Life Insurance Test Review

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance -A person does not require an inssurance producer license if he or she only advertises without intent to solicit insurance. Howeve, a lisence is required if there is solicitation.

The Ownership provision entitles the policyowner to do all of the following EXCEPT

Set premium rates

All of the following are dividend options EXCEPT

Fixed period installments -is a settlement option, and not one of the divident options.

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory -An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk.

All of the following are considered unfair or deceptive act in connection with the sale of insurance EXCEPT

Attempting to settle a claim in which liability is clear.

All of the following information must be disclosed to the viator prior to the execution of a viatical settlement contract EXCEPT

Availability of stranger-originated life insurance

Which of the following terms is used to name the nontaxed return of unused premiums?

Divided

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed Insurability -Guaranteed insurability is a rider that is included at the time of application which allows the insured to increase the amount of insurance without proving evidence of insurability.

Life income joint and survivor settlement option guarantees

Income for 2 or more recepients until they die

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced.

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 (thil tam cawk ruang i man tthumhmi khi a si) -When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

conditional -the contract is formed on the basis that certain conditions are met.

What percentage of continuing hours must be in a classroom setting?

50%

An insurer must acknowledge receipt of a Notice of Claim within how many days?

15

An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?

90 days -If an agent does not fulfill his or her continuing education requirements or pay the necessary fees then their license will expire within 90 days of due date.

All of the following must be true of an individual before a license can be issued EXCEPT that the

Applicant submitted his or her most recent tax return to the department

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider -a single rider that provides coverage to every family momber is called a "family rider".

The usage of words or symbols that are similar to what entity is prohibited in life insurance advertisements?

Federal govenement

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies. -Making accurate comparisons of policies is not illegal

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid.

All of the following are mandatory life insurance policy provision EXCEPT

Policy backdating

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary. -the employee usually has a period of 31 days after terminating from a group in order to exercise the consersion option. During this time, the employee is still covered under the original group policy.

Is it illegal for an insurance company to advertise that it is the leader of the financial industry and therefore pays the claims each year?

Yes; advertisements must not mislead the public in terms of financial standing.

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?

Limited-pay Life -In Limited-pay policies, the premium for coverage will be completely paid-up well before age 100, usually after a specified number of years.

If an agent suspects that insurance fraud is being committed, within how many days must the agent notify the Insurance Fraud Unit of the Department of Insurance?

30 days

An insurance company has published a brochure that inaccurately portrays the advantage of a particular insurance the advantage of a particular insurance policy. What is this an example of?

False Advertising -False Advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group of insurance participants.

Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount.

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

Stock -only stock insurance companies are owned and controlled by stockholders.

Which members of a corporation or partnership are required to obtain an individual insurance agent's license in order for the association to be licensed?

At least one officer or partner and any other person acting as an agent.

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securites license

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application -An insurance contract must contain a copy of the original application.

To become a Texas insurance agent, you must:

Have passed a licensing exam within the 12 months before applying

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium - the policy does not go into effect until the premium has been collected. If the premium was not collected at the time of the application, the producer may also be required to get a Statement of Good Health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy, and not something to be obtained from the applicant.

Which of the following type of insurance policies is most commonly used in credit life insurance?

Decreasing term -Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the debtor. It is usually written as decreasing term.

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Decreasing term -decreasing term policy's face amount decreases as the amount of debt is reduced.

An individual covered under a group life insurance may convert the policy to any of the following EXCEPT

15-year level term -Indiduals and dependents insured on a group life policy may concert to an individual policy issued by the same insurer. They can convert to any individual policy except term.

According to the Entire Contract provision, a policy must contain

A copy of the origial applicaiton for insurance.

Which of the following would NOT be considered rebating?

Giving a client a $25 pen with the insurer's logo during the insurance applicaiton process -promotional materials value of $25 or less are not considered valuable therefore, are allowed.

All of the following are Nonforfeiture options EXCEPT

Interest only -Nonforfeiture values include cash surrender, extended term and reduced paid-up. Interest only is a settlement options.

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?

have attained fully insured status -although Social Security offers many benefits, such as retirement, survivors and Medicare, only those who have attained fully insured status are eligible for Disability Income Benefits. Contributing to Social Security for 40 quarters (10 years) attains fully insured status.