LIFE LICENCE EXAM
a premature distribution from a modified endowment contract(MEC) incurs a penalty tax of
10%
what is the maximum number of employees(earning at least 5000) that an employer can have in oder to start SIMPLE retirement plan ?
100
what minimum procentage of all elibible employees must participate in a group life
100 %
after an annuity has been in force ____ years, it becomes incontestable
2 years
an insured has a 25k whole life policy with 6 cash value available. under extended term nonforfeiture option, what the amount of insurance available to the insured?
25k
An insurer must keep advertising materials and records for al least how many years?
3 years
a licensee whose name or adress changes must notify the Department of insurance whitin___days
30
which type of life insurance policy is best suited for paying off the outstandindg balance od 30-year morgage in the event of insured's death?
30-year decreasing term
Greg had recently been terminated from his job that covered him for group life insurance. how long does he have to convert his coverage to individual policy?
31 days
Arizona allows a maximum of how many attempts in a 12-month period, before having to wait one year before attempting the exam again?
4 attempts
a policy owner decides to surrender the cash value of a whole life insurance policy. the insurer has up to __ months to delay this payment
6
according to the telemarketing Scales rule, what is the earliest time of the day that telemarketing calls may be received?
8 am
which is an accurate description of premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years then remains level
which of these is NOT CONSIDERED A TYPE OF LIMITED PAYMENT WHOLE LIFE INSURANCE ?
ENDOWMENT AT AGE 70
the application is part of the annuity contract according to the
Entire Contract clause
An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT
LIVING IN A RURAL AREA
john bought a deferred annuity on Marry, John amends the contract years later to name Tom as the recipient of the proceeds if Marry dies. who is the annuitant for this contract?
Mary
which statement regarding an adjustable life insurance policy is NOT true ?
Policy loans are not permitted
how are level term policies able to provide level premiums
Premiums are averaged over the term of the policy
which of the following could be a future use of cash value that builds in a recently-purchased whole life insurance policy?
Provide supplemental income in 35 years
what effect can a long-term care benefit rider have on a life insurance policy?
Reduce death benefit
an advantage of owning a flexible premium life insurance policy would be
The policy owner can make policy changes with out difficulty
THE CONVERSION OPTION FOR GROUP TERM INSURANCE MAY BE EXERCISED BY AN EMPLOYEE
WITHIN 311 DAYS OF TERMINATED EMPLOYMENT
When does the producer give a premium receipt for a life insurance application?
When the initial premium has been paid with the application
after the applicant reads and sings an insurance application, he/she should be conscious of the fact that
a false statement could lead to loss of coverage
which of the following conbinations best describe a universal life insurance policy
a flexible premium deposit fund and monthly renewable term insurance policy
Which of the fallowing actions is considered to be an unfair trade practice?
a producer who sells insurance to an individual by meas of treat .
A producer working for an insurance company may be personally liable for ?
acts performed which are prhibited in the agency contract
which of the following is NOT a valid contract exchange?
an annuity exchanged for a life insurance policy
an individual who purchase a modified life insurance policy expects
an improvement in the future income
an individual who purchases a modified life insurance policy expects
an improvement in the future income
The surrender charge on many deferred annuity contracts are waived when the
annuitant dies or becomes disabled
an applicant submits a life insurance application where an investigative custumer report is used in the underwriting process.
applicant has a right to receive a copy of the report
traditional individual retirement annuity (IRA) DISTRIBUTIONS MUST START BY
april 1st of the year following the year the participant attains age 70 1/2, or an excise tax will be assessed .
when there is a named beneficiary on a life insurance policy, the death benefits
are paid directly to the beneficiary without inference from insurance creditors
which of the fallowing actions would be considered a felony in the state of Arizona
attempting to defraud an insurer
who manages the premiums collected from a group's members for a reciprocal insurer ?
attorney in fact
a__ company is licensed by the Department of insurance to conduct insurance business in Arizona.
authorized
who normally pays the premium for group credit life insurance?
barrower
the refusual of doing business with an individual or business is called a
boycott
which of these is not considered to be a cost connected with an individual/s death
business expenses
an ________agent is an insurance agent who represents only ONE insurance company
captive
which statement regarding the waiver of premium rider is accurate ?
cash payment is not directly to the policy owner
A source of supplemental income for a life insurance policyowner can be derived from the
cash value
which of these is NOT considered a federal punishment for unfair and deceptive insurance practices?
community service
which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions?
conduit IRA .
if a dividend option choices are offered on a whole life insurance policy, the policy MUST
contain a statement that dividends are NOT guaranteed
if dividend option choices are offered on a whole life insurance policy, the policy must
contain a statment that dividends are not guaranteed.
al surrenders his life insurance policy for its cash value. The total of premiums paid in to the policy minus total dividends received in cash or used to offset premiums is referred to as the
cost basis
according to the needs approach, an emergency reserve fund's primary purpose is to
cover the cost of unexpected expenses
any employee insured under a group life insurance plan is normally
cover with term insurance
which of the following disability buy-sell agreements is the best suited for business with a limited number of parners?
cross-purchase agreement
to protect information systems, producers, brokers, and insurance companies must implement and maintain
cybersecurity policy
mike applied for life insurance and was issued a conditional receipt. he is later found to be insurable and is issued a policy. When does his coverage become effective ?
date of ussuance of conditional receipt
what kind of life policy typically offers mortgage protection
decreasing term
an individual, age 45, would like to help pay for his daughter's collage expenses in q0 years. which annuity would be appropriate for this individual?
deferred annuity
which of the following is NOT guaranteed in a whole life policy?
dividend scale
when using the needs aproach for life insurace planning, a lump sum may be created to provide for all of the following EXEPT
employee benefits
which statement best defines what a policy Title means on an insurance policy?
every policy must have a title on the face and on the back of the policy, briefly describing the policy
death benefits from a life insurance policy are normally considered to be
exempt from federal income tax
when an applicant applies for a large amount of life insurance coverage, which of the following would like NOT be underwriting requirement ?
eye examination
a policy-owner fell behind on the premium payments of a whole life policy and is now the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?
face amount minus the loan balance and the past-premium
when an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?
final contract settlement will be reduced
which settlement option makes minimum guaranteed dollar payments over a stated number of years?
fixed-period, option pays proceeds (including interest and principal) in minimum guaranteed dollar payments over a specific number of years.
which of the fallowing contacts offer deferred taxation, flexible payments, a guaranteed interest rate and death benefits equal to the cash value ?
flexible premium fixed annuity
Rick owns a variable universal life policy choses a variable death benefit option. what will typically happen to the death benefit as a result of this selection
fluctuate with changes in the cash account
insurable interest in one's own life is legally considered as
generally unlimited
when the disclosure of an insured's nonpublic information is involved, what is the insurer obligation to do?
give notice, explain, and allow opting out
the administrator for a corparate pension plan bought an accumulation annuity contract for 2000 employees. all 2000 participating employees received certificates of participation. what king of contract is thi
group deferred annuity
when is it acceptable to charge or receive a fee or service charge in addition to the premium in connection with the transaction of insurance ?
if the amount of fee or service charge is reasonably related to the cost of service
when must insurable interest exist for a life insurance contract to be valid ?
inception of the contract
which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
incontestable clause
which statement is incorrect about the interest-only settlement option in a life insurance policy
interest on proceeds must be paid by the beneficiary
in what way are insurance policies said to be aleatory?
involves the potential for unequal exhange of value
after an insurance application has been originated, the producer normally
is the major personal contact to the insurer
which statement regarding the certificate of insurance is accurate
it indicates evidance of an employee's insurance coverage.
which life insurance settlement option pays lifetime benefits to two or more people ?
joint and survivor
what type of insurance policy covers two or more persons and pays the face amount upon the death of the first insured?
joint life
All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT
leave a conditional receipt with the client
The death proceeds of a credit life insurance policy are typically paid to the
lender
the death proceeds of a credit life insurance policy are typically paid to the
lender
a policyowner has a life insurance policy where she had listed her age on the application as 5years younger that her actualage. if she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?
less than the face amount
What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?
less that the policy face amount
Laura added a children's rider to her life insurance policy. what type of coverage was added?
level term
after the extended term life nonforfeiture option is chosen, the available insurance will
level term for stated period of time
what is another term used for a pure life annuity ?
life income
which of these is NOT a common life insurance nonforfeiture option?
life income annuity
joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment ?
loan amount is increased to reflect the amount of interest due
field underwriting by a producer
may result in the disclosure of hazardouse activities of the applicant
which of the fallowing may be considered an act of misrepresentation
misleading or failling to adequately disclose and true nature of policy offered to a client.
which of the following is NOT A VALID REASON for an insurer to contest a life insurance policy during the policy's first two years of existence ?
misstatement of age
a life insurance that has premiums that are lowe than normal during the early years is called
modified life .. modified life has premiums that are lower than normal during the early years of the policy
life insurance premiums are computed on what three factors ?
mortality, interest, expenses
In Arizona, the human immunodeficiency Virus (hiv) consent from
must disclose who will be receiving a copy of the test results.
wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit, Which index should he be looking at when making comparations ?
net payment cost index
this is not an unfair claims settlement practice !
offering to setle a claim by arbitration.
if a producer surrenders their license, how long must they re-apply for the same license ?
one year
The authority to change the beneficiary in an individual annuity lies with the
owner
when a deferred annuity is surrendered, who must sing the authorization to do so ?
owner
a life annuity which provides benefit payments for minimum number of year, no matter when the annutant dies, is call
period certain
A life insurance guaranteed insurability rider gives the insured the right, with out proving insurability to
periodically purchase additional insurance
what typically changes at the re-entry option date found in some term life policies?
premium
where is the difference between a standard risk and a substandard risk reflected?
premium charges
which statment regarding the life insurance premium for childrens rider is true
premiums remains that same no matter ho many childrens
when must a producer provide disclosure about information practices to an applicant?
prior to or at the time of signing the application.
A statement MUST be singed by the _____for any illustrations usted in the sale of a life insurance policy?
producer
which of the fallowing outlines the authority given to the producer on behalf of the insurer.
producer contract
which benefit can be found in an equity indexed annuity, but not in a fixed annuity ?
protection against long-term inflation
Which of the fowllowing could be future use of the cash value that builds in a recently - purchase whole life insurance policy?
provide supplemental income-in 35 years, whole life policies typically being to accrue cash value during the 3rd year after issue. the cash value that accumulates can be used to supplement income during retirement years.
what is considered interstate travel under the federal fraud and false statements act?
puerto rico
Which of these statEments is NOT A CHARACTERISTIC OF THE LAW LARGE NUMBERS
rates can be calculated to compensate for losses
An insured is entitled to coverage under a policy that prudent person would expect it to provide. This principle is called
reasonable exceptions
which of the following is an unicorporated association whose members provide coverage for one onother ?
reciprocal
a life insurance policyowner would like a dividednd option that results in a limited current outlay of funds, which dividend uption would be chosen?
reduction of premium payment
when a lapsed policy premium has been paid current, it has the potential of being
reinstated
an insurer has a contractual agreemnent which transfers a portion of its risk exposure to another insurer. what type of ontractual arrangement is this ?
reinsurance contract
what kind of arrangement gives the policy owner the right to change the beneficiary
revocable designation
which term describes the elimination of hazard?
risk avoidance
A group-owned insurance company that is formed to assume and spread the liability risk of its members s known as a
risk retention group
Which life insurance policy provision prohibits a beneficiary from 'commuting,encumbering withdrawing, or assigning' any portion of the proceeds prior to actual receipt from the company ?
spendhrift clause
which of the following entities does NOT establish regulations for variable insurance products ?
state attorney general
contributions made by an employee to qualified retirement plan are require to be
subject to a vesting schedule
Under a deferred annuity, which contract feature initially charges a 5-10% fee that eventually reduces to 0 % a stated amount of time ?
surrender charge
an insurer will typically assess a back-end load on deferred annuity that is cancelled during the early contract years. what is this back-end load refereed to as ?
surrender charge
which of these annuity contract features is meant to discourage withdrawals and exchanges?
surrender charges
if an employer pays for accidental death and dismemberment insurance for its employees, the amount paid by the employer is generally
tax deductible to the business
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for
ten year term insurance for a person aged 55
the exclusion ratio determines
the amount of an annuity payment subject to income tax
All of these statEments concerning group insurance are falSe EXPEPT
the face amount is based on the outstanding loan balance
Peter, age 50, surrenders his modified endowment contract (MEC). HOW IS THE GAIN treated in terms of federal income taxes?
the gain is treated as taxable income and a penalty tax is imposed on the gain
what would be considered an advantage of purchasing term life insurance?
the initial premium is lower compared to an equivalent of whole life coverage
which statement regarding a fixed period settlement option is true
the installment payment amount is determinate by the total number of installments
When a producer acts whitin the scope of his/her contractural authority, which of the following is legally responsable for these actions?
the insurer
Under an adjustable life insurance policy, which of the following may NOT be changed without further undewriting?
the person insured
the reason for backdating a policy is
to obtain a premium rate based on an earlier age
a hold-harmeless clause is an example of risk
transfer
how is a collateral assignment used in a life insurance contract?
transfers specific ownership rights to a creditor
what would be the disadvantage of naming a trust as beneficiary of a life insurance policy?
trust administration fees would reduce policy proceeds
A life insurance policy can usually be contested by the insurer only during the first__ years of the contract.
two
what is the face amount of 50000 graded death benefit life insurance policy when the policy is issued?
under 50,000 but increases annually intil fully insured
Which of the following is NOT considered to be an expense for surviving famili members of a deceased wage earner?
unemployment tax expenses
when a ceding insurer transfers a portion of its risk to an assuming insurer on a case by case basis this process is referred to as
facultative reinsurance " facultative reinsurance for a single risk or a defined package of risk.
a consumer who has been recently denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such. Which of the following does this statute original from?
fair credot report act
Tim is confined a nursing home but doesnt have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
long term care benefit rider
taxable income may be the result from all these modified endowment contracts(mec) transactions EXEPT for
the policy is surrendered for less than what was paid into it
which of the following statements about universal life insurance is NOT true ?
universal life insurance normally has a minimum guaranteed cash value for duration of the policy
a terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. this sale called a
viatica settlement
a terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. This is called a
viatical settlement
which event triggers a deferred annuity to start making benefit payments to the annuitant?
when the contract is annuitized
when would evidence of insurability be required for a person already covered with a variable universal life policy?
when the death benefit is increased
when does the producer give a premium receipt for a life insurance application ?
when the initial premium has been paid with the application
according to federal fraud and false statements regulation, what is required for a prohibited person to transact insurance business in this state?
written consent from the state insurance regulatory agency
a licensee or applicat who is odered into active military service may request that the license or application be placed on inactive status by sending the depar,ent a
written statement
