Life questions

when a ben receives payments consisting of both principal and int portions, which are are taxable as income? a. nothing b. principal only c. interest only d. principal and int

interest only

during the policy replacement, the PO is entitled to a free look period of how many days? 10, 20, 30 days?

20 days

according to the state regulation pertaining to claims settlements, after receiving a notification of claim from an individual PO, the insurer must acknowledge that within a. 30 working days b. 30 calendar days c. 10 working days d. 3 working days

10 working days -15 days for group contracts

how long must insurers maintain a copy of each disclosure document used in insurance trans? 6 months, 1, 3, 5 years

3 years

all of the following info about a customer must be used in determining annuity suitability except .a. annual income b. beneficiary's age c. tax status d. financial experience

beneficiary's age

which provision of life insurance policy states the insurers duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a. beneficiary clause b. consideration clause c. insuring clause d. entire contract clause

insuring clause -states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss received by the insurer -state who will be covered by the policy and who will receive the proceeds if insured dies

which of the following policy components contains the company's promise to pay? a. insuring clause b. premium mode c. consideration clause d. entire contract provision

insuring clause -contains company's promise to pay

if a producer wants to sell annuity contracts, how often must the producer complete annuity suitability training? annually, every 2 years, one time training

one time training

with adjustable life, the owner can change all of the following except a. length coverage will last b. insured c. death benefit d. premium

b. the insured

an insurer receives a report regarding a potential insured that includes their financial status, hobbies, and habits. What report is this? a. underwriters report b. inspection report c. MIB report d. agents report

inspection report -covers moral and financial info

cash values guarantees in a whole life policy are called a. nonforfeiture values b. living benefits c. cash loans d. dividends

nonforfeiture values -certain guarantees that cannot be forfeited by the PO bc permanent life insurance has cash values -req by state law to be included in the policy

dividends receive on participating life insurance policies are.. not taxable or taxable?

not taxable bc they are a return of unused premium

life insurance disclosure rules would apply to which of the following types of coverage? a. deferred annuity b. whole life c. credit life d. variable life

whole life -does not apply to annuities, credit life, group policies, variable,

the entire contract includes all the following except a. riders/amendments b. buyer's guide c. life insurance policy d. copy of the app

buyers guide -it must have policy, copy of app, and riders/amendments

which of the following best describes annually renewable term insurance? a. neither premium or death benefit is affected by insured's age b. it provides an annually increasing DB c. it is level term insurance d. it requires proof of insurability at each renewal

it is level term insurance -form of level term -offers most insurance at lowest cost

which of the following would not be eligible for coverage under key person? a. owner of a shop b. exec officer of a company c. pharmacist in a drug store d. manager of a small store

owner of a shop -owner is the principal not a key person

if an insured purchases an insurance policy w a large deductible, what risk management is the insured exercising a. sharing b. retention c. transfer only d. avoidabce

retention

An annuity has accumulated a CV of $70,000 of which $30,000 is from premium payments. annuitant dies during accumulation phase. the ben will receive

$70,000 -will receive amount of premiums paid into the plan or the CV whichever is greater

what is the minimum rate at which the unpaid DB accrues int? a. 5% b. 6 c. 8 d. 10

8%

how long does a person receiving written notification of the commisioner's order have to respond and request a hearing? a. 30 days b. 60 days c. 90 days d. 120 days

90 days

another name for risk classifcation

rated

what is the penalty for the insurer who fails to refund a premium within 30 days after the free look period?

10%

when a whole life policy is surrendered for its nonforfeiture value, what is the auto option? a. extended term b. paid up additions c. cash surrender value d. reduced paid up

extended term

what type of violation is transacting insurance w/o a license class b or a felony?

class b bitch

what is the max penalty for willful noncompliance w the fair credit reporting act? a. 100 per violation b. revocation of license c. 2500 d. 1000

2500

when a policy is replaced, replacing insurers must maintain replacement register for the policy for 3, 5, 8, 10 years

3 years

what is the purpose of a conditional receipt? - given by the agent to applicants who fully prepay all scheduled premiums in advance of policy issue b. intended to provide coverage earlier than date of policy issuance c. guarantees that a policy will be issued in the amount applied for in the app d. proof that agent thinks person is fully insurable

b. intended to provide coverage earlier than date of policy issuance -coverage starts at date of app or medical exam as long as the app is determined to be insurable at the rate applied for

in a variable life insurance policy, all of the following assets are held in the insurance company's general account except a. incidental benefit amounts b. cash surrender values c. mortality reserves d. face amount reserves

cash surrender values -does not guarantee or participate in the investment risk of a variable life insurance policy -all underlying assets must be kept in the separate account -variable does not provide a guaranteed cash surrender value

an adjustable life PO can change which of the following policy features? a. coverage period b. mortailtiy expense c. investment account d. insured

coverage period -can increase, decrease, change premium paying period -increase/decrease face amount of coverage -change period of protection

life insurance creates an immediate estate. what explains this statement? a. policy has CV and NF values b. policy generates immediate cash c. DB will always be paid to the estate of the insured d. FV of the policy is payable to the beneficiary upon the death of the insured

d. FV of the policy is payable to the beneficiary upon the death of the insured -life insurance policy's FV is available immediately in one lump sum upon death of insured

the type of term insurance that provides increasing death benefits as the insured ages is called a. interest sensitive term b. age-sensitive term c. increasing term d. flexible term

increasing term -provides an increase in the DB each year

the type of term insurance that provides increasing death benefits as the insured ages is called a. interest sensitive term b. age sensitive term c. increasing term d. flexible term

increasing term -increase in DB each year

the death protection component of universal life insurance is always a. whole life b. adjustable life c. increasing term d. annually renewable term

annually renewable term -universal has two components: insurance component and cash account -insurance component (death protection) is always ART

all of the following are true of survivorship except a. premium will be lower than in joint life policy b. it can insure more than 2 lives c. premium is based on the age of each insured d. death benefit is not paid till last death

c. premium is based on the age of each insured -survivorship/second to die is much the same as joint life in that it insures two or more lives for a premium based on joint age

all of the following are dividend options except a. fixed period installments b. accumulated at interest c. reduction of premium d. paid up additions

fixed period installments -this a is a settlement option not a dividend option

a PO wants to make sure that when he dies, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should he pick a. fixed amount option b. interest only option c. life income with period certain d. joint and survivor

interest only option -insurance company retains the proceeds and pays interest on the proceeds to the beneficiary at regular intervals

which of the following is true regarding the agent's report during the policy app process? a. it provides the agent's personal observations concerning the proposed insured b. it is only used when the initial premium is not paid w the app c. it becomes part of the entire contract after policy is issued d. it is req

it provides the agents personal observations -doesn't become part of entire contract but is part of the app process

what is the adv of reinstating a policy instead of applying for a new one? a. face amount can be increased b. the CV have gained int while policy was lapsed c. the orginal age is used for premium deterimination d. proof of insurability is not req

org age is used for premium

which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy? a. they are taxable to the insured's estate b. they are tax deductible c. they are received tax free d. they are considered income taxable

received tax free -bc it's for terminally ill

Which nonforfeiture option provides coverage for the longest period of time? a. accumulated at interest b. reduced paid up c. extended term d. paid-up option

reduced paid up -provides protection until insured reaches 100 -face amount is reduced by what the cash would buy

if an immediate annuity is purchased w the face amount at death or w the cash value at surrender, this would be considered a? a. rollover b. settlement option

settlement option

the commissioner may permit an agent to enter into a reasonable arrangements with a prospective insureds to charge a reduced fee in situations where services that are charged for are

provided beyond the scope of cusomarily services in connection with the solicitation and procurement of insurance

which of the following is incorrect regarding a 20-year level term policy? a. the policy premium will remain level for 20 years b. if the insured dies before the policy expired, the beneficiary will received 100,000 c. the policy will expire at the end of the 20 year period d. at the end of 20 years, the policy's CV will equall 100,000

d. at the end of 20 years, the policy's CV will equal 100,000 -term policies do not develop cash values

within how may days must an insurance producer reply to an inquiry of the commissioner? 5, 10, 15, 30

15 days

which of the following types of policies allowes the PO to skip premiums? variable, adjustable, universal, flexible life?

universal life -has flexibility to increase/decrease premium up or skin paying -must have CV to compensate

which of the following statements regarding the taxation of a modified endowment contract is false? a. policy loans are taxable distributions b. accumulations are tax deferred c. withdrawals are not taxable d. distributions before age 59.5 get a 10% penalty

withdrawals are not taxable -distributions from MECs are taxable, including withdrawals and policy loans

which of the following will provide the UW with info about an applicant's credit? a. inspection report b. agent's report c. federal report d. consumer reports

consumer report -written/oral info regarding customer's credit, character rep, habits collected by a reporting agency from employment records, credit reports, other public sources

which of the following is true of level term insurance? a. policy endows at age 100 b. policy offers nonforfeiture values c. it is temp protection d. premium will increase/decrease based off int rates

it is temp protection

when comparing joint life policy to two individual life polocies of the same amount on the same insureds, what is true? a. joint life has a premium identical to the sum of the two indivual policies b. the joint life premium can only be paid monthly c. joint life has a higher premium that the total of the two individual policies d. . joint life has a lower premium that the total of the two individual policies

joint life has a lower premium that the total of the two individual policies -since joint life only pays one death benefit (first death) its premium is less than the total of two individual policies

the human life value approach to determining life insurance needs is based upon which of the following ideas a. needs for college b. retirement needs c. loss of breadwinners income d. replacement of assets

loss of breadwinners income -human life value approach is based on loss of income

the policy owner pays for her life insurance annually. Until now, she has collected a nontaxable dividened check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option is this? a. paid up addition b. accumulation at interest c. cash option d. reduction of premium

reduction of premium -allows the PO to apply policy dividends toward the next year's premium -dividend is subtracted from the premium amount

all of the following are true regarding the federal fair credit reporting act except a. customer must be notified if adverse selection is taken as result of a report b. reports may be sent to anyone who requests one c. insurers are not req to give customers a copy of the report d. it applies to credit reports ordered in connection w insurance, banking, and employment

reports may be sent to anyone who requests one -credit reports may only be order by those involved in underwriting, bank loans, or employment

an agent is hand delivering an insurance policy to a PO, what must the agent obtain to complete the trans? a. signed delivery receipt b. conditional receipt c. statement of good health d. agent's report

signed delivery receipt -when delivered by hand, must have a delivery receipt signed

someone got an inheritance. He wants to used money to create income. He purchases an annuity and wished to receive payments in 2 months what'd he get single premium deferred annuity or single premium immediate annuity

single premium immediate annuity -any annuitization 12 months or less is considered immediate

which of the following determines the length of time that benefits would be received under the fixed amount settlement option? a. interest b. size of each installment c. predetermined length of time stated in contract length of income period

size of each installment -logically follows that larger installments trasnslate into shorter benefit periods

all of the following statements concerning the use of insurance as an executive bonus are correct except a. the employer pays a bonus to a selected employee to fund the policy b. it is considered a nonqualified employee benefit c. the policy is owned by the company d. any type of insurance may be used

the policy is owned by the company -employee owns it

a life insurance policy qualifies a MEC if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? a. 7 years b. the life of the policy c. 3 years d. 5 years

7 years -if the policy's premium paid in its first 7 years exceeds what would have been into a life policy w level annua; premiums that would be paid up in 7 years, the policy fails the 7 pay test and is an MEC

what type of group covers employees of the US gov, state, political subdivision a. credit union groups b. public employee associations c. debtor groups d. association

public employee associations

which of the following requires a securities license? a. fixed annuity b. equity indexed annuity c. deferred annuity d. variable annuity

-variable annuity is considered to be a security and regulated by the SEC

to sell a variable life insurance policy, an agent must receive all of the following except a. life insurance license b. SEC registration c. FINRA license d. securities license

SEC registration -SEC is for securities not agents

all of the following are examples of policy replacement except? a. an existing policy being reissued w a reduction in cash value b. a term policy being converted to whole life c. an existing policy has lapsed or surrendered d. a policy is being changed to reduced paid up or extended term

a term policy being converted to whole life -converting term policy to permanent is not replacement

all of the following are consideration in an insurance policy except a. promise to pay covered losses b. cash value in the policy c. statements on the applicaiton d. premium paid at time of app

cash value in the policy

what is the cost of coverage based on for group life insurance?

avg age and ratio of men to women

which of the following is a feature of a variable annuity a. securities license is not req b. benefit payments are not guaranteed c. payments into the annuity are kept in general account d. interest rate is guaranteed

benefit payments are not guaranteed -no guaranteed min int rate or benefit payment amounts

who makes up the medical info bureau? a. former insured b. physicians and paramedics c. insurers d. hospitals

insurers -the MIB is made up of insurers so companies can compare info they have collected with info other insurers may have discovered

which rider would not cause the DB to increase? a. guaranteed insurability rider b. cost of living rider c. accidental death rider d. payor benefit rider

payor benefit rider -doesn't increase DB pays premium if the payor is disabled or dies

a whole life policy is surrended for a reduced-paid up policy. the CV in the new policy will a. decease b. reduce to pre surrender value c. continue to increase d. same

continue to increase -new policy continues to build its own CV and will remain in force until death or maturity

which of the following is true regarding the annuity period? a. payments grow interest tax deferred b. also referred to as accumulation period c. it is the period of time which the annuitant makes premiums payments into the annuity d. it may last for the lifetime of the annuitant

d. it may last for the lifetime of the annuitant -annuity period is time which accumulated money is converted into an income stream -can last for lifetime of shorter depending on benefit option selected

which of the following best describes what the annuity period is? a. period of time during which accumulated money is converted into income payments b. period of time during which money is accumulated into the annuity

a. period of time during which accumulated money is converted into income payments -annuity period is when accumulated money is turned into income stream

the paid up addition option used 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 CV

to purchase a smaller amount of the same type of insurance as the original policy -dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy