Life Exam Questions
All of the following are Nonforteiture options Except
Interest Only
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
In terms of parties to a contract, which of the following does NOT describe a competent party?
The person must have at least completed secondary education
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance
Which of the following settlement options in life insurance is known as straight life?
Life Income
Which of the following is not a limited line of insurance?
Life Insurance
Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death?
Life Insurance Proceeds
The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called
Life income with period certain
Which of the following is an example of a Limited-Pay life policy:
Life paid up at age 65
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 (premium payments cease at 65)
An insured has a policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited-pay Life
What happens if a deferred annuity is surrendered before the annuity period?
The owner will receive the surrender value of the annuity
An individual applies for a life policy. Two years ago he suffered a head injury fronm an accident so he cannot remember parts of his past. But is otherwise competent. He has also been hospitalized for drug abuse but does not remmeber this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen?
The policy will not be effected
If an insured continually uses the automatic premium loan option to pay the policy premium,
The policy will terminate when the cash value is reduced to nothing
Which of the following best describes what the annuity period is?
The preiod of time during which accumulated money is converted into income payments
An insured innocently omitted a health problem in her life insurance application that would have influenced her premium amounts. The policy is issued and the insurer discovers the error 3 years later. Which of the following will most likely happen?
The premium amounts will remain unchanged
All of the following are true about variable products except
The premiums are invested in the insurer's general acount
All of the following would be eligible to establish a Keogh Retirement plan EXCEPT
The president and employee of a family corporation
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with a Notice Regarding Replacement.
A group of 15 skydivers meet at a seminar and begin talking about life insurance during a break. Because it is expensive to get individual life insurance, they decide to band together to form a small group so that they will be eligible. They apply for small group life insurance and are rejected. Why?
The purpose of the group was to purchase life insurance
What is true about the spouse term rider?
The rider is usually level term insurance
Which is true about a spouse term rider?
The rider is usually level term insurance
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
The termination of marital property rights may be reversed for all of the following reasons EXCEPT
The spouse named as beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation.
All of the following are characteristics of a group life policy life insurance plan except
There is a requirement to prove insrability on the part of all participant
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants.
Annuities differ from life insurance in all of the following ways EXCEPT
They are purchased with premiums
A policy owner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called
1035 exchange
The Commissioner may issue a temporary license for an intermediary for up to
12 months
Which of the following produces evaluations of insurers financial status often used by state departments of insurance?
Am Best
Under which of the following circumstances would an insurer pay accelerated benefits?
An insured is diagnosed with cancer and needs help paying for medical treatments
Which of the following would be considered an illegal inducement to purchase insurance?
Confirming future dividend in a life insurance policy
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
Contracts that are prepared by on party and submitted to the other party on a take-it or- leave- it basis are classified as
Contracts of Adhesion
an insurance producer just sold an insurance policy to his sister. What kind of business is this?
Controlled
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
Life income joint and survivor settlement option guarantees
Income for 2 or more recipients until they die
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
Variable whole life insurance is based on what type of premium?
Level Fixed
The Commssioner Obtains a restraining order against a person who has violated an insurance law. The person continues the violation for 10 days. The person will have to pay a fine of
$0
any licensed person whose activities affect interstate commerce and who knowingly makes false statements related to the business of insurance may be imprisoned up to
10 years
If a person does not comply with an order issued within 2 weeks after the commissioner has given notice, for each day that the violation continues, the commissioner may issue a fine up to
$5000
If a person does not comply with an order issued within 2 weeks after the commissioner has given notice, for each day the violation continues, the commissioner may issue a fine up to?
$5000
What is the penalty for IRA distribution that are below the required minimum for the year ?
%50
What is the maximum annual billing for an insurer?
1% of net premiums earned
Insurance Regulations in this state require prompt initiation and completion of claims investigations, and delivery of necessary claims forms and assistance to the insured and claimant. What constitutes prompt action?
10 consecutive days
During a life insurance policy replacement the insurer is required to provide the policy owner a free-look period of at least
10 days
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified?
15
What is the minimum age to apply for an insurance license in the stat of WI
18
After the original hearing and a final order is issued, an aggreived person may request a re-hearing within
20 days
An intermediary must maintain records for how long?
3
Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?
3
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Records of replacemet suitability inquiries must be kept in the agents file for at least
3 years
Any Person who violates an insurance statute or rule WI can be imprisoned for up to how many years?
3 years and $10000
A claim is considered overdue if NOT paid within how many days after the insurer receives writing notice?
30 days
During a life insurance policy replacement, the insurer is required to provide the policy owner a free look period of at least
30 days
If the commisioner issues an order without having conducted a hearing, the persom aggrieven by the order may demand a hearing within how many days after the order was mailed?
30 days
In this state, insurers must pay a claim within how many days of receiving proof of loss
30 days
The Commissioner issues an order without having conducted a hearing. Within how many days of receiving the orders can the person aggrieved by the order request a trial?
30 days
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time
Am insured decides to surrender his 100,000 Whole Life policy. The premiums paid into the policy added up to 15,000. At surrender, the cash surrender value was 18,000. What part of the surrender value would be income table?
3000
What is the minimum duration of a grace period in a group life insurance policy in this state?
31 days
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5
What is the max number of insurance risks an agency can place with a single insurer in one calendar year if the ageny is not listed with that insurer?
5
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 Days
The Commissioner is required to examine every domestic insurer and every licensed rate service organization every
5 years
The commissioner is required to examine every domestic insurer and every licensed rate service organization every
5 years
When replacing a policy, and insurer must maintain a file containing copies of all statements for
5 years
When the Commissioner revokes an intermediary's license for any reason other than nonpayment of fees, the intermediary may NOT apply for a new license for how many years?
5 years
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed is required
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
What is the waiting period on a Waiver of Premium rider in life insurance policies
6 months
What is the waiting period on a waiver of premium rider in life insurance policies
6 months
The Commissioner issues an order withoiut holding a hearing. The person aggrieved by the order demands a hearing shortly after receiving the order. The hearing must be held within a maximum of how many days?
60 days
An insurance producer who by contract is bound to write insurance for only one company or group of companies is classified as a/an
A Captive Agent
according to the entire contract provision, the policy must contain
A copy of the original application for insurance
Which fo the following statements is NOT true concerning insurable interest as it applies to life insurance?
A debtor
A straight life policy has what type of premium?
A level annual premium for the life of the insured
Which of the following persons is not required to complete CE?
A limited lines intermediary with 40 years of continuous licensure
Which of the following is NOT an allowable 1035 exchange
A whole life insurance policy is exchanged for a term insurance policy
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs
Adjustable Life
Which of the following is the closest term to an authorized insurer?
Admitted
Which of the following would not be a violation of state insurance regulations?
Agent C uses her license to write only business other than controlled
What documentation grants express authority to an agent?
Agents contract with the principle.
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of rist on the part of the insurance company
Aleatory
All other factors being equal, the least expensive first-year premium payment is found in
Annually Renewable Term
The death protection component of Universal Life Insurance is always
Annually Renewable Term
the death protection component of universal life is
Annually Renewable Term
A Universal Life Insurance Policy is best described as a
Annually Renewable Term Policy with a cash value account
When an annuity is written, whose life expectancy is taken into account?
Annuitant
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
Short-term annuities that limit the amounts paid to a certain fixed period or until a certain fixed amount is liquidated. These annuities are purchased as either a fixed-period installment or a fixed amount installment.
Annuity Certain
Which of the following is NOT true of Section 13 Policy Exchanges?
Any exchange made under Section 1035 of the internal revenue code must be completed within 30 days.
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
Which of the following types of agent authority is also called perceived authority?
Apparent
How is the Commissioner of Insurance placed in office?
Appointed By the Governer
Simple plan require all of the following except
At least 1000 Employees
What describes a ledger or proposal used to show both guaranteed and nongauranteed elements of policys
Basic Illustration
Which of the following is true about a class designation?
Beneficiaries are not identitified by name
In Wisconsin, producers are permitted to share or split commisions, provided that
Both are properly licensed for the line of insurance
Variable Whole Life insurance is based on what type of premium?
Level Fixed
All of the following are duties and responsibilies of producers at the time of applications EXCEPT
Change any incorrect statement on the application by personally initialling next to the correct statement
In the even the key employee quits or is terminated what provision provides for the owner of the policy to transfer coverage to the replacement employee provided the new employee provides evidence of insurability
Change of insured
What term is used for replacing insurnace policies for the sole purpose of making commisions?
Churning
When a policy owner designates a group of individuals as a beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
Class designation
Each insurer must report or list all appointments and all terminations of appointments to what authority?
Commissioner
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
Cost of Living Rider
A long stretch of national economic hardship causes a 7% rate of inflation. Devonne notices that the face value of her life insurance policy has been raised 7% as a result. What is the name of the provision that caused this change?
Cost of living rider
Which of the following will not be an appropriate use of a deferred annuity?
Creating an Estate
Which component increases in the increasing term insurance?
Death Benefit
Which of the following are not fundable by annuities?
Death Benefits
Which of the following is NOT an example of insurable interest?
Debtor in Creditor
An individual has just borrowed$10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing Term
When the Commissioner examines an insurer, who pays the examination costs?
Department
A producer agent must do all of the following when delivering a new policy to the insured except
Disclose commissions earned from the sale of the policy
Which of the following changes does not need to be reported to the commissioner in 30 days?
Each commission paid to a licensee who has held a license for less than a year
All of the following are purposes of insurance EXCEPT for
Earn Commissions
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would life a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)...
Equity Indexed Annuity
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?
Executive is the owner, and the executive pays the premium.
The Authority granted to an agent through the agents contract is referred to as
Express Authority
The authority granted to an agent through the agent's contract is referred to as
Express Authority
Which nonforfeiture option has the highest amount of insurance protection?
Extended Term
An agent selling variable annuities must be registered with
FINRA
Which policy component decreases in decreasing term insurance?
Face amount
All of the following violations may result in an agent's imprisonment EXCEPT
Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction.
An applicant is denied insurance because of the information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair Credit Reporting Act
Circulation deceptive sales material to the public is what type of Unfair Trade Practice?
False Advertising
Circulationg deceptive sales material to the publis is what type of Unfair Trade Practice?
False Advertising
All funds collected by an intermediary for prompt payment to insureds, insurers, or producers as entitled are received in what is known as
Fiduciary Capacity
The requirement that agency not commingle insurance monies with their own funds is known as
Fiduciary Responsibility
A person that markets insurance but does not include an insurer is called
Firm
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed Period
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed period
When an employee terminates coverage under a group insurance policy, coverage continues in force
For 31 days
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insured by 10% over the next two years. What term best describes this act?
Fraud
In life insurance policies, cash value increases
Grow tax deferred.
An insured has a Modifies Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?
He will have to pay a penalty if he is younger that 59 1/2
Which of the following methods of calculation the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?
Human Life Value Approach
a father purchases a life insurance policy on his teenage daughter and adds the pay benefit rider. in which of the following scenarios will the rider waive the payment of premium?
IF the father is disables for more than 6 months
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
Illegal
What tyoe if annuity can be purchased with a single premium and provides benefit payments immediately
Immediate
A return of premium term life policy is written as what type of term coverage?
Increasing
What type of insurance would be used for a Return pf Premium rider?
Increasing Term Insurnace
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installments for a fixed period
Which of the following is an intermediary who acts in the procuring of insurance on behalf of an applicant for insurance or an insured?
Insurance Agent
If an insurer requires that an applicant or insured undergo a physical examination in order to obtain or continue coverage, who must pay the cost of such examination?
Insurer
which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?
Insureres guaranteed minimum rate of interest
Who does the Interstate Insurance Product Regulation Compact serve?
Insurers
Who does the interstate insurance product regulation compact serve?
Insurers
Interstate Insurance Product Regulation Compact is a contract between
Insurers and insureds
The policy owner 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. What settlement option should the policy owner choose?
Interest-only option With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.
State laws specifically prohibit using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT
Inviting prospective clients to the grand opening of the company's new office.
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time.
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following is true regarding the annuity period?
It may last for the lifetime of the annuity
Which of the following is not true regarding a nonqualified retirement plan?
It needs IRS Approval
Which of the following statements is TRUE concerning the Accidental Death Rider?
It pays double or triple the face value
Which of the following applies to the 10-day free-look privilege?
It permits the insured to return the policy for a full refund of premiums paid.
Which of the following is true regarding a single life settlement option?
It provides income the beneficiary cannot outlive: payments stop upon death of the beneficiary
Which of the following is a feature of a single premium immediate annuity?
It starts payments withing 1 year
Insured buys a 5 year level premium term policy with a face amount of $10000. Policy also contains renewability and convertibility options. When insured renews in 5 years, what happens to the premium?
It will increase because the insured will be 5 years older than when the policy was originally issued. It will remain level during the term of the policy, but upon renewal it will be based on the insured's attained age.
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
Joint Life Annuity
twin brothers are starting a new business. they know it will take years to build the business to the point that they can pay off debt incurred in starting the business. what type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint life
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?
Jumping Juvenile Policy
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
LArger
What is the other term for cash payment settlement options?
Lump Sum
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?
Material Misrepresentation
The Interstate Insurance Product Regulation Compact is a contract between
Member states
When an insurer is given an order of liquidation, which of the following will protect the insureds unpaid claims?
The Insurance Security Fund
Which of the following is not true regarding the needs approach method of determining the value of an individual life?
Needs is predicted by using the number of years until the insured's retirement
a 35-year-old spouse of the insured collects early distributions from her husbands retirement plan as a result of a divorce settlement. What penalties if anyy will she have to pay?
No Penalties
Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments?
No later than 1 year from the time of purchase
A 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay?
No penalties
An insurer can refuse, cancel or deny insurance coverage to any class of risk based on which of the following characteristics of an applicant or insured?
None of the Above
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing, the payments will cease
Which of the following documents must be provided to the policy owner or applicant during policy replacements?
Notice Regarding Replacement
The dividend option in which the policy owner uses dividend to purchase a term policy for one year is referred to as the
One-year term option
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
Only Written statments can be considered fraud
Under a pure life annuity, an income is payable by the company...
Only for the life of the Annuitant
Which of the following can surrender a deferred annuity contract?
Only the Annuity owner
Which Univeral Life option has a gradually increasing cash value and a level death benefit?
Option A
which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy?
Owners Rights
Which of the following refers to the amount of retirement benefits a worker receives under Social Security Based on the workers earning and retirement age?
PIA
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
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
Payments for 15 years
Which of the following is NOT true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
Which of the following riders would not cause the death benefit to increase?
Payor Benefit Rider
The causes of loss insured against in an insurance policy are known as
Perils
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
Permanent
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should it be?
Permanent
All of the following are true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value.
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death
Which of the following will be included in a policy summary?
Premium amounts and surrender values
All of the following are examples of risk retention except
Premiums
All of the following are characteristics of group life insurance except
Premiums are determined by the age,sex, and occupation of each individual certificate holder
Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?
Premiums are tax deductible as a business expense
Which of the following statements is an accurate comparison between private and government insurers?
Private insurers may be authorized to transact insurance by state insurance departments.
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit Sharing Plan
The Gramm-Leach- Bliley Act was passed to
Protect private customer information filed with a financial institution
The risk of loss may be classfied as
Pure Risk and speculative risk
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?
Pure life
Another name for a substandard risk classification is
Rated
Policies issued in this state must be presented in a meaningful sequence, be appropriately captioned, must provide definitions where appropriate, and must be printed in specified type. All these requirements refer to the rule of
Readability
All of the following are true regarding Rebates except
Rebates are only allowed if specifically stated in the policy
What determines the penalty for surrendering a market value adjusted annuity prematurely?
The current interest rate at the time of surrender
Which nonforfeiture option provides coverage for the longest period of time?
Reduced Paid-up
The policy owner 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 her next premium. What option would allow her to do this?
Reduction of premium
The Federal Fair Credit Reporting Act
Regulates consumer reports
Which of the following is a person, other than an officer or employee of the ceding insurer, who solicits, negotiates, or places reinsurance cessions on behalf of a ceding insurer?
Reinsurance Broker
Which of the following statments is INCORRECT?
Replacing insurance policies for the purpose of making commissions is legal
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may:
Require evidence of insurability
Under the Fair Credit and Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the Consumers complaint
Annuities can be used to fund which of the following
Retirement Plans
Agent D submitted an application for life insurance on client A. No moneu was sent with the application. When Agent d attempted to deliver the policy, he discovered that A had suffered a heart attach since the application was taken. The agent should
Return the Policy to the insurer
All of the following are true of an annuity owner except
The owner must be the party to receive benefits
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT?
SEPs are suitable for large companies
If an agency wishes to sell variable life policies, what license must the agent obtain?
Securities
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Set premium rates.
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 employee has group insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurablility withing 31 days of leaving a group plan.
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
Signed Waiver of premium
An IRA purchased by a small employer to cover employees is known as a
Simplified Employee Pension plan
An insurance policy that only requires a payment of premium at its inception provides insurance protection for the life of the insured and matures at the isnured age 100 is called
Single Premium Whole Life
Which of the following applicants would not qualify for Keogh Plan?
Someone who works 400 hours per uear
All of the following are Beneficiary Designations Except
Specified
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?
Spouse
Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting
Stock
Which of the following types of annuities will generally provie the highest monthly income?
Straight Life
Your client is planning to retire. She has accumulated 100000 in 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
After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?
Surrender Charge
What type of annuity activity will cause immediate taxation of the interest earned?
Surrendering the annuity for cash
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor Protection
Which of the following would help prevent a universal life policy from lapsing?
Target Premium
The advantage of qualified plans to employers is
Tax-deductible contributions
The interest earned on policy dividends is
Taxable
During the accumulation period in a non qualified annuity, what are the tax consequences of a withdrawal?
Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on Accumulation
A 403(b) plan, commonly referred to as a TSA, is available to be used by
Teachers and not-for-profit organizations.
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
Nonforfeiture values guarantee which of the following for the policyowner?
That the cash value will not be lost
In a group life insurance policy, the employer may select all of the following EXCEPT
The Beneficiary
Knowledge and actions of an agent are deemed to be of
The Department of Insurance
Which of the following is not true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner
All of the following about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of return
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit.
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value
Which of the following is an example of liquidity in a life insurance contract?
The cash value available to the policyowner
THe commissioner conducts an examination of a domestic insurer and believes that the cost of examination places an unreasonable financial burden on the insurer. Which of the following will happen?
The commissioners office may pay all or part of the costs
In comparison to consumer reports, which of the following describes a unique characteristic of investing consumer reports?
The customers associates, friends and neighbors provide the reports data
The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
Which of the following describes the tax advantage of a qualified retirement plan?
The earnings in the plan accumulate tax deferred.
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?
The employer is the owner and beneficiary
An employee is insured under her employers group life plan. If she terminiated her group coverage, which of the following statesments is true?
The insured may choose to convert to term or permanent individual coverage
a father owns a life insurance policy on his 15 year old daughte. the policy contains the optional payor benefit rider. If the father becomes disabled what will happen to the life insurance premium?
The insured premiums will be waived until she is 21
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death.
The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
The insured's estate
Which of the following are generally not considered when underwriting group insurance?
The insureds' medical history
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 statements regarding the accumulation at interest option EXCEPT
The interest credited under this option is not taxable since it remains inside the insurance policy. The interest credited under this option is TAXABLE, whether or not the policyowner receives it.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?
The interest will continue to accumulate Tax deferred
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT
The loss must be catastrophic
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are taxed as income for the employee but are tax free upon withdrawal
Which of the following statements regarding deferred compensation funds is incorrect?
They are usually qualified plans
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years
For what reason may a life insurance producer back date a life insurance policy?
To avoid an increase in premium rate for the insured
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key person
What is the purpose of the Wisconsin State Life Insurance Fund?
To offer low-cost life insurance to the state residents
In a direct rollover, how is the money transferred from one plan to the new one?
Trustee to trustee
In addition to an other forfeiture imposed, any person who violates an effective orer may be required to pay
Twice the amount of any profit gained from the violation
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
Type of investment
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
Unilateral
The Waiver of Cost of Insurance rider is found in what type of insurance?
Universal Life
Which of the types of policies allows the policyowner to skip premium payments provided that there is enough cash value in the policy to cover the premium amount?
Universal Life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal Life
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - option A
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
How long will the beneficiary receive payments under the single life settlement option?
Until the beneficiary's death
Which of te following is Not true about beneficiary designation?
the beneficiary must have insurable interest in the insured
Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds?
Vacation Travel Expenses
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
Viatical Settlement
Which of the following is a person who received a fee or commission to attempt to negotiate settlements between a life insurance policy holder or certificate holder and one or more viatical settlement providers?
Viatical Settlement Broker
A Buyer's Guide must be presented
When the application is taken
When would a 20-pay whole life policy endow?
When the insured reaches age 100
When would life insurance policy proceeds be included in the insured's taxable estate?
When there are any incidents of ownership at the time of death
Which of the following types of insurance policies would perform the function of cash accumulation?
Whole Life
Which of the following statements regarding the taxation of modified endowment contract is false?
Withdrawals are not taxable
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce:
Without written consent from an insurance regulatory authority
All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?
a 60-year old man
All of the following could own group life insurance XCEPT
a group needing low-cost life insurance
A corporation is the owner and beneficiary of the key person life policy. IF the corporation collects the policy benefit, then
the benefit is received tax free
The two types of assignments are
absolute and collateral
In insurance, an offer is usually made when
an applicant submits an application to the insurer
who can make a fully deductible contribution to a traditional IRA
an individual not covered by an employer-sponsored okan who has earned income
Employer contributions made to a qualifies plan
are subject to vesting requirements
The full premium was submitted with the application for life insurance, & the policy was issued 2 weeks later as requested. When does the policy coverage become effective?
as of the application date
Which of the following is incorrect regarding a $100,000 20-year level term policy?
at the end of 20 years, the policy's cash value will equal $100,000
all of the following are personal uses of life insurance except
buy-sell agreement
Which of the following statements concerning buy-sell agreement is true?
buy-sell agreements are normally funded with a life insurance policy
What does "level" refer to in level term insurance?
face amount
The death benefit under the universal life option b
gradually increase each year by the amount that the cash value increases
annually renewable term policies provide a level death benefit for a premium that
increases annually
All of the following are Nonforfeiture options EXCEPT
interest only
What is the purpose of the seven pay test?
it determines if the insurnace policy is a MEC
Which of the following is true regarding the accumulation period of an annuity?
it is a period during which the payments into the annuity grow tax deferred
Which of the following is not true regarding the accumulation period of an annuity?
it would not occur in a deferred annuity
Jack and Jill are twin. when their grandfather died, he left each of them 100,000 which they each used to purchase an Annuity, When they retire, since each select the life income option, which will receive the larger monthly annuity payment/
jackspayments will be larger
which of the following is NOT true regarding policy loans?
money borrowed from the cash value is taxable
after a back injury and insured is disabled for year his insurance policy carries a disability income benefit Rider which of the following benefits will he receive
monthly premium waiver and monthly income
Death benefits payable to a beneficiary under a life insurance policy are generally
not subject to income taxation by the federal government
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
other-insured rider
All of the following would be different between qualified and nonqualified retirement plans except
taxation on accumulation
Which of the following is not the consideration in a policy
the application given to a prospective insured
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
the death benefit will be smaller
What happends to policy coverage during the grace period
the insured is covered as he.she was before grace person
Which of the following is NOT a goal of risk retention?
the minimize the insureds level of liability in the event of loss
In a life settlement contract, whom does the life settlement broker represent?
the owner
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?
the producer
Which of the followuing is the best reason to purchase life insurance than annuties?
to create an estate
What is the purpose of establishing the target premium for a universal life policy?
to prevent the policy in force
All fo the following are true regarding the convertibility option under a term life polciy except
upon conversion the death benefit of the permanent policy wil reduce by 50%
What is the latest point that a Buyer's Guide can be issued?
when the applicant turns in the application
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant
with the policy
A Surplus lines agent or broker may be required to supply a bond no greater than what amount?
$100,000
If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to
$1000
The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place?
10 days after the notice was delivered to the policyholder
All of the following are true of the federal tax advantage of a qualified plan except
At distribution, all amounts received by the employee are tax free
An Individual was involved in a head-on collision while driving home one day. His injuries were not serious and he recovered, However, he decided that in order to never be involved in a another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe?
Avoidance
To legally transact insurnace in this state, an insurer must obtain which of the following?
Certificate of Insurance
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of?
Coercion
A producer who fails to segregate premium monies from his own personal funds is guilty of
Commingling
If an insurer develops a new policy form, which authorities must approve it?
Commissioner
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable the contract is
Conditional
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. What insurance principle has the insurer violated?
Consideration
When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?
Distributions are taxable
What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences?
Section 11035 Policy Exchange
What type of whole life insurance policy generates immediate cash value?
Single premium
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium is waved if he purchases an insurance policy today
Which of the following in an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchases the insurance policy today
Which of the following may not be included in an insurance company's advertisement?
That its policies are covered by a state Insurance Security Fund
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive