
30 days
When an employee terminates coverage under a group insurance policy, coverage continues in force for how many days?
31 days.
Traditional IRA's have a premature distribution penalty for distributions taken before what age?
59 1/2
How long must an insurer keep books and records of insurance transactions in the Premium Fund Trust Account?
7 years
According to the Entire Contract provision, a policy must contain...
A copy of the original application for insurance.
All of the following are true regarding reinstatement of a lapsed producer license EXCEPT...
A producer's license may be reinstated within 24 months without having to pass a written exam.
Temporary producer license can be issued to all the following EXCEPT...
A spouse of a disabled licensed producer before and after the sale of the business.
Which of the following contractual elements consists of the offer and the acceptance?
Agreement.
An insured bought a disability policy and paid 1 month's premium of $150. He was then disabled for 2 years and collected a total of $15,000 from the insurer. This is an example of what concept?
Aleatory.
Who is considered a non-resident agent?
An agent who resides in another state, but is licensed to write insurance in this state.
To which of the following policies would the state regulation on illustrations NOT apply?
An individual variable life policy.
The death protection component of Universal Life Insurance is always...
Annually Renewable Term
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT...
Applicant's past income.
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date.
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT...
At distribution, all amounts received by the employee are tax free.
The accelerated benefits provision will allow for an early payment of the death benefit when the insured...
Becomes terminally ill.
an insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option.
All of the following are regulated areas of the insurance industry EXCEPT...
Commissions.
A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called...
Conservation.
Which entity ultimately decides is an advertisement is complete and truthful?
Director.
Which of the following terms is used to name the nontaxed return of unused premiums?
Dividend.
Items stipulated in the contract that the insurer will not provide coverage for are found in the...
Exclusions clause.
Hospital confinement indemnity coverage may not exclude emergency confinement in what type of facility?
Federally operated hospital.
An insured received a new life policy 1 week ago, then decides to return it and requests a full refund of the premium paid. What provision gives the insured the right to return this policy?
Free look.
Life insurance death proceeds are...
Generally not taxed as income.
In which of the following cases will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to age 100.
Insurance agents are prohibited from referring to themselves as all of the following EXCEPT...
Insurance producer.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option.
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Which of the following is true about the premium on the children's rider in a life insurance policy?
It remains the same no matter how many children are added to the policy.
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount.
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
What are some uses of annuities?
Large lump-sum settlements, qualified retirement plans, retirement income, education funds
Types of Term Insurance
Level, increasing (usually a rider), decreasing (usually to cover a debt d=debt)
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65.
What is an example of a limited-pay life policy?
Life Paid-up at age 65.
Variable life, group life, and annuities are EXEMPT under which rule?
Life Solicitation.
Which settlement option potentially allows the beneficiary to receive more than the initial death benefit?
Life income.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life.
The premium of a survivorship life policy compared with that of a joint life policy would be...
Lower.
In group coverage, what is the policy called?
Master policy.
Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called...
Material misrepresentations.
Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?
Medical Information.
The regulation regarding replacement of life insurance and annuities helps minimize what?
Misrepresentation and incomplete discolsures.
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?
Monthly premium waiver and monthly income.
Unilateral
One-sided
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called...
Paid-up additions.
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up option.
Single Premium Whole Life (SPL)
Policyholder pays a lump sum of money upfront in exchange for a guaranteed death benefit. The policy requires that the holder has access to a large sum of money up front, meaning it's not financially feasible for many individuals. Has immediate cash value.
Level Term Insurance
Premium and death benefits stay the same for the life of the policy.
Whole Life
Provides coverage throughout the life of the insured person to age 100. In addition to paying a tax-free death benefit, whole life insurance also contains a savings component in which cash value may accumulate. Interest accrues on a tax-deferred basis.
The annuitization period is best defined as the time during which the annuitant...
Receives payments.
Which nonforfeiture option will provide coverage for the longest period of time?
Reduced paid-up.
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of premium.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allows this?
Reinstatement provision.
Statements provided by an applicant for insurance are considered to be...
Representations.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy...
Required a premium increase each renewal.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a...
Settlement option.
An IRA purchased by a small employer to cover employees is known as...
Simplified Employee Pension plan.
What is the best way to handle an error in an application?
Start a new application.
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend...
Straight life.
Which type of life insurance policy would provide the greatest amount of protection for a temporary period when an insured has limited financial resources?
Term Life.
Increasing Term Insurance
Term life insurance in which the death benefit increases periodically over the policy's term and the premium stays the same for that period of time. Usually purchased as a rider.
Annually Renewable Term (ART) Insurance
Term life policy which offers a guarantee of future insurability for a set number of years. During the stated period, the policyholder will be able to renew each year without reapplying or taking another medical exam to reaffirm eligibility. Premium increases each year with a level death benefit.
Decreasing Term Insurance
Term life policy with a level premium and a death benefit that decreases over time. It's beneficial if you expect your loved ones to gradually need less financial support as time passes. Can also be used to cover a debt while you still owe a lender money.
All of the following employees may use a 403(b) plan for their retirement EXCEPT...
The CEO of a private corporation.
The Director must find all of the following to be true of a viatical supplement provider applicant before a license will be issued EXCEPT...
The applicant posts a bond with the Department of Insurance.
Who owns a key person life insurance policy?
The business the key person works for.
Which of the following entities determines who can receive a Limited Lines Producer License?
The company that the person represents.
If an insured dies during the grace period, what is the insurer obligated to pay?
The face amount of the policy minus any owed premium.
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary.
All of the following are true regarding a decreasing term policy EXCEPT...
The payable premium amount steadily declines throughout the duration of the contract.
What consequences will occur if a producer acts without a bond that is required?
The producer's license may be revoked.
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?
Third-party ownership.
Insurance is a means of...
Transferring risk.
Aleatory
Unequal exchange of values.
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
Unilateral.
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal life.
A life insurance policy with a cash value that fluctuates depending upon the performance of the separate account is...
Variable life.
What is the name of the insured who enters into a viatical settlement?
Viator.
In policy replacement, when should an old policy be cancelled?
When a new one is issued.
The paid-up addition option uses the dividend to...
purchase a smaller amount of the same type of insurance as the original policy.