Life Study - Tailored
Wisconsin grace period. How many days?
31 days
A person that markets insurance but does not include an insurer is called a 1. Solicitor. 2. Conglomerate. 3. Firm. 4. Broker.
Firm
Which of the following statements regarding deferred compensation funds is INCORRECT? (Choose from the following options) 1. They are usually qualified plans. 2. They can be established by employers. 3. They can be made with cash deposits to an annuity. 4. They generally provide additional retirement benefits.
guess -
If a person violates an order specifically issued to them, they may be required to pay a fine up to $1,500. $2,000. $3,000. $1,000.
$1,000. Violating an order issued to a person will result in a fine up to $1,000 for each violation. Each day the violation continues is considered a separate offense.
Insurer is legally bound to pay losses covered by a policy in force.
Unilateral
An agent is presumed to have exceeded the occasional exchange of business if the agent places more than how many insurance risks per calendar year with all insurers?
25
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? (Choose from the following options) 1. Nothing 2. $50,000 3. $100,000 4. $200,000
$100,000
4. A participating insurance policy may do which of the following? (Choose from the following options) 1. Pay dividends to the policyowner 2. Provide group coverage 3. Pay dividends to the stockholder 4. Require 80% participation
1 - pay dividends to the policyowner
3. Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to (Choose from the following options) 1. 3 years. 2. 5 years. 3. 10 years. 4. 12 years.
10 years
How long must a life insurance policy be in force before the owner can enter into a viatical settlement contract? (Choose from the following options) 1. 90 days 2. 6 months 3. 1 year 4. 2 years
2 years
After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within
20 Days
Intermediaries are required to maintain records related to insurance transactions for what period of time?
3 Years
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? 1. They provide information about a customer's character and reputation. 2. The customer has no knowledge of this action. 3. The customer's associates, friends, and neighbors provide the report's data. 4. They provide additional information from an outside source about a particular risk.
3. The customer's associates, friends, and neighbors provide the report's data.
How long are oral contracts valid in Wisconsin? (Choose from the following options) 1. 30 days 2. Oral contracts are not valid. 3. 48 hours 4. 3 business days
30 days
#19. An aggrieved person's petition for a re-hearing will be considered denied if the Commissioner does not act on it within a) 10 days. b) 20 days. c) 30 days. d) 45 days.
30 days If the Commissioner does not act on an aggrieved person's petition for re-hearing within 30 days after its filing, the petition is considered to have been denied.
Replacement Rules - how many years must be kept on file?
5 years
#13. An insurance policy is considered a "new policy" if it has been in effect for what maximum time period? a) 10 days b) 30 days c) 60 days d) 90 days
60 days A new insurance policy is one that has been in effect for less than 60 days since the issue.
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death? (Choose from the following options) 1. A business partner of the insured 2. The wife of the deceased insured 3. The former wife of the deceased insured 4. A minor son of the insured
A minor son of the insured Because a minor does not have the legal capacity to release the insurer from further obligation, benefits normally have to be passed through a guardian or trustee.
3. Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? (Choose from the following options) 1. AM Best 2. NAIC 3. Consumer's guide 4. SEC
AM Best AM Best & Company assigns ratings to life, property and casualty insurance companies based upon the financial stability of the insurer.
The minimum interest rate on an equity indexed annuity is often based on (Choose from the following options) 1. An index like Standard & Poor's 500. 2. The returns from the insurance company's separate account. 3. The annuitant's individual stock portfolio. 4. The insurance company's general account investments.
An index like Standard & Poor's 500.
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT 1. Employer contributions are tax deductible as ordinary business expense. 2. Funds accumulate on a tax-deferred basis. 3. Employee and employer contributions are not counted as income to the employee for income tax purposes. 4. At distribution, all amounts received by the employee are tax free.
At distribution, all amounts received by the employee are tax free
What describes a ledger or proposal used to show both guaranteed and non-guaranteed elements of the policy? Basic illustration Ledger proposal Outline of coverage Portioning illustration
Basic illustration An illustration is a presentation that includes non-guaranteed elements of a policy over a period of years. A basic illustration is a ledger or proposal used to show both guaranteed and non-guaranteed elements of the policy.
Which of the following is NOT true regarding an annuity certain? It is a short-term annuity. Benefits stop at the annuitant's death. It will pay until a fixed amount is liquidated. There are no life contingencies.
Benefits stop at the annuitant's death. Annuities Certain are short-term annuities which limit the amount paid to a certain fixed period or until a certain fixed amount is liquidated. There are no life contingencies.
Which of the following best describes fixed-period settlement option? 1. The death benefit must be paid out in a lump sum within a certain time period. 2. Income is guaranteed for the life of the beneficiary. 3. Both the principal and interest will be liquidated over a selected period of time. 4. Only the principal amount will be paid out within a specified period of time.
Both the principal and interest will be liquidated over a selected period of time.
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called (Choose from the following options) 1. Revocable designation. 2. Irrevocable designation. 3. Stirpes designation. 4. Class designation.
Class designation.
Take it or leave it by the insurer - Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of Adhesion
Which of the following is NOT typically excluded from life policies? (Choose from the following options) 1. Death that occurs while a person is committing a felony 2. Death due to war or military service 3. Death due to plane crash for a fare-paying passenger 4. Self-inflicted death
Death due to plane crash for a fare-paying passenger
CRAPPO - what does it go with?
Dividends Cash Reduced premium Accumulation at interest Paid up additions Paid up options One-year term
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? a) Needs approach b) Blackout approach c) Lump-sum approach d) Human life value approach (HLVA)
Human life value approach (HLVA) Human life value approach is determined by the loss of income that would result with the death of the insured, after making adjustments for expenses, inflation, etc.
What are the two components of a universal policy? Separate account and policy loans Insurance and cash account Insurance and investments Mortality cost and interest
Insurance and cash account A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher.
Which statement regarding insurable risks is NOT correct? An insurable risk must involve a loss that is definite as to cause, time, place and amount. Insureds cannot be randomly selected. Insurance cannot be mandatory. The insurable risk needs to be statistically predictable.
Insureds cannot be randomly selected. Granting insurance must not be mandatory, selecting insureds randomly will help the insurer to have a fair proportion of good risks to poor risks. All other statements are true.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? (Choose from the following options) 1. Payments can be made in installments and as a single cash refund. 2. It does not guarantee that the entire principal amount will be paid out. 3. It is a life contingency option. 4. The beneficiary receives the remainder of the principal amount upon the annuitant's death.
It does not guarantee that the entire principal amount will be paid out.
What is the benefit of choosing extended term as a nonforfeiture option? (Choose from the following options) 1. It matures at age 100. 2. It allows for coverage to continue beyond maturity date. 3. It can be converted to a fixed annuity. 4. It has the highest amount of insurance protection.
It has the highest amount of insurance protection. Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? (Choose from the following options) 1. It is a percentage of the cash value and decreases over time. 2. It is always 7% of the cash value. 3. It is a flat fee determined by the annuity owner when the annuity is purchased. 4. It will increase as the accumulation period increases.
It is a percentage of the cash value and decreases over time.
Which statement is NOT true regarding a Straight Life policy? 1. It has the lowest annual premium of the three types of Whole Life policies. 2. Its premium steadily decreases over time, in response to its growing cash value. 3. The face value of the policy is paid to the insured at age 100. 4. It usually develops cash value by the end of the third policy year.
Its premium steadily decreases over time, in response to its growing cash value.
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? (Choose from the following options) 1. Mortality rate 2. Risk exposure 3. Morbidity 4. Life expectancy
Life expectancy
STUDY THIS - Which of the following best describes gross annual premium? (Choose from the following options) 1. Annual loading 2. Basic insurance rate plus commissions 3. Expense premium 4. Net premium plus expenses
Net premium plus expenses
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive The remainder of the principal. Nothing; the payments will cease. Guaranteed minimum benefit. The amount paid into the annuity.
Nothing; the payments will cease. Straight or pure life annuity will pay a specific amount of income for the remainder of the annuitant's life. This payment will cease at death, regardless of the amount of principal that hasn't been paid out. There is no refund or payments to survivors.
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the 1. Accelerated endowment. 2. Paid-up additions. 3. One-year term option. 4. Paid-up option.
One-year term option.
97. Under a pure life annuity, an income is payable by the company (Choose from the following options) 1. For a guaranteed period of time, whether or not the annuitant survives to the end of that period. 2. For as long as either the annuitant or a named beneficiary is alive. 3. Only for the life of the annuitant. 4. Until the principal and interest are exhausted.
Only for the life of the annuitant. Straight or pure life will pay an amount for the remainder of the annuitants life. Payments cease at death. Nothing for survivors.
Which of the following can surrender a deferred annuity contract? (Choose from the following options) 1. A deferred annuity cannot be surrendered. 2. Only the annuity owner 3. Only the insurance company for nonpayment of premiums 4. The beneficiary after the owner's death
Only the annuity owner
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? (Choose from the following options) 1. Payments for 15 years 2. Payments for 20 years 3. Payments for life 4. Nothing
Payments for 15 years
All of the following are true regarding insurance policy loans EXCEPT (Choose from the following options) 1. Policy loans can be made on policies that do not accumulate cash value. 2. The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. 3. The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. 4. Policyowners can borrow up to the full amount of their whole life policy's cash value.
Policy loans can be made on policies that do not accumulate cash value. The policy loan option is only found in policies that contain cash value.
A situation in which a person can only lose or have no change represents (Choose from the following options) 1. Speculative risk. 2. Adverse selection. 3. Hazard. 4. Pure risk.
Pure risk. Pure risk refers to situations that can only result in a loss or no change. Pure risk is the only type insurance companies are willing to accept.
Which nonforfeiture option provides coverage for the longest period of time? (Choose from the following options) 1. Paid-up option 2. Accumulated at interest 3. Reduced paid-up 4. Extended term
Reduced Paid-Up Extended term provides the most amount of coverage for the least amount of time, whereas reduced paid-up provides the least amount of coverage for the longest period of time.
A domestic insurer issuing variable contracts must establish one or more (Choose from the following options) 1. General accounts. 2. Separate accounts. 3. Liability accounts. 4. Annuity accounts.
Separate accounts.
Which settlement option provides a single beneficiary with income for the rest of his/her life? 1. Single Life 2. Fixed Amount 3. Lump Sum 4. Retained Assets
Single life The Single Life Option provides a single beneficiary with income for the rest of his/her life
Annuity payment options (Accumulation)
Single premium and Periodic Single premium - one time lump sum. Periodic which premiums are paid in installments over a period of time.
47 Which of the following would provide an underwriter with information concerning an applicant's health history? (Choose from the following options) 1. The inspection report 2. The Medical Information Bureau 3. A medical examination 4. The agent's report
The Medical Information Bureau
34. A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to 1. The insurance company. 2. The insured's estate. 3. The insured's firstborn child. 4. Both children who share equally on a per-capita basis.
The insured's estate.
In a life settlement contract, whom does the life settlement broker represent? The owner The insurer The beneficiary The life settlement intermediary
The owner Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.
#44. Which of the following is true regarding a market value adjusted annuity? a) There are no penalties for a premature surrender of the annuity. b) It provides a level benefit payment. c) The owner is guaranteed a fixed interest rate for a specific period of time. d) The insurer bears all the market risk of changing interest rates.
The owner is guaranteed a fixed interest rate for a specific period of time. Under a market value adjusted (modified guaranteed) annuity, the insurer guarantees a competitive interest rate for a specific period (the longer the period, the better the guaranteed rate). At the end of the period, the owner has the option of taking the accumulated value or reinvesting the values at a new interest rate.
All of the following are general requirements of a qualified plan EXCEPT a) The plan must be communicated to all employees. b) The plan must be for the exclusive benefits of the employees and their beneficiaries. c) The plan must be permanent, written and legally binding. d) The plan must provide an offset for social security benefits.
The plan must provide an offset for social security benefits. Plans must meet the general requirements established by IRS.
What must happen when an individual policy or annuity has been personally delivered to the policyowner? (Choose from the following options) 1. The producer must go over the policy with the policyowner. 2. A notary public must witness the exchange. 3. The policyowner must sign a delivery receipt. 4. The policyowner must pay the annual premium in full.
The policyowner must sign a delivery receipt.
Which of the following is NOT true of life settlements? (Choose from the following options) 1. The seller must be terminally ill. 2. They could be used for a key person coverage. 3. They could be sold for an amount greater than the current cash value. 4. They involve insurance policies with large face amounts.
The seller must be terminally ill. With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-person" coverage, corporate owned policies, or policies representing excess coverage that is no longer needed, and could be sold for an amount greater than the current cash value.
The Waiver of Cost of Insurance rider is found in what type of insurance? (Choose from the following options) 1. Whole Life 2. Joint and Survivor 3. Juvenile Life 4. Universal Life
Universal Life
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as 1. Utmost good faith. 2. Reasonable expectations. 3. A warranty. 4. Implied warranty.
Utmost good faith The insurer must be able to rely on the statements given by the insured in the application. The insured must be able to rely on the insurer's promise to pay covered losses.
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? (Choose from the following options) 1. Decreasing term life 2. Variable universal life 3. Increasing term life 4. Credit term life
Variable universal life
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 (Choose from the following options) 1. Upon issuance of the policy. 2. Within 30 days after the first premium payment was collected. 3. Prior to filling out an application for insurance. 4. With the policy.
With the policy
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? (Choose from the following options) 1. A policy summary 2. A notice regarding replacement 3. A privacy notice 4. A buyer's guide
guess - policy summary
#39 The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to (Choose from the following options) 1. The insured's estate. 2. Probate. 3. The state. 4. The beneficiary's estate.
the insured's estate.
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? (Choose from the following options) 1. Life with period certain 2. Fixed amount 3. Interest only 4. Fixed period
Fixed period Payments for a specified time period until exhausted
A Universal Life insurance policy has two types of interest rates that are called (Choose from the following options) 1. Option A and Option B. 2. Fixed and Variable. 3. Minimum and Target. 4. Guaranteed and Current.
Guaranteed and Current.
Which of the following is a presentation that includes nonguaranteed elements of a policy over a period of years? 1. Illustration 2. Prospectus 3. Policy summary 4. Agent's report
Illustration
Variable Whole Life insurance is based on what type of premium? (Choose from the following options) 1. Graded 2. Level fixed 3. Increasing 4. Flexible
Level fixed Variable Whole Life insurance is a level fixed premium investment-based product.
The Interstate Insurance Product Regulation Compact is a contract between
Member states
What document must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement Signed by both the applicant and the producer.
20. All of the following are examples of risk retention EXCEPT (Choose from the following options) 1. Premiums. 2. Deductibles. 3. Copayments. 4. Self-insurance.
Premiums
Rebates are true except
Rebates are allowed if it is in the best interest of the client
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? (Choose from the following options) 1. Replacement rule 2. Reinstatement rule 3. Conversion rule 4. Disclosure rule
Replacement rule
Children's riders attached to whole life policies are usually issued as what type of insurance? a) Variable life b) Adjustable life c) Whole life d) Term
Term Children's term riders provide term insurance with coverage expiring when the minor reaches a certain age.
81. In a defined contribution plan, (Choose from the following options) 1. The contribution and the benefit are unknown. 2. The contribution and the benefit are known. 3. The contribution is known and the benefit is unknown. 4. The benefit is known and the contribution is unknown.
The contribution is known and the benefit is unknown.
Who bears all of the investment risk in a fixed annuity? 1. The insurance company 2. The owner 3. The beneficiary 4. The annuitant
The insurance company
All of the following are true regarding the Policy Summary EXCEPT (Choose from the following options) 1. The policy summary is required to be given at policy delivery if the insurer did not provide a policy illustration. 2. The policy summary may only describe the guaranteed elements of the policy. 3. The policy summary may show dividends. 4. The policy summary must show the annual premiums for the first 20 years.
The policy summary may show dividends. The policy summary may not include dividends since they are not guaranteed elements of the policy
Proof of loss to the insurance company. Considered overdue if not paid within how many days?
30 days
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out? (Choose from the following options) 1. $10,000 2. $40,000 3. $50,000 4. $60,000
$50,000
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? $20,000 $25,000 $50,000 The face amount will be determined by the insurer.
$50,000 The face of the term policy would be the same as the face amount provided under the whole life policy.
Which is NOT true about beneficiary designations? (Choose from the following options) 1. The beneficiary must have insurable interest in the insured. 2. The beneficiary may be a natural person. 3. The policy does not have to have a beneficiary named in order to be valid. 4. Trusts can be valid beneficiaries.
1. The beneficiary must have insurable interest in the insured.
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT 1. Upon conversion, the death benefit of the permanent policy will be reduced by 50%. 2. Evidence of insurability is not required. 3. Most term policies contain a convertibility option. 4. Upon conversion, the premium for the permanent policy will be based upon attained age.
1. Upon conversion, the death benefit of the permanent policy will be reduced by 50%. Convertible term insurance is convertible without proof of insurability up to the full term death benefit. However, upon conversion, the premium for the permanent policy will be based on the insured's attained age.
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? 1. Company is the owner, and the company pays the premium. 2. Executive is the owner, and the executive pays the premium. 3. Company is the owner, but the executive pays the premium. 4. Board of directors is the owner, and the board of directors pays the premium.
2. Executive is the owner, and the executive pays the premium. Executive buys the policy and pays the premium, and the employer reimburses the executive for cost (or pays a bonus in the amount of the premium). Since the executive is receiving compensation, the amount paid by the employer would be considered taxable income.
After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within 20 days. 30 days. 40 days. 15 days.
20 days An aggrieved person may request a re-hearing within 20 days after the original hearing and a final order is issued. This petition does not suspend or delay the effective date of the order unless the petition is granted or the order is superseded, modified, or set aside.
An agent is presumed to have exceeded the occasional exchange of business if the agent places more than how many insurance risks per calendar year with all insurers? 10 15 25 5
25 Unless proven otherwise, an agent is presumed to have exceeded the occasional exchange of business if he/she places more than 5 insurance risks per calendar year with a single insurer with which he/she is not listed as an agent, or exchanges more than 25 insurance risks per calendar year with all insurers.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Intermediaries are required to maintain records related to insurance transactions for what period of time? 3 years 5 years 10 years 2 years
3 years Each intermediary must maintain records for a 3 year period.
#97 Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? (Choose from the following options) 1. Credit term life 2. Decreasing term life 3. Variable universal life 4. Increasing term life
3. Variable universal life Variable universal life policies have cash value, so they allow policy loans. Term insurance policies do not have cash value.
Which of the following is a key distinction between variable whole life and variable universal life products? 1. Variable whole life allows policy loans from the cash value. 2. Variable universal life has a fixed premium. 3. Variable whole life has a guaranteed death benefit. 4. Variable universal life is regulated solely through FINRA.
3. Variable whole life has a guaranteed death benefit.
During policy replacement, the policyowner is entitled to a free look period of how many days
30 days
In terms of insurance, an intermediary is 1. A common carrier representative who sells short-term travel ticket policies. 2. A salaried employee of an insurer who does not receive compensation based on the amount of insurance business. 3. Anyone who provides information for the purpose of reducing loss. 4. A person who helps another person place insurance or annuities.
4. A person who helps another person place insurance or annuities.
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? 1. Accumulation at Interest 2. Paid-up additions 3. Dividend Accumulation option 4. Paid-up option
4. Paid-up option With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.
What is the number of credits required for fully insured status for Social Security disability benefits? (Choose from the following options) 1. 4 2. 10 3. 30 4. 40
40
An insurer decides to renew a life policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified? 1. 30 2. 60 3. 90 4. 100
60 day
A policy may be issued for a term longer than one year or for an indefinite term as long as there is a clause in the policy providing for cancellation by giving how much notice prior to the anniversary date? A. 90 days B. 100 days C. 30 days D. 60 days
60 days
If the Commissioner issues an order and the person who is the object of the order demands a hearing within 30 days, within how many days must the hearing be held? 1. 30 2. 60 3. 90 4. 120
60 days
An "insurance broker" is an intermediary who acts in the procuring of insurance on behalf of 1. An insurer. 2. A financial institution. 3. The Commissioner. 4. An applicant.
An applicant Type of intermediary: acts in the procuring of insurance on behalf of an applicant for insurance or an insured. A broker does not act on behalf of the insurer, except to collect premiums
Rider - LEVEL TERM - INCREASES ANUALLY - premium increases with age - UNIVERSAL LIFE
Annually renewable term
Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? Refund life Variable annuity Annuity certain Fixed annuity
Annuity certain Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.
Which of the following is NOT true regarding an annuity certain? A. It is a short-term annuity. B. Benefits stop at the annuitant's death. C. It will pay until a fixed amount is liquidated. D. There are no life contingencies.
B. Benefits stop at the annuitant's death. Annuities Certain are short-term annuities which limit the amount paid to a certain fixed period or until a certain fixed amount is liquidated. There are no life contingencies.
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called (Choose from the following options) 1. Payor rider. 2. Cost of living rider. 3. Accelerated benefit rider. 4. Living need rider.
Cost of living rider. Addresses the inflation factor by automatically the amount of insurance without evidence of insurability. The face value of the policy may be increased by a cost of living factor tied to an index such as Consumer Price Index (CPI).
The term "fixed" in a fixed annuity refers to all of the following EXCEPT 1. Death benefit 2. Guaranteed rate of interest 3. Equal annuity payments 4. Amount and length of payments
Death benefit A fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.
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? (Choose from the following options) 1. Decreasing term 2. Variable life 3. Universal life 4. Whole life
Decreasing term
What type of insurance would be used for a Return of Premium rider? (Choose from the following options) 1. Level Term 2. Decreasing Term 3. Annually Renewable Term 4. Increasing Term
Increasing term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? (Choose from the following options) 1. Stop-loss 2. Consideration 3. Reasonable expectations 4. Indemnity
Indemnity
STUDY THIS - Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? Payments can be made in installments and as a single cash refund. It does not guarantee that the entire principal amount will be paid out. It is a life contingency option. The beneficiary receives the remainder of the principal amount upon the annuitant's death.
It does not guarantee that the entire principal amount will be paid out. With the Life with Guaranteed Minimum annuity settlement option, if the annuitant dies before the principal amount (the amount paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to his/her beneficiary. Pure life provides the highest monthly benefits for an individual annuitant.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? (Choose from the following options) 1. It does not guarantee that the entire principal amount will be paid out. 2. It is a life contingency option. 3. The beneficiary receives the remainder of the principal amount upon the annuitant's death. 4. Payments can be made in installments and as a single cash refund.
It does not guarantee that the entire principal amount will be paid out. With the Life with Guaranteed Minimum annuity settlement option, if the annuitant dies before the principal amount (the amount paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to his/her beneficiary. Pure life provides the highest monthly benefits for an individual annuitant.
#95 Why is an equity indexed annuity considered to be a fixed annuity? (Choose from the following options) 1. It is not tied to an index like the S&P 500. 2. It has a guaranteed minimum interest rate. 3. It has modest investment potential. 4. It has a fixed rate of return.
It has a guaranteed minimum interest rate. The current interest rate that is actually often tied to a familiar index like the Standard and Poor's 500 (S&P500)
2. Which of the following is true regarding a risk retention group? (Choose from the following options) 1. It is a benefit society formed to provide insurance for members of an affiliated lodge. 2. It is a company owned by the stockholders that provides nonparticipating policies. 3. It is a liability insurance company owned by its members. 4. It provides support for underwriters and is not an insurance company.
It is a liability insurance company owned by its members.
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? It must be assumed that the death of the insured will occur immediately. Need is predicted using the number of years until the insured's retirement. Coverage is based on the predicted needs of that family. The death of an insured must be premature.
Need is predicted using the number of years until the insured's retirement. In the needs approach method, need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen immediately. The policy allows for benefits to be collected upon the insured's death.
REC - what does it go with?
Nonforfeiture Options Reduced Paid Up Extended Cash Surrender
96. Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? (Choose from the following options) 1. Waiver of Premium 2. Payor Benefit 3. Jumping Juvenile 4. Juvenile Premium Provision
Payor Benefit If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21. NOTE: Waiver of premium - pays the premium to disabled or died (disabled for at least 6 months) Jumping Juvenile - is a policy where the face amount jumps up at 21 - $10,000 to $50,00 and premium stays the same.
Which of the following riders would NOT cause the Death Benefit to increase? (Choose from the following options) 1. Accidental Death Rider 2. Payor Benefit Rider 3. Guaranteed Insurability Rider 4. Cost of Living Rider
Payor Benefit Rider Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.
Who has the right to change the beneficiary in a life insurance policy? (Choose from the following options) 1. Policyowner 2. Beneficiary 3. Any insured under the policy 4. Insurer
Policyowner Policy owner is the only one person who can change the policy.
37. An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? (Choose from the following options) 1. Tax-sheltered account plan 2. HR 10 plan 3. Profit sharing plan 4. 401(k) plan
Profit sharing plan
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to (Choose from the following options) 1. Pay back all premiums owed plus interest. 2. Receive payments for a fixed amount. 3. Purchase a single premium policy for a reduced face amount. 4. Purchase a term rider to attach to the policy.
Purchase a single premium policy for a reduced face amount.
Which type of retirement account does not require the owner to start taking distributions at age 72? Standard IRA Traditional IRA Roth IRA Nonqualified IRA
Roth IRA Roth contributions can continue regardless of the account owner's age, and in contrast with a traditional IRA, distributions do not have to begin at age 72.
Which of the following best details the underwriting process for life insurance? (Choose from the following options) 1. Issuance of policies 2. Reporting and rejection of risks 3. Selection, classification, and rating of risks 4. Solicitation, negotiation and sale of policies
Selection, classification, and rating of risks
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable? Charitable organization Dependents Annuitant Spouse
Spouse If an annuities contract holder dies before the effective starting date, the contract's interest continues to be taxable, unless the beneficiary is a spouse. In that case, this tax can be deferred.
Which of the following is a licensee able to place insurance with unauthorized insurers? A. Surplus lines agent B. Reinsurance intermediary C. Reinsurance broker D. Managing general agent
Surplus lines agent
Which of the following would help prevent a universal life policy from lapsing? Face amount Adjustable premium Corridor of insurance Target premium
Target premium The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT 1. Taxation on accumulation 2. Taxation of withdrawals 3. Taxation of contributions 4. IRS approval requirements
Taxation on accumulation Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.
In a life settlement contract, whom does the life settlement broker represent? a) The owner b) The insurer c) The beneficiary d) The life settlement intermediary
The Owner Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.
If the annuitant dies during the accumulation period, who will receive the annuity benefits? (Choose from the following options) 1. The insurance company 2. The annuitant's estate 3. The beneficiary 4. The annuity owner
The beneficiary
Which of the following statements about group life is correct? The cost of coverage is based on the ratio of men and women in the group. The premiums are higher than in an individual policy because there is no medical exam. The group sponsor receives a Certificate of Insurance. The policy can be converted to an individual term insurance policy.
The cost of coverage is based on the ratio of men and women in the group. Group life insurance can be converted to an individual whole life, not a term, policy; the group life insurance premiums are usually lower than those of an individual policy; the group sponsor receives a master contract, while the participants receive certificates of insurance. The cost of the coverage is based on the average age of the group and the ratio of men to women.
What determines the penalty for surrendering a market value adjusted annuity prematurely? 1. The current interest rate at the time of surrender 2. The flat fee determined by an index of interest gains and the amount of time the annuity would take to mature 3. There are no penalties imposed for surrendering annuities prematurely. 4. The guaranteed minimum interest rate provided in the contract
The current interest rate at the time of surrender If the owner surrenders a market value adjusted annuity prematurely, a penalty is imposed. The penalty amount depends directly upon the current interest rates at the time of surrender.
An agent makes a sales pitch that contains blatant lies about the insurer and its competitions. Who will ultimately be held legally responsible for this? 1. The insurer 2. The State 3. The Commissioner 4. The agent
The insurer Every insurer is bound by any act of its agent performed in this state that is within the agent's apparent authority. In other words, the insurer is liable for the acts of its agents."
86.What is the advantage of reinstating a policy instead of applying for a new one? (Choose from the following options) 1. The face amount can be increased. 2. The cash values have gained interest while the policy was lapsed. 3. The original age is used for premium determination. 4. Proof of insurability is not required.
The original age is used for premium determination. The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.
26. All of the following statements are true regarding installments for a fixed amount EXCEPT (Choose from the following options) 1. This option pays a specific amount until the funds are exhausted. 2. The annuitant may select how big the payments will be. 3. The payments will stop when the annuitant dies. 4. Value of the account and future earnings will determine the time period for the benefits.
The payments will stop when the annuitant dies. Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.
All of the following statements are true regarding installments for a fixed amount EXCEPT (Choose from the following options) 1. This option pays a specific amount until the funds are exhausted. 2. The annuitant may select how big the payments will be. 3. The payments will stop when the annuitant dies. 4. Value of the account and future earnings will determine the time period for the benefits.
The payments will stop when the annuitant dies. Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as (Choose from the following options) 1. Utmost good faith. 2. Reasonable expectations. 3. A warranty. 4. Implied warranty.
Utmost good faith.
98. An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? (Choose from the following options) 1. When the agent submits the application to the company and the company issues a conditional receipt 2. When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health 3. On the designated effective date 4. On the application date
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health Policy goes into effect when premium has been collected.
What is the latest point that a Buyer's Guide can be issued? (Choose from the following options) 1. When the applicant turns in the application 2. Up until the day before policy delivery 3. On the day of policy delivery 4. 30 days after policy delivery
When the applicant turns in the application The insurer must also provide a copy of the life insurance buyer's guide to all prospective buyers, at the time the application is taken.
When would a 20-pay whole life policy endow? (Choose from the following options) 1. After 20 payments 2. In 20 years 3. When the insured reaches age 100 4. At the insured's age 65
When the insured reaches age 100
When must an insurer provide a policy summary? (Choose from the following options) 1. When the application is taken 2. When the policy is delivered 3. Within 10 days of policy delivery 4. Within 30 days of policy delivery
When the policy is delivered
When do full Social Security retirement benefits begin? (Choose from the following options) 1. When the worker reaches 59 1/2. 2. When the worker has earned the required credits. 3. When the worker reaches age 65 and has earned the required amount of work credits. 4. When the worker reaches 65.
When the worker reaches age 65 and has earned the required amount of work credits.
If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? a)Nonforfeiture b)Indemnity c)Reasonable expectations d)Cease and desist
c)Reasonable expectations
Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? a. Refund life b. Variable annuity c. Annuity certain d. Fixed annuity
c. Annuity Certain Annuity certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.
