Primerica: Guaranty Exam
To be qualified as chronically ill, an individual should be unable tp perform at least how many activities of daily living due to their condition? A. 2 B. 3 C. 4 D. 5
A. 2
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? A. Both guarantee that the principal and interest will be fully paid out B. The amount of payments is based on the recipient's life expectancy. C. The size of the installments decrease after certain period of time. D. Both guarantee payments for the life expectancy of the beneficiary.
A. Both guarantee that the principal and interest will be fully paid out
Under what circumstance will the contingent beneficiary receive the death benefit? A. If the primary beneficiary dies before the insured B. If the tertiary beneficiary dies before the insured C. If designated by the insured D. If designated by the primary beneficiary
A. If the primary beneficiary dies before the insured
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance? A. Insurance application B. Risk analysis C. The law of large numbers D. Agent's report
A. Insurance application
All of the following statements are true regarding an Ordinary (straight) life policy EXCEPT A. It does not have a guaranteed death benefit B. It is funded by a level premium C. It builds cash value D. If the insured lives to age 100, the policy matures, and the face amount is paid to the insured
A. It does not have a guaranteed death benefit
Which risk classification is representative to the majority of people in a certain age group and with similar lifestyles? A. Standard B. Substandard C. Declined D. Preferred
A. Standard
In a deferred annuity, the difference between the accumulation value and the surrender value is the A. Surrender charge B. Mortality charge C. Interest credit D. Front end load
A. Surrender charge
Life insurance can provide which of the following? A. Survivor protection B. Protection against outliving one's assets C. Creation of a future liability D. Liquidation of one's estate
A. Survivor protection
What is the tax penalty for withdrawing money from an annuity prior to age 59 1/2? A. 5% B. 10% C. 12% D. 20%
B. 10%
A loss resulting from which of the following would qualify for the accidental death rider coverage? A. A hazardous hobby B. An automobile accident C. A health condition D. A disability
B. An automobile accident
What type of an interest rate is guaranteed in universal life policies? A. Current interest rate B. Contract interest rate C. Nominal interest rate Adjustable interest rate
B. Contract interest rate
An insurer's life license must be renewed A. Every year B. Every 2 years C. Every 3 years D. Every 5 years
B. Every 2 years
Which type of authority is found in the agents contract? A. Implied B. Express C. Assumed D. Apparent
B. Express
Because of an injury, an insured has been unable to work for 7 months. When his life insurance premium came due, he was unable to pay, yet the policy remained in force. He policy includes A. Nonforfeiture options B. Waiver of premium rider C. Guaranteed insurability benefits D. Facility of payment clause
B. Waiver of premium rider
Once an insurer receives a claim, within how many days must the insurer provide claim forms to the insured? A. 3 calendar days B. 10 working days C. 15 working days D. 30 calendar days
C. 15 working days
The entire contract includes all of the following EXCEPT A. A copy of the application B. Any rider or amendments C. A buyer's guide D. The insurance policy
C. A buyer's guide
Insurers CANNOT transact insurance in this state without a A. Certificate of Insurance B. Letter of Clearance C. Certificate of Authority D. Broker's License
C. Certificate of Authority
Which of the following is NOT a component of an insurance policy premium? A. Insurer expenses B. Investment return C. Number of beneficiaries D. Mortality cost
C. Number of beneficiaries
Which of the following statements is true regarding thrift plans? A. The employer is the sole contributor to the plan B. The employer contributes up to 10% of each employee's salary C. The employer contributes a certain amount for each dollar contributed by the employee D. The employee is the sole contributor to the plan.
C. The employer contributes a certain amount for each dollar contributed by the employee
An individual acted as an exclusive general agent even though she was not licensed to do so. Since this offense over a period of 60 days, what is the maximum penalty she faces? A. $60,000 and a second degree misdemeanor B. $1000 and third degree misdemeanor C. $10000 and a second degree felony D. $60000 and a third degree misdemeanor
D. $60000 and a third degree misdemeanor
How many excess continuing education credit hours may a licensee carry forward from one licensing period to the next? A. None B. 6 C. 12 D. 24
D. 24
An agent is hand delivering an insurance policy to a policyowner. What must the agent obtain to complete the transaction? A. A conditional receipt B. A statement of good health C. An agent's report D. A signed delivery receipt
D. A signed delivery receipt
The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas? A. Replacement of assets B. Specified needs for college education C. Retirement needs D. Loss of breadwinner's income
D. Loss of breadwinner's income
The reduction of premium option uses the dividend to reduce A. This year's premium B. The previous year's premium C. The premium on any other policy owned by the policyowner D. Next year's premium
D. Next year's premium
Contributions to Roth IRAs are A. Tax deductible B. Always subject to a 6% tax penalty C. Paid with pre-tax dollars D. Not tax deductible
D. Not tax deductible
What is the cost of coverage based on a for group life insurance? A. The average age B. The ratio of men to women C. The insureds' individual ages D. The average age and the ratio of men to women
D. The average age and the ratio of men to women
How long is the right to examine period for a new individual annuities issued in this state? A. 10 days B. 20 days C. 45 days D. 90 days
A. 10 days
If a consumer requests additional concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 5 days B. 7 days C. 10 days D. 3 days
A. 5 days
Under the 401(k) bonus or thrift plan, the employer will contribute A. An undetermined percentage for each dollar contributed by the employee B. All of the money to the plan C. 30% of what the employee contributes D. 75% of what the employee contributes
A. An undetermined percentage for each dollar contributed by the employee
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? A. Collateral assignment B. Insurable interest C. Modification clause D. Ownership provision
A. Collateral assignment
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? A. Equal to the original policy for as long as the cash values will purchase B. In lesser amounts for the remaining term of age 100 C. Equal to the cash value surrendered from the policy D. The same as the original policy minus the cash value
A. Equal to the original policy for as long as the cash values will purchase
All of the following are true regarding rebates EXCEPT A. Rebates are allowed if it is in the best interest of the client B. Rebates are only allowed if specifically states in the policy C. Rebating can be anything of monetary value given as an inducement to purchase insurance D. Dividends are not considered rebates.
A. 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? A. Replacement rule B. Reinstatement rule C. Conversion rule D. Disclosure rule
A. Replacement rule
If another governmental agency takes legal action against a licensee, whose responsibility is it to report the action? A. The licensee B. The Department of Insurance C. The judge D. The person/entity requesting the action
A. The licensee
Which method of dealing with risk is applied when insurance is purchased? A. Transfer B. Sharing C. Avoidance D. Reduction
A. Transfer
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty? A) $1,000 B) $2,500 C) $5,000 D) $10,000
B) $2,500
How long is the grace period for an individual life insurance policy? A. 3 months B. 1 month C. 2 weeks D. 7 to 10 business days
B. 1 month
Which of the following is NOT a characteristic of variable insurance and annuities? A. Cash value is adjusted for inflation B. Benefits are determined solely based on the policy premium C. Cash value accumulates based on the performance of stocks D. Benefits are not guaranteed
B. Benefits are determined solely based on the policy premium
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the A. Paid-up additions B. One-year term option C. Paid-up option D. Accelerated endowment
B. One-year term option
How are policy loans calculated? A. The face amount of the policy minus investment fees B. The policy cash value minus unpaid loans and accrued interest C. The face amount of the policy minus unpaid loans D. Premium contribution over the previous year minus unpaid loans
B. The policy cash value minus unpaid loans and accrued interest
An insured purchased a nonparticipating whole life policy. This policy includes all of the following EXCEPT A. Permanent protection B. Cash Values C. Dividends D. A premium calculated closely to the cost of the insurance.
C. Dividends
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. Blackout approach B. Lump-sum approach C. Human life value approach (HLVA) D. Needs approach
C. Human life value approach (HLVA)
A life insurance policy has a legal purpose if both of which of the following elements exist? A. Offer and counteroffer B. Policyowners and named beneficiaries C. Insurable interest and consent D. Underwriting and reciprocity
C. Insurable interest and consent
Which of the following best describes gross annual premium? A. Basic insurance rate plus commissions B. Expense premium C. Net premium plus expense D. Annual loading
C. Net premium plus expense
Who might receive dividends from a mutual insurer? A. Stockholder B. Agents C. Policyholders D. Subscribers
C. Policyholders
Which two terms are associated directly with the way an annuity is funded? A. Immediate or deferred B. Renewable or convertible C. Single payment or periodic payments D. Increasing or decreasing
C. Single payment or periodic payments
Variable life insurance is regulated by all of the following entites EXCEPT A. The Department of Insurance and/or Financial Services B. The Financial Industry Regulatory Authority (FIRNA) C. The US Department of Treasury D. The Securities and Exchange Commission (SEC)
C. The US Department of Treasury
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A. Business partners have an insurable interest in each other B. A marries person has an insurable interest in their spouse C. An individual has an insurable interest in their own life D. A debtor has an insurable interest in the life of a lender
D. A debtor has an insurable interest in the life of a lender
Under the conditions for payment form, an insurer may require all of the following conditions to be met in order to pay accelerated death benefits EXCEPT A. The insured paying all necessary medical fees for the diagnosis of a medical condition B. The written consent of a beneficiary C. A second medical opinion on the diagnosis of the insured's medical condition D. A probationary period of no more than 1 year
D. A probationary period of no more than 1 year
Because an agent is using stationary with the logo of an insurance company applicants for insurance assume that the agent us authorized to transact on behalf of the insurer. What type of agent authority does this describe? A. Express B. Implied C. Assumed D. Apparent
D. Apparent
An IRA contribution can be made from which of the following? A. Life Insurance B. Collectible C. Stocks and Bonds D. Cash
D. Cash
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? A. Reduced paid-up B. Paid-up options C. Extended term D. Cash surrender
D. Cash surrender
Who makes up the Medical Information Bureau? A. Hospitals B. Former insured C. Physicians and paramedics D. Insurers
D. Insurers
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT A. It is funded by a level premium B. It builds cash value C. If the insured lives to age 100, the policy matures, and the face amount is paid to the insured D. It does not have a guaranteed death benefit
D. It does not have a guaranteed death benefit
Who does the spendthrift clause in life insurance policy protect? A. The insured B. The policyowner C. The creditors D. The beneficiary
D. The beneficiary
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? A. The date of the policy delivery B. The date of issue C. The date of application D. The date of medical exam
D. The date of medical exam
All of the following statement about indexed whole life are correct EXCEPT A. The premium is fixed B. There is a guaranteed minimum interest rate C. The cash value depends on the performance of the equity index D. The policy face amount remains level throughout the life of the policy
D. The policy face amount remains level throughout the life of the policy
All of the following are true of the Survivorship policy EXCEPT A. The death benefit is not paid until the last death B. The premium would be lower than in a joint life policy C. It can insure more than 2 lives D. The premium is based on the age of each insured
D. The premium is based on the age of each insured
When an insured terminates membership in the insured group, the insured can convert to A. Term with proof of insurability B. Whole life without proof of insurability C. Whole life with proof of insurability Term without proof of insurability
b.Whole Life without proof of insurability
Hazard is best defined as a. The uncertainty of loss b. Neglect to communicate a material fact c. A deliberate attempt to deceive d. Something that increases the risk of loss
d. Something that increases the risk of loss
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have? A. Irrevocable B. Contingent C. Primary D. Revocable
D. Revocable
What is the difference between a straight life policy and a 20-pay whole life policy? A. Premium payment period B. The benefit settlement option C. The face amount and cash value D. Policy maturity date
A. Premium payment period
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? A. Reduced paid up B. Extended term C. Paid up additions D. Cash surrender value
B. Extended term
Which of the following is consideration on the part of an insurer? A. Paying the premium B. Underwriting C. Paying a claim D. Decreasing premium amounts
C. Paying a claim
Which of the following will be eligible for a tax-sheltered annuity? A. Military personnel B. The elderly C. Dependents under the age of 21 D. Public school teachers
D. Public school teachers
In life insurance, which of the following is NOT required to have an insurable interest in the insured? A. The beneficiary B. The policyowner C. The insured D. The applicant
A. The beneficiary
An Equity Index Annuity will grow based upon A. Performance in a separate account B. Current interest rate C. A rate of interest determined by the banking system D. Performance of a recognized index
D. Performance of a recognized index
Which of the following would NOT trigger the payment of Accelerated Death Benefits? A. Being permanently disabled B. Terminal illness C. Requiring an organ transplant for the insured to survive D. Being permanently institutionalized
A. Being permanently disabled
Which of the following riders provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result within 2 years? A. Living Needs Rider B. Long-term care rider C. Cost of living rider D. Accidental Death Rider
A. Living Needs Rider
Which of the following could reduce the amount of the death benefit? A. Adding a family term rider B. Making premium payments within the grace period C. Choosing a paid-up addition dividend options D. Failure to repay a policy loan
D. Failure to repay a policy loan
What does the Guaranty Association guard against? A. Insurance fraud B. Double indemnity C. Rebating D. Insurer insolvency
D. Insurer insolvency
Which of the following best describes pure life annuity? A. It provides the highest monthly benefits B. It continues payments to the beneficiary when the annuitant dies C. It is also known as refund life annuity D. It guarantees to pay out all the proceeds
D. It guarantees to pay out all the proceeds
Which type of insurance policies provides a pure life insurance protection without a savings element? A. Permanent B. Variable C. Universal D. Term
D. Term
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called? A. Indemnity B. Exposure C. Pure loss D. Insurable interest
D. Insurable interest
Which of the following best describes a rebate? A. A producer returning part of her commission to her client, as an inducement to buy B. A producer misrepresenting policy provision or coverage at issue C. A producer requires an insured to buy insurance from her as a condition to a loan D. A producer selling insurance primarily to himself, family members, and friend
A. A producer returning part of her commission to her client, as an inducement to buy
If a retirement plan or annuity is qualified, this means A. It satisfies IRS requirements for favorable tax treatment B. It has unlimited uses C. Dividend will be paid until payments are distributed D. It is not permitted by the IRS
A. It satisfies IRS requirements for favorable tax treatment
Life insurance creates an immediate estate. Which of the following best explains this statement? A. The face value of the policy is payable to the beneficiary upon death of the insured B. The policy has cash values and nonforfeiture values C. The policy generate immediate cash value D. The death benefit will always be paid to the estate of the insured
A. The face value of the policy is payable to the beneficiary upon death of the insured
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend? A. Payor benefit B. Guaranteed insurability C. Automatic Premium loan D. Waiver of premium
A.Payor benefit
All of the following statements about mutual insurance companies are correct EXCEPT A. Mutual companies issue policies referred to as participating B. Policy dividends issued by mutual companies are guaranteed and not taxable C. Dividends allow policyholders to share in a mutual company's divisible surplus D. Dividends are a return of unused premiums
B. Policy dividends issued by mutual companies are guaranteed and not taxable
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this? A. Automatic premium loan B. Incontestability C. Grace Period D. Waiver of premium
C. Grace Period
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose? A. Fixed period B. Interest only C. Joint and survivor D. Fixed amount
D. Fixed amount
Hazards are conditions or situation that A. Decrease the likelihood of loss occurring B. Determine the likelihood of a loss occurring C. Guarantee that a loss will occur D. Increase the likelihood of a loss occurring
D. Increase the likelihood of a loss occurring
Which of the following is TRUE of level term insurance? A. The premium will increase or decreased based on current interest rates B. The policy endows at age 100 C. The policy offers nonforfeiture values D. It is temporary protection
D. It is temporary protection
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death? A. Second - to - Die B. Last Survivor C. Survivorship Life D. Joint Life
D. Joint Life
In a viatical settlement, a person is considered "terminally ill" if he is not expected to live longer than A. 9 months B. 12 months C. 24 months D. 6 months
C. 24 months
J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan? A. Unqualified B. Variable C. Deferred D. Qualified
D. Qualified
An insured receives an annual life insurance dividend check. What term best describes this arrangement? A. Cash Option B. Reduction of Premium C. Annual Dividend Provision D. Accumulation at Interest
A. Cash Option
All of the following are duties and responsibilities of producers at the time of application EXCEPT A. Change any incorrect statement on the application by personally initialing next to the corrected statement B. Explain the nature and type of any receipt the producer is giving to the applicant C. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information D. Check to make sure that there are on unanswered questions on the application.
A. Change any incorrect statement on the application by personally initialing next to the corrected statement
Slippery floors, reckless driving, or providing false information are examples of A. Hazards B. Pure risks C. Causes of loss D. Perils
A. Hazards
An annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive A. $30,000 B. $70,000 C. $100,000 (combination of the cash value and premiums paid) D. A survivor benefit determined by the insurance company
B. $70,000
Items stipulated in the contract that the insurer will not provide coverage for are found in the A. Consideration clause B. Exclusions clause C. Insuring clause D. Benefit Payment clause
B. Exclusions clause
Agents may be found guilty of defamation if they make a false statement that is intended to? A) misinform prospective clients about policy coverage B) misrepresent the benefits payable under policies C) maliciously criticize another insurance company D) deceive a policyholder
C) maliciously criticize another insurance company
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? A. $20,000 B. $25,000 C. $50,000 D. The face amount will be determined by the insurer
C. $50,000
With Adjustable Life, the owner can change all of the following EXCEPT A. premium B. the length of time the coverage will last C. The insured D. the death benefit
C. The insured
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered A. A misrepresentation B. A required disclosure C. A legal representation of the Association D. An unfair trade practice
D. An unfair trade practice
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose? A. Fixed Period B. Interest Only C. Joint and Survivor D. Fixed Amount
D. Fixed Amount
What are the two components of a universal policy? A. Insurance and investments' B. Mortality cost and interest C. Separate account and policy loans D. Insurance and cash account
D. Insurance and cash account
In the event the key employee quits or is terminated, what provision allows the policyowner to transfer coverage to the replacement employee, provided the new employee provides evidence of insurability? A. Change of insured B. Consideration C. Misstatement of age D. Free Look
A. Change of insured
Which of the following is NOT typically excluded from life policies? A. Death due to plane crash for a fare-paying passenger B. Self-inflicted death C. Death that occurs while a person is committing a felony D. Death due to war or military service
A. Death due to plane crash for a fare-paying passenger
All of the following violations may result in an agent's imprisonment EXCEPT A. Engaging in the business of insurance after being convicted of breach of trust B. Failing to report to the department a criminal prosecution taken against in another jurisdiction C. Embezzling funds from the insurer D. Knowingly obtaining information about a consumer under false pretenses.
B. Failing to report to the department a criminal prosecution taken against in another jurisdiction
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy? A. Fund a retirement B. Use it for emergency expenses C. Secure a car loan next year D. Make a down payment in 5 years
B. Use it for emergency expenses
When an insured terminates membership in the insured group, the insured can convert to A. Term with proof of insurability B. Whole life without proof of insurability C. Whole life with proof of insurability D. Term without proof of insurability
B. Whole life without proof of insurability
Which of the following best describes life annuity with period certain option? A. The maximum guarantee period is 10 years B. The benefit payments cease with the death of the annuitant C. It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary D. It provides the highest monthly benefit for an individual annuitant
C. It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary
Why is an equity indexed annuity considered to be a fixed annuity? A. It has fixed rate of return B. It is not tied to an index like the S&P 500 C. It has a guaranteed minimum interest rate D. It has modest investment potential
C. It has a guaranteed minimum interest rate
Which of the following is TRUE of qualified plan? A. It may discriminate in favor of highly paid employees B. It may allow unlimited contributions C. It has a tax benefit for both employer and employees D. It does not need to have a vesting schedule
C. It has a tax benefit for both employer and employees
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be A. determined by the health of the insured B. Based on the issue age of the insured C. Discounted D. Adjusted to the insured's age at the time of renewal
D. Adjusted to the insured's age at the time of renewal
Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract? A. Advertising B. Rescission C. Insurable interest D. Insurance transaction
D. Insurance transaction
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is the money placed? A. Forwarded to an investor B. Each contract's separate account C. The annuity owner's account D. The insurance company's general account
D. The insurance company's general account
What is the purpose of the buyer's guide? A. To provide the name and address of the agent/producer issuing the policy B. To list all policy riders C. to provide information about the issued policy D. To allow the consumer to compare the cost of different policies.
D. To allow the consumer to compare the cost of different policies.
A new homeowner wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most expensive type of policy that would accomplish this need would be A. Decreasing term B. Increasing term C. Flexible term D. Level term
A. Decreasing term
Which of the following statement concerning the Medical Information Bureau is correct? A. Information contained in the Medical Information Bureau report is available to all physicians B. The Medical Information Bureau assists underwriters in evaluating and classifying risks. C. The Medical Information Bureau report must be attached to each life insurance policy issued. D. All applicants for life insurance receive a copy of the findings of the life insurance medical examination.
B. The Medical Information Bureau assists underwriters in evaluating and classifying risks.
Which dividend option will increase the death benefit? A. Extended term B. Reduced paid-up C. Paid-up Addition D. Accumulation
C. Paid-up addition
How will life insurance proceeds that are paid as a lump sum received by the beneficiary? A. Taxed as investment income B. As tax-deductible income C. Free of federal income taxation D. Taxed as ordinary income
C. Free of federal income taxation
An individual has a $200,000 convertible term life insurance policy. If he chooses, he can A. Convert to a whole life policy for the same face amount without proof of insurability B. Convert to another term policy with a lower face amount without proof of insurability C. Purchase an individual annuity for any face amount using the 1035 exchange privilege D. Purchase another term policy and increase his death benefit without proof of insurability
A. Convert to a whole life policy for the same face amount without proof of insurability
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A. Nonforfeiture option B. Guaranteed Insurability rider C. Paid-up additions option D. Cost of living provision
B. Guaranteed Insurability rider
Under which of the following conditions would life insurance proceeds be taxable by the federal government? A. If paid to the policyowner B. If there is a transfer for value C. If collaterally assigned to a lender D. If taken as a lump sum
B. If there is a transfer for value
Which of the following is TRUE about a class designation? A. Beneficiaries are not identified by name B. Beneficiaries must be part of the insured's immediate family. C. It is not allowed D. It determines the succession of beneficiaries
A. Beneficiaries are not identified by name
Which of the following individuals must have insurable interest in the insured? A. Underwriter B. Producer C. Policyowner D. Beneficiary
C. Policyowner
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? A. Universal life B. Variable whole life C. Decreasing term D. Straight whole life
A. Universal life
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement? A. Single B. Level C. Flexible D. Lump Sum
B. Level
Cash Value guarantees in a whole life policy are called A. Dividends B. Nonforfeiture values C. Living benefits D. Cash Loans
B. Nonforfeiture values
All of the following would be considered an insurance transaction EXCEPT A. Negotiating coverage B. Obtaining an insurance license C. Soliciting a policy D. Advising a policyowner regarding a claim
B. Obtaining an insurance license
Which dividend option will increase the death benefit? A. Reduced paid up B. Paid-up additions C. Accumulation D. Extended term
B. Paid-up additions
A whole life policy that will generate immediate cash value is a A. Variable life policy B. Limited-pay policy C. Single premium policy D. Continuous premium policy
C. Single premium policy
When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called? A. Statement of Insurability B. Insuring Agreement C. Insurability Clause D. Statement of Good Health
D. Statement of Good Health
Which of the following has the right to change a settlement option on a life insurance policy A. A beneficiary after the policyowner's death B. The insured C. A beneficiary at any time D. The policyowner at any time during the life of the insured
D. The policyowner at any time during the life of the insured
What type of policy that can changed from on that does not accumulate cash value to the one that does is a A. Convertible term policy B. Renewable term policy C. Decreasing term policy D. Whole life policy
A. Convertible term policy
All of the following are licensing requirements for a business entity, EXCEPT A. Having all employees complete continuing education courses once every 2 years B. Demonstrating general fitness, competence, and reliability C. Maintaining on staff at least 1 licensed person in good standing D. Applying for a license in the same lines of authority as held by licensed designees.
A. Having all employees complete continuing education courses once every 2 years
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan? A. Immediately B. Within 10 days C. Within 30 days D. Within 90 days
A. Immediately
When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true? A. Joint Life has a lower premium than the total of the two individual policies B. Joint Life has a premium that is identical to the sum of the two individual policies C. The Joint Life premium can only be paid monthly D. Joint Life has a higher premium than the total of the two individual policies
A. Joint Life has a lower premium than the total of the two individual policies
In the event an annuitant dies during the accumulation period, and there is a beneficiary named in the annuity, annuity benefits would be paid to the A. Named Beneficiary B. Annuitant's estate C. Next of Kin D. Insurance Company
A. Named Beneficiary
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? A. Only written statements can be considered fraud B. Omissions of material fact on insurance application are fraud C. False statements about financial condition of an insurer are unlawful D. Statements made with the intent to deceive are unlawful
A. Only written statements can be considered fraud
A licensee who has moved to Pennsylvania from out of state must provide which of the following before becoming licensed as a resident in this state? A. Proof of licensing or a letter of clearance from the previous home state B. A notarized copy of a Pennsylvania's driver's license C. A current utilities bill D. A United States postal service change-of-address form
A. Proof of licensing or a letter of clearance from the previous home state
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A. Signed waiver of premium B. Statement of good health C. Payment of premium D. Delivery receipt
A. Signed waiver of premium
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? A. Universal life B. Flexible life C. Variable life D. Adjustable life
A. Universal life
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? A. Employers looking to provide cost effective group life insurance their employees may choose annual renewable term B. Applicants who may require a larger death benefit in the future should buy convertible term insurance C. Applicants concerns with the increasing cost of living should purchase increasing term D. Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan.
B. Applicants who may require a larger death benefit in the future should buy convertible term insurance
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 a=example of which concept? A. Indemnity B. Reasonable expectations C. Cease and desist D. Nonforfeiture
B. Reasonable expectations
Which of the following insurers are owned by stockholders? A. Fraternal B. Stock C. Mutual D. Reciprocal
B. Stock
Which of the following would be required to be licensed as an insurance producer? A. A salaried full-time employee who furnishes information for group ins B. An insurance company director who performs executive, administrative and managerial duties C. A salaried employee who advertises and solicits insurance D. A person whose activities are limited to producing insurance advertseiments
C. A salaried employee who advertises and solicits insurance
Under an extended term nonforfeiture option, the policy cash value is converted to A. A lower face amount than the whole life policy B. A higher face amount than the whole life policy C. A same face amount than the whole life policy D. The face amount equal to the cash value
C. A same face amount than the whole life policy
Refusing to pay claims without conducting a reasonable investigation based upon all available information is an example of A. A typical insurance practice B. A required practice C. An unfair claims practice D. A fair trade practice
C. An unfair claims practice
A Tax sheltered annuity is a special tax-favored retirement plan available to A. Certain age groups only B. Certain groups depending on factors such as race, gender, and age C. Certain groups of employees only D. Anyone
C. Certain groups of employees only
An adjustable life policy can assume the form of A. Only term insurance B. Only permanent insurance C. Either term insurance or permanent insurance D. Neither term insurance nor permanent insurance
C. Either term insurance or permanent insurance
Which of the following is an example of an unfair claims settlement practice? A. Making claims payments which clearly indicate under which coverage payment has been made B. Using arbitration when the insured and insurer cannot reach agreements C. Failure to promptly settle a claim which liability has been clearly established D. Denying coverage after a reasonable investigation has been conducted
C. Failure to promptly settle a claim which liability has been clearly established
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A. Illegal until endorsed by the Guaranty Association B. Legal, provided that the other insurers are paid royalties for the usage of their names C. Illegal under any circumstances D. Legal, provided that the information can be verified.
C. Illegal under any circumstances
Which of the following applies to the 10-day free look privilege? A. It can be waived only by the insurance company B. It is granted only at the option of the agent C. It permits the insured to reject the policy with a full refund D. It allows the insured 10 days to pay the initial premium
C. It permits the insured to reject the policy with a full refund
Based on the Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? A. Insured's annual expense B. Effect of inflation on income over time C. Predicted needs of the family after the insured's death D. Insured's current and future income.
C. Predicted needs of the family after the insured's death
All of the following are true of annually renewable insurance EXCEPT A. Death benefit remains leveled B. The policy renews regardless of the insured's health C. Proof of insurability must be provided at each renewal D. The premium cost increases each year
C. Proof of insurability must be provided at each renewal
Which of the following is true regarding a waiver of surrender charge on an annuity contract? A. The surrender charge will be applied to all premature surrenders B. The surrender charge waiver only applies to immediate annuity C. The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days D. The charge can only be waived if the annuitant needs the funds for medical expenses
C. The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A. The beneficiary will receive 2/3 of the benefit, with the final 1/3 payable when the first beneficiary dies. B. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies C. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive D. The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time
C. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? A. 3 years B. 5 years C. 7 years Lifetime of the policy
C.7 years
If a viatical settlement provider transfers ownership of an insurance policy, how long does the insurer have to inform the insured of the change? A. 30 days B. 60 days C. 90 days D. 20 days
D. 20 days
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? A. A notice regarding replacement B. A privacy notice C. A buyer's guide D. A policy summary
D. A policy summary
Which of the following documents used in the underwriting process contains specific medical details about an applicant? A. Statement of Good Health B. Agent's report C. Application D. Attending Physician's statements (APS)
D. Attending Physician's statements (APS)
What limits the amount that a policyowner may borrow from a whole life insurance policy? A. Premiums paid B. Amount stated in the policy C. Face amount D. Cash value
D. Cash value
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will A. Remain the same B. Decrease over time C. Reduce to the pre-surrender value D. Continue to increase
D. Continue to increase
Which of the following authorities monitors the financial strength of insurers? A. National Association of Insurance Commissioners (NAIC) B. Financial Industry Regulatory (FIRNA) C. Insurance companies D. Department of Insurance
D. Department of Insurance
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A. Reciprocal B. Nonprofit service organization C. Stock D. Mutual
D. Mutual
All of the following are factors that an underwriter could use to select and classify risk EXCEPT A. Morals B. Occupation C. Avocation D. National origin
D. National origin
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend option is being used? A. Reduce of premium B. Fixed amount C. Reduced paid up D. Paid-up Additions
D. Paid-up Additions
Annuities Certain limit the amount paid by the annuity to a certain fixed A. Period only B. Amount only C. Period with a certain fixed amount D. Period or fixed amount
D. Period or fixed amount
Which of the following has the right to convert the existing term coverage to permanent insurance? A. Insurer B. Beneficiary C. Producer D. Policyowner
D. Policyowner
What type of insurer uses a formal sharing agreement? A. Stock insurers B. Mutual insurers C. Fraternal Benefit Societies D. Reciprocal insurers
D. Reciprocal insurers
The termination of marital property rights may be reversed for all of the following reasons EXCEPT A. The beneficiary can prove the couple were living together as husband and wife or planning to remarry B. The spouse was named as beneficiary by class C. The divorce or annulment decree or judgment is not recognized as valid D. The spouse named as beneficiary had obtained or consented to a final decree or judgment of an annulment, divorce or separation
D. The spouse named as beneficiary had obtained or consented to a final decree or judgment of an annulment, divorce or separation
What is the purpose of the surrender charge in a deferred annuity? A. To punish the annuitant for breach of contract B. To prevent the over funding of the annuity C. To provide additional revenue for the insurance company D. To compensate the company for loss of investment value
D. To compensate the company for loss of investment value
The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called A. A collateral assignment B. An insurance pledge C. A unilateral agreement D. An absolute assignment
A. A collateral assignment
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select? A. Fixed-period installments B. Life income C. Joint and survivor D. Fixed-amount installments
A. Fixed-period installments
Which of the following statements is TRUE regarding an Agent's Report during the policy application process? A. It is a required element of the contract B. It provided the agent's personal observation concerning the proposed insured C. It is only used when the initial premium is not paid with the application D. It becomes part of the entire contract after the policy is issued
B. It provided the agent's personal observation concerning the proposed insured
Which of the following best describe the difference between joint life and joint and survivor annuit payment options. A. Joint and survivor is a life contingency option B. Joint and survivor pays out a smaller benefit C. In joint life option, the benefits stop after the first death D. Joint life covers 2 or more annuitants
C. In joint life option, the benefits stop after the first death
How does insurance distribute the financial consequences of individual losses? A. It transfers the risk to associates if the insured. B. It transfers the risk to a small number of persons insured. C. It transfers the risk to all persons insured. D. It retains the financial consequences.
C. It transfers the risk to all persons insured.
According to the life insurance replacement regulations, which of the following would be an example of policy replacement? A. A term policy expires, and the insured buys another term life policy B. Term insurance is changed to a whole life policy C. A lapsed policy is reinstated within a specific timeframe D. A policy is reissued with a reduction in cash value
D. A policy is reissued with a reduction in cash value
Which of the following is NOT a personal use of life insurance? A. An individual buys insurance to help the family pay off the mortgage in case of premature death B. An individual buys insurance to fund a buy-sell agreement C. An individual buys insurance to provide future income to a surviving spouse D. An individual buys cash value insurance to fund his children's college education
D. An individual buys cash value insurance to fund his children's college education
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of A. Misrepresentation B. Unfair discrimination C. Illegal inducement D. Coercion
D. Coercion
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will A. Adjust the death benefit to what the premium would have purchased at the actual age or gender B. Pay the face amount specified at the time of policy issue C. Deny all claims because of the misrepresentation D. Adjust the back premiums for the proper age or gender
A. Adjust the death benefit to what the premium would have purchased at the actual age or gender
Which of the following best defines the unfair practice of rebating? A. Making statements that misrepresent an insurance policy9in order to induce an insured to replace the policy B. Charging premium amounts in excess of the amount stated on the policy C. Makin false statements that are maliciously critical to injury another person in the business of insurance D. Offering an inducement if something not specified on the policy
D. Offering an inducement if something not specified on the policy
Which of the following is true regarding joint life annuity? A. The payments stop at the last death B. The payment go to the beneficiary upon the last death C. The payments go to the surviving annuitant after the first death D. The payments stop at the first death
D. The payments stop at the first death
An applicant for a disability insurance policy has a heart condition which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered A. Fraudulant answer B. Representation C. Warranty D. Concealment
B. Representation
All of the following are true of group life insurance EXCEPT A. Premium rates are based upon the average age, gender and purpose of the group B. When the insured terminates membership in the group the coverage can be converted to whole life C. The insureds each own their own contract D. Evidence of insurability is usually not required.
C. The insureds each own their own contract
Which of the following policies can be describe as a flexible premium adjustable life policy? A. Whole life B. Term Life C. Credit Life D. Universal Life
D.Universal Life
Variable life insurance is regulated by all of the following entities EXCEPT A. The department of insurance and/or financial services B. The financial industry regulatory authority (FIRNA) C. The US department of treasury D. The securities and exchange commission(SEC)
C. The US department of treasury
In a life insurance application, all of the following signatures will be required EXCEPT A. The owner (if different from the insured) B. The agent C. The home office underwriter D. The insured
C. The home office underwriter
In whole life insurance, when is the policy cash value scheduled to equal the face amount? A. At the insured's age 100 B. By the policy's 10th year C. When the insured paid up all policy loans D. It depends on the type of whole life purchased
A. At the insured's age 100
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? A. Spendthrift provision B. Settlement option C. Accelerated Benefit provision D. Loan Provision
A. Spendthrift provision
In contrasting stock insurers with mutual insurers, which statement is true? A. Stock insurers are owned by the shareholders and issue nonparticipating policies B. Stock dividends are tax free while policy dividends are taxable C. Nonparticipating policies can pay out dividends to the policyholders D. Mutual insurers are owned by the shareholders and issue participating policies
A. Stock insurers are owned by the shareholders and issue nonparticipating policies
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? A. The annuitant will receive the higher of either the guaranteed minimum rate or current rate. B. The annuitant will always receive the current interest rate C. The annuitant will receive the lower of either the guaranteed minimum rate or current rate. D. The annuitant will only receive the guaranteed minimum specified in the contract.
A. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
Which is true about a spouse term rider? A. The rider is usually level term insurance B. Coverage is allowed for an unlimited time C. The rider is decreasing term insurance D. Coverage is allowed up to age 75
A. The rider is usually level term insurance
If an applicant submits the initial premium with an application, which action constitutes acceptance? A. The underwrite approve the application B. The applicant submits a statement of good health C. The producer delivers the policy D. The insurance company receives the application and initial premium
A. The underwrite approve the application
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as A. Twisting B. Fraud C. Concealment D. Misrepresentation
A. Twisting
Which of the following would be required to become licensed as an insurance producer? A. A customer service representative who solicits no more than one policy a year B. Agency supervisor whose actions do not include selling insurance C. A person whose activities are limited to insurance advertising D. An officer of an insurer who does not receive commissions
A.A customer service representative who solicits no more than one policy a year
Which of the following statements is true regarding advertising that the Insurance Guaranty Association would ensure payment of benefits in the event of insurer insolvency? A. All advertisements of an insurer must mention coverage by the Association B. It is an unfair trade practice to mention the Association in advertisements C. Insurers may choose whether to mention the Association in advertisements, but if they choose to do so, they must first pay a fee to the Department of Insurance D. If insureds join the Association, they will be protected financially if their insurers become insolvent
B. It is an unfair trade practice to mention the Association in advertisements
All of the following would be different between qualified and nonqualified plans EXCEPT A. IRS approval requirements B. Taxation on accumulation C. Taxation of withdrawals D. Taxation of contributions
B. Taxation on accumulation
The Guaranteed Insurability rider allows the owner to purchase additional amounts of the life insurance without proof of insurability at all of the following EXCEPT A. Birth of child B. Marriage C. Purchase of a new home D. Approximately every 3 years between the ages of 25 and 40
C. Purchase of a new home
Which of the following is required in order for a plan to be qualified? A. The plan must be for the exclusive benefit of the employee B. The plan's contribution formula is allowed to discriminate in favor of the officers of the company C. The plan must be formally written and communicated to the employees D. The plan must not be permanent
C. The plan must be formally written and communicated to the employees
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed? A. The estate or the primary beneficiary and the contingent beneficiary split the benefits equally B. The insured dies before the primary beneficiary C. The primary beneficiary died before the insured D. The deaths occurred at the same time
C. The primary beneficiary died before the insured
The minimum interest rate on an equity indexed annuity is often based on A. The returns from the insurance company's separate account B. The annuitant's individual stock portfolio C. The insurance company's general account investments D. An index like Standard & Poor's 500.
D. An index like Standard & Poor's 500.
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered A. Twisting B. Controlled business C. Adverse selection D. Discrimination
D. Discrimination
Which of the following is NOT true of the agent's implied authority? A. It is assumed by the agent in order to transact the business of insurance B. It is incidental to express authority C. It is given to an agent by the insurance company that is not specifically communicated D. It is specifically stated in the contract
D. It is specifically stated in the contract
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called A. Fixed period B. Fixed amount C. Joint life D. Joint and survivor
D. Joint and survivor
A policyowner decides to sell his life insurance policy to a viatical settlement company. Which of the following is true? A. Only the insurance company or a licensed broker may seek the viatical settlement contract B. It is the viatical settlement provider's responsibility to inform the policyowner's insurance company that the policy has been viaticated C. The insurance Department must notify the policyowner's insurer that the policy has been viaticated D. It is the policyowner's sole responsibility to inform his insurance company that the policy has been viaticated
B. It is the viatical settlement provider's responsibility to inform the policyowner's insurance company that the policy has been viaticated
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE? A. The cash value will be paid to the state government B. The cash value will be paid to the annuitant's estate C. The premium value will be paid to the annuitant's estate D. All benefits will be forfeited
B. The cash value will be paid to the annuitant's estate
Which of the following statements is true concerning the creditors of the deceased insured? A. The creditors of the deceased insured have no rights to the proceeds of life insurance under any circumstances B. The creditors have right to the proceeds if they show evidence of valid assignment C. Anyone may put a lien against the proceeds of a life insurance policy D. None of the above is true.
B. The creditors have right to the proceeds if they show evidence of valid assignment
All of the following are true of an annuity owner EXCEPT A. The owner is the party who may surrender the annuity B. The owner must be the party to receive benefits C. The owner pays the premiums on the annuity D. The owner has the right to name the beneficiary
B. The owner must be the party to receive benefits
In life insurance underwriting, all of the following are true regarding HIV testing EXCEPT A. The proper protocol must be followed in performing the test B. The person may be denied coverage based solely on the presence of HIV C. The reporting of test results must include the name and address of the reporting company D. The applicant must be notified that HIV testing will be done
B. The person may be denied coverage based solely on the presence of HIV
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? A. When the agent submits the application to the company and the company issues a conditional receipt B. When the agent delivers the policy, collects the premium, and the applicant completes an acceptable Statement of Good Health C. On the designated effective date D. On the application date
B. When the agent delivers the policy, collects the premium, and the applicant completes an acceptable Statement of Good Health
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 determine 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? A. $0 B. $50,000 (50% of the policy value) C. $100,000 D. $300,000 (triple the amt of policy value)
C. $100,000
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? A. $0 B. $200 C. $9,800 D. $10,000
C. $9,800
What would be an advantage to naming a contingent beneficiary in a life insurance policy? A. It ensures the policy proceeds will be split between the primary and contingent beneficiaries B. It requires that someone who is not the primary beneficiary handles the estate C. It determines who receives policy benefits if the primary beneficiary is deceased D. It allows creditors to receive payment out of the proceeds
C. It determines who receives policy benefits if the primary beneficiary is deceased
Which statement best describes agreement as it relates to insurance contracts? A. All parties must be capable of entering into a contract B. Each party must offer something of value C. One party accepts the exact terms of the other party's offer D. The intent of the contract must legally acceptance to both parties.
C. One party accepts the exact terms of the other party's offer
A policyowner no longer needs a life insurance policy and agrees to sell it to a third party for more than its cash value. This type of transaction is called a/n A. 1035 exchange B. Investor-originated life insurance C. Viatical settlement D. Life settlement
D. Life settlement
If a settlement option is not chosen by the policyowner or the beneficiary, what option will be used ? A. Life income B. Fixed Period C. Fixed amount D. Lump sum
D. Lump sum
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? A. Moral B. Legal C. Physical D. Morale
D. Morale
A stock insurer is defined as an insurer A. Owned by its policyowners B. That invests at least 20% of its premium income in the stock market C. Who pays dividends to its policyowners D. Owned by its stockholders
D. Owned by its stockholders
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT A. Insurers are not required to give consumer a copy of the report B. It applies to credit reports ordered in connection with insurance, banking and employment C. The consumer must be notified if adverse action is taken as a result of a report D. Reports may be sent to anyone who requests one.
D. Reports may be sent to anyone who requests one.
Decreasing Term insurance is often used to A. Cover a mortgage B. Liquidate an estate C. Build up cash value for retirement D. Pay estate taxes.
A. Cover a mortgage
An annuity would normally be purchased by an individual who wants to A. Provide income for retirement B. Provide a death benefit to surviving family C. Earn a higher rate of interest D. Create an estate.
A. Provide income for retirement
An insured's life expectancy is 6 months. How often may a viatical settlement provider contact the insured and inquire about the insured's health status? A. As often as deemed appropriate B. Once a month C. Every other week D. Once a week
B. Once a month
What does the term reciprocity mean? A. Waiving continuing education requirements for one type of license if the requirements have been met for a different type of license B. Allowing producers transact insurance after their suspended license if reinstated C. Allowing producers share commissions on related business D. Waiving licensing requirements for nonresident applicants who are licensed in their home state, if the home state awards licenses to producers in this state on the same basis
D. Waiving licensing requirements for nonresident applicants who are licensed in their home state, if the home state awards licenses to producers in this state on the same basis
During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is A. Specified in the annuity contract B. More beneficial to the insurer C. Higher D. Lower
C. Higher
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe? A. Negligent underwriting B. Misrepresentation C. Unfair discrimination D. Defamation
C. Unfair discrimination
An insured's flexible premium is invested into a separate account. What type of insurance product did he purchase? A. An annuity B. Variable Life C. Variable Universal Life D. Universal Life
C. Variable Universal Life
Which of the following is NOT a standard exclusion in life insurance policies? A. Disability B. Hazardous occupation C. War and military service D. Aviation
A. Disability
All of the following are true about key-person insurance EXCEPT A. The death benefit is taxable to the business B. The business is the applicant and owner C. The employee must give written consent by signing the application D. The business is the beneficiary
A. The death benefit is taxable to the business
