state insurance pratice exam

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount?

$25

An employee is covered under a company group life plan with a $50,000 death benefit.What is the MAXIMUM amount a spouse may be insured for under this program?

$25,000

which of the following types of term life policies most likely contains a renewabillity feature?

10 year convertible term

All of the following statements about traditional individual retirements accounts are false Except.

10% penalty is applied to withdrawals before age 59 1/2

An insured may assign up to ___ of policy ownership under an individual life insurance policy.

100%

a 15-year mortgage is best protected by whaty kind of life policy?

15 year descreasing term

In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?

2 years

An individuals participant personally received eligible rollover funds from a profit sharing plan. the income tax withholding requirements for this transaction?

20% is withheld for income tax

A new general property and casualty licensee must complete at LEAST ____ hours of continuing education within 24 months of initial licensure

24

In Texas , an individial life insurance policy is required to have a GRACE PERIOD of ?

31 days

One becomes eligible for Social Security disability benefits after having been disabled for

5 months

_____ of continuing education MUST be completed in the classroom or classroom equivalent.

50%

An insurer may normally delay the payment of a cash value loan or surrender value for up to

6 months

how long can a cash surrender value payment be defferred by the insurance compant under the nonforfeiture law?

6 months

what is the monetary penalty for willfully violation a cease-and-desist order?

A fine up to $500

which of these is NOT a reason for a business to buy key person life insurance ?

A pension deficiency if they key employee dies

Before a life insurance policy is issued, which of these components of the contract is required?

A signed application by prospect

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is a policy owner, C is the insured, and ABC is the beneficiary

which of the following is NOT included in annuity contract?

AD&D Rider

Which of the following actions does the commissioner of insurance NOT have the power to conduct?

Activate insurance companies finanical reserves.

If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?

An amount that the premiums paid would have purchased at the current age

An insurer is NOT required to provide information on fraudulent claims if requested by

An insured

An example of false advertising would be

An insurer exaggerating its dividends in a magazine advertisement

With whom may an agent legally share commissions?

Another agent with the same line of insurance

When an insurance application is taken by a producer, which of these statements is true?

Any changes made on the application require the applicants initials

A certificate of __________ permits an insurance company to transact business in texas.

Authority

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?

Aviation exclusion

which of these is not considered to be a cost connected with an indiduals death?

Business expenses

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion

B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of

Coercion

which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance poilcy?

Complete the application and review the information wityh the customer prior to obtaining the customers signature , then send the application off to the insurance compant.

T is given a receipt After completing a life insurance application and paying the initial premium. Under this situation, T's coverage is

Conditional, depending on the insurers underwriting guidelines

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

Daughter

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing term rider

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

Deffered

Which of these provisions is not required in life insurance plans

Extended term

An insurance compant organized under new york laws and licensed to do business in texas is considered an?

Foreign company

What is an organization that solicits insurance only to its members

Fraternal benefit society

A lif insurance policy would be considered a wagering contract WITHOUT

Insurable interest

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

A sole propritor may use this plan ONLY if the employee of the buisness is included.

Keogh Pension Plan

What kind of premium does a Whole Life policy have?

Level

during a sales presentation for a participating life insurance policy an agent must

Make a prospect undestand that dividends are not guaranteed

in a life insurance policy , which provision states who may select policy options , designate and name a beneficiary , and be the reciouebt if any finacial benefits from the polict?

Owners rights

All of the followign statements are true regarding a policys Grace period. EXCEPT

Past due premiums are waived

Which action will a life insurance company most likely take if an insurewd dies and it is discovered that the insureds age was misstated on the application

Pay an amount the premiums would have purchased at the insureds actual age

The underwriting process involves all of these. EXCEPT

Policy loan

Who of the follwing is an example of a nonforfetiture option?

Reduced Paid up option

S buys a $10,000 whole life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. what kind of rider did s include on the policy?

Return of premium rider

What dies a 401 (k) plan generally provide its paricipants?

Salary-deferall contrubutions

which of these factors DOES NOT influence an applicants need for life insurance?

Self-Maintenance

To terminate a agents appoinment, an insurance company must

Send termination notice to teh Texas Department of insurance

Who owns a stock unsurance company

Stockholders

Which of these life insurance riders allows the applicant to have excess coverage?

Term Rider

All of these statments about the commissioner of insurance are true except

The commissioner must be elected in a general election

What are the underlying concept regarding level Premiums?

The early years are charged more than what is needed

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premium can be lowered or raised based on investment performance

The free-look provision begins

Upon receipt of the policy by the policyowner

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable life

S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?

Variable whole life

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy. only if iys discovered during the Contesable period and proven to be material

When is the face amount of a Whole Life policy paid?

When the insured dies or the policy maturity date, whchever happens first

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole life

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of

adhesion

A qualified profit sharing plan is designed to

allow employees to participate in the profits of the company

In Texas, which of these statements regarding the Suicide clause is TRUE?

an insurer may not use suicide as a defense against payment after the second year.

in a qualified retirement plan , the yearly contributions to an employees account

are restricited to maximum levels set by the IRS

The Automatic premium loan provision is designed to

avoid a policy lapse

The Phrase " Transacting business" includes?

collecting premiums

which of the following is NOT included in a life insurance illustration?

companys mortality table

What type of group insurance plan involves employees sharing the cost?

contributory plan

a variable insurance policy:

does not guarantee a return on investment accounts

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)

exclusion

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

family maintenance policy

a 55 year old recently received a $30,000 distribution from a previous employers 401k plan , minus $6,000 withholding. which federal taxes apply if none of the funds were rolled over?

income taxes plus a 10% penally tax on 30,000

which of the following groups may NOT be insured by a group life insurance policy?

individuals who are related by blood

Credit Life Insurance is

insurance issued on a debtor to cover outstanding loan balances

How are policyowner dividends treated in regards to income tax?

interest on accumulations is taxed

A license may be denied, suspended, or revoked if the licensee?

is found guilty of misrepresenting in obtaining the license

life insurance that covers an insureds whole life with level premiums paid over a limited time is called?

limited pay life

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?

misrepresentation

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

modified whole life

An insurance agent has fiduclary responsibility to all of the following execpt?

other agents

Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT

partial withdrawal faetures bneoynd a surrender charge period

Which life insurance rider typically appears on a Juvenile life insurance policy?

payor benefit rider

A retirement plan that sets aside part of the companys net income for distributations to qualified employees is called a

profit-sharing plan

An example of rebating would be

returning a portion of a premium as inducement to purchase insurance

which of the following is NOT a required provision in group life poilcies?

right to loan

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

set up a meeting with the applicant to answer the remaining questions

an individual who purchases a life annuity is given protection against

the risk of living longer than expected

An example of unfair claims settlement practice is

turning down a claim without providing the basis of denial

ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering

unfair methods of competition

S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be

universal life

how long does an insurance comapny appointment remain in force?

until terminated

A foreign insurance company conducting insurance business in texas

was formed under the laws of another state.

a life insurance policy that provides a policyowner with cash value along with a LEVEL FACE amount is called

whole life