Life Prac Exam 3

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

Any person or organization willfully violating any provision of rate-making provisions of the law will be punished by a fine of

A maximum of $500 for each such violation.

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 paramedic or examining physician at the insurer's expense.

Who can make changes to the policy once it is in effect?

An executive officer of the insurer

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?

Attending Physician Statement

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

Decreases

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an

Modified endowment contract.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

Permanent

If an insured continually uses the automatic premium loan option to pay the policy premium,

The policy will terminate when the cash value is reduced to nothing.

Which is true about a spouse term rider?

The rider is usually level term insurance.

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Universal life

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?

Withdrawn amounts are taxed on a last in, first out basis.

Whenever the Commissioner has reason to believe that any person has engaged in any unfair method of competition or any unfair or deceptive act or practice, the Commissioner will serve a notice of a hearing, the time and place of which CANNOT be

Sooner than 21 days after the date such notice was served.

The authority granted to an agent through the agent's contract is referred to as

Express authority.

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the

Entire contract.

If a company has a Simplified Employee Pension plan, what type of plan is it?

A qualified plan for a small business

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?

It is a percentage of the cash value and decreases over time.

A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?

Joint and Survivor

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

Joint life annuity.

Which of the following is NOT a goal of risk retention?

To minimize the insured's level of liability in the event of loss

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

$100,000

The Commissioner may delay the effective date of an insurer's rate plan which has been duly filed for not more than 30 additional days in order to

Properly examine the filing and any supporting information filed as requested or to permit a related hearing.

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability.

What documentation grants express authority to an agent?

Agent's contract with the principal

The interest earned on policy dividends is

taxable

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider.

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

The contingent beneficiary.

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

$100,000

Paul is a producer in Vermont and wants to become a producer in Massachusetts. The Department will waive certain examination requirements, provided that Vermont would waive these same requirements if a Massachusetts producer sought licensure in Vermont. What term is used to describe this phenomenon?

Reciprocity

Annuities can be used to fund which of the following?

Retirement plans

What type of annuity activity will cause immediate taxation of the interest earned?

Surrendering the annuity for cash

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment.

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?

The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?

The purpose of the group was to purchase life insurance.

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant

With the policy.