Life Insurance- Simulator Exam
If an insurer terminates a producer's appointment, the Commissioners must be notified within how many days? A. 10 B. 30 C. 60 D. 90
B. 30
An insured pays $1200 annually for her life premium. The insured applies this year's $300 worth of accumulation dividend to the next year's premium, thus reducing it to $900. What option does this describe? A. Accumulation at interest B. Cash option C. Flexible premium D. Reduction of premium
D. Reduction of premium
The LEAST expensive first-year premium is found in which of the following policies? A. Annually Renewable Term B. Increasing Term C. Decreasing Term D. Level Term
A. Annually Renewable Term
How long is the right to examine period for a new individual annuities issued in this state? A. 10 days B. 20 days C. 45 days D. 90 days
A. 10 days
The causes of loss insured against in an insurance policy are known as A. Risks B. Hazards C. Perils D. Losses
C. Perils
Which of the following is an example of the liquidity in a life insurance contract? A. The money in a saving account B. The cash value available to the policyowner C. The death benefit paid to the beneficiary D. The flexible premium
B. The cash value available to the policyowner
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) A. Keogh plan B. Roth IRA C. SEP D. 403(b)Plan(TSA)
D. 403(b)Plan(TSA)
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits. A. Principal is tax free, but interest is taxed B. The entire benefit will be received tax free C. The entire living benefit is considered taxable income D. A portion of the benefit up to a limit is tax free; the rest is taxable income
D. A portion of the benefit up to a limit is tax free; the rest is taxable income
When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by A. A paramedic or examining physician at the insurer's expense B. The agent C. A physician of the applicant's choice and at his expense D. A home office underwriter
A. A paramedic or examining physician at the insurer's expense
Why is an equity indexed annuity considered to be a fixed annuity? A. It is not tied to an index like the S&P 500 B. It has a guaranteed minimum interest rate C. It has modest investment potential D. It has a fixed rate of return
B. It has a guaranteed minimum interest rate
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A. Domestic B. Unauthorized C. Foreign D. Alien
C. Foreign
When a beneficiary receives payments consisting of both principal and interest portion, which parts are taxable as income? A. Neither principal nor interest B. Principal only C. Interest only D. Both principal and interest
C. Interest only
Which of the following policies would be classified as a traditional level premium contract? A. Universal Life B. Variable Universal Life C. Straight life D. Adjustable Life
C. Straight life
Which of the following policies would have an IRS required corridor or gap between the cashvalue and death benefit? A. Equity Indexed Universal Life B. Variable Universal Life C. Universal Life - Option A D. Universal Life - Option B
C. Universal Life - Option A
Within how many days must a producer respond to an inquiry from the Commissioner? A. 3 days B. 10 days C. 15 days D. 30 days
D. 30 days
Which of the following will NOT be an appropriate used of deferred annuity? A. Accumulating retirement funds B. Accumulating funds in an IRA C. Funding a child's college education D. Creating an estate
D. Creating an estate
The automatic premium loan provision is activated at the end of the A. Free-look period B. Elimination period C. Policy period D. Grace period
D. Grace period
All of the following are examples of risk retention EXCEPT A. Premiums B. Deductibles C. Copayments D. Self-insurance
A. Premiums
The policyowner pays for her life insurance annually. Until now, she collected a nontaxable dividend check each year. She has decided that she would rather use the dividend to help pay for her next premium. What option would allow her to do this? A. Reduction of premium B. Paid-up addition C. Accumulation at interest D. Cash Option
A. Reduction of premium
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of A. Rebating B. Twisting C. Defamation D. Misrepresentations
B. Twisting
The death protection component of Universal Life Insurance is always A. Adjustable Life B. Decreasing Term C. Annually Renewable Term D. Whole Life
C. Annually Renewable Term
Violation of unfair discrimination law may result in all of the following penalties EXCEPT A. Refusal to renew licenses B. Imprisonment C. Fines of up to $1000 for each act D. Suspended licenses
C. Fines of up to $1000 for each act
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits? A. Variable amount B. Fixed period C. Fixed amount D. Variable period
C. Fixed amount
The provision which state that both the policy and a copy of the application form the contract between the policyowner and the insured is called the A. Total contract B. Aleatory contract C. Complete contract D. Entire contract
D. Entire contract
A producer licensed in another state wants to become a producer in Pennsylvania. The other state give the same privileges to Pennsylvanis producers wanting to be licensed in that state as it does its own agents. Pennsylvania, therefore, extends the privileges of its agents to the prospective agent of the other state. What is this called? A. Fair exchange B. Equanimity C. Reciprocity D. Equality
C. Reciprocity
How often may a viatical settlement provider contact an insured regarding the insured's health status if the insured's life expectancy is more than one year? A. Not more often than once a year B. Any time C. Once a month D. Once every 3 months
D. Once every 3 months
An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces? A. A second-degree felony and a $10,000 fine B. A third-degree misdemeanor and a $1,000 fine C. A second-degree misdemeanor and a $1,000 fine D. A third-degree felony and a $10,000 fine
A. A second-degree felony and a $10,000 fine
In an annuity, the accumulated money is converted into a stream of income during which time period? A. Annuitization period B. Payment period C. Amortization period D. Conversion period
A. Annuitization period
Which of the following required certain qualifying factors be met in order for an insured to receive accelerated death benefits? A. Conditions for payment form B. Beneficiary change form C. Medical Authorization Form D. Disability Claim form
A. Conditions for payment form
The insurer may suspect that a moral hazard exists if the policyholder A. Is not honest about his health on an application for insurance B. Is prone to depression C. Is indifferent to activities that may be dangerous D. Always drives over the speed limit
A. Is not honest about his health on an application for insurance
All of the following are beneficiary designations EXCEPT A. Specified B. Tertiary C. Contingent D. Primary
A. Specified
Which of the following is NOT the consideration in a policy? A. The application given to a prospective insured B. Something of value exchanged between parties C. The premium amount paid at the time of application D. The promise to pay covered losses
A. The application given to a prospective insured
How are state Insurance Guaranty Associations funded? A. By the Department of Insurance B. By NAIC C. By the Government D. By the members - authorize insurers
D. By the members - authorize insurers
What is the purpose of establishing the target premium for a universal life policy? A. To pay up the policy faster B. To cover all policy expenses C. To keep the policy in force D. To accumulate cash value faster
C. To keep the policy in force
If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur? A. The change must be reported to the Commissioner B. The change must be reported to the Federal Producer's Directory C. The licensee must obtain a new license D. It is illegal to transact insurance under any name other than the one listed on the license.
A. The change must be reported to the Commissioner
The death benefit in a variable universal life policy A. Depends on the performance of a separate account B. Is guaranteed to be higher than when the policy is originally issues C. Is fixed D. Always equals the face amount stated in the policy
A. Depends on the performance of a separate account
Which of the following is usually true of a participatingg life insurance policy? A. It pays dividends to policyowners B. It may be converted to a term life policy C. It pays dividend to stockholders D. It assesses premium against stockholders
A. It pays dividends to policyowners
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? A. Viatical settlement B. Estate conversation C. Life Insurance proceeds D. State Education waiver
C. Life Insurance proceeds
A couple owns a life insurance policy with a Childrens Term Rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to a permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A. Proof of insurability is not required B. Medical exam C. Her parents' federal income tax return D. Medical exam and parent's medical history
A. Proof of insurability is not required
Which of the following os NOT a goal of risk retention? A. To minimize the insured's level of liability in the event of loss B. To reduce expenses and improve cash flow C. To increase control of claim reserving and claims settlements D. To fund losses that cannot be insured
A. To minimize the insured's level of liability in the event of loss
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than A. With the policy B. Upon issuance of the policy C. Within 30 days after the first premium payment was collected D. Prior to filling out an application for insurance
A. With the policy
The state Insurance Code identified all of the following as prohibited acts that can cause suspension, revocation or denial of insurance producer license EXCEPT A. Committing a felony or its equivalent B. Committing any misdemeanor C. Failing to pay state income taxes D. Failing to pay child support obligations
B. Committing any misdemeanor
What term best describes the act of withholding material information that would be crucial to an underwriting decision? A. Breach of warranty B. Concealment C. Withholding D. Leading
B. Concealment
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? A. Fixed period B. Life with period certain C. Fixed amount D. Interest only
B. Life with period certain
Which of the following rider would NOT cause the death benefit to increase? A. Accidental Death Rider B. Payor Benefit Rider C. Guaranteed Insurability Rider D. Cost of Living Rider
B. Payor Benefit Rider
What is the purpose of a conditional receipt? A. It serves as proof that the applicant has been determined insurable B. It is given only to applicants who fully repay the premium C. It is intended to provide coverage on a date prior to the policy issue D. It guarantees that a policy will be issued in the amount applied for
C. It is intended to provide coverage on a date prior to the policy issue
Traditional IRA contribution are tax deductible based on which of the following? A. Owner's age B. IRA limit C. Owner's Income D. How long the plan has been in force
C. Owner's Income
When must insurable interest exist in a life insurance policy? A. At the time of policy delivery B. When there is a change of the beneficiary C. At the time of loss D. At the time of application
D. At the time of application
An employee quite and converts his group policy to an individual policy; the premium for the individual policy will be based on his A. Experience rating B. Group rate C. Insurer's scheduled rate D. Attained age
D. Attained age
In insurance transactions, fiduciary responsibility means A. Maintaining a good credit report B. Being liable with respect to payment 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 provisions in annuity contracts allow the owner to surrender the annuity if interest rate drop to a specified level? A. Nonforfeiture B. Annuitization C. Bail-out D. Surrender
C. Bail-out
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A. Local insurer B. Certified insurer C. Self-insurer D. Authorized insurer
D. Authorized insurer
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in A. Recession of the policy B. Adjustment in the amount of the death benefit C. No change whatsoever D. Automatic lapse
B. Adjustment in the amount of the death benefit
Who can make a fully deductible contribution to a traditional IRA? A. A person whose contribution are funded by a return on investment B. An individual not covered by an employer-sponsored plan who has earned income C. Anybody; all IRA contribution are fully deductible regardless of income level D. Someone making contribution to an educational IRA
B. An individual not covered by an employer-sponsored plan who has earned income
An insured has a life insurance 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? A. Variable Life B. Adjustable Life C. Graded Premium Life D. Limited-Pay Life
D. Limited-Pay Life
Which Universal Life option has a gradually increasing cash value and a level benefit? A. Juvenile Life B. Term Insurance C. Option B D. Option A
D. Option A
Which the following would help prevent a universal life policy from lapsing? A. Face amount B. Adjustable premium C. Corridor of Insurance D. Target Premium
D. Target Premium
Which of the following statement concerning buy-sell agreements is true? A. Benefits received are considered income taxable B. Buy-sell agreements are normally pay in the event pf a medical emergency C. Buy-sell agreements are normally funded with a life insurance policy D. Premiums paid are deductible as a business expense.
C. Buy-sell agreements are normally funded with a life insurance policy
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? A. The policy will be void B. The insurer may deny coverage later, because of the information on the application C. The policy will be interpreted as if the insurer waived its right to have an answer on the application D. The policy will be interpreted as if the insured did not have an answer to the question.
C. The policy will be interpreted as if the insurer waived its right to have an answer on the application
A man decided to purchase a $100,00 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy A. Require a premium increase each renewal B. Built cash value C. Required proof of insurability every year D. Decrease death benefit at each renewal
A. Require a premium increase each renewal
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 A. Survivor protection B. Life planning C. Survivorship insurance D. Juvenile protection provision
A. Survivor protection
Which of the following would NOT fall into the category of costs associated with death? A. The expense of a vacation for surviving family members B. Funeral expenses C. Final medical expenses of the insured D. Day-to-day expenses of maintaining the family
A. The expense of a vacation for surviving family members
All of the following are true of a key person insurance EXCEPT A. The plan is funded by permanent insurance only B. There is no limitation on the number of key employee plan 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
What must happen when an individual policy or annuity has been personally delivered to the policyowner? A. The policyowner must sign a delivery receipt B. The policyowner must pay the annual premium in full C. The producer must go over the policy with the policyowner D. A notary public must witness the exchange
A. The policyowner must sign a delivery receipt
Which of the following is an example of a producer's fiduciary duty? A. The trust that a client places in the producer in regard to handling premiums B. An obligation to state every know fact about the policy the producer is selling C. A duty to base all transactions upon the principle of Utmost Good Faith D. The obligation to tell the truth to the best of one's knowledge
A. The trust that a client places in the producer in regard to handling premiums
If a viatical settlement provider transfers ownership of an insurance policy, how long does the insurer have to inform the insured of the change? A. 60 days B. 90 days C. 20 days D. 30 days
C. 20 days
Under which of the following circumstances would an insurer pay accelerated benefits? A. An insured is looking for a way to put her daughter through college B. A couple wants to build a house and would like to make a larger down payment C. An insured is diagnosed with cancer and needs help paying for her medical treatment D. A couple is nearing retirement and needs a steady stream of income
C. An insured is diagnosed with cancer and needs help paying for her medical treatment
When an annuity is written, whose life expectancy is taken into account? A. Life expectancy is not a factor when writing an annuity B. Owner C. Annuitant D. Beneficiary
C. Annuitant
Which of the following types of agent authority is also called "perceived authority? A. Implied B. Fiduciary C. Apparent D. Express
C. Apparent
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. Unfair discrimination B. Errors and omissions C. Fraud D. Defamation
C. Fraud
Which of the following best describes a misrepresentation? A. Making a maliciously critical statement that is intended to injure another person B. Discriminating among individuals of the same insuring class C. Issuing sale material with exaggerated statements about policy benefits D. Making deceptive or untrue statement about a person engaged in the insurance business
C. Issuing sale material with exaggerated statements about policy benefits
What is a material misrepresentation? A. Any misstatement made by an applicant for insurance B. Any misstatement by the producer C. Concealment D. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
D. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
What documentation grants express authority to an agent? A. Agent's insurance license B. Fiduciary contract C. State provisions D. Agent's contract with the principal
D. Agent's contract with the principal
For a retirement plan to be qualified, it must be designed for the benefit of A. Key employee B. Employer C. IRS D. Employees
D. Employees
How often must the Commission examine rating organizations? A. Annually B. Every 2 years C. Every 3 years D. Every 5 years
D. Every 5 years
Which of the following is true regarding a single life settlement option? A. Payments continue until the entire principal is exhausted B. Proceeds are paid out in a lump sum C. It provides income for a specified period of time D. It provides income the beneficiary cannot outlive
D. It provides income the beneficiary cannot outlive
If a life insurance policy increase significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? A. Limited pay whole life policy B. Modified life insurance policy C. Single premium policy D. Jumping juvenile policy
D. Jumping juvenile policy
Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called A. Fraudulent statements B. Warranties C. Common errors D. Material misrepresentations
D. Material misrepresentations
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 effecting interstate commerce A. Under any circumstances B. Unless they have served an appropriate prison sentence C. Without receiving written consent from a federal judge D. Without receiving written consent from an insurance regulatory authority
D. Without receiving written consent from an insurance regulatory authority
Concerning insurance, the definition of a fiduciary responsibility is A. Handling assets or money belonging to others B. Being liable for negligence with respect to client's applications C. Maintaining an agent's personal funds D. Handling insurer funds in a trust capacity.
D. Handling insurer funds in a trust capacity.
What is the major difference between a stock company and a mutual company? A. Ownership B. Amount of benefits C. Number of producers D. Types of policies issued
A. Ownership
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? A. Sworn health affidavit from the applicant B. Statement of Continued Good Health C. Attending Physician Statement D. A complete medical record
C. Attending Physician Statement
Insurers are required to give the insured converting to an individual notice of their conversion privilege A. Within 60 days of the conversion B. 7 days after the groyp policy expires C. 15 days prior to group policy expiration D. 30 days in advance
C. 15 days prior to group policy expiration
According to the Entire Contract provision, a policy must contain A. Buyer's guide to life insurance insurance B. Listing of the insured's former insurer(s) for incontestability provisions C. A copy of the original application for insurance D. A declaration page with a summary of insureds
C. A copy of the original application for insurance
A Straight Life policy has what type of premium? A. A decreasing annual premium for the life of the insured B. A variable annual premium for the life of the insured C. A level annual premium for the life of the insured D. An increasing annual premium for the life of the insured
C. A level annual premium for the life of the insured
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to A. The policyowner B. The insurance company C. The contingent beneficiary D. The insured's spouse
C. The contingent beneficiary
For what reason may a life insurance producer backdate a life insurance policy? A. To make a policy effective during a period when the agents appointment was in force B. To shorten the period of contestability C. To avoid an increase in premium rate for the insured D. To meet sales quotas established by the insurer
C. To avoid an increase in premium rate for the insured
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? A. Value Adjustment Rider B. Return of Premium Rider C. Inflation Rider D. Cost of Living rider
D. Cost of Living rider
Which of the following is NOT true about a joint and survivor annuity benefit option? A. Payments stop after the first death among the annuitants. B. A period certain option may be included. C. This option guarantees income for two or more recipients. D. The surviving annuitant may receive reduced payments.
A. Payments stop after the first death among the annuitants.
Underlying assets for variable annuity contracts must be maintained in what type of account? A. Separate account B. General Account C. Fiduciary account D. Securities account
A. Separate account
Licensees must make a report of any action taken against them in another jurisdiction or by another governmental agency in Pennsylvania within how many days of the final disposition of the matter? A. 10 B. 30 C. 60 D. 90
B. 30
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. Discounted B. Adjusted to the insured's age at the time of renewal C. Determined by the health of the insured D. Based on the issue age of the insured
B. Adjusted to the insured's age at the time of renewal
What required provision protects against unintentional lapse of the policy? A. Reinstatement B. Grace Period C. Assignment D. Payment of premiums
B. Grace Period
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
What does "liquidity" refer to in a life insurance policy? A. The policyowner receives dividend checks each year. B. The insured receives payments each month in retirement. C. Cash values can be borrowed at any time. D. The death benefit replaces the assets that would have accumulated if the insured had not died.
C. Cash values can be borrowed at any time.
Which of the following products requires a securities license? A. Equity Indexed annuity B. Deferred Annuity C. Variable Annuity D. Fixed Annuity
C. Variable Annuity
The accelerated benefits provision will provide for an early payment of the death benefit when the insured A. Has earned enough credits B. Becomes disabled C. Becomes terminally ill D. Needs to borrow money
C. Becomes terminally ill
Which of the following is true regarding a waiver of a surrender charge on an annuity contract? A. The surrender charge will be applied to all premature surrenders. B. The surrender charge waiver only applies to immediate annuity. C. The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days. D. The charge can only be waived if the annuitant needs the funds for medical expenses.
C. The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as A. Rebating B. Misleading advertising C. Defamation D. Coercion
D. Coercion
Under a 20-year whole life policy, in order for the policy to pay the death benefit to a beneficiary, te premiums must be paid A. Until the policyowner reaches age 65 B. For at least 20 years C. Until the policyowner's age 100, when the policy matures D. For 20 years or until death, whichever comes first.
D. For 20 years or until death, whichever comes first.
Which of the following is an example of a limited-pay policy? A. Renewable Term to Age 70 B. Level Term Life C. Straight Life D. Life Paid-up at age 65
D. Life Paid-up at age 65
Insurers are required to keep records. When may the Department examine these records? A. Every 5 years B. At any time C. Never D. Every year
B. At any time
Annually renewable term policies provide a level death benefit for a premium that A. Decrease annually B. Remains level C. Fluctuate D. Increases annually
D. Increases annually
ABC Insurance Company wishes to begin transacting business in Pennsylvania. Before it can do so, it must do which of the following? A. Receive a letter of clearance from ABC's home estate B. Obtain approval of each of its corporate officers and executives C. Obtain a Certificate of authority D. Receive permission from the Governor of Pennsylvania
C. Obtain a Certificate of authority
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wished to retain all rights of ownership. The policyowner should have her husband named as the A. Contingent beneficiary B. Irrevocable beneficiary C. Revocable beneficiary D. Secondary beneficiary
C. Revocable beneficiary
Which of the following allows the insurer to relieve a minor from premium payments of the minor's parents have died or become disabled? A. Jumping Juvenile B. Juvenile Premium Provision C. Waiver of Premium D. Payor Benefit
D. Payor Benefit
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? A. Predicted needs of the family after the insured death. B. Insured's current and future income. C. Insured's annual expenses. D. Effect of inflation on income over time.
A. Predicted needs of the family after the insured death.
The term illustration in a life insurance policy refers to A. A depiction of policy benefits and guarantees B. Pictures accompanying a policy C. Charts and graphs D. A presentation of nonguaranteed elements of a policy
D. A presentation of nonguaranteed elements of a policy
If a retirement plan or annuity is qualified, this means A. It has a penalty for early withdrawal B. It accepts after-tax contributions C. It is noncancellable D. It is approved by the IRS
D. It is approved by the IRS
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. Interest-sensitive whole life B. Life annuity with period certain C. Increasing term D. Limited pay whole life
D. Limited pay whole life
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit. A. The insurance company B. The insured's estate C. The primary beneficiary's estate D. The insured's contingent beneficiary
D. The insured's contingent beneficiary
Which of the following premium modes would result in the highest annual cost for an insurance policy? A. Monthly B. Quarterly C. Semi-annual D. Annual
A. Monthly
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
What type of insurance would be used for a Return of Premium rider? A. Annually Renewable Term B. Increasing term C. Level Term D. Decreasing term
B. Increasing term
Which of the following authorities is authorized to issue a temporary producer's license? A. Commissioner B. NAIC C. Federal Insurance Licensing Association D. State Insurance Board
A. Commissioner
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? A. The insured may renew the policy for another 10 years, but at a higher premium rate. B. The insured must provide evidence of insurability to renew the policy C. The insured may only convert the policy to another term policy D. The insured may renew the policy for another 10 years at the same premium.
A. The insured may renew the policy for another 10 years, but at a higher premium rate.
A producer has successfully completed 52 hours of continuing education (CE0. How many hours can the producer apply to her current reporting period, and how many hours can she carry toward the next reporting period? A. Only 24 hours of the 52 earned may be applied to this reporting period B. 24 hours will be applied to the current reporting period and 24 can be applied to the period immediately following C. 24 hours will be applied to the current reporting period, and 28 can be applied to the period immediately following D. 26 hours will be applied to the current reporting period, and the remaining 26 can be applied to the period immediately following
B. 24 hours will be applied to the current reporting period and 24 can be applied to the period immediately following
What is the purpose of a fixed-period settlement option? A. To provide a guaranteed income for life B. To provide a guaranteed amount of money each month C. To provide a guaranteed income for a certain amount of time D. To settle the insurance company's liability
C. To provide a guaranteed income for a certain amount of time
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 like a return that will equal the performance of the Standard and Poor's 500 index. She would likely purchase a(n) A. Variable annuity B. Flexible Annuity C. Immediate Annuity D. Equity Indexed Annuity
D. Equity Indexed Annuity
When the Commission suspects that a person is violating an insurance law or other regulation, what can be issued that would order the person to stop committing the act of violation? A. Stop action order B. Limitation of Authority order C. Suspension of Power order D. Cease and Desist order
D. Cease and Desist order
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 an insurance policy from the bank on the amount of the loan. This is an example of A. Loading B. Defamation C. Twisting D. Coercion
D. Coercion
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? A. 1 year B. 2 years C. 5 years D. 7 years
B. 2 years
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 had what provision? A. Common Disaster B. Accidental death C. Survivor Life D. Second-to-Die
A. Common Disaster
Which of the following statement is TRUE about a policy assignment? A. It transfers rights of ownership from owner to another person. B. It is the same as a beneficiary designation C. It permits the beneficiary to designate the person to receive benefits. D. It authorizes an agent to modify the policy.
A. It transfers rights of ownership from owner to another person.
Following a career change, an insured is no longer required to perform physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Whish method of dealing with risk does this scenario describe? A. Reduction B. Transfer C. Avoidance D. Retention
A. Reduction
During replacement of life insurance, a replacing insurer must do which of the following? A. Send a copy of the Notice Regarding Replacement to the Department of Insurance B. Obtain a list of all life insurance policies that will be replaced C. Guarantee a replacement for each existing policy D. Designate a new produce for a replaced policy
A. Send a copy of the Notice Regarding Replacement to the Department of Insurance
What is the minimum age for obtaining an insurance producer's license in this state? A. 16 ½ B. 18 C. 19 D. 21
B. 18
Which of the following is NOT an example of a valid insurable interest? A. Child in parents' lives B. Debtor in the life of the creditor C. Business partners in each other's lives D. Employer in key employee's life
B. Debtor in the life of the creditor
Under which of the following annuity option does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? A. Installment refund B. Cash refund C. Installments for a fixed period D. Installments for a fixed amount
C. Installments for a fixed period
In insurance, an offer is usually made when A. The insurer approves the application and receives the premium B. The agent hand the policy to the policyholder C. An agent explains a policy to a potential applicant D. An applicant submit an application to the insurer
D. An applicant submit an application to the insurer
Partners in a business enter into a bur-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy interest of the deceased partner. What type of insurance policy may be used to fund this agreement. A. Term insurance only B. Permanent insurance only C. Universal Life insurance only D. Any form of life insurance
D. Any form of life insurance
Life insurance death proceeds are A. Taxable to the extent tha they exceed 7.5% of the beneficiary's adjusted gross income. B. Taxed as a capital gain. C. Taxed as ordinary income. D. Generally not taxed as income.
D. Generally not taxed as income.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a period of time is known as the A. Reinstatement clause B. Insuring Clause C. Misstatement Age Clause D. Incontestability Clause
D. Incontestability Clause
All of the following statements are true regarding installments for a fixed amount EXCEPT A. Value of the account and future earnings will determine the time period for the benefits B. This option pays a specific amount until the funds are exhausted C. The annuitant may select how big the payments will be D. The payments will stop when the annuitant dies
D. The payments will stop when the annuitant dies
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What tyoe of policy does the insured have? A. Term B. Securities C. Stock D. Variable
D. Variable
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? A. 1 B. 3 C. 5 D. 10
C. 5
Which of the following statements about group life is correct? A. The group sponsor receives a Certificate of Insurance B. The policy can be converted to an individual term policy C. The cost of coverage is based on the ratio of men and women in the group. D. The premiums are higher than an individual policy because there is no medical exam
C. The cost of coverage is based on the ratio of men and women in the group.
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? A. Term Life B. Limited Pay C. Universal Life D. Adjustable Life
C. Universal Life
Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? A. Debt Cancellation B. Day Care C. Vacation travel expenses D. Travel expenses for a family to come to the funeral.
C. Vacation travel expenses
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A. The date the policy was delivered B. The date of issue C. The date of the application D. The date of the medical exam
D. The date of the medical exam
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about A. The gender of the applicant B. The type of policy requested C. Which individual will pay the premium D. Whether an insurable interest exists between the individuals.
D. Whether an insurable interest exists between the individuals.
A 60-year-old participant in a 401k plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? A. No taxes are due since the plan participant is over ae 59 ½ B. There is a 10% early withdrawal penalty C. The amount distributed is subject to ordinary income tax D. The amount of the distribution is reduced by the amount of a 20% withholding tax
B. There is a 10% early withdrawal penalty
All of the following are characteristics of group life insurance EXCEPT A. Certificate holders may convert you an individual policy without evidence of insurability. B. Premiums are determined by the age, sex, and occupation of each individual holder C. Amount of coverage is determined according to nondiscriminatory rule D. Individuals covered under the policy receive a certificate of insurance.
B. Premiums are determined by the age, sex, and occupation of each individual holder
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 company
B. The interest is not taxable since it remains inside the insurance policy
Which of the following is NOT a characteristic of an insurable risk? A. The loss exposure must be large B. The loss must be catastrophic C. The loss must be due to chance D. The loss must be measurable
B. The loss must be catastrophic
The full premium was submitted with the application for the life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A. As of the policy delivery date B. As of the first of the month after the policy issue C. As of the policy issue date D. As of the application date
D. As of the application date
Which of the following persons is required to hold a producer license? A. A person who negotiates insurance contracts B. A person who creates insurance advertisements C. A person who takes messages related to claims D. A person who administers employee benefits
A. A person who negotiates insurance contracts
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be A. Approved B. Authorized C. Certificate D. Qualified
B. Authorized
What describes the specific information about a policy? A. Producer's report B. Policy summary C. Illustrations D. Buyer's guide
B. Policy summary
All of the following are characteristics of group life insurance EXCEPT A. Certificate holders may convert coverage to an individual policy without evidence of insurability B. Premiums are determined by the age, sex and occupation of each individual certificate holder C. Group life insurance is written as a master policy D. Individuals covered under the policy receive a certificate of insurance
B. Premiums are determined by the age, sex and occupation of each individual certificate holder
Which of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant? A. Public adjuster solicitor B. Producer C. Broker D. Public adjuster
B. Producer
Which of the following best describes what the annuity period is? A. The period of time from the effective date of the contract to the date of its termination B. The period of time during which accumulated money is converted into income payments C. The period of time from the accumulation period to the annuization period D. The period of time during which money is accumulated in an annuity.
B. The period of time during which accumulated money is converted into income payments
A father purchased a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the ride waive the payment if premium? A. If the daughter is disabled for more than 3 months B. If the daughter is disabled for any length of time C. If the father is disabled for more than 6 months D. If the father is disabled for a least a year
C. If the father is disabled for more than 6 months
Which of the following is TRUE regarding the accumulation period of an annity? A. It is a period of time which the beneficiary receives income B. It is limited to 10 years C. It is a period during which the payments into the annuity grow tax deferred D. It is also referred to as the annuity period.
C. It is a period during which the payments into the annuity grow tax deferred
When a reduced paid up nonforteiture option is chosen, what happens to the face amount of the policy? A. It decreases over the term of the policy B. It remains the same as the original policy, regardless of any difference in value C. It is reduced to the amount of what the cash value would buy as a single premium D. It is increased when extra premiums are paid.
C. It is reduced to the amount of what the cash value would buy as a single premium
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do? A. Pay a decreased death benefit B. Sue for the right to not pay the death benefit C. Pay the death benefit D. Refuses to pay the death benefit because of the misstate mentioned in the application
C. Pay the death benefit
Which nonforfeiture option provides coverage for the longest period of time? A. Paid-up option B. Accumulated at interest C. Reduced paid-up D. Extended term
C. Reduced paid-up
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? A. Principal is tax free, but interest is taxed B. The entire benefit will be received tax free C. The entire living benefit is considered taxable income D. A portion of the benefit up to a limit is tax free; the rest is taxable income
D. A portion of the benefit up to a limit is tax free; the rest is taxable income
Which component increases in the increasing term insurance? A. Interest on the proceeds B. Premium C. Death benefit D. Cash Value
C. Death benefit
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statement is INCORRECT? A. The insured may choose to convert to term or permanent individual coverage B. The insured would not need to prove insurability for a conversion policy C. The insured may convert coverage to an individual policy within 31 days D. The premium for individual coverage will be based upon the insured's attained age
A. The insured may choose to convert to term or permanent individual coverage
Which of the following best describes a bail-out provision? A. It decrease the annuity surrender value. B. It allows the owner to surrender the annuity without a charge. C. It waives the surrender charge for the annuitants confined to a long-term care facility. D. It allows the owner to receive a higher interest rate at certain timeframe.
B. It allows the owner to surrender the annuity without a charge.
An insured has entered into a viatical settlement but decided that he would like to back out of the contract. Which of the following is true? A. The insured has 30 days from the effective date of the contract to rescind it. B. This is possible at any time, but the longer the insured waits, the more of a penalty he will have to pay. C. Once a contract has been signed, it cannot be rescinded. D. The insured has 15 calendar days from the effective date of the contract to rescind it.
D. The insured has 15 calendar days from the effective date of the contract to rescind it.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. In lesser amounts for the remaining policy term of age 100. B. Equal to the cash value surrender from the policy. C. The same as the original policy minus the cash value. D. Equal to the original policy for as long as the cash values will purchase.
D: Equal to the original policy for as long as the cash values will purchase.
All of the following are true regarding a decreasing term policy EXCEPT A. The contract pays only in the event of death during the term and there is no cash value B. The face amount steadily declines throughout the duration of the contract C. The payable premium amount steadily declines throughout the duration of the contract D. The death benefit is $0 at the end of the policy term.
C. The payable premium amount steadily declines throughout the duration of the contract
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.
The mode of premium payment A. Does not affect the amount of premium paid B. Is defined as the frequent and the amount of the premium payment C. Is the factor that determines the amount of dividend in a policy D. Is the method used to compute the cash surrender value of the policy
B. Is defined as the frequent and the amount of the premium payment
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as Consumer Price Index, is called A. Living need rider B. Payor rider C. Cost of living rider D. Accelerated benefit rider
C. Cost of living rider
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? A. The applicants habits and health do not affect the premiums B. It will likely be lower because the applicant is a preferred risk C. It will likely be higher because the applicant is a substandard risk D. It will likely be the average premium issued to standard risks
C. It will likely be higher because the applicant is a substandard risk
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? A. Standard risk requires extra rating B. Standard risk is also known as high exposure risk. C. Standard risk is representative of the majority of people. D. Standard risk pays a higher premium than a substandard risk
C. Standard risk is representative of the majority of people.
The paid-up addition uses the dividend A. To reduce the next year's premium B. To accumulate additional savings for retirement C. To purchase a smaller amount of the same type of insurance as the original policy D. To purchase a one-year term insurance in the amount of the cash value.
C. To purchase a smaller amount of the same type of insurance as the original policy
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividend to increase the death benefit. The dividend option that the insured has chosen is called A. One-year term purchase B. Accumulation at interest C. Reduction of premium D. Paid-Up additions
D. Paid-Up additions
Which of the following is another term for the accumulation period of an annuity? A. Premium period B. Liquidation period C. Annuity period D. Pay-in period
D. Pay-in period
Which of the following is NOT true regarding a Variable Universal Life policy? A. The death benefit B. The policyowner can participate in some of the investment decisions C. The minimum death benefit is guaranteed D. The cash values are not guaranteed
D. The cash values are not guaranteed
