Life Insurance Certification IL

On March 1 C, who holds an Illinois non-resident license moves from Idaho to Iowa. By which date must C notify the Illinois Director of Insurance about this move? A: By March 31 B: C does not have to notify Illinois since he was a non-resident license holder. C: By May 1 D: By March 16

A: By March 31 If a licensee moves from one state to another, must notify Illinois within 30 days of the move.

K has a participating policy and has selected a dividend option that If K were to die this year it would pay more death benefit than the Face Value, but expire if K is alive at the end of the year. K selected: A: One-Year Term Option B: Cash C: Premium Application D: Acceleration of Endowment

A: One-Year Term Option

If the insurer finds a Material Misrepresentation during the underwriting process: A: The insurer can refuse to issue any contract that would have been made B: The insurer must give the insured a second chance to tell the truth C: The insurer will factor fraud into the premium cost D: The insure must issue coverage because it is the agent's job to guarantee the insured tell the truth

A: The insurer can refuse to issue any contract that would have been made

Which of the following policies would be most likely to have a Return of Premium rider? A: Whole Life B: Variable Life C: Variable Universal Life D: Adjustable Life

A: WL Return of Premium Rider - is commonly added to permanent life insurance (whole life). When added to coverage, if the insured dies before a certain age (commonly before 60-65), the policy pays the death benefit plus the premiums paid to the point of death to the named beneficiary. Increasing term insurance coverage is normally used since the rider added to the permanent policy to create this effect.

Once a producer has a felony conviction entered officially against him, what action is most likely to be taken pertaining to his producer license? A: The Director can do nothing until the producer's appeals rights have been exhausted through all state and/or federal courts. B: The producer will have his license revoked. C: The producer will have his license revoked with a mandatory fine. D: Each felony is reviewed on the facts by the Director to determine whether or not license termination is warranted.

A?

What action is required of a life insurance company when a death claim is submitted? A: The carrier is required to search their records for other possible policies that may be in force and payable on the same life B: To pay all valid claims within 5 business days. C: To notify a claimant in writing with reasons if a claim has not been resolved within 60 days for the delay. D: The carrier must double the claim payment if it is erroneously denied originally

A?

Which of the following actions on the part of a producer could lead to license denial? A: The producer signed an insurance application on behalf of the applicant with the applicant's full knowledge and verbal permission to do so. B: The producer truthfully compares the benefits of one policy against those of another in an explanation to a consumer. C: A producer is more than six months late in completing continuing education requirements. D: A producer fails to inform the Director of a residential move within 30 days.

A?

Which of the following conditions would allow the insured to receive Accelerated Death Benefits? A: Terminal Illness or Injury B: Loss of Occupation C: A stubbed toe D: Cancer that is not considered to be terminal

A?

Which of the following is a requirement for qualification as an Illinois insurance producer. A: The candidate's credit score must equal 650 or better on the standard FICO scale. B: The candidate must have a high school diploma. C: The candidate must have at least a high school equivalency certificate. D: Candidates must take and pass their state exam, both part one and part two, of the line of authority for which they seek licensing.

A?

If an application is incomplete which of the following is most likely to occur? A: The policy will be approved and corrected later B: The policy will not be approved until the application is corrected C: The agent will have to pay for the policy D: The insurer will require the applicant to select a new policy

B: The policy will not be approved until the application is corrected

D bought a policy and has become terminally ill. Which of the following will allow D to sell a portion of his death benefit before he dies to help pay medical bills? A: Accelerated Benefits B: Viatical Settlement C: Accelerated Benefit Rider D: STOLI

B: Viatical Settlement

Joint Life premiums are: A: paid by each individual insured separately B: based off a joint average age C: are more expensive than if individuals had separate policies D: are inexpensive no matter what insurability of the insureds would be

B: based off a joint average age

The Director A: is elected by the people of Illinois every 2 years. B: is appointed by and serves at the pleasure of the Governor. C: is elected by the people of Illinois every 4 years. D: is appointed by the President of the United States.

B: is appointed by and serves at the pleasure of the Governor

The best way to summarize the controlled business law is that the producer A: should never sell insurance on their own life. B: must sell more insurance to strangers than they do to themselves, their spouse or to their employer. C: is not allowed to sell controlled business in any amount D: can sell as much insurance as they can to everyone but themselves.

B: must sell more insurance to strangers than they do to themselves, their spouse or to their employer. Controlled business means insurance procured or to be procured by or through the licensed person upon: His own life, person, property, or risks, or those of his spouse, or The life, person, property, or risks of his employer or his own business.

A life producer states that the company's policy is approved by the department of insurance. The producer has violated: A: Replacement Law B: Advertising Law C: Defamation D: Rebating

B?

G has just lost his business partner and going to dissolve the business. When the company was created, G purchased a policy to cover any expenses should he die while the company was still transacting business. G decided he no longer needs or wants his life insurance policy and wishes to sell it. This is known as a(an): A: Viatical Settlement B: Life Settlement C: mistake D: Stranger-Originated Life Policy

B? Life settlements are transactions when an individual, who is not terminally ill, sells his or her entire policy or a share of ownership to a third party. Life insurance is a freely transferable asset under the assignment clause in a life insurance contract, and since the policy was not purchased originally only with the intent to sell, it is not considered STOLI or IOLI. Stranger/Investor-Originated Life Insurance (STOLI/IOLI) - A FRAUDULENT practice. An insurance producer or investor will approach a potential insured (often a wealthy person) and induce him or her to apply for large amounts of life insurance. The insurer will be falsely told that the life insurance is being purchased for a legitimate purpose. However, the real purpose of the purchase is to later have the policy owner sell the policy for a profit back to the producer or investor who initiated the sale. The investor will either keep or then sell ownership to another party, hoping to profit from the death of the insured in the future. STOLI is an example of illegal human life wagering.

A certificate of insurance for a group policy: A: proves ownership of the policy B: proves that the insured has group insurance C: proves that the policyholder and insured are the same person D: proves that the insured's auto policy is in force

B? The employees are enrolled into the plan and receive a certificate of insurance, which is proof that person has coverage under the group policy. If the employer cancels the contract, then employees have no coverage.

Before the insurer pays proceeds to a beneficiary, they find that the insured misstated their age. The insurer will: A: Not pay the death benefit B: Pay the full death benefit purchased because Incontestability has expired C: Adjust the death benefit to the insured's true age and pay proceeds accordingly D: Pay the death benefit, but it will be taxable

C: Adjust the death benefit to the insured's true age and pay proceeds accordingly Misstatement of Age and Gender - If either misstatement is discovered at death, the death benefit is adjusted (NOT THE PREMIUM!) up or down to the amount it should have been had proper premiums been paid from the time of policy issuance.

All of the following is an example of an unfair practice EXCEPT: A: An applicant being denied based on military experience B: An applicant being denied based off partial blindness C: An applicant being denied for being a sky dive instructor D: An applicant being denied solely for being disabled.

C: An applicant being denied for being a sky dive instructor

Each of the following is a requirement for a Life, Health, Property and Casualty prelicensing course, EXCEPT: A: The licensing candidate must spend 7.5 hours in class per line. B: The licensing candidate must complete a 20 hour course per line. C: An exam proctored by a course provider must be successfully passed before a prelicensing course is successfully completed. D: An exam that is graded by a course provider must be passed before a prelicensing course is successfully completed.

C: An exam proctored by a course provider must be successfully passed before a prelicensing course is successfully completed.

Renewal commissions are also called A: Residual income B: Referral income C: Deferred compensation D: Repeat revenue

C: Deferred compensation

R purchased a life policy in which the agent described that the actual cash value rate or return could fluctuate depending on market performance, but still guaranteed a minimum rate or return. R purchased a(an): A: Annuity B: Variable Life C: Interest Sensitive Whole Life D: Variable Universal Life

C: Interest Sensitive Whole Life Interest Sensitive Whole Life offers a minimum guaranteed interest rate, but the rate can fluctuate depending on market performance.

An example of a conditional contract is when: A: one party is bound to pay losses B: one party is bound to pay premium C: both parties must perform certain duties D: when the insurer must pay a loss after the stop loss limit has been met

C: both parties must perform certain duties CONDITIONAL: BOTH PARTIES must perform in the policy. Performance by one party is predicated upon the satisfaction of certain conditions first being met by the other party; e.g., the insurance company will perform only if the insured has met the condition of premium payment. -Unilateral: only one party must perform

Insurable interest in a third-party ownership situation must exist at: A: the time of loss B: inception and the time of loss C: inception D: before a policy is cancelled

C: inception

All of the following are true regarding the Guaranty Association EXCEPT: A: A claimant may receive less benefits than what they had from a policy. B: The Association is comprised of All member insurers C: The Association is comprised of All member insurers and have a right to end membership while still transacting business in IL D: There is a $250,000 limit on the present value of annuity benefits.

C?

An insured has a term policy that allows them to renew coverage before it expires. The insured purchased the policy when they were healthy but since have developed many serious health conditions. Which of the following will take place? A: The insured will be able to renew regardless of insurability. B: The insured will be denied renewal. C: The insured will renew however, the policy will then be rated. D: The policy will have to be converted to a permanent policy.

C?

If a policy does not lapse at the end of the grace period because money is taken from the cash values to pay the premiums, what provision is in effect? A: Insuring Clause B: Extended Term Insurance C: Automatic Premium Loan D: Automatic Dividend Option

C?

Which of the following MAY NOT engage in the business of offering insurance advice for a fee? A: An attorney licensed to practice law who advises his client about a life insurance matter. B: A licensed insurance producer offering advice on a line of insurance for which they hold licensing authority. C: A Certified Public Accountant who solicits a client for the sale of an insurance policy. D: An actuary engaged in a consulting capacity performing incidental duties.

C? 1) An attorney licensed to practice law performing duties incidental to that position. 2) A licensed insurance producer, limited lines producer insurance representative, or temporary insurance producer offering advice on a class of insurance for which he or she is licensed. 3) Public adjusters, while acting within the scope of their license. 4) Trust officers of banks, while performing incidental duties. 5) An actuary or a certified public accountant engaged or employed in a consulting capacity, performing duties incidental to those positions.

All of the following are true about decreasing term insurance EXCEPT: A: The coverage will decline over time B: It is the least expensive term policy C: Cash Value is guaranteed D: Uniformly decreasing term death benefit goes down by the same dollar amount every year until the policy expires.

C? DECREASING - Death benefit/face amount reduces to zero over the term time. Decreasing term (the death benefit decreases over the term coverage period, but the premium charge remains constant from year to year over the entire coverage period). The face amount of insurance decreases from year to year until it reaches zero at the end of the contract period. Although the premium charge is the same year after year, the cost per thousand dollars of coverage actually increases each year since the same premium amount is paid annually for less and less death benefit. Typical coverage periods are 10, 15, 20, 25, and 30 years.

All of the following are characteristics of a TRADITIONAL IRA, EXCEPT: A: contributions can be made in cash B: contributions are tax deducted C: the withdrawals are tax free D: the IRS limits contributions per year

C? Traditional Individual Retirement Account (IRA) - is an example of a tax-qualified retirement plan and has the following key characteristics: • Available to ANY tax-paying individual who is younger than age 70½. • Contributions made to the plan in cash (checks, money orders, cash, etc.) are tax deductible and must stop by age 70½. • The 2020 limit per year per individual is $6,000 for those age 49 years old and younger, and $7,000 for those age 50 and older (also, you can't put in more than you earn). • Distributions (income) from the IRA must be taken by age 70½. • ALL WITHDRAWALS are TAXED. If younger than 59½, there is also a 10% tax penalty.

All of the following are CORRECT about replacement regulations EXCEPT: A: the purpose of replacement is to protect the insured B: information must be factual and not misleading C: the insured must receive information to make a decision in their best interest D: None of the Above

D

What is the largest dollar civil penalty that will be assessed for a single act of defamation? A: $1,000 B: $2,500 C: $5,000 D: $10,000

D: $10,000 Any statements that unfairly damage the business reputation of another company or their representatives are strictly prohibited, and the fine for guilty parties is a minimum of $200 and a maximum of $10,000.

H let their policy lapse and is now asking the company for reinstatement. Which of the following will occur? A: H may have to pay all back premiums plus interest B: H may have to prove insurability to be reinstated. C: The insurer may deny coverage due to a reasonable cause D: All of the Above

D: All of the Above

How often must accounting posting occur with a Premium Fund Trust Account? A: At least every 7 days B: At least every 10 days C: At least every 15 days D: At least every 30 days

D: At least every 30 days All accounting posting must be done in no less time than every 30 days. All books and records for a fiscal year must be maintained for at least seven years.

K has a wife, three children and two business partners. Which of the following parties do not have insurable interest in K's life? A: K's wife B: K's children C: K's business partner D: The agent K just met that wrote the policy

D: The agent K just met that wrote the policy Remember: Insurable interest is only needed at inception.

What action would be required of a producer who fails to reinstate a lapsed producer license within the statutory allowed time period? A: The person is barred from entering the insurance business for 5 years. B: The person is barred from entering the insurance business for life. C: The person would be required to take a certified prelicensing course and state exam for each line or authority sought and then to submit an application with the payment of a $180 license fee. D: The person would be required to take a certified prelicensing course and state exam for each line or authority sought and then to submit an application with the payment of a $360 license fee

D: The person would be required to take a certified prelicensing course and state exam for each line or authority sought and then to submit an application with the payment of a $360 license fee. Reinstatement (of a lapsed license) - If a producer license lapses (is not renewed on time), the producer has up until 12 months after lapse to comply and complete the 24-hour CE requirement and will have to pay a double license fee ($360.00). After 12 months from the date of lapse, the license terminates, and a person must complete a prelicensing course and pass a state exam again.

Adverse Selection would fall under which underwriting class? A: Standard Risk B: Substandard Risk C: Preferred Risk D: Uninsurable Risk

D: Uninsurable Risk Adverse selection occurs when people are placed in a pool such that the rates charged are too low relative to the risk to which the insurance company is actually exposed. Adverse selection is just another way of saying they're uninsurable b/c the risk potential is too great for the insurer.

A producer is violating the rule against controlled business if they write too much insurance business on the risks of all of the following persons, EXCEPT: A: themselves B: their spouse C: their own business D: their parents

D: their parents Controlled businessmeans insurance procured or to be procured by or through the licensed person upon: His own life, person, property, or risks, or those of his spouse, or The life, person, property, or risks of his employer or his own business.

All of the following statements are true regarding Accelerated Benefits EXCEPT: A: The department of insurance must review all policy forms. B: The insurer can require medical evidence proof of a qualifying condition. C: Accelerated Benefits can be paid in lump sum. D: The remaining death benefit can be reduced by 75% after the accelerated benefits are deducted.

D?

If a producer demands a hearing to challenge the reasonableness of a license suspension, when will the hearing take place? A: Within 20 to 30 days of the date the producer demands a hearing. B: A time to be determined by the Director with 20 days prior notice C: A time to be determined by the Director with 10 days prior notice D: The hearing takes place within 20 to 30 days from the date the Director's mailing of the hearing notification.

D?

If a worker is fully insured through social security, what is the determining factor of when they can receive retirement benefits? A: the amount of credits B: birth year C: age 62 D: Only A and B

D?

If an insurance company issues deceptive statements about its assets, this action is A: false advertising. B: an unfair trade practice. C: unfair discrimination. D: falsification.

D?

In a life insurance transaction, an offer is made when: A: the insured pays the initial premium B: when an insured applies for coverage C: when an insurer has approved the policy D: when the insured provides payment in exchange for coverage

D?

R is applying for a life policy. R decided to pay the premium at application time. Two weeks after receiving the application, R dies. The insurer is most likely to take which of the following actions? A: Deny the policy because underwriting did not finish. B: Finish underwriting as if R was alive. C: Require R's family to step in as the insured to receive coverage. D: Require R's family to pay a higher premium to have the death benefit paid.

D?

Which of the following are elements of a Viatical Settlement? A: The viator must be terminally ill and/or injured and have less than two years to live. B: Benefits are received tax free, but it is always best to consult a tax advisor. C: Viatical providers must be licensed to transact such business by state law. D: All of the Above

D?

Which of the following are required legal elements of a contract? A: Offer and Acceptance B: Consideration C: Competent Parties and Legal Purpose D: All of the Above

D?

Which of the following is true regarding a return of premium rider? A: It must be added at the time of application. B: It will increase the cost of premiums. C: It can be added on either term or permanent insurance. D: All of the Above

D?

Absolute assignment: A: Allows the policyholder to transfer partial ownership on a temporary basis. B: Changes the owner of a policy once insurable interest is proven. C: Allows the policyholder to take a loan from a term policy. D: Allows the policyholder to change the owner of a policy fully and on a permanent basis, regardless of insurance interest

D? Absolute - this means all incidents of ownership are transferred to the assignee, who now stands in the same position as did the assignor who transferred the rights (the first owner assigns the policy ownership to a new owner). This form of assignment is total and permanent.

K has a $100,000 death benefit and has become terminally ill. K decides to use his Accelerated Death Benefit option and takes 75% of his proceeds before he dies to take a trip around the world. When K dies his beneficiary will receive? A: $25,000 B: $100,000 C: $50,000 D: $0

Either A or C

N is applying for a life policy. N is in the best shape that an individual can be in and does not smoke cigarettes. Although N has been healthy her entire life, she had a sister die of cancer at age 46. N's policy will be: A: Standard Risk B: Substandard Risk C: Preferred Risk D: Uninsurable Risk

A Preferred is best w/ amazing health and family history Substandard risk means the applicant will be charged an additional premium, or be RATED (a surcharge over the standard issue rate), because he or she is in a higher risk category (can be based on health and/or occupational factors).

A producer's duty to educate the client on the product, determine their needs and evaluate cost or relative plans is called: A: Analysis and Suitability B: Whole Life C: Term Life D: None of the Above

A: Analysis and Suitability The producer's duty to help a client address all their needs is known as analysis and suitability.

If a Cease and Desist order is issued the Director must serve notice to the recipient of the order of a hearing to be held at a fixed time and place which A: may not be less than 20 or more than 30 days after the notice of hearing is served to the recipient B: must provide at least 10 days notice C: may not be less than 10 or more than 20 days after the notice of hearing is served to the recipient D: is of mutual agreement.

A: may not be less than 20 or more than 30 days after the notice of hearing is served to the recipient If a Cease and Desist order is issued, the Director must serve notice to the recipient of the order of a hearing to be held at a fixed time and place, which may not be less than 20 or more than 30 days after the notice of hearing is served to the recipient.

J and K have a survivorship life policy. J has died but K is still alive. What is paid to the beneficiary when J dies? A: The full death benefit B: 50% of the face amount C: Nothing D: 25% of the death benefit

A?

When must insurable interest exist in life insurance? A: When an application is taken B: When a beneficiary is named C: When a policy is delivered D: When an initial premium installment is paid

A?

MODIFIED ENDOWMENT CONTRACTS (MECs)

Any policy that FAILS the seven-pay test is considered an MEC.

If an insured has a policy with a Waiver of Premium rider and is disabled for a year, how many months would the life policy's premium be waived for? A: 6 Months B: 12 Months C: 9 Months D: Forever

B: 12 months If an insured was disabled for one full year, for how many months would premium be waived? The correct answer is twelve months, not six month because although only the second six months are waived, and the first six months are reimbursed.

An agent makes pejorative statements about another agent. This may be an example of A: False Advertising B: Defamation C: Misrepresentation D: Twisting

B: Defamation

Verbal defamation is known as A: Libel B: Slander C: Rumor D: Twisting

B: Slander

The insured's primary beneficiary has died before them. When the insured dies all proceeds will go to: A: The insured's estate B: The insured's contingent beneficiary if named C: The insurer will retain all proceeds D: None of the Above

B: The insured's contingent beneficiary if named

Which of the following is more of a long term strategy for funding an annuity? A: Single Premium B: Flexible Premiums C: All of the Above D: None of the Above

B? A single premium annuity is one lump-sum payment made to collect interest until the later annuitization. This single lump-sum payment can range from several thousand to millions of dollars. Flexible premiums, on the other hand, are more a pay as you go plan by which the annuity owner can decide how often and how much to pay into the annuity and when to stop if a certain desired principal is attained.

Once a producer license lapses, how long does the licensee have to seek reinstatement of the producer license? A: 90 days. B: 180 days C: 12 months D: There is no ability to reinstate a lapsed producer license

C: 12 months If a producer license lapses (is not renewed on time), the producer has up until 12 months after lapse to comply and complete the 24-hour CE requirement and will have to pay a double license fee ($360.00).

If insurance Company X place funds into a producer D's Premium Fund Trust Account on April 1 to refund to an insured, by which of the following dates must these funds be credited to the account of the insured? A: 4-Apr B: 11-Apr C: 16-Apr D: 1-May

C: 16-Apr

All of the following are considered to be advertising violations EXCEPT: A: A producer describes a policy as a savings plan B: A producer states that dividends are guaranteed C: A producer uses an approved pamphlet that the insurer issued to explain a policy D: A producer states that the policy is limited and the applicant must buy today

C: A producer uses an approved pamphlet that the insurer issued to explain a policy

The Suicide Clause is known as a(an): A: Law B: Exclusion C: Temporary Exclusion D: Rider

C: Temporary Exclusion Since suicide is covered by a life policy after a certain period of time (usually two years of issuance), it is known as a temporary exclusion. for test purposes, this is a two-year period from the policy issue date (issue date is key) permitting a company not to pay a death benefit if the cause of death is suicide. Liability to the company during this temporary exclusion period is limited to premiums paid without interest (premiums paid are refunded to the beneficiary).

Each of the following meets the purpose of Illustration regulation, EXCEPT: A: protect and educate suitable parties B: allow agents and insurers to show potential of the policy in a specified format C: allow the insurer to hide the fact that money in the future will not be worth the same value today D: to require the agent to provide an illustration at application

C: allow the insurer to hide the fact that money in the future will not be worth the same value today

K just funded a Single Premium annuity, what are his options for withdrawing the income? A: Immediate B: Deferred C: A and B D: Immediate Only

C?

Which of the following is not true regarding annuity income payments? A: The older an annuitant is the higher the income payment will be. B: The younger an annuitant is the lower the income payment will be. C: The older the annuitant is the lower the income will be. D: Life expectancy is a major factor in determining the amount of income paid at annuitization.

C? Annuities usually STOP payment upon the death of the annuitant (recipient).

All things being equal, which of the following is the least expensive mode of premium? A: Monthly B: Quarterly C: Semi-Annual D: Annual

D: Annual B/c there's less processing fees (monthly is most expensive)

An individual life insurance application must bear the name and signature of which of the following entities? A: The Director of Insurance B: An officer of the insurance company. C: The underwriter of the policy application. D: The licensee who solicited and wrote the application.

D: The licensee who solicited and wrote the application.

F wants to pay a policy off for life in one payment. F's agent warns him that by doing this he creates a MEC. What is a MEC?

Modified Endowment Contract

Which of the following are exemptions under life solicitation rule? A: Credit Life B: Annuities C: Variable Life D: All of the Above

The solicitation regulation does not apply to these policies: Credit Life Annuities Franchise life Group life insurance Variable life insurance ERISA type pension plan and welfare plans

Which of the following statements regarding a warranty is CORRECT? A: It is a failure to disclose an immaterial fact B: They are statements which are true in the opinion of the person making them C: They are statements which are supposed to be absolutely true D: They include mutuality of assent

idk - B?

If a positive HIV test result is found during underwriting all of the following parties may be notified EXCEPT: A: The MIB B: The doctor of the insured C: Underwriting D: The producer

D: The producer The form further allows the company to inform the Medical Information Bureau (MIB) and the applicant's personal physician of the positive presence of HIV in the collected and tested samples. Positive results cannot be disclosed to agents or brokers (insurance producers).