CO Life Insurance Exam-ExamFX
Records of replacement must be kept for how many years? A. 3 B. 5 C. 7 D. 10
B
All other factors being equal, the least expensive first-year premium payment is found in A Increasing Term. B Decreasing Term. C Level Term. D Annually Renewable Term.
D
The death protection component of Universal Life Insurance is always A. Annually Renewable Term B. Whole Life C. Adjustable Life D. Increasing Term
A
Group Life Insurance can be converted into a(n) A. Term Policy B. Individual Whole Life Policy C. Another group life insurance policy D. A property insurance policy
B
Which of the following is true regarding taxation of dividends in participating policies? A. Dividends are considered income for tax purposes B. Dividends are not taxable C. Dividends are taxable only after a certain amount is accumulated annually D. Dividends are taxable in some life insurance policies and nontaxable in others
B
A man decided to purchase a $100,000 Annually Renewable Term Life Policy to provide additional protection until his children finished college. He discovered that his policy A. Required Proof of Insurability every year B. Decreased Death Benefit at each renewal C. Required Premium Increase each renewal D. Built Cash Values
C
How is the commissioner selected for office? A. Elected by popular vote B. Appointed by the governor C. Appointed by the NAIC D. Elected by state insurers
B
What kind of policy allows withdrawals or partial surrenders? A. Universal Life B. 20-Pay Life C. Term Policy D. Variable Whole Life
A
All of the following are true about Variable Life Products EXCEPT A. The premiums are invested in the insurer's general account B. The minimum Death Benefit is guaranteed C. The cash value is not guaranteed D. Policyowners bear the investment risk
A
All of the following statements regarding dividends are true EXCEPT A. Dividend amounts are guaranteed in the policy B. Lower Insurance Company costs generate higher dividends. C. They stem from favorable underwriting experience D. Favorable investment results generate higher dividends
A
Which Universal Life Policy has a gradually increasing cash value and a level death benefit? A. Option A B. Option B C. Juvenile Life D. Term Insurance
A
Which of the following is NOT true regarding the Notice Regarding Replacement A. A copy must be sent to the existing insurer B. It must be given out when replacing renewable term insurance C. It requires the signatures of both the insurer and the applicant D. It must be sent along with the policy application to the new insurer.
A
Who is a third-party owner? A. A policyowner who is not the insured B. An insurer who issues a policy for two people C. An employee in a group policy D. An irrevocable beneficiary
A
In order for an insurer to legally transact insurance it must obtain which of the following? A. Power of Authority B. Director's Decree C. Authorization of Power D. Certificate of Authority
D
The death benefit under the Universal Life Option B A Decreases by the amount that the cash value increases. B Increases for the first few years of the policy, and then levels off. C Remains level. D Gradually increases each year by the amount that the cash value increases.
D
Which of the following documents must be provided to the policyowner or applicant during policy replacement? A. Disclosure authorization form B. Buyer's Guide and Policy Summary C. Policy Illustrations D. Notice regarding replacement
D
which of the following defines the "owner" as it pertains to life settlement contracts? A. The policyowner of the life insurance policy B. A financial entity that sponsors the transaction C. A fiduciary for the contract D. The Insurance provider
A
All of the following statements are true regarding tax-qualified annuities EXCEPT A. They must be approved by the IRS B. Withdrawals are taxed C. Employer contributions are not tax deductible D. Tax accumulation is deferred
C
Which of these statements is true regarding the accidental death rider? A. It is only known as a triple indemnity rider B. The rider is only available to insureds over the age of 65 C. It is only available in group insurance D. It will pay double or triple the face amount
D
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A. Spouse RIder B. Children's Rider C. Additional Insured Rider D. Family Term Rider
D
In a survivorship life policy, when does the insurer pay the death benefit? A Upon the last death B Upon the first death C Half at the first death, and half at the second death D If the insured survives to age 100
A
Under SIMPLE plans an employee may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of an employee's annual wages? A. 3 B. 5 C. 7 D. 10
A
What are the two components of a Universal Life Policy? A. Insurance and Cash Account B. Insurance and Investments C. Mortality cost and Interest D. Separate Account and Policy Loans
A
The regulations regarding replacement apply to which of the following? A. Group Life B. Renewable Term C. Replacement of existing policy by the same insurer D. Credit Life
B
Which of the following statements about group life is correct? A. The policy can be converted to an individual term insurance policy B. The cost of coverage is based on the ratio of men and women in the group C. The premiums are higher than in an individual policy because there is no medical exam D. The group sponsor receives a certificate of insurance
B
The primary purpose of replacement regulations in Colorado is A. Protect the solvency of insurers doing business in the state B. Ensure that group plans do not lapse or terminate employee coverage C. Provide the insurers with product options to offer the insured D. Protect the interests of policyholders and insureds
D
What is the purpose of a fixed-period settlement option? A. to settle the insurance company's liability B. To provide a guaranteed income for life C. To provide a guaranteed amount of money each month D. To provide a guaranteed income for a certain amount of time
D
Which of the following is TRUE of a qualified plan? A. It does not need to have a vesting schedule B. It may discriminate in favor of highly paid employees C. it may allow unlimited contributions D. It has tax benefits for both employer and employee
D
Which type of life insurance generates immediate cash value? A. Level Term B. Decreasing Term C. Continuous Premium D. Single Premium
D
5The two types of assignments are A Absolute and collateral. B Absolute and partial. C Complete and partial. D Complete and proportionate.
A
A domestic insurer issuing variable contracts must establish one or more A. Seperate accounts B. Liablility accounts C. Annuity accounts D. General accounts
A
Who is responsible for covering the expenses associated with the examination of domestic insurers? A. The examined insurer B. The Commissioner C. The Department of Insurance D. The Insurance Guaranty Association
A
__________________________ policy must maintain a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS. If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and consequently loses most of the tax advantages that have been associated with life insurance. A Universal Life - Option A B Universal Life - Option B C Equity Indexed Universal Life D Variable Universal Life
A
A Return of Premium (ROP) Life Policy is written as what type of term coverage? A. Level B. Increasing C. Decreasing D. Renewable
B
Employer contributions to a qualified plan A. Are after-tax contributions B. Are taxed annually as salary C. Must have a vesting requirement D. May discriminate in favor of highly paid employees
C
Equity Indexed Annuities A. are security instruments B. Invest conservatively C. Seek Higher Returns D. Are more risky than variable annuities
C
If a settlement option is not chosen by the beneficiary or policyowner, which option will be used? A. Fixed Period B. Fixed Amount C. Lump Sum D. Life Income
C
In which of the following situations has replacement occurred? A. A policyowner borrows 25% of their cash value to buy a new policy B. An applicant buys life insurance for the very first time C. An applicant buys a new policy but intends to keep his old policy in force D. An insured lapses his group life coverage in order to buy a whole life policy
A
The automatic premium loan provision is activated at the end of the A. Grace Period B. Free-Look Period C. Elimination Period D. Policy Period
A
How many days is the free-look period on a life policy issued in Colorado? A. 10 B. 15 C. 31 D. 45
B
To which of the following situations does the Replacement Regulation apply? A. Non-Renewable coverage expiring in 8 years B. Group Life Insurance C. Immediate annuities purchased with proceeds from an existing policy D. Coverage under a binding receipt issued by the same company
A
If an agent fails to obtain an applicant's signature on the application, the agent must A. Send the application to the insurer with a note explaining the absence of signature B. Return the application to the applicant for a signature C. Sign the application for the applicant D. Sign the application, stating it was by the agent
B
Which of the following best describes annually renewable term insurance? A. It provides an annually increasing death benefit. B. It is level term insurance C. It requires proof of insurability at each renewal D. Neither the premium nor the death benefit is affected by the insured's age
B
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? A. Family Term Rider B. Third-Party Ownership C. An Irrevocable beneficiary D. a buy-sell agreement
B
Which of the following would be deducted from a death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive? A. 10% federal death benefit income tax B. Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit. C. There are no deductions from death benefits D. Penalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income
B
If an annuitant dies before annuitization occurs, what will the beneficiary receive? A. Amount paid into the plan B. Cash Value of the plan C. Either the amount paid into the plan or the cash value of the plan, whichever is greater. D. Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount.
C
In forming an Insurance Contract, when does acceptance usually occur? A. When an insurer receives an application B. When an insured submits an application C. When an insurer's underwriter approves coverage D. When an insurer delivers the policy
C
In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A. 1 B. 3 C. 5 D. 10
C
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider was attached to this policy? A. Decreasing term B. Premature death C. Return of premium D. Cost of living
C
Which of the following determines the cash value of a variable life policy? A The policy's guarantees. B The premium mode C The performance of the policy portfolio D The company's general account
C
Which of the following is NOT a type of whole life insurance? A. Straight life B. Limited Payment C. Increasing Term D. Single Premium
C
Which of the following would be considered a nonmedical insurance application? A An application submitted with the Agent's Report B Any application for life insurance C An application on which the medical information is completed by the applicant and the agent only D An application that does not ask any questions about the applicant's medical history
C
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A. Conversion rule B. Disclosure rule C. Replacement rule D. Reinstatement rule
C
Who is responsible for giving the notice to the replacing insurer in a replacement life transaction? A. The insured B. The existing insurer C. The producer D. The Insurance commissioner
C
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? A Life annuity with period certain B Increasing term C Limited pay whole life D Interest-sensitive whole life
C
Colorado's Insurable Interest Act allows all of the following EXCEPT: A. Viatical Settlements B. Stranger-originated life insurance C. The purchase of life insurance by a business owner on a key person of business D. The purchase of life insurance by a step-parent on a step child
B
Which of the following is NOT true of life settlements? A. They involve life insurance policies with large face amounts B. The seller must be terminally ill C. They could be used for key person coverage D. They could be sold for an amount greater than the cash value
B
Which of the following is correct regarding the replacement of an existing life insurance policy? A. The new policy must have a 20-day free-look period B. A replacement notice must be given out before taking the application C. Replacement rules apply to both individual and group policies D. Records of replacement must be kept for at least 3 years
B
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Guaranteed insurability option B. Dividend options C. Guaranteed renewable option D. Nonforfeiture options
A
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option would the insured utilize? A. Change of beneficiary B. Viatical Settlement C. Estate liquidation D. Nonpayment of premium
B
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit then A. the benefit is received as taxable income B. The benefit is received tax free C. The benefit is subject to the exclusionary rule D. IRS has no jurisdiction
B
Which of the following is NOT one of the 3 basic types of coverage that are available, based on how the face amount changes during the policy term? A. Level B. Increasing C. Renewable D. Decreasing
C
What is the purpose of key person insurance? A. To lessen the risk of financial loss because of the death of a key employee B. To provide health insurance to the families of key employees C. To insure retirement benefits available to all key employees D. To maintain an account that insures the owner of a company remains solvent
A
An individual has just borrowed $10,000 from his bank on a 5 year installment loan requiring monthly payments. What type of life insurance policy would be best suited to fit this situation? A. Whole life B. Decreasing Term C. Variable life D. Universal life
B
Which of the following is a statement, guaranteed to be true and if untrue, may breach an insurance contract? A. Warranty B. Concealment C. Indemnity D. Representation
A
Which of the following is the basic source of information used by the company in the risk selection process? A. Application B. Agent's Report C. Warranty D. Consumer Report
A
An employee is employed under her employer's group life plan. If she terminates her group coverage, which of the following statement's is INCORRECT? A. The insured may convert coverage to an individual policy within 31 days. B. The premium for individual coverage will be based upon the insured's attained age C. The insured may choose to convert to term or permanent individual coverage D. The insured would not need to prove insurability
C
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? A. Adjustable life B. Graded Premium Life C. Limited-Pay Life D. Variable Life
C
An IRA (Independent Retirement Account) purchased by a small employer to cover employees is known as A. 401(k) plan B. Defined contribution plan C. 403(b) plan D. Simplified Employee Pension Plan
D
