Life Exam

Life Settlement

A policyowner who no longer needs a policy sells to a third party for more than its cash value. This type of transaction is called a/n

$60,000 and a third-degree misdemeanor

An individual acted as an exclusive general agent even though she was not licensed to do so. Since this offense occurred over a period of 60 days, what is the maximum penalty she faces?

$5,000

What is the maximum civil penalty per violation of the regulations of the Insurance Code that define acts that are subject to fines, or license suspension or revocation>

Reciprocal Insurers

What type of insurer uses a formal sharing agreement?

Reciprocal insurers

What type of insurer uses a formal sharing agreement?

Contract interest rate

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

Extended Term

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

whole life without proof of insurability

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

Both partial cash surrender and policy loan

Which distributions from a MEC would be taxable as income at the time received to the extent that the cash value of the contract immediately before the payment exceeds the investment in the contract?

It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary

Which of the following best describes life annuity with period certain option?

It provides the highest monthly benefits

Which of the following best describes pure life annuity?

Number of beneficiaries

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

Disability

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

It is temporary protection

Which of the following is TRUE of level term insurance?

Fixed annuities do not provide protection against inflation

Which of the following is a correct statement about annuities?

One party accepts the exact terms of the other party's offer

Which statement best describes agreements as it relates to insurance contracts?

Joint and Survivor

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?

Proof of licensing or a letter of clearance from the previous home state

A licensee who has moved to PA from out of state must provide which of the following before becoming licensed as a resident in this state?

Payor Benefit

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 the premium payments due to death or disability. Which policy rider should their agent recommend?

Decreasing Term

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be

Continue to increase

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

A policy is reissued with a reduction in cash value

According to 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

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

Either term insurance or permanent insurance

An adjustable life policy can assume the form of

Not tax deductible

Contributions to Roth IRA's are

not tax deductible

Contributions to Roth IRAs are

Cover a mortgage

Decreasing Term insurance is often used to

Legal and not against public policy

For a contract to be enforceable by law, the purpose of the contract must be

Misrepresentation

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

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

How are policy loans calculated?

1 month

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

Prior to performance of the test

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

$2,500

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?

Pay the death benefit to the estate of the insured

Key person insurance can provide protection for all of the following economic losses to a business EXCEPT

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

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

10 Working Days

Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured?

6 months

Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period up to

Loss of the breadwinner's income

The Human Life Value Approach to determining life insurance needs is based upon which of the following ideas?

Governor

The commisioner of insurance is appointed by which authority:

Deny any payment of death benefit

The owner of a whole life policy with an accidental death rider dies by suicide after having the policy for 18 months. What is the insurance company's course of action?

Insurable Interest

To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss.

The insured

With adjustable life, the owner can change all of the following EXCEPT

Variable Universal Life

An insured's flexible premium is invested into a separate account. What type of insurance product did he purchase?

3 Days

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?

At the insured's age 100

In whole life insurance, when is the policy cash value scheduled to equal the face amount?

Reduce the death benefit

What effect will the long-term care (LTC) rider have on the death benefit of a life insurance policy if LTC benefits were paid to the insured?

The face amount is paid to the insured

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

To compensate the company for loss of investment value

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

Extended term

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

Whole life without proof of insurability

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

An MEC must always pass the 7-pay test

Which of the following statements is INCORRECT concerning MECs?

Being Permanently Disabled

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Insured's income

All of the following are considerations under the needs approach for life insurance EXCEPT

The insureds each own their own contract

All of the following are true of group life insurance EXCEPT

The premium is based on the age of each insured

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

Reports may be sent to anyone

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

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

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

Being permanently disabled

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Applicants who may require a larger death benefit in the future should buy convertible term insurance

Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs?

Term

Which type of insurance policies provide pure life insurance protection without a savings element?

Policy dividends issued by mutual companies are guaranteed and not taxable

All of the following statements about mutual insurance companies are correct EXCEPT