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Which of the following statements below regarding a life policy's grace periods is CORRECT? A life policy's grace period extends for 60 days after the date in which the premium is normally due. A life policy's grace period extends for 10 days after the date in which the premium is normally due. A life policy's grace period extends for 30 or 31 days after the date in which the premium is normally due. A life policy's grace period extends for 7 days after the date in which the premium is normally due.
A life policy's grace period extends for 30 or 31 days after the date in which the premium is normally due.
In regards to group insurance, which of the following statements below is correct? A master contract is issued by the insurer to the employees, while the employer is given a certificate of insurance Although group insurance provides individuals with plans that contain higher amounts of benefits, premiums are higher with group than with individual insurance Group insurance is often associated with very strict eligibility requirements A master contract is issued by the insurer to the employer, while employees are given certificates of insurance
A master contract is issued by the insurer to the employer, while employees are given certificates of insurance
How is a conditional receipt BEST described? A receipt given to an applicant when an agent collects both the application and initial premium. Under a conditional receipt, the applicant is covered against loss, should it occur, before the policy becomes effective, on the 'condition' that the applicant is found to be insurable as applied for by the insurer's underwriting department upon completion of its underwriting process. A receipt given to an applicant to review the insurance proposal before submitting the initial premium. A receipt conditional to the applicant accepting coverage from the insurer. A receipt that stipulates the date of coverage and requires an insurer to cover the applicant regardless of issuance or denial of the policy.
A receipt given to an applicant when an agent collects both the application and initial premium. Under a conditional receipt, the applicant is covered against loss, should it occur, before the policy becomes effective, on the 'condition' that the applicant is found to be insurable as applied for by the insurer's underwriting department upon completion of its underwriting process.
A statement that is believed to be true to the best of one's knowledge is said to be: A conditional statement A representation A statement of utmost good faith A warranty
A representation
What is the most common type of employment-related group life insurance? Group Paid-Up Annual Modified Term Group Ordinary Annual Renewable Term
Annual Renewable Term
Which of the following statements regarding variable annuities is CORRECT? Because the contract owner bears the investment risk, variable annuities are considered to be securities rather than simple life insurance. Once a variable annuity has been annuitized, monthly annuity income never changes. By placing funds into the insurer's general account, a minimum guarantee rate is most likely to occur. Although variable annuities vary in the number of annuity units, the value of each unit is fixed.
Because the contract owner bears the investment risk, variable annuities are considered to be securities rather than simple life insurance.
All of the following are sources for obtaining information regarding an applicant's insurability EXCEPT: the application Medical Information Bureau (MIB) the medical report Central Medical Bureau (CMB)
Central Medical Bureau (CMB)
Which provision or clause below will illustrate the frequency and amount of policy premiums? Assignment provision Reinstatement provision Insuring clause Consideration clause
Consideration clause
Agents who knowingly offer products from unauthorized insurers to consumers or aids such insurer are subject to the following possible consequences EXCEPT: Suspension or revocation of all insurance licenses held by the agent Responsible for any unpaid claims by the unauthorized insurer Conviction of a third-degree felony Conviction of a first-degree felony
Conviction of a first-degree felony
Unauthorized entities acting as a licensed insurer in the state of Florida are subject to the following possible consequences EXCEPT: Suspension or revocation of all insurance licenses Responsible for any unpaid claims Conviction of a first-degree felony Conviction of a third-degree felony
Conviction of a third-degree felony
Making or circulating false or malicious information regarding an insurer is known as: Misrepresentation Nondisclosure Rebating Defamation
Defamation
Which of the following is NOT a retirement vesting schedule? Deferred Vesting Immediate Vesting Graded Vesting Cliff Vesting
Deferred Vesting
Due to the historical mismanagement of employee retirement plans, which federal law did Congress pass to protect employee retirement plans against misuse? Employee Retirement Benefits Act (ERBA) Employee Income Regulation Act (EIRA) Federal Retirement Act (FRA) Employee Retirement Income Security Act (ERISA)
Employee Retirement Income Security Act (ERISA)
Richard has worked at J&J Printing Inc. for the past three months and wants to join the company's contributory group insurance plan. Which answer BEST describes the period is he entering and how long does he have to apply without proof of insurability? Group insurance does not require proof of insurability Eligibility period; 10 days Enrollment period; 30-31 days Eligibility period; 60 days
Enrollment period; 30-31 days
Which type of buy-sell agreement is most practical when purchasing life insurance on several partners within the company? Cross-Purchase Plan Key Person Plan Split-Dollar Plan Entity Plan
Entity Plan
Which formula is used to compute the taxable portion of an annuity payment? Annuitization ratio Return ratio Exclusion ratio Accumulation ratio
Exclusion ratio
Linda now owns a $120,000 term life policy after she forfeited her whole life policy and reinvested its cash value. As described by her actions, which nonforfeiture option did Linda exercise? Extended Term Option Reduced Paid-up Option Paid-up Additions Option Fixed-Amount Option
Extended Term Option
Which of the following is NOT considered to be a life policy settlement option? Fixed-Amount option Interest Only option Life Income option Extended Term option
Extended Term option
If Jim decides to cancel his whole life insurance policy and uses his policy's cash value to purchase a term life policy with a face amount of equal value but with a likely shorter coverage period, he is utilizing which type of life insurance nonforfeiture option? Reverse transferral option Term transferral option Reduced paid-up option Extended term option
Extended term option
An insurance contract becomes a Modified Endowment Contract (MEC) if which of the following occurs? Insured cancels their coverage prior to age 59 1/2 Insured fails to pay back all loans taken against its cash values Fails the 7-Pay Test Fails the 5-Pay Test
Fails the 7-Pay Test
Which approach is more commonly used when assessing the correct amount of life insurance, taking into account medical deductibles, final expenses, surviving family maintenance income such as mortgage payments and cost-of-living expenses, as well as future income needs such as college tuition and spousal retirement income? Family Needs assessment Family Maintenance assessment Human Life Value assessment Human Life Needs assessment
Family Needs assessment
Which of the following life policy settlement options provides installments composed of both the policy's face amount and earned interest, the amount of which is determined by the length of time in which payments are to be made to the policy's beneficiary? Fixed-Period Option Extended Term Option Fixed-Amount Option Interest Only Option
Fixed-Period Option
In the event a whole life policy is cancelled or lapses due to nonpayment, all of the following nonforfeiture options are available to the policyowner EXCEPT Reduced Paid-Up option Extended Term option Cash Surrender option Fixed-Period option
Fixed-Period option
An insurance company whose headquarters are located in California but conducts business in Georgia is what type of insurer? Alien Domestic Foreign National
Foreign
Which type of whole life policy is characterized by premiums that are typically lower for the first few years, and then increases each year until leveling off? Graded Premium Whole Life policy Indeterminate Premium Whole Life policy Juvenile policy Indexed Whole Life policy
Graded Premium Whole Life policy
Susan has been paying premiums on her whole life policy for the past 14 years. Recently, she decided to stop making payments, but did not select a nonforfeiture option. Since she did not select such option, what actions will her insurer take? Her insurer will issue a paid-up term life policy with the same face value as the original whole life policy and a term length based on the amount of cash value that the forfeited whole life policy can purchase. Her insurer will issue a paid-up whole life policy with the same face value as the original whole life policy and a term length based on the amount of cash value that the forfeited whole life policy can purchase. Her insurer will issue a reduced paid-up term life policy with a lesser face value than the original whole life policy and a term length based on the amount of cash value that the forfeited whole life policy can purchase. Her insurer will keep her accumulated cash value since she forfeited her policy within the first 15 years after it was issued. If she forfeited her policy after 15 years, her insurer would surrender her accumulated cash value to her.
Her insurer will issue a paid-up term life policy with the same face value as the original whole life policy and a term length based on the amount of cash value that the forfeited whole life policy can purchase.
Leon currently receives $650 per month from his variable annuity. Since he is scheduled to receive payments from his variable annuity for the remainder of his life, what will most likely occur to Leon's distribution payment amount as time goes on? His distribution payment amount will continue to increase to keep pace with the cost of living His distribution payment amount will continue to decrease as he gets older His distribution payment amount will continue to remain at $650 per payment until his death His distribution payment amount will fluctuate depending on the return of interest at the time of each distribution payment
His distribution payment amount will fluctuate depending on the return of interest at the time of each distribution payment
All of the statements below pertaining to group life insurance are correct EXCEPT: When paid in a lump sum, group life insurance proceeds paid to a deceased employee's beneficiary are exempt from income taxation Employers may deduct the group plan premiums as a business expense If the insurance coverage is less than $50,000, employees do not have to report the employer-paid premiums as income If the insurance coverage is less than $75,000, employees do not have to report the employer-paid premiums as income
If the insurance coverage is less than $75,000, employees do not have to report the employer-paid premiums as income
Which of the following insurance contracts must follow the Florida Life Solicitation Law? Life insurance policies issued in connection with pension and welfare plans Group life insurance Individual life insurance Credit life insurance
Individual life insurance
In the event that a policyowner surrenders his or her individual whole life policy, which outcome will likely occur? Interest earned will be taxed, but premiums paid into the policy will not be taxed. Premiums paid into the policy will be refunded, while interest earned will be surrendered. Premium payments and earned interest will be taxable upon surrender. Policy loans will be subtracted from premiums paid and then taxed along with earned interest.
Interest earned will be taxed, but premiums paid into the policy will not be taxed.
Which of the following statements is CORRECT in regards to a Roth IRA? Interest is not taxed upon withdrawal due its funding from post-tax dollars Interest, or earnings of funds, will be taxed on withdrawals prior to the age of 70 1/2 In conjunction with other factors, funds must be held in the account for a minimum of 2 years in order for it to be recognized as a qualified withdrawal Roth IRAs do not place a maximum limit on annual contributions
Interest is not taxed upon withdrawal due its funding from post-tax dollars
Linda has decided to make her husband John the beneficiary to her life insurance policy. She has chosen a beneficiary designation that can only allow her to change beneficiaries with the written consent of her husband. This type of beneficiary designation is known as a(n): Irrevocable designation Revocable designation Tertiary designation Per Stirpes designation
Irrevocable designation
The cash value in a whole life policy is also considered to be the policy's: Living benefits Face amount Straight whole life value Universal cash benefits
Living benefits
Which of the following is the rate at which death occurs within a given population, and is a factor when determining life insurance premiums? Interest Rate Loss Ratio Rate Morbidity Rate Mortality Rate
Mortality Rate
Which agency has influenced the insurance industry by introducing uniform regulation 'models' for states to follow in an attempt to standardize multiple-state insurance laws? National Association of Insurance Commissioners (NAIC) Federal Deposit Insurance Corporation (FDIC) Federal Trade Commission (FTC) Securities and Exchange Commission (SEC)
National Association of Insurance Commissioners (NAIC)
Group insurance plans that do not require employees to pay a portion of policy premiums are referred to as: Non-participatory plans Self-insured plans Premium exempt plans Non-contributory plans
Non-contributory plans
In the event that a parent dies or becomes disabled, which rider allows surviving child coverage to continue until the child reaches a specified age? Surviving Income Rider Waiver of Premium Rider Substitute Insured Rider Payor Rider
Payor Rider
Benefits that are passed to a beneficiary's child or children in equal shares in the event that the beneficiary dies is known as the: Per stirpes rule Per capita rule Per scion rule Per viscera rule
Per stirpes rule
Which of the following sets of fundamental principles is insurance based? Speculative risk and pure risk Pooling of risks and the law of large numbers Perils and hazards Law of large loss and risk
Pooling of Risk and law of large numbers
Patricia has good health, good habits and even good credit. If she were to apply for an insurance policy, which classification would she most likely be labeled? Substandard risk Standard risk Minimal risk Preferred risk
Preferred risk
Which of the following is considered to be a 'morale' hazard? Smoking Running a red light while texting Dishonesty Credit card abuse
Running a red light while texting
Insurance is not intended to protect against? The possibility of loss only Pure risk Speculative risk Premature death
Speculative risk
Mr. Baker has named his son as the beneficiary to his life insurance policy, but he is worried about his son's spending habits and the money his son might already owe when he receives the death benefit. Which policy provision, clause or rider best fits his situation? Estate Designation Rider Irrevocable Assignment Clause Spendright Creditor Provision Spendthrift Provision
Spendthrift Provision
In the event an insurance company becomes insolvent, this type of association ensures unpaid claims will be paid for covered policyowners? National Association of Health Underwriters National Association of Insurance Commissioners State Guaranty Association State Association of Insurance and Financial Advisors
State Guaranty Association
Kevin, who has been receiving payments from his annuity for the past 17 years, has recently died. As a result, no additional payments are available and all remaining funds in the annuity are forfeited back to the insurer. Which type of annuity did Kevin own? Straight Life Income Annuity Refund Life Annuity Temporary Annuity Certain Life Annuity with Period Certain
Straight Life Income Annuity
Which of the following is established to fund a multiemployer plan? Taft-Hartley Trust Multiple Employer Trust MEWA ART
Taft-Hartley Trust
All of the following are true regarding the McCarran-Ferguson Act EXCEPT: The McCarran-Ferguson Act defined insurance as a form of interstate commerce. The McCarran-Ferguson Act ratified legislation in all states to conform to federal law; however, Congress still concluded that state regulation of insurance made the most sense from a consumer's standpoint. The McCarran-Ferguson Act was passed by Congress in 1945. Under the McCarran-Ferguson Act, the business of insurance is primarily regulated by the states, allowing the federal government to regulate in addition to, but not to supersede state insurance laws.
The McCarran-Ferguson Act defined insurance as a form of interstate commerce.
Due to the uncertainty and risk of loss associated with a variable annuity, which authority regulates variable annuities because they are based on non-guaranteed equity investments such as common stock? National Association of Insurance Commissioners (NAIC) Federal Trade Commission (FTC) Federal Trade Commission (FTC) and the Securities & Exchange Commission (SEC) The Securities & Exchange Commission (SEC)
The Securities & Exchange Commission (SEC)
Nicholas has purchased a whole life insurance policy; however, while completing his life insurance application he accidentally wrote down an incorrect date of birth. As a result, the insurance company believes he is 2 years younger than his actually age. When he brings this to the attention of the insurance company, what will likely be the course of action as a result of the Misstatement of Age provision? The company will adjust the amount of future premiums and request payment of the additional premium Nicholas should have paid The policy will be void and Nicholas will need to reapply with proof of insurability His date of birth will be updated and no other changes will occur His death benefit will be reduced to reflect his correct age
The company will adjust the amount of future premiums and request payment of the additional premium Nicholas should have paid
In order for a beneficiary to receive double indemnity, which of the following scenarios must occur? The dismemberment of the insured due to an accident The death of the insured due to illness The death of the insured due to an accident The insured's loss of sight due to illness or an accident
The death of the insured due to an accident
In regards to group insurance, which statement below is INCORRECT? If an individual converts his or her certificate of coverage to an individual policy, he or she cannot be denied coverage if his or her individual plan is with the same insurer. In order for a group to qualify for insurance, it must have been formed for some reason other than to obtain insurance. The insurance company evaluates the group as a whole instead of individuals within a group, and then measures the group's risk against it underwriting standards. The insurance company evaluates the individuals within a group instead of the group as a whole, and then measures the individual's risks against its underwriting standards.
The insurance company evaluates the individuals within a group instead of the group as a whole, and then measures the individual's risks against its underwriting standards.
During the annuity period, which of the following is considered correct in regards to variable annuities? The number of annuity units is fixed, but the value of each unit will fluctuate. The number and value of annuity units is fixed. The number and value of annuity units will fluctuate. The number of annuity units will fluctuate, but the value of each unit will remain fixed.
The number of annuity units is fixed, but the value of each unit will fluctuate.
Barbara is currently within her Social Security 'blackout' period. Which of the following BEST describes this period of time? The period of time when a surviving spouse is eligible for survivor's benefits. The period of time before social security benefits begin. The period of time after a surviving spouse's youngest child is no longer eligible and before the surviving spouse turns age 60. The period of time when a surviving spouse's children receive survivor benefits.
The period of time after a surviving spouse's youngest child is no longer eligible and before the surviving spouse turns age 60.
Loss Ratio is defined as: The ratio between company losses and company revenue that determines an insurance company's revenues that must be maintained to cover annual claims by its policyowners. The ratio between company operating expenses and company revenue that determines an insurance company's revenues that must be maintained to cover annual claims by its policyowners. The ratio that determines the rate at which death occurs within a given population, and is the basis for the cost of life insurance. The ratio that determines the rate at which an incidence for specific illness or death occurs within a given population, and is the basis for the cost of health and life insurance.
The ratio between company losses and company revenue that determines an insurance company's revenues that must be maintained to cover annual claims by its policyowners.
When an agent persuades a client to cancel his or her current coverage for a policy from an entirely different company solely to produce another first year commission is called? Churning Up selling Reselling Twisting
Twisting
This Supreme Court case placed the regulation of insurance within the authority of the federal government by defining insurance as a form of interstate commerce? Paul v. Virginia (1868) United States v. Southeastern Underwriters Association (1944) 1958 Intervention by the FTC The McCarran-Ferguson Act (1945)
United States v. Southeastern Underwriters Association (1944)
Which statement regarding annuities is CORRECT? Variable annuity units are fixed but the annuity payment will vary according to the value of the annuity unit. If an individual owns an annuity, the interest is generally taxable during the accumulation period. Annuity payments begin the next day for an immediate annuity. Variable annuities provide a fixed rate of return if funds are invested moderately.
Variable annuity units are fixed but the annuity payment will vary according to the value of the annuity unit.
An individual, company or legal entity that purchases ownership of a life insurance contract from a policyowner who, in return, receives compensation amounting to less than the policy's death benefit, usually 60%-80% of the policy's proceeds is known as a : Viatical settlement provider Viator Life policy liquidation company Policy retention provider
Viatical settlement provider
Which two life insurance riders can Bill purchase to guarantee that his policy will continue without further commitment from him and that income will be paid to him if he becomes totally and permanently disabled? Insurance Protection and Waiver of Premium Riders Disability Income and Guaranteed Insurability Riders Waiver of premium and Disability Income Riders Guaranteed Insurability and Payor Riders
Waiver of premium and Disability Income Riders
Under a family plan life insurance policy, coverage on the breadwinner is often provided by which of the following insurance types? Disability income insurance Term life Whole life Accident death and dismemberment
Whole life
Raymond, a licensed insurance producer, solicits insurance through more than one insurer and negotiates on behalf of his clients; therefore, he is considered to be a broker. a solicitor. an agent. an independent agent.
a broker.
Insurable interest is required at the time of application. at the time of claim. at the time of death. at the time of benefit distribution.
at the time of application.
An aleatory contract is BEST defined as a contract that is: dependent on chance or an uncertain outcome that the insurer may receive more value than the insured. defined by one party, the insurer, and is non-negotiable by the other party, the insured. unilateral in that only one party, the insurer, makes promises to the other party, the insured. based on warranties, but not representations.
dependent on chance or an uncertain outcome that the insurer may receive more value than the insured.
According to the NAIC Life Insurance Solicitation Model, when soliciting life insurance, a producer is required to provide a prospect with a ______ and a _______ specific to the product being marketed. general buyer's guide; policy summary conditional receipt; policy summary health disclosure statement; conditional receipt binding receipt; policy summary
general buyer's guide; policy summary
Overstating promises, using inaccurate or misleading information and guaranteeing insurance are types of: misrepresentation churning rebating defamation
misrepresentation
In reference to health insurance, which of the following is a factor when determining health insurance premiums? mortality rate morality rate morbidity rate loss ratio rate
morbidity rate
The 'parol evidence rule' states that once an insurance contract, including its provisions and riders, is constructed and provided in written form to the insured, it cannot be modified by any oral, or verbal, statements made by either party. any handwritten or typed material that is added to an insurance policy by the insurer after the original printed contract is formed is interpreted by the courts as intended by the insurer to be included, and serves as a better indication of the parties' intent over the original printed material. once a policy is rescinded, neither party is contractually obligated to each other and typically any value or property held by the opposing party is returned. in order to fully understand the validity of an insurance contract, the court examines the entirety of a contract in determining the intent of both parties.
once an insurance contract, including its provisions and riders, is constructed and provided in written form to the insured, it cannot be modified by any oral, or verbal, statements made by either party.
A paramedical exam includes all of the following EXCEPT reviewing the applicant's MIB file. checking the applicant's blood pressure. collecting blood for analysis. conducting a verbal questionnaire regarding the applicant's medical history and lifestyle.
reviewing the applicant's MIB file.
In an employer-related group life contract, an employee may choose any of the following individuals or entities to serve as his or her policy's beneficiary EXCEPT the employer. the employee's spouse or children. the employee's family will or trust. a charity.
the employer.
An 'in force' life insurance policy illustration is defined as an illustration that is furnished at any time after the policy that it depicts has been in force for at least how long? 1 year 90 days 10 days 2 years
1 year
In a qualified employer retirement plan, an employee is entitled to what percentage of the vested interest in benefits that accrue from his or her contributions? 50% 75% 85% 100%
100%
When an employee makes contributions into a pension plan, what percentage of his or her own contributions are vested? 100% 75% 50% 30%
100%
Under Florida law, how long must an individual be allowed to review a new life policy or annuity contract with the option of an unconditional refund if not fully satisfied? 10 days for annuities and 21 days for life policies 30 days for both life policies and annuities 7 days for life policies and 14 days for annuities 14 days for life policies and 21 days for annuities
14 days for life policies and 21 days for annuities
How many hours of continuing education must a life and/or health insurance agent complete who has held an insurance license for a period of 6 years or more? 24 16 12 20
20
Within what amount of time must a licensed insurance agent report to the Florida Department of Financial Services that he/she has been found guilty of or has pleaded guilty to a felony or crime punishable by imprisonment of 1 year or more? 30 days 60 days 90 days 120 days
30 days
According to the NAIC Model Group Life Insurance Provisions, what is the standard grace period? 14 days 10 days 30-31 days 7 days
30-31 days
What is the maximum number of Social Security credits an individual can earn per year? 4 credits 10 credits 12 credits 1 credits
4 credits
For individuals who have reached their normal retirement age, their spouses are entitled a retirement benefit that is equal to what percentage of the retired worker's primary insurance amount (PIA)? 50% 25% 30% 75%
50%
If an individual wants to transfer funds from their 401(k) plan into a Rollover IRA, what is the maximum allowed time in order to be eligible for a tax-free rollover? 120 days 90 days 30 days 60 days
60 days
In a contributory group plan, what percentage of eligible employees must be covered? 50% 25% 100% 75%
75%
Which of the following does not have the responsibility of acting as a fiduciary? A beneficiary An insurer An agent A broker
A beneficiary
Which of the following BEST describes a tertiary beneficiary? A beneficiary who receives a policy's death benefits if both the primary and secondary beneficiaries have died before the insured. A charity or trust that receives a policy's death benefits when the policy's insured has died. An estate that receives a policy's death benefits when the policy's insured has died. A beneficiary who receives a policy's death benefits if the primary beneficiary has died before the insured.
A beneficiary who receives a policy's death benefits if both the primary and secondary beneficiaries have died before the insured.
