6 exam

Which of the following statements is FALSE regarding Credit Life Insurance? A Usually the individual debtor pays the premium monthly B The insurance will terminate if the debt is prepaid or refinanced C The amount of coverage is dependent upon the duration of the loan D The creditor must apply the insurance proceeds to the discharge of the loan

The amount of coverage is dependent upon the duration of the loan The amount of the coverage is dependent upon the amount of indebtedness, not the duration of the loan.

All of the following are parties to a life insurance contract, except: A The insured B The beneficiary C The policyowner D The insurer

The beneficiary While beneficiaries are named, they are not a party to a life insurance policy.

Who are the parties in a third-party life insurance ownership situation? A The insured, the insurer, and the beneficiary B The policyowner, the insured, and the beneficiary C The policyowner, the insurer, and the beneficiary D The policyowner, the insured, and the insurer

The policyowner, the insured, and the insurer

Group insurance is a contract between: A The employees and his/her dependents B The sponsor and the employees C The sponsor and the insurance company D The insurance company and the employees

The sponsor and the insurance company

With a Contributory Group Life Plan, what percentage of the employees must participate? A At least 50% B A full 100% C At least 60% D At least 75%

At least 75%

The 31 days in which the employee may change his/her group policy to an individual policy upon termination and without evidence of insurability, is known as: A Ownership Rights Provision B The Conversion Period C The Contestable Period D Change of Policy Provision

The Conversion Period As the name implies, the Conversion Period is the period in which an employee may convert the group term death benefit to an individual permanent policy upon termination and without evidence of insurability.

To be eligible for a group insurance plan, the group must be: A Approved by the Commissioner of Insurance B A natural group C Formed for reducing the cost of insurance D Formed for procuring insurance

A natural group To be eligible for a group insurance plan, the group must be a natural group, meaning it was formed for a purpose other than for procuring or reducing the cost of insurance.

Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is all of the following, except: A Premium payor B Policyholder C Insured D Beneficiary

Insured Under an Entity Purchase Plan form of a Buy-Sell Agreement, the business is the owner, premium payor, and beneficiary of a policy written upon each of the partners or shareholders who are the insureds.

Which of the following is not one of the most common methods of determining group insurance benefits? A Position in the company B Tax bracket C Percentage of income D Flat benefit

Tax bracket The most common methods of determining group insurance benefits are flat benefit (all employees receive the same insurance amounts), percentage of income (employees receive 100%, 150%, or 200% of their annual base wage, subject to imputed income), and position in the company (the employer may establish different benefits for specific classes of employees, but may not discriminate between employees in the same class).

The extension of group benefits for an employee or dependent may terminate if: A The employee qualifies for Medicare or the dependent obtains coverage through Medi-Cal B It has been more than 36 months since the extension of benefits have been provided for the employee, or 24 months for the dependent C The employee or dependent is no longer totally disabled D The employee or dependent attains the limiting age

The employee or dependent is no longer totally disabled The extension of group benefits may be terminated if the employee or dependent is no longer totally disabled or at such time as a succeeding carrier may elect to provide replacement coverage to that employee or dependent without limitation as to the disabling condition.

A Credit Life Policy will be cancelled if: A The insurer's credit rating falls below A+ B The loan is paid off or refinanced C The coverage is less than the total debt outstanding D The premiums increase by more than 10%

The loan is paid off or refinanced

Which of the following is a likely outcome if a buy-sell agreement in a two person partnership is not in place when one of the partners dies? A Partnership transfer taxes are due within 9 months B The agreement will need to go through the probate process C The value of the business will increase D The surviving spouse of the deceased becomes the other partner

The surviving spouse of the deceased becomes the other partner Without a Buy-Sell Agreement in place, the surviving spouse of the deceased partner will likely step in as the new partner.

How is the funding for Social Security provided? A Through FICA taxes that are paid by employers B Through FICA taxes that are paid by employees C Through FICA taxes that are paid by both employers and employees D Through the PIA

Through FICA taxes that are paid by both employers and employees

All of the following regarding credit life are true, except: A The coverage is on the life of the debtor B Usually the creditor pays the premium C It can be either in the form of individual or group coverage D The form of coverage is normally decreasing term insurance

Usually the creditor pays the premium Usually the individual debtor pays the premium.