Life Insurance Quiz

In order to get a nonresident license in this state, a producer must

Apply and pay a fee to a nonresident state that reciprocates

Which policy component decreases in decreasing term insurance?

Face amount

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

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

Which of the following is called a "second-to-die" policy?

Survivorship life

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

$3,000

An insurer who frequently misses deadlines to respond to inquiries from the Division of Insurance may be fined, for each violation, as much as

$5,000

What is the maximum a producer may be fined for violating a cease and desist order?

$500

A licensee has met licensing qualifications for Life, Health, Property, and Casualty Insurance. How many separate licenses will the Department of Insurance issue?

1

The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is

A nonqualified annuity plan

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?

Paid-up option

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

An insured decides to replace his life insurance policy with one offered by a new insurer. After receiving the policy, he is unsatisfied with the provisions and decides to return it. Within how many days must he return the policy to receive a full premium refund?

30 days

Which of the following is NOT true regarding the Notice Regarding Replacement?

A copy must be sent to the existing insurer

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of Adhesion

Variable Whole Life insurance is based on what type of premium?

Level fixed

Which of the following best describes the unfair trade practice of defamation?

Making derogatory oral statements about another insurer's financial condition

To which of the following situations does the Replacement Regulation apply?

Nonrenewable coverage expiring in 8 years

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

The full death benefit

An employee is insured under her employers group life plan. If she terminates her group coverage, which of the following statements is incorrect?

The insured may choose to convert to term or permanent individual coverage

A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown up children. Assuming he never changed the beneficiary, the policy proceeds will go to

The insureds estate

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?

Withdrawals are not taxable

All of the following are considered to be misuses of fiduciary funds EXCEPT

Collecting interest on customer balances held in a producer's trust account

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

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

What type of life insurance would be used for a Return of Premium rider?

Increasing term

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy

Which of the following applicants would NOT qualify for a Keogh plan?

Someone who works 400 hours per year

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?

Guaranteed insurability option

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What should the insurer do with the application?

Return to the applicant for completion

Producers will be deemed to be using their license primarily to write controlled business if, during any 12-month period

The total premiums on controlled business exceed the total premiums on all other business written

Within how many days are insurers required to notify the Commissioner that a producers employment has been terminated?

30 days

Under what circumstance will the proceeds payable under an employee's group life be taken to pay to a creditor of the employee?

When the creditor is named as the beneficiary of the proceeds by the insured employee

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income

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?

As of the application date

How often must the Commissioner examine all insurers to guard against insurance company insolvency?

At least once every 5 years

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

mutual