Mississippi Insurance Licensing Exam

Who bears all of the investment risk in a fixed annuity?

the insurance company

Which two terms are associated directly with the way an annuity is funded?

single payment or periodic payment

when the insured selects the extended term non-forfeiture option the cash value will be used to purchase term insurance with what face amount?

equal to the original policy for as long as the cash value will purchase

An insured has a live insurance policy company and receives quarterly dividends. he has instructed the company to apply the policy dividends to increase the death benefit. the dividend option that the insured has chosen is called?

Paid-up additions

which of the following can surrender a deferred annuity contract? (A) a deferred annuity cannot be surrender (B) only the annuity owner (C) only the insurance company for non-payment of premiums (D) the beneficiary after the owner's death

(B) only the annuity owner

The paid-up addition option uses the dividend....

To purchase a smaller amount of the same type of insurance as the original policy.

An insured receives an annual life insurance dividend checks. what term best describes this arrangement?

cash option

contracts that are prepared by one party and are submitted to the other party as on a take it or leave it basis are classified as

contracts of adhesion

which of the following is not typically excluded from live policies?

death due to plane crash for a fair paying passenger

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?

profit sharing plan

Which of the following determines the length of time that benefits will be received under the fixed amount settlement option?

size of its installment

when would a 20-pay whole life policy endow?

when the insured reaches age 100

All the following are true about the variable product expect: (A) policy owner bears the investment risk (B) the premiums are invested in the insurer's general account (C) the minimum death benefit is guaranteed (D) the cash value is not guaranteed

(B) the premiums are invested in the insurer's general account

Which of the following is not true regarding a certificate of authority? (a) it is equivalent to an insurance license (b) it is issued by the state department of insurance (c) it is issued to a group insurance participants (d) it may not be necessary for transacting business in specific states

(C) it is issued to a group insurance participants

A producer who fails to segregate premium monies from his personal funds is guilty of (a) commingling (b) larceny (c) embezzlement (d) theft

(a) Commingling it is ILLEGAL for insurance producers to commingle premiums collected from the applicants with their own personal funds.

When the commissioner determines that a licensee has violated the regulations of the Mississippi insurance Code, the commissioners first response is likely to be (a) issue a cease and desist order (b) issue an arrest warrant (c) revocation of that license (d) issue a restraining order

(a) issue a cease and desist order

which of the following will be included in a policy summary? (a) premium amounts and surrender values (b) copies of illustrations and application (c) comparisons with similar policies (d) Primary and secondary beneficiary designations

(a) premium amounts and surrender values a policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium cash value, surrender value, and death benefit figures for specific policy years.

Pertaining to insurance, what is the definition of a fiduciary responsibility? (a) promptly forwarding premiums to the insurance company (b) helping insureds to file claims (c) performing reviews of insured's coverage (d) offering additional coverage to clients

(a) promptly forwarding premiums to the insurance company

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as (a) juvenile protection provision (b) Survivor protection (c) life planning (d) Survivorship insurance

(b) Survivor protection Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. this is known as survivor protection

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristics does this describe? (a) personal (b) adhesion (c) unilateral (d) conditional

(b) adhesion a contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written

State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT (a) offering benefit certificates or securities in return for purchasing insurance (b) inviting prospective clients to the grand opening of the company's new office (c) issuing or delivering stock in return for purchasing insurance (d) Promising returns and profits from the purchase of insurance

(b) inviting prospective clients to the grand opening of the company's new office

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. the insurer returns all the premium payments to the owner, except for a predetermined percentage. what is the percentage called? (a) inflation adjustment (b) surrender charge (c) termination penalty (d) bail-out charge

(b) surrender charge

Which of the following would qualify as a competent party in an insurance contract? (a) the applicant is a 12-year-old student (b) the applicant is under the influence of a mind-impairing medication at the time of application (c) the applicant has a prior felony conviction. (d) the applicant is intoxicated at the time of application.

(c) the applicant has a prior felony conviction when an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. It is is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, a 12-year-old student is considered to be underage in most states and a person under a mind-impairing medication most likely would not be mentally competent.

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? (a) the Guaranty association (b) Consumer privacy act (c)the fair credit reporting act (d)unfair trade practices law

(c) the fair credit reporting act the purpose of the fair credit reporting act is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer reporting agencies are fair and equitable in their treatment of consumers.

All of the following are true regarding insurance policy loans except (a) the amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. (b) the policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. (c) Policy owners can borrow up to the full amount of their whole life policy's cash value. (d) policy loans can be made on policies that do not accumulate cash value

(d) policy loans can be made on policies that do not accumulate cash value

the validity of coverage under a live insurance policy may not be contested except for nonpayment of premium, after the policy has been enforced for at least how many years?

two years

your client paid for her annuity with a lump sum payment but after a year she still hasn't received her first income payment from the annuity. which of the following is true? (A) she may have a deferred annuity (B) the sum of premium paid so far has not met the designated pay off level (C) the first income payment does not have to be made until the first year of payment (D) a single deferred annuity is made in a lump sum but the annuity income payments do not have to be distributed within a year unlike a single premium annuity

(A) she may have a deferred annuity

Which of the following is true regarding variable annuities? (a) a person selling variable annuities is required to have only a life agent's licence. (b)the annuitant assumes the risk of investment (c) the funds are invested in the company's general account (d) the company guarantees a minimum interest rate

(b) the annuitant assumes the risk investment the payments that the annuitant invests into the variable annuity are invested in the insurer's separate account. The separate account under many annuities provides the annuitant with a dozen or more investment options ranging from "money market funds" to "growth stock funds" to "precious medal funds." Therefore, the annuitant assumes the risk of the investment

What is the purpose of the insurance guaranty association? (a) to prevent unfair trade practices (b) to protect policy owners against insurer insolvency (c) to protect insurance companies against insurance fraud (d) to provide double indemnity for the insured's loss

(b) to protect policy owners against insurer insolvency

In an annuity the accumulated money is converted into a stream of income during which time period?

annuitization period

The automatic premium loan provision is activated the end of the ----

grace period

the policy owners wants to make sure that upon his death the live policy will pay a portion of the proceeds annually to his spouse, but the principle will be paid to their children when the reach a certain age. which settlement option should the policy owner choose?

interest only option

what is the benefit of choosing an extended term as a non-forfeiture option?

it has the highest amount of insurance protection

When a reduced pay up nonforfeiture option is chosen, what happens to the base amount of the policy?

it is reduced to the amount of what the cash value would buy as a single premium

An insured purchased a live policy in 2010 and died in 2017. the insurance company discovers that the insured had concealed information during the application process. what can they do?

pay the death benefit

which of the following types of risk will result in the highest premium?

substandard risk

Insurer Insolvency

the company is in a position financially that they cannot meet obligations to policyholders because of insufficient policy reserves, capital and surplus requirements.

what is the purpose of the buyer's guide?

to all the consumer to compare the cost of different policies

what is the purpose of a fixed period settlement option?

to provide a guaranteed income for a certain amount of time