Life Insurance Exam
The death protection component of Universal Life Insurance is always a. Decreasing Term b. Annually Renewable Term c. Whole Life d. Adjustable Life
b. Annually Renewable Term
According to the Facility of Payment Clause, if the insured person under a life insurance policy dies and no beneficiary is stated, what is the maximum amount that another person (not stated in the policy) can receive for the insured's funeral expenses? a. $1,000 b. $2,500 c. $5,000 d. Full funeral costs
a. $1,000
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a. The policy is owned by the company b. Any type of insurance policy may be used c. The employer pays a bonus to a selected employee to fund the policy d. It is considered a nonqualified employee benefit
a. The policy is owned by the company
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a. As of the application date b. As of the policy delivery date c. As of the first of the month after the policy issue d. As of the policy issue date
a. As of the application date
After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within a. 30 days b. 40 days c. 15 days d. 20 days
20 days
The Interstate Insurance Product Regulation Compact is a contract between a. Reciprocal states b. Insurers and insureds c. Member states d. Commissioners of Insurance in different states
c. Member states
A resident agent must pay a biennial regulation fee of a. $35 b. $50 c. $70 d. $100
a. $35
Your client uses $50,000 in inheritance money to purchase a single premium immediate annuity. How soon can he begin receiving income payments? a. No later than 1 year from the time of purchase b. No sooner than 6 months from the time of purchase c. At age 65 d. After 2 years
a. No later than 1 year from the time of purchase
In Wisconsin, producers are permitted to share or split commissions, providing that a. There is a written agreement between the producers b. Both are properly licensed for the line of insurance c. The insured knows and agrees to the arrangement d. The insurance department knows of the arrangement.
b. Both are properly licensed for the line of insurance
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified? a. 30 b. 10 c. 15 d. 20
c. 15
What is the minimum age to apply for insurance license in Wisconsin? a. 21 b. 25 c. 18 d. 19
c. 18
The Commissioner issues an order without holding a hearing. The person aggrieved by this order demands a hearing shortly after receiving the order. The hearing must be held within a maximum of how many days? a. 10 b. 30 c. 60 d. 90
c. 60
A tornado that destroys property would be an example of which or the following? a. loss b. A physical hazard c. A peril d. A pure risk
c. A peril
An intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years? a. 12 b. 20 c. 22 d. 24
d. 24
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a. 7 days b. 10 days c. 3 days d. 5 days
d. 5 days
The Commissioner is required to examine every. domestic insurer and every licensed rate service organization every a. 1 year b. 2 years c. 3 years d. 5 years
d. 5 years
Which of the following is a statement made in an insurance application by the insured that is the absolute truth? a. Oath b. Claim c. Representation d. Warranty
d. Warranty
A person that markets insurance but does not include an insurer is called a a. Firm b. Broker c. Solicitor d. Conglomerate
a. Firm
Which two terms are associated directly with the premium? a. Fixed or variable b. Term or permanent c. Renewable or convertible d. Level or flexible
d. Level or flexible
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a. Automatic premium loan b. Extended term c. Reinstatement d. Reduced paid-up option
a. Automatic premium loan
What type of an interest rate is guaranteed in universal life policies? a. Contract interest rate b. Nominal interest rate c. Adjustable interest rate d. Current interest rate
a. Contract interest rate
Which of the following is NOT fundable by annuities? a. Death benefits b. Cash accumulation for any reason c. A person's retirement d. Estate liquidation
a. Death benefits
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a. Guaranteed insurability option b. Dividend options c. Guaranteed renewable option d. Nonforfeiture options
a. Guaranteed insurability option
If a retirement plan or annuity is "qualified," this means a. It is approved by the IRS b. It has a penalty for early withdrawal c. It accepts after-tax contribution d. It is non-cancellable
a. It is approved by the IRS
Which of the following is NOT true regarding a nonqualified retirement plan? a. It needs IRS approval b. Contributions are not currently tax deductible 3. It can discriminate in benefits and selecting participants 4. Earnings grow tax deferred
a. It needs IRS approval
Which of the following is NOT true regarding the accumulation period of an annuity? a. It would not occur in a deferred annuity b. It is the period during which the annuity payments earn interest c. It is the period over which the owner makes payments into an annuity d. It is also known as the pay-in period
a. It would not occur in a deferred annuity
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? a. Limited pay whole life b. Interest-sensitive whole life c. Life annuity with period certain d. Increasing term
a. Limited pay whole life
Which of the following has the right to transfer ownership of a life insurance policy to another person? a. Policyowner b. All insureds under the policy c. Government d. Insurer
a. Policyowner
Who may contribute to a Keogh (HR-10) plan? a. Self-employed plumber b. Manager of a store c. Corporate executive d. Partner with at least 5% ownership
a. Self-employed plumber
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur? a. The interest will continue to accumulate tax deferred b. The interest will become immediately taxable c. The premiums will increase d. The premiums will decrease
a. The interest will continue to accumulate tax deferred
All of the following are true of key person insurance EXCEPT a. The plan is funded by permanent insurance only b. There is no limitation on the number of key employee plans in force at any one time c. The employer is the owner, payor and beneficiary of the policy d. The key employee is the insured
a. The plan is funded by permanent insurance only
Which of the following is NOT true of life settlements? a. The seller must be terminally ill b. They could be used for a key person coverage c. They could be sold for an amount greater than the current cash value d. They involve insurance policies with large face amounts
a. The seller must be terminally ill
Which of the following types of policies allows the policy owner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? a. Universal life b. Flexible life c. Variable life d. Adjustable life
a. Universal life
In forming an insurance contract, when does acceptance usually occur? a. When an insurer's underwriter approves coverage b. When an insurer delivers the policy c. When an insurer receives an application d. When an insured submits an application
a. When an insurer's underwriter approves coverage
An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders? a. 2% b. 2.5% c. 3% d. Whatever interest rate the company deems appropriate
b. 2.5%
The Commissioner issued an order without holding a hearing. The person aggrieved by this order sent a demand for a hearing 20 days ago. The hearing must be held within the next a. 10 days b. 40 days c. 60 days d. 90 days
b. 40 days
Which of the following types of agent authority is also called "perceived authority"? a. Fiduciary b Apparent c. Express d. Implied
b. Apparent
Which of the following is TRUE of level term insurance? a. The policy offers nonforfeiture values b. It is temporary protection c. The premium will increase or decrease based on current interest rates d. The policy endows at age 100
b. It is temporary protection
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 a. Joint life annuity b. Life income with period certain c. Life income with refund d. Joint and survivorship
b. Life income with period certain
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a. Option A b. Option B c. Corridor option d. Variable option
b. Option B
Which of the following is NOT true about a joint and survivor annuity benefit option? a. The surviving annuitant may receive reduced payments b. Payments stop after the first death among the annuitants c. A period certain option may be included d. This option guarantees income for two or more recipients
b. Payments stop after the first death among the annuitants
Annuities differ from life insurance in all of the following ways EXCEPT a. They can be used in a qualified retirement plan b. The annuitant must be living to collect c. They are purchased with premiums d. There is no stated amount of death benefit
b. The annuitant must be living to collect
An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE? a. The application will be voided b. The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy c. The premium would be returned to the insured's estate because the policy was not issued d. The death claim will be rejected
b. The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums b. The insured's premiums will be waived until she is 21 c. The premiums will become tax deductible until the insured's 18th birthday d. Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected
b. The insured's premiums will be waived until she is 21
Which of the following policies can be described as a flexible premium adjustable life policy? a. Credit Life b. Universal Life c. Whole Life d. Term Life
b. Universal Life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a. Straight whole life b. Universal life c. Variable whole life d. Decreasing term
b. Universal life
Life insurance policy illustration rules apply to which of the following types of policies? a. Life insurance with a face amount of less than $10,000 b. Whole life insurance c. Variable life insurance d. Individual annuity contracts
b. Whole life insurance
Which of the following would NOT be a violation of state insurance regulations? a. Agent A uses her license to write only insurance for herself and her immediate family b. Agent B charges his clients a consulting fee, in addition to the premium for placing a policy c. Agent C uses her license to write only business other than controlled d. Agent D collects premiums due on policies and deposits the funds in his own personal account
c. Agent C uses her license to write only business other than controlled
When must insurable interest exist in a life insurance policy? a. When there is a change of the beneficiary b. At the time of loss c. At the time of application d. At the time of policy delivery
c. At the time of application
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a a. Decreasing Term Policy b. Whole Life Policy c. Convertible Term Policy d. Renewable Term Policy
c. Convertible Term Policy
Which of the following changes does NOT need to be reported to the Commissioner within 30 days? a. Management powers in the business entity b.From nonresident to resident status c. Each commission paid to a licensee who has held a license for less than 1 year d. The principal officers of a corporation licensed as intermediaries
c. Each commission paid to a licensee who has held a license for less than 1 year
Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach? a. Mortgages b. Expenses c. Estimated longevity d. Outstanding debt
c. Estimated longevity
In a direct transfer, how is money transferred from one retirement plan to a traditional IRA? a. From the participant to the new plan b. From the original plan to the original custodian c. From trustee to trustee d. From trustee to the participant
c. From trustee to trustee
Who does the Interstate Insurance Product Regulation Compact serve? a. Commissioner b. NAIC c. Insurers d. Insureds
c. Insurers
An illustration used to sell a life insurance policy must be labeled as a. Example Illustration b. Illustrations do not need labels c. Life Insurance Illustration d. General Insurance Illustration
c. Life Insurance Illustration
Which of the following settlement options in life insurance is known as straight life? a. Life with period certain b. Fixed amount c. Life income d. Single life
c. Life income
When does an agent's license expire? a. December 31 every other year after the license is obtained b. On the last day of the month of the agent's birth every year c. On the last day of the month of the agent's birth every other year d. December 31 every odd-numbered year
c. On the last day of the month of the agent's birth every other year
During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal? (Choose from the following options) a. Both interest and principal are taxed; no other penalties are imposed b. Neither interest nor principal is taxed, but penalties may be imposed c. Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½ d. Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½
c. Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½
An agent's advertisements for life insurance must be approved by a. The Governor b. The agent c. The agent's company d. The Commissioner
c. The agent's company
Which of the following is NOT the consideration in a policy? a. The premium amount paid at the time of application b. The promise to pay covered losses c. The application given to a prospective insured d. Something of value exchanged between parties
c. The application given to a prospective insured
Life settlements sold in Wisconsin must allow for the rescission of the contract within a. 10 days b. 15 days c. 20 days d. 30 days
d. 30 days
When replacing a policy, an insurer must maintain a file containing copies of all statements for a. 10 years. b. As long as the insurer remains in business c. 3 years d. 5 years
d. 5 years
What is the waiting period on a Waiver of Premium rider in life insurance policies? a. 30 days b. 3 months c. 5 months d. 6 months
d. 6 months
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a. Good health b. Adhesion c. Conditional d. Aleatory
d. Aleatory
Which of the following is TRUE about a class designation? a. Beneficiaries must be part of the insured's immediate family b. It is not allowed. c. It determines the succession of beneficiaries d. Beneficiaries are not identified by name
d. Beneficiaries are not identified by name
If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed an act of a. Misrepresentation b. Defamation c. Coercion d. Churning
d. Churning
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 insureds by 10% over the next two years. What term best describes this act? a. Defamation b. Unfair discrimination c. Errors and omissions d. Fraud
d. Fraud
In insurance transactions, fiduciary responsibility means a. Maintaining a good credit record b. Being liable with respect to payment of claims c. Commingling premiums with agent's personal funds d. Handling insurer funds in a trust capacity
d. Handling insurer funds in a trust capacity
Which of the following is the basis for a claim against an insurance policy? a. Materia change b. Hazard c. Misrepresentation d. Loss
d. Loss
Which of the following is FALSE regarding the life insurance replacement rules? a. Replacement policies must have a 30-day free look b. The existing insurer must be notified of the proposed replacement transaction within 5 business days of receipt of the application c. The replacing insurer must verify that all required forms are completed and received with the application d. Replacement forms must be kept on file for 7 years
d. Replacement forms must be kept on file for 7 years
What happens to the face amount of a whole life policy if the insured reaches the age of 100? a. It is paid to the insured's estate and the policy is terminated b. It is paid to the beneficiary in full c. The cash value and the face amount are paid to the insured d. The face amount is paid to the insured
d. The face amount is paid to the insured
An insurer refuses to renew a policy written by an intermediary whose contract has been terminated. This is allowed if a. The intermediary is the subject of an investigation by the Commissioner b. The policy has been in effect for 5 years or more c. The intermediary has retired d. The notice contains an offer to renew the policy by written request
d. The notice contains an offer to renew the policy by written request
All of the following are true regarding the waiver of cost of insurance rider EXCEPT a. The rider waives insurance costs in the event the insured becomes disabled b. The rider is only applicable to universal life policies c. The rider cannot waive the cost of premiums that accumulate cash value d. The rider expires when the insured reaches age 60
d. The rider expires when the insured reaches age 60
When would a 20-pay whole life policy endow? a. At the insured's age 65 b. After 20 payments c. In 20 years d. When the insured reaches age 100
d. When the insured reaches age 100
The Commissioner 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 a. $0 b. $5,000 c. $10,000 d. $50.000
a. $0
Which of the following is NOT an allowable 1035 exchange? a. A whole life insurance policy is exchanged for a term insurance policy b. A whole life insurance policy is exchanged for a Universal life insurance policy c. An annuity is exchanged for another annuity d. A life insurance policy is exchanged for an annuity
a. A whole life insurance policy is exchanged for a term insurance policy
What is the purpose of a conditional receipt? a. It is intended to provide coverage on a date prior to the policy issue b. It guarantees that a policy will be issued in the amount applied for c. It serves as proof that the applicant has been determined insurable d. It is given only to applicants who fully prepay the premium
a. It is intended to provide coverage on a date prior to the policy issue
What is effect of negotiations for a contract? a. The principle of consideration on the part of the insured b. An unfair practice of coercion c. The time when a statement made by an insured can affect the insurer's obligations d. The period of time during which the policy may be returned for a full refund
c. The time when a statement made by an insured can affect the insurer's obligations
How many days after passing their state examination does an applicant have to apply for a license? a. 30 days b. 60 days c. 90 days d. 180 days
d. 180 days
How long must a life insurance policy be in force before the owner can enter into a viatical settlement contract? a. 90 days b. 6 months c. 1 year d. 2 years
d. 2 years
A claim is not considered overdue if NOT paid within how many days after the insurer receives written notice? a. 30 days b. 60 days c. 90 days d. 180 days
a. 30 days
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a. An offer of employment b. Stocks, securities, or bonds c. An offer to share in commissions generated by sale d. Dividends from a mutual insurer
d. Dividends from a mutual insurer
An insurer can refuse, cancel or deny insurance coverage to a class of risks based on which of the following? a. Moral character b. Physical condition or developmental disability c. Sexual preference d. None of the above
d. None of the above
The causes of loss insured against in an insurance policy are known as a. Perils b. Losses c. Risks d. Hazards
a. Perils
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 of up to a. $3,000 b. $5,000 c. $1,500 d. $2,000
b. $5,000
The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place? a. 10 days after the decision was made b. 10 days after the notice was delivered to the policyholder c. 10 days after the notice is sent out to the policyholder d. Immediately
b. 10 days after the notice was delivered to the policyholder
Any person who violates an insurance statute or rule of Wisconsin can be imprisoned for up to how many years? a. 2 b. 3.5 c. 4.5 d. 5
b. 3.5
Producers are required to comply with strict regulations when advising senior consumers about annuities. Which of the following would be considered a senior consumer? a. An person qualified for Medicare b. Any person age 65 or older c. Any person age 60 or older d. Any person qualified for Social Security
b. Any person age 65 or older
The risk of loss may be classified as a. High risk and low risk b. Pure risk and speculative risk c. Certain risk and uncertain risk d. Named risk and un-named risk
b. Pure risk and speculative risk
If reasonably possible, a notice of proof of loss claim must be provided to the insurer within what period of time after the time required by the policy? a. 6 months b. 9 months c. 12 months d. 3 months
c. 12 months
When an insurer is given an order of liquidation, which of the following will protect the insureds' unpaid claims? a. The Wisconsin Insurers Association b. A reinsurance company c. The Wisconsin Insurance Security Fund d. The office of the Commissioner of Insurance
c. The Wisconsin Insurance Security Fund
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a. They provide information about a customer's character and reputation b. The customer has no knowledge of this action c. The consumer's associates, friends, and neighbors provide the report's data d. They provide additional information from an outside source about a particular risk
c. The consumer's associates, friends, and neighbors provide the report's data
A Straight Life policy has what type of premium? a. An increasing annual premium for the life of the insured b. A decreasing annual premium for the life of the insured c. A variable annual premium for the life of the insured d. A level annual premium for the life of the insured
d. A level annual premium for the life of the insured
An intermediary's license remains in effect for how long? a. 1 year b. 2 years c. 3 years d. Indefinitely
d. Indefinitely
The Commissioner conducts an examination of a domestic insurer and believes that the costs of examination places an unreasonable financial burden on the insurer. Which of the following will happen? a. The federal government will absorb the full cost b. The federal government will absorb part of the cost, and the state government will absorb the rest of the cost c. The costs will be reduced to the amount that the examinee can reasonable pat; the rest will be paid by the federal government d. The Commissioner's office may pay all or part of the costs
d. The Commissioner's office may pay all or part of the costs
The Commissioner issues an order and the person who is the object of the order demands a hearing within 30 days, within how many days must the hearing be held? a. 60 b. 30 c. 90 d. 120
a. 60
If a company has a Simplified Employee Pension plan, what type of plan is it? a. A qualified plan for a small business b. The same as a 401(k) plan c. The same as an IRA, with the same contribution limits d. An undefined contribution plan for large businesses
a. A qualified plan for a small business
An intermediary must notify the Commissioner of a change of residence address within how many days of the change? a. 20 b. 30 c. 5 d. 10
b. 30
When the appointment of an individual agent is terminated, the insurer must notify the Office of the Commissioner with appropriate forms within how many days after the termination date? a. 20 b. 30 c. 10 d. 15
b. 30
What does "level" refer to in level term insurance a. Cash value b. Interest rate c. Face amount d. Premium
c. Face amount
The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a. The death benefit can be increased only when the policy has developed a cash value b. The death benefit can be increased only by exchanging the existing policy for a new one c. The death benefit can be increased by providing evidence of insurability d. The death benefit cannot be increased
c. The death benefit an be increased by providing evidence of insurability
In insurance transactions, fiduciary responsibility means a. Handling insurer funds in a trust capacity b. Maintaining a good credit record c. Being liable with respect to payment of claims d. Commingling premiums with agent's personal funds
a. Handling insurer funds in a trust capacity
State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT a. Inviting prospective clients to the grand opening of the company's new office b. Issuing or delivering insurance company stock in return for purchasing insurance c. Promising returns and profits from the purchase of insurance d. Offering benefit certificates or securities in return for purchasing insurance
a. Inviting prospective clients to the grand opening of the company's new office
Which of the following best describes annually renewable term insurance? a. It is level term insurance b. It requires proof of insurability at each renewal c. Neither the premium nor the death benefit is affected by the insured's age d. It provides an annually increasing death benefit
a. It is level term insurance
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a. Level term b. Term to specified age c. Ordinary life policy d. Limited pay whole life
a. Level term
All of the following are true regarding rebates EXCEPT a. Rebates are allowed if it is in the best interest of the client b. Rebates are only allowed if specifically stated in the policy c. Rebating can be anything of monetary value given as an inducement to purchase insurance d. Dividends are not considered to be rebates
a. Rebates are allowed if it is in the best interest of the client
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a. Telling a client that his first premium will be waived if he purchases the insurance policy today b. Inducing the insured to drop a policy in favor of another one when it is not the insured's best interest c. Charging a client a higher premium for the same policy as another client in the same insuring class d. Making deceptive statements about a competitor
a. Telling a client that his first premium will be waived if he purchases the insurance policy today
Which of the following statements regarding deferred compensation funds is INCORRECT? a. They are usually qualified plans b. They can be established by employers c. They can be made with cash deposits to an annuity d. They generally provide additional retirement benefits.
a. They are usually qualified plans
A tax-sheltered annuity is a special tax-favored retirement plan available to a. Certain groups depending on factors such as race, gender, and age b. Certain groups of employees only c. Anyone d. Certain age groups only
b. Certain groups of employees only
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as a. Defamation b. Coercion c. Rebating D. Misleading advertising
b. Coercion
Which of the following statements is an accurate comparison between private and government insurers? a. Private insurers provide insurance in areas where the government will not b. Private insurers may be authorized to transact insurance by state insurance departments c. Insurance provided by the government is called federal insurance d. Private insurers offer fewer lines of insurance than government insurers
b. Private insurers may be authorized to transact insurance by state insurance departments
Which of the following policies would be classified as a traditional level premium contract? a. Variable Universal Life b. Straight Life c. Adjustable Life d. Universal Life
b. Straight life
If a policy is marketed with an illustration who must sign the illustration? a. The agent and the Commissioner b. The applicant and the agent c. Only the agent d. Only the applicant
b. The applicant and the agent
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a. The customer has no knowledge of this action b. The customer's associates, friends, and neighbors provide the report's data c. They provide additional information from an outside source about a particular risk d. They provide information about a customer's character and reputation
b. The customer's associates, friends, and neighbors provide the report's data
Which of the following are generally NOT considered when underwriting group insurance? a. The size of the group b. The insureds' medical history c. The nature of the group d. The group's past claim experience
b. 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? a. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one b. The insurer will pay the full death benefit from the group policy to the beneficiary c. The insurer will pay a reduced death benefit to the beneficiary d. The insurer will pay the death benefit minus one month's premium
b. 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 a. The policyholder has the right to withdraw the accumulations at any time. b. The interest is not taxable since it remains inside the insurance policy. c. The annual dividend is retained by the company. d. The interest is credited at a rate specified by the policy.
b. The interest is not taxable since it remains inside the insurance policy
Which of the following persons is NOT required to complete CE? a. A property insurance intermediary with 40 years of continuous licensure b. Any licensee over 65 with more than 25 years of continuous licensure c. A limited lines intermediary with 40 years of continuous licensure d. A life insurance intermediary with 18 years of continuous licensure
c. A limited lines intermediary with 40 years of continuous licensure
Which of the following would not be a violation of state insurance regulations? a. Agent A uses her license to write only insurance for herself and her immediate family b. Agent B charges his clients a consulting fee, in addition to the premium for placing a policy c. Agent C uses her license to write only business other than controlled d. Agent D collects premiums due on policies and deposits the funds in his own personal account
c. Agent C uses her license to write only business other than controlled
Which nonforfeiture option has the highest amount of insurance protection? a. Decreasing Term b. Reduced Paid-up c. Extended Term d. Conversion
c. Extended Term
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? a. Those who have no history of claims b. Those who have been insured under the plan for at least 5 years c. Those who have worked in the company for at least 3 years d. Those who have dependents
b. Those who have been insured under the plan for at least 5 years
What is the purpose of establishing the target premium for a universal life policy? a. To cover all policy expenses b. To keep the policy in force c. To accumulate cash value faster d. To pay up the policy faster
b. To keep the policy in force
Which of the following best describes fixed-period settlement option? a. The death benefit must be paid out in a lump sum within a certain time period b. Income is guaranteed for the life of the beneficiary c. Both the principal and interest will be liquidated over a selected period of time d. Only the principal amount will be paid out within a specified period of time
c. Both the principal and interest will be liquidated over a selected period of time
All of the following are CORRECT regarding temporary licenses EXCEPT a. The Commissioner may limit the authority of a temporary license b. The Commissioner may revoke temporary licenses if it is the public's interest c. Examinations are never required for the issuance of a temporary license d. They are granted to representatives of licensed intermediaries who cannot currently transact business
c. Examinations are never required for the issuance of a temporary license
All of the following violations may result in an agent's imprisonment EXCEPT a. 1. Knowingly obtaining information about a consumer under false pretenses b. Engaging in the business of insurance after being convicted of breach of trust c. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction d. Embezzling funds from the insurer
c. Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
The automatic premium loan provision is activated at the end of the a. Elimination period b. Policy period c. Grace period d. Free-look period
c. Grace period
An agent who includes a statement or omits a statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed has committed a. Twisting b. Coercion c. Misrepresentation d. Defamation
c. Misrepresentation
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise What dividend option could she use? a. Reduction of premium b. Accumulation at interest c. Paid-up option d. One-year term
c. Paid-up option
All of the following are characteristics of group life insurance EXCEPT a. Individuals covered under the policy receive a certificate of insurance b. Certificate holders may convert coverage to an individual policy without evidence of insurability c. Premiums are determined by the age, sex, and occupation of each individual certificate holder d. Amount of coverage is determined according to nondiscriminatory rules
c. Premiums are determined by the age, sex, and occupation of each individual certificate holder
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policy owner should have her husband named as the a. Contingent beneficiary b. Irrevocable beneficiary c. Revocable beneficiary d. Secondary beneficiary
c. Revocable beneficiary
All of the following are considered unfair trade practices in the business of insurance EXCEPT a. Rebating b. Defamation c. Sharing commissions d. Boycott
c. Sharing commissions
Which of the following insurers are owned by stockholders? a. Reciprocal b. Fraternal c. Stock d. Mutual
c. Stock
What term is used for replacing insurance policies for the sole purpose of making commissions? a. Misrepresentation b. Replacement c. Coercion d. Churning
d. Churning
What happens to policy coverage during the grace period? a. The coverage can be effective retroactively once the past-due premiums are paid b. The insured is covered as he/she was before the grace period c. The insured is covered partially, compared to the time before the grace period d. The insured is not covered
b. The insured is covered as he/she was before the grace period
Life income joint and survivor settlement option guarantees a. Payout of the entire death benefit. b. Equal payments to all recipients. c. Income for 2 or more recipients until they die. d. Payment of interest on death proceeds.
c. Income for 2 or more recipients until they die
Which of the following is true regarding state regulations for recorded maintenance? a. Any records except for checks may be maintained electronically b. Insurer's records must be maintained both electronically and in paper form c. Insurer's records may be maintained electronically d. Insurer's records must be maintained as hard copies of original records
c. Insurer's records may be maintained electronically
All of the following are Nonforfeiture options EXCEPT a. Extended term b. Reduced paid-up c. Interest only d. Cash surrender
c. Interest only
The death benefit under the Universal Life Option B a. Gradually increases each year by the amount that the cash value increases b. Decreased by the amount that the cash value increases c. Increases for the first few years of the policy, and then levels off d. Remains level
a. Gradually increases each year by the amount that the cash value increases
The maximum penalty that may be assessed to a person for a willful violation of the Insurance Code of this state is a. $3,000 b. $10,000 c. $50,000 d. $100,000
b. $10,000
The insurer must maintain copies of all signed illustrations for a minimum of how many years after the policy is no longer in force? a. 1 b. 3 c. 5 d. 10
b. 3
Which of the following is the use of false, misleading, or deceptive statements to describe the terms or benefits of any policy? a. Fraudulent disclosure b. Misrepresentation c. False advertisement d. Defamation
b. Misrepresentation
Life insurance death proceeds are a. Generally not taxed as income b. Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income c. Taxed as a capital gain d. Taxed as ordinary income
a. Generally not taxed as income
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a. Signed waiver of premium b. Statement of good health c. Payment of premium d. Delivery receipt
a. Signed waiver of premium
If a life insurance policy has an irrevocable beneficiary designation a. The beneficiary can only be changed with written permission of the beneficiary b. The beneficiary cannot be changed for at least 2 years c. The owner can always change the beneficiary at will d. The beneficiary cannot be changed
a. The beneficiary can only be changed with written permission of the beneficiary
All of the following are advantages of a qualified retirement plan EXCEPT a. The income at retirement is tax free b. The contribution is deductible to the employer c. The contribution is not taxable to the employee when made d. The funds grow tax deferred
a. The income at retirement is tax free
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to a. The insured's estate b. Probate c. The state d. The beneficiary's estate
a. The insured's estate
All of the following are true regarding the guaranteed insurability rider EXCEPT a. This rider is available to all insureds with no additional premium b. The insured may purchase additional coverage at the attained age c. The insured may purchase additional insurance up to the amount specified in the base policy d. It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events
a. This rider is available to all insureds with no additional premium
An intermediary failed to complete the CE requirements by the due date 14 months ago. What must they do to reinstate their license? a. Complete the CE requirements as usual b. File an extension with the Commissioner c. Pay a $1,000 fine in addition to completing the CE requirements d. Complete a prelicensing education course and pass the state exam
d. Complete a prelicensing education course and pass the state exam
When the Commissioner examines an insurer, who pays the examination costs? a. The state government b. Examinees c. Department of Insurance d. The federal government
b. Examinees
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a. Until the policyowner's age 100, when the policy matures b. For 20 years or until death, whichever occurs first c. Until the policyowner reaches age 65 d. For at least 20 years.
b. For 20 years or until death, whichever occurs first
Which of the following statements is TRUE concerning the Accidental Death Rider? a. It is only available in group insurance b. It will pay double or triple the face amount c. It is also known as a triple indemnity rider d. This rider is only available to insureds over the age of 65
b. It will pay double or triple the face amount
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? a. Dividend Accumulation option b. Paid-up option c. Accumulation at Interest d. Paid-up additions
b. Paid-up options
All of the following are correct regarding temporary licenses EXCEPT a. They are granted to representatives of licensed intermediaries who cannot currently transact business b. The Commissioner may limit the authority of a temporary license c. The commissioner may revoke temporary licenses if it is in the public's interest d. Examinations are never required for the issuance of a temporary license
d. Examinations are never required for the issuance of a temporary license
Which of the following best describes annually renewable term insurance? a. Neither the premium nor the death benefit is affected b the insured's age b. It provides an annually increasing death benefit c. It is level term insurance d. Requires proof or insurability at each renewal
c. It is level term insurance
Jack and Jill are twins. 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? a. Their payments will be based upon their health condition at the time payments begin b. Because they are the same age, the payments will be the same c. Jack's payment will be larger d. Jill's payment will be larger
c. Jack's payment will be larger (because Jill's life expectancy is greater, her payments will be less)
A policy owner neglects to pay his life insurance premium on time. He dies ten days later. Which of the following is true? a. The death benefit will not be paid c. The death benefit will be paid, minus the premiums and a penalty d. The death benefit will be paid in full
c. The death benefit will be paid, minus the premium
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? a. False advertising b. Rebating c. Twisting d. Switching
c. Twisting
If reasonably possible, a notice of proof of loss claim must be provided to the insurer within what period of time after the time required by the policy? a. 3 months b. 6 months c. 9 months d. 12 months
d. 12 months
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time. the policy premium will be a. Determined by the health of the insured b. Based on the issue age of the insured c. Discounted d. Adjusted to the insured's age at the time of renewal
d. Adjusted to the insureds age at the time of renewal
In an annuity, the accumulated money is converted into a stream of income during which time period? a. Payment period b. Amortization period c. Conversion period d. Annuitization period
d. Annuitization period
What describes a ledger or proposal used to show both guaranteed and non-guaranteed elements in the policy? a. Ledger proposal b. Outline of coverage c. Portioning illustration d. Basic illustration
d. Basic illustration
All of the following actions can be described as twisting EXCEPT a. Misrepresenting the terms and conditions of the existing policy to make the new one more attractive b. Embellishing the terms of the proposed policy in order to convince the insured to switch c. Making an incomplete comparison between the existing and proposed policies d. Explaining to client the advantages of permanent insurance over term and suggesting changing policies
d. Explaining to client the advantages of permanent insurance over term and suggesting changing policies
During partial withdrawal from a universal life policy, which portion will be taxed? a. Cash value b. Principal c. Loan d. Interest
d. Interest
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? a. She will still be covered under the group plan, but will have to pay an individual policy premium b. She can only convert her coverage without proof of insurability if she has the master policy c. She must apply for a new policy, which requires her to provide proof of insurability d. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
d. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
Which of the following would be allowed in advertising of a life insurance policy? a. Stating that the insurer is sponsored by the government b. Stating that the insurer's accounts are protected by the Guaranty Association c. Stating that non-guaranteed elements are guaranteed d. Stating that the person giving an endorsement will be paid
d. Stating that the person giving an endorsement will be paid
The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? a. The owner's estate will receive the money paid into the annuity. b. The insurance company will retain the cash value and pay back the premiums to the owner's estate c. The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary d. The beneficiary will receive the greater of the money paid into the annuity or the cash value
d. The beneficiary will receive the greater of the money paid into the annuity or the cash value
In a life settlement contract, whom does the life settlement broker represent? a. The insurer b. The beneficiary c. The life settlement intermediary d. The owner
d. The owner
Which of the following is true regarding a market value adjusted annuity? a. The insurer bears all the market risk of changing interest rates b. There are no penalties for a premature surrender of the annuity c. It provides a level benefit payment d. The owner is guaranteed a fixed interest rate for a specific period of time
d. The owner is guaranteed a fixed interest rate for a specific period of time
In life insurance underwriting, all of the following are true regarding HIV testing EXCEPT a. The reporting of test results must include the name and address of the reporting company b. The applicant must be notified that HIV testing will be done c. The proper protocol must be followed in performing the test d. The person may be denied coverage based solely on the presence of HIV
d. The person may be denied coverage based solely on the presence of HIV
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as a. The previous premium payments were high enough to create an excess of premium b. The policyowner cannot skip premiums without the policy lapsing c. The next month's premium is sufficient to cover both the current premium amount and the skipped amount d. The policy contains sufficient cash value to cover the cost of insurance
d. The policy contains sufficient cash value to cover the cost of insurance
