Simulated exam

The insurer may suspect that a moral hazard exists if the policyholder

Is not honest about his health on an application for insurance

What type of license is needed to transact non-major lines of insurance like baggage and accident only insurance?

Limited

Which of the following statements is TRUE concerning whole life insurance?

Lump-sum death benefits are not taxable (Dividend interest is taxable; Policy loans are not tax deductible, and premiums are not tax deductible

An individual's tendency to be dishonest would be indicative of a

Moral hazard

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

In Alabama, an insurance company certificate of authority is issued for what period of time?

Perpetual ( Once isussed, a certfifcate of authority remaines valid unless terminated,suspended, or revoked

The term "fiduciary capacity" deals with a producers?

Position of financial trust

Insurance is the transfer of what?

Risk

When the insurer stipulates the time period for payment claims, how soon must the insurer pay a death benefit claim after receiving the proof of death?

2 Months

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT

Consequential loss insurance

Which of the following reports will provide the underwriter with the information about a consumer's credit?

Consumer report

Under a defined benefit retirement plan, who determines what benefits a retired employee will receive?

Employer

Misrepresenting an insurance policy as a share of stock is an example of which of the following?

False adverising

A tax-sheltered annuity is a special tax-favored retirement plan available to

certain groups of employees only (a tax sheltered annuity is a special tax favored retirement plan available only to certain groups of employees (nonprofit, education, other 501c3 organizations, including all employees in public education.)

Units with the same or similar exposure to loss are referred to as?

homogeneous

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured. (A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have interest in the policy holder.)

The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

Which of the following life insurance policies would be considered interest sensitive?

Universal Life