Insurance License

Outstanding life insurance policy loans will not lapse unless

The amount of the loan and accrued interest exceeds 100% of the available cash values

How are policy loans calculated?

The policy's cash value minus unpaid loans and accrued interest.

An insured receives his life insurance policy and is not satisfied with the provisions. He decides to return the policy after 25 days. What percentage of his premium will he be refunded?

0%

How long is the grace period for an individual life insurance policy?

1 month

A public employee group which is eligible for a group life insurance policy must have at least how many employees?

5

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

A policy is reissued with a reduction in cash value.

An Agent is hand delivering an insurance policy to a policyowner. What must the agent obtain to complete the transaction?

A signed delivery receipt

An agent is hand delivering an insurance policy to a policyowner. What must the agent obtain to complete transaction?

A signed delivery receipt.

When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as

Estate conservation

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 policyowner select?

Joint and Survivor

An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement?

Level

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?

Misrepresentation

Guaranteeing future dividends is considered to be an unfair or deceptive act known as

Misrepresentation

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making premium payments due to death or disability. Which policy rider should their agent recommend?

Payor Benefit

If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?

Prior to performance of the test

All of the following are true regarding renewing a producer license EXCEPT

Producers may continue to sell for up to 3 months on an expired license

What type of insurer uses formal sharing agreement?

Reciprocal insurers

S set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does S have?

Simplified Employee Pension (SEP)

Which of the following will NOT be included in the buyer's guide?

Specific information about the policy, it only provides generic info

Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles?

Standard

In contrasting stock insurers with mutual insurers, which statement is true?

Stock insurers are owned by the shareholders and issue nonparticipating policies

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is

Taxed as ordinary income

In life insurance, which of the following is NOT required to have an insurable interest in the insured?

The beneficiary

Who does the spendthrift clause in a life insurance policy protect?

The beneficiary

Life insurance creates an immediate estate. Which of the following best explains this statement?

The face value of the policy is payable to the beneficiary upon the death of the insured

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

In life insurance underwriting, all of the following are true regarding HIV testing EXCEPT

The person may be denied overage based solely on the presence of HIV (they cannot be declined based on this alone)

All of the following statements about indexed whole life insurance are correct EXCEPT

The policy face amount remains level throughout the life of the policy

The client chooses to buy an annuity product that was not recommended to him. Which of the following is true?

The suitability rule does not apply

If an applicant submits the initial premium with an application, which action constitutes acceptance?

The underwriters approve the application

What is the purpose of the surrender charge in a deferred annuity?

To compensate the company for the loss of investment value

When is the company responsible for actions of its agents?

Whenever the agent is acting within the conditions of the contract

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability

All of the following are true of the Survivorship Life policy EXCEPT

the premium is based on the age of each insured

According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

The primary beneficiary died before the insured.

Which of the following is true regarding a joint life annuity?

The payments stop at the first death

All of the following are true of a nonqualified deferred compensation plan EXCEPT

contributions are tax deductible

How long is the grace period in all annuity contracts issued or delivered in this state?

30 days

At what point would an automatic premium loan be generated?

Following the grace period

A person has a history of DUI's. To his insurer, this presents what type of hazard?

Morale

Dividends received on participating life insurance policies are

Not taxable because they are a return of unused premiums

Which of the following is NOT a component of an insurance policy premium?

Number of beneficiaries

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?

Paid-up additions

Contributions to Roth IRAs are

not tax deductible

An individual who violates a single provision of the Insurance Code may be fined up to

$1,000

An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive

$70,000

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT

Reports may be sent to anyone who requests one

During the grace period, what is the annual interest rate that the insurer may charge for the number of days before the premium is paid?

6%

Which of the following best describes a rebate?

A producer returning part of her commission to her client, as an inducement to buy

To obtain an Idaho producer's license as a nonresident, an individual must

Have a similar license in his or her home state

If a creditor has claims against an insured, what may the insurer do with the proceedings of a life insurance policy?

Hold the proceeds

To purchase life insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?

Insurable interest

Which of the following is TRUE of level term insurance?

It is temporary protection

When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true?

Joint Life has a lower premium than the total of the two individual policies

The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called

A collateral assignment

Which of the following is not considered eligible for group life insurance?

A credit union with 10 members

The Director may suspend a producer's license for all of the following EXCEPT

A misdemeanor traffic violations

An IRA contribution can be made from which of the following?

Cash

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

Continue to increase

Which of the following is NOT a standard exclusion in life insurance policies?

Disability

A policy loan cannot bear interest in excess of

8% per year

What is the tax penalty for withdrawing money from an annuity prior to age 59 1/2?

10%

How many days in advance must the Director give notice of a hearing?

14 days

The incontestability provision included in an annuity contract states that the validity of the contract cannot be contested after how many years?

2 years

Replacing insurance companies must keep evidence of the notice regarding replacement, the policy summary, contract, and any ledger statements used for the replacement policy for how long?

3 years

When a licensee moves to a new address, the Commisioner must be notified within

30 days

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?

Children's term rider

Which of the following is NOT one of the duties of the Director?

Examining the financial condition of insureds

The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?

Loss of the breadwinner's income

What is the minimum time period an insurance producer must keep transaction records available for inspection?

5 years

An insured decides to surrender his Whole Life Insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?

The difference between the premiums paid and the cash value.

All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT

An association of 35 people

Which of the following indicates the person upon whose life the annuity income amount is determined?

Annuitant

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT

It does not have a guaranteed death benefit

Which of the following is NOT true of the agent's implied authority?

It is specifically stated in the contract

To which of the following could a producer pay part of her commission without violating any insurance regulation?

Another producer who has a like license

Which of the following documents used in the underwriting process contains specific medical details about an applicant?

Attending Physician's Statement (APS)

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describers this action?

False financial statement

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

Fixed Amount

Which of the following is a correct statement about annuities?

Fixed annuities do not provide protection against inflation

How will life insurance proceeds that are paid as a lump sum received by the beneficiary?

Free of federal income taxation