Chapters 1-6 Exam Review
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of the issuance of the policy.
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which universal life option has gradually increasing cash value and a level death benefit?
Option A
Which of the following is a key distinction between variable whole life and variable universal life products?
Variable whole life has a guaranteed death benefit
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
$50,000
What type of premium do both universal life in variable life policies have?
Flexible
Which of the following entities is not an insurer but in organization formed to provide insurance benefits for its members of an affiliated lodge or religious organization?
Fraternal benefit Society
Which is true about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income.
The minimum interest rate on an equity indexed annuity is often based on
And index like Standard and Poor's 500
The least expensive first year premium is found in which of the following policies?
Annually renewable term
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policy owner should have her has been named as the
Revocable beneficiary
The premiums paid by the employer in a business life insurance policy are
Tax deductible by the employer
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
Which of the following information will be stated in the consideration clause of a life insurance policy?
The amount of premium payment
Which of the following is true regarding variable annuities?
The annuitant assumes the risks on investment
Which of the following is not the consideration in a policy
The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.
If a life insurance policy has an irrevocable beneficiary designation,
The beneficiary can only be changed with written permission of the beneficiary
All of the following are requirements for life insurance illustrations EXCEPT
They must be part of the contract.
All of the following are true regarding the guaranteed insurability rider except
This rider is available to all insureds with no additional premium.
The paid up additions option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy
An insured submits a proof of loss form within 10 days of a loss. The insurer, however, does not Acknowledge the form for three months. Which of the following violations has the insurer committed?
Unfair claim settlement
What kind of policy allows withdraws or partial surrenders?
Universal life
Which of the following policies would have been an IRS required corridor or gap between the cash value and the death benefit?
Universal life - Option A
Which of the following products requires a security license?
Variable annuity
Which of the following types of policies allow for a flexible premium and a variable investment component?
Variable universal life insurance
And insured owned a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extent term option for the policies cash value, which is currently $20,000. What would be the face amount of the new term policy
$50,000
In order for a debtor group to qualify for group life insurance, what should be the minimum number of participants joining the plan every year?
100
Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of
12 months
The minimum age for purchasing life insurance policy in Florida is
15
In order to maintain an insurance license, an agent will need to satisfy Florida is continuing education requirements of
24 hours of continuing education every two year period
They paid up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available options within how many days after the due date of the premium in default?
60
Regulations for annuity recommendations would apply when a consumer is at least what age?
65 years old
If a claim is made on the policy during the grace period, and ensure is allowed to deduct the overdue premium and to charge interest. What is the maximum allowed interest rate?
8%
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A portion of the benefit up to a limit is tax free the rest is taxable income
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
For variable products, underlying assets must be kept in
A separate account
Which of the following insurance products will be subject to the regulation on life insurance solicitation
A term life policy
Life insurance agents are expected to be familiar with which of the following laws?
All of the insurance laws and regulations
What is reinsurance?
An agreement between a ceding insurer and assuming insurer
In classifying a risk, the home office underwriting department will look at all of the following EXCEPT
Applicant's past income
All the following information about a customer must be used in determining an annuity suitability EXCEPT
Beneficiaries' age
Who examines the books and records of insurance companies in Florida?
Chief Financial Officer
A producer who fails to separate premium money from his own personal funds is guilty of
Commingling
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated
What characteristic makes whole life permanent protection?
Coverage until death or age 100
Applications to ensure must include all of the following information, EXCEPT
Credit history report
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death benefit
Which of the following authorities grants and revokes licenses?
Department of Financial Services
Which of the following is not a term for the period of time during which the annuitant or the beneficiary receives income?
Depreciation period
Which of the following is not a responsibility of the office of insurance regulation?
Enacting new insurance laws. New laws are enacted by the state legislature.
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the standard and pours 500 index. She would likely purchase (an)
Equity indexed annuity
No insurance policy form can be issued, delivered, or used in this state unless it has been
Filed with and approved by the office of insurance regulations
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
Which type of insurance would be used for a return of premium rider?
Increasing term
What are two components of a universal life policy?
Insurance and cash account
The policy owner wants to make sure that upon his death the life policy will pay a portion of the proceeds annually to a spouse but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policy owner choose?
Interest only option
As a field underwriter, a producer is responsible for all of the following tasks EXCEPT
Issue the policy that is requested
The office of insurance regulation is responsible for all of the following insurer activities EXCEPT
Issues of security
Why is an equity indexed annuity consider to be a fixed annuity?
It has a guaranteed minimum interest-rate
Which statement is NOT true regarding a policy summary
It must be combined with a sales illustration
An insured buys a five-year level premium term policy with a face amount of $10,000. The policy also contains renewable and convertibility options. When the insured renews the policy in five years what will happen to the premium?
It will increase because the insured will be five years older than when the policy was originally purchased
Which statement is not true regarding a straight life policy?
Its premium steadily decreases over time, in response to its growing cash value.
Which of the following is NOT a type of whole life insurance?
Level term
When replacing life insurance, the duties of the replacing insurance company include all of the following EXCEPT
Maintaining a copy of the notice regarding replacement and all sale proposals used for at least five years
Which part of an insurance application would contain information regarding the cause of death of the applicants deceased relatives?
Medical information
Which of the following is NOT true regarding policy loans
Money borrowed from the cash value is taxable.
Which term describes the benefits of a life insurance policy that the policy owner does not automatically relinquish even if the policy lapses?
Nonforfeiture values
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
All of the following would be considered an insurance transaction EXCEPT
Obtaining an insurance license
What is the official name for the Social Security program?
Old-Age, Survivors, and Disability Insurance
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner then would have been possible otherwise. What dividend option could she use?
Paid-up option
A participating insurance policy made you which of the following?
Pay dividends to the policy owner
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
Which of the following allows the insured to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor benefit
Which of the following has the right to convert the existing term coverage to permanent insurance?
Policyowner
Which of the following will be included in a policy summary?
Premium amounts and surrender values
A couple owns a life insurance policy with a children's term writer. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required
When an insurer terminates an agent appointment, the insurer must do all of the following EXCEPT
Provide a 30 day advance notice to the commissioner
When and ensure terminate an agent appointment, the insured must you all of the following EXCEPT
Provide a 30 day advance notice to the commissioner
Which of the following is among the regulations set forth by the Florida replacement rule?
Providing a written comparison and summary statement
In what way can an agent demonstrate a high standard of ethics?
Putting the client's best interest before their own
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
Rebating
If an employer decides to change its life insurance policy to a similar one with a different insurer, which of the following describes the extent that replacement regulations will be exercised?
Replacement regulations will not apply in this situation.
What role would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
Which of the following statements is incorrect?
Replacing insurance policies for the purpose of making commissions is legal
And insurance agent ex has been found guilty of a felony and was sentenced to three years in prison. What would be the appropriate plan of action?
Send a written notification to the department of insurance
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Set premium rates
An agent's appointment has been denied. Which of the following is true?
State taxes may be refunded upon written requests
Which of the following insurers are owned by stockholders?
Stock
Which of the following would help prevent a universal life policy from lapsing?
Target premium
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
A customer with an existing life insurance contract is considering exchanging it for a newer contract. What Florida insurance regulation should the customer insurance agent consult?
The Florida replacement rule
A 60 year old participant in a 401k plan takes a distribution and roasted over to an IRA within 60 days. Which of the following is true?
The amount of distribution is reduced by the amount of a 20% withholding tax
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
The cost of coverage is a deductible expense by the employer
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 describes the tax advantage of a qualified retirement plan?
The earnings in the plan accumulate tax deferred.
And employee is insured under her employer's group life plan. If she terminates her coverage, which of the following statements is incorrect?
The insured may choose to convert to term or permanent individual coverage.
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
The insured's age at death
A person insured under a group Life insurance policy can make an assignment of all or any part of the incidence of ownership conferred on the insured by the policy or by law, to any of the following EXCEPT
The policy holder
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans
If a life insurance holds the proceeds of any policy it issues, which of the following is true
The proceeds may be exempt from any creditors claim against a beneficiary other than the policy owner
How must a replacing produce respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with a notice regarding replacement
In accordance with the code of ethics, agents must provide a completed application to
The prospective insured and the insurer
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
And insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
Which of the following is true for both equity indexed annuity's and fixed annuities?
They have a guaranteed minimum interest rate
Which of the following insurance agreements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policy owner?
Third-party ownership
An agent transacts business for Insurer A and Insurer B, both selling life insurance, and for Insurer C, selling health insurance. How many appointments must the agent hold?
Three - one for each insurer
What is the purpose of a disclosure statement in life insurance policies?
To explain features and benefits of a proposed policy to the consumer
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
When does a free look period begin on a life insurance policy
When the policy is delivered to the insured.
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicants
ancestry
The death protection component of universal life insurance is always
annually renewable term
The universal life insurance policy is best described as an
annually renewable term policy with a cash value account
How often must domestic insurance companies be examined by the chief financial officer in Florida?
at least every 5 years
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
concealment
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
conditional
All of the following statements are true regarding tax qualified annuities except
employer contributions are not tax deductible
Fixed annuities provide all of the following EXCEPT
hedge against inflation
Under what conditions will proof of insurability NOT be required of an employee wanting to enroll in a group insurance plan?
if employee enrolls within certain time period
Which of the following riders would not cause the death benefit to increase?
payor benefit rider
The interest earned on policy dividends is
taxable
All of the following are true regarding a decreasing term policy EXCEPT
the payable premium amount steadily declines throughout the duration of the contract
All of the following are true regarding a decreasing term policy except
the payable premium amount steadily declines throughout the duration of the contract
What is the name of the insured who enters into a viatical settlement
viator
Under what circumstances can and agents appointment be transferred to another person?
Under no circumstances
All of the following actions can be described as twisting EXCEPT
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair credit reporting act
An insurance company has published a brochure that in accurately portrayed the advantages of a particular insurance policy. What is this an example of?
False advertising
Which of the following would NOT be a violation of state insurance regulations?
Agent C uses her license to write only business other than controlled.
All of the following are general qualifications for an agents license EXCEPT
Have a high school diploma
Regarding the free look provision, the insurance company
Must allow the policyowner to return the policy for a full refund.
Which of the following entities is responsible for agent licensing and administrative supervision?
Office of Insurance Regulation
An agent selling variable annuities must be registered with
FINRA
When must insurable interest exist in a life insurance policy?
At the time of application
The dividend option in which the policy owner uses the dividend to purchase a term policy for one year is referred to as the
One year term options
Pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
For how long is an insurance company allowed to defer policy loan requests
6 months
What is the waiting period on a waiver of premium writer in life insurance policies?
6 months
Which of the following is the required number of participants in a contributory group plan?
75%
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
A SEC registration
Which policy component decreases in decreasing term insurance?
Face amount
The death benefit under the Universal Life Option B
Gradually increases each year by the amount that the cash value increases
Which of the following is correct concerning the taxation of premiums and a key person's life insurance policy?
Premiums are not tax-deductible as a business expense.
When a whole life policy lapse is or a surrendered surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount
Which nonforfeiture option provides coverage for the longest period of time?
Reduced Paid-Up
What method do insurers is used to protect themselves against catastrophic losses?
Reinsurance