Colorado Life - Learn As You Go

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a) The death benefit can be increased only by exchanging the existing policy for a new one. b) The death benefit can be increased by providing evidence of insurability. c) The death benefit cannot be increased. d) The death benefit can be increased only when the policy has developed a cash value.

b) The death benefit can be increased by providing evidence of insurability.

All of the following are true of an annuity owner EXCEPT a) The owner is the party who may surrender the annuity. b) The owner must be the party to receive benefits. c) The owner pays the premiums on the annuity. d) The owner has the right to name the beneficiary.

b) The owner must be the party to receive benefits.

Which of the following best describes what the annuity period is? a) The period of time from the effective date of the contract to the date of its termination b) The period of time during which accumulated money is converted into income payments c) The period of time from the accumulation period to the annuitization period d) The period of time during which money is accumulated in an annuity

b) The period of time during which accumulated money is converted into income payments

A producer is subject to criminal prosecution in another jurisdiction. Within what time frame must the producer report this fact to the Commissioner? a) Immediately after the hearing b) Within 30 days after the initial pre-trial hearing c) Within 15 days after the initial complaint d) Within 10 days after the final order

b) Within 30 days after the initial pre-trial hearing

The Commissioner may revoke a producer license for all of the following reasons EXCEPT a) Commingling of funds. b) Misrepresenting the terms of a policy. c) Acting in a fiduciary capacity. d) Accepting business from an unlicensed person.

c) Acting in a fiduciary capacity.

Which is TRUE about the cash surrender nonforfeiture option? a) The policy remains active for some time after the policyholder opts for cash surrender. b) The policyholder receives the original cash value of the policy. c) Funds exceeding the premium paid are taxable as ordinary income. d) After the cash surrender, the insured is covered for a grace period of one month.

c) Funds exceeding the premium paid are taxable as ordinary income.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a) IRS has no jurisdiction. b) The benefit is received as taxable income. c) The benefit is received tax free. d) The benefit is subject to the exclusionary rule.

c) The benefit is received tax free.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a) The death benefit can be increased only when the policy has developed a cash value. b) The death benefit can be increased only by exchanging the existing policy for a new one. c) The death benefit can be increased by providing evidence of insurability. d) The death benefit cannot be increased.

c) The death benefit can be increased by providing evidence of insurability.

What is the purpose of a fixed-period settlement option? a) To provide a guaranteed income for life b) To provide a guaranteed amount of money each month c) To provide a guaranteed income for a certain amount of time d) To settle the insurance company's liability

c) To provide a guaranteed income for a certain amount of time

Which of the following terms will be permissible in describing a life insurance policy in company advertisements? a) Investment plan b) Retirement plan c) Variable plan d) Risk-free plan

c) Variable plan

An insurer who frequently misses deadlines to respond to inquiries from the Division of Insurance may be fined, for each violation, as much as a) $500. b) $800. c) $1,000. d) $5,000.

d) $5,000.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? a) It is a life contingency option. b) The beneficiary receives the remainder of the principal amount upon the annuitant's death. c) Payments can be made in installments and as a single cash refund. d) It does not guarantee that the entire principal amount will be paid out.

d) It does not guarantee that the entire principal amount will be paid out.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? (2) a) It is a life contingency option. b) The beneficiary receives the remainder of the principal amount upon the annuitant's death. c) Payments can be made in installments and as a single cash refund. d) It does not guarantee that the entire principal amount will be paid out.

d) It does not guarantee that the entire principal amount will be paid out. (2)

An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do? a) Refuse to pay the death benefit because of the misstatement on the application b) Pay a decreased death benefit c) Sue for the right to not pay the death benefit d) Pay the death benefit

d) Pay the death benefit

The ___ prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex and identity.

incontestability clause

The Commissioner may ___ for all of the following reasons - Commingling of funds. - Misrepresenting the terms of a policy. - Accepting business from an unlicensed person.

revoke a producer license

The following is true regarding the ___ annuity settlement option (2) - It is a life contingency option. - The beneficiary receives the remainder of the principal amount upon the annuitant's death. - Payments can be made in installments and as a single cash refund.

Life with Guaranteed Minimum (2)

Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits? a) $50,000 b) $62,500 c) $75,000 d) Nothing

a) $50,000

Which of the following is NOT true regarding an annuity certain? a) Benefits stop at the annuitant's death. b) It will pay until a fixed amount is liquidated. c) There are no life contingencies. d) It is a short-term annuity.

a) Benefits stop at the annuitant's death.

What is another name for interest-sensitive whole life insurance? a) Current assumption life b) Variable life c) Term life d) Adjustable life

a) Current assumption life

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a) Entire contract. b) Total contract. c) Aleatory contract. d) Complete contract.

a) Entire contract.

What is the purpose of a conditional receipt? a) It is intended to provide coverage on a date prior to the policy issue. b) It guarantees that a policy will be issued in the amount applied for. c) It serves as proof that the applicant has been determined insurable. d) It is given only to applicants who fully prepay the premium.

a) It is intended to provide coverage on a date prior to the policy issue.

Which of the following is INCORRECT concerning a noncontributory group plan? a) The employees receive individual policies. b) They help to reduce adverse selection against the insurer. c) They require 100% employee participation. d) The employer pays 100% of the premiums.

a) The employees receive individual policies.

The following is true regarding the ___ - It is the period during which the annuity payments earn interest. - It is the period over which the owner makes payments into an annuity. - It is also known as the pay-in period.

accumulation period of an annuity

Which of the following is NOT true regarding the Notice Regarding Replacement? a) It must be sent along with the policy application to the new insurer. b) A copy must be sent to the existing insurer. c) It must be given out when replacing renewable term insurance. d) It requires the signatures of both the producer and the applicant.

b) A copy must be sent to the existing insurer.

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select? a) Straight life b) Joint and survivor c) Joint annuity d) Cash refund annuity

b) Joint and survivor

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) Graded Premium Life b) Limited-pay Life c) Variable Life d) Adjustable Life

b) Limited-pay Life

What is the other term for the cash payment settlement option? a) Proceeds b) Lump sum c) Principal amount d) Face amount

b) Lump sum

What describes the specific information about a policy? a) Producer's report b) Policy summary c) Illustrations d) Buyer's guide

b) Policy summary

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death? a) Joint and survivor b) Pure life c) Life with guaranteed minimum d) Installment refund

b) Pure life

Group life insurance policies delivered in Colorado must contain all of the following provisions EXCEPT a) A copy of the application is considered part of the policy. b) Statements on the applicant are considered warranties. c) A grace period of 31 days. d) Incontestability period of 2 years.

b) Statements on the applicant are considered warranties.

Which of the following information will be stated in the consideration clause of a life insurance policy? a) The conditions for insurability b) The amount of premium payment c) The parties to the contract d) The time period allowed for the payment of premium

b) The amount of premium payment

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? (2) a) As of the application date b) As of the policy delivery date c) As of the first of the month after the policy issue d) As of the policy issue date

a) As of the application date (2)

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) Insuring clause b) Entire contract clause c) Beneficiary clause d) Consideration clause

a) Insuring clause

Which of the following is true about the premium on the children's rider in a life insurance policy? a) It remains the same no matter how many children are added to the policy. b) It decreases when the oldest child reaches the age of 21. c) It increases when a newborn baby is added to the policy. d) It decreases when an adopted child is added to the policy.

a) It remains the same no matter how many children are added to the policy.

The following is true regarding the ___ annuity settlement option - It is a life contingency option. - The beneficiary receives the remainder of the principal amount upon the annuitant's death. - Payments can be made in installments and as a single cash refund.

Life with Guaranteed Minimum

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a) 100% participation of members is required in noncontributory plans. b) Each member covered receives a policy. c) Coverage cannot be converted when an individual leaves the group. d) Premiums are determined by age, occupation, and individual underwriting.

a) 100% participation of members is required in noncontributory plans.

As part of the continuing education (CE) requirement, what is the minimum number of hours of CE specific to annuities that must be completed for each license renewal period? a) 4 b) 6 c) 8 d) 10

a) 4

If a company has a Simplified Employee Pension plan, what type of plan is it? a) A qualified plan for a small business b) The same as a 401(k) plan c) The same as an IRA, with the same contribution limits d) An undefined contribution plan for large businesses

a) A qualified plan for a small business

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? a) As of the application date b) As of the policy delivery date c) As of the first of the month after the policy issue d) As of the policy issue date

a) As of the application date

Insurance producers who sell annuities are required to complete an initial ___ related to annuities every licensing period.

4-hour annuity training course and then 4 hours of continuing education

The Replacement Regulation does not apply to nonconvertible or nonrenewable term insurance that expires in ___. All other answer choices are also exceptions to the replacement rules.

5 years or less

The following is true regarding the ___ - It must be sent along with the policy application to the new insurer. - It must be given out when replacing renewable term insurance. - It requires the signatures of both the producer and the applicant.

Notice Regarding Replacement

___ will cease at her age 65, but coverage will continue to her death or age 100.

Premium payments

Statement are true regarding a ___ - It has the lowest annual premium of the three types of Whole Life policies. - The face value of the policy is paid to the insured at age 100. - It usually develops cash value by the end of the third policy year.

Straight Life policy

Which of the following statements is correct regarding the replacement of an existing life insurance policy? a) A replacement notice must be given out before taking the application. b) Replacement rules apply to both individual and group policies. c) Records of replacement must be kept for 3 years. d) The new policy must have a 20-day free-look period.

a) A replacement notice must be given out before taking the application.

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) Automatic premium loan b) Extended term c) Reinstatement d) Reduced paid-up option

a) Automatic premium loan

Which policy component decreases in decreasing term insurance? a) Face amount b) Cash value c) Dividend d) Premium

a) Face amount

Which is TRUE about the cash surrender nonforfeiture option? a) Funds exceeding the premium paid are taxable as ordinary income. b) After the cash surrender, the insured is covered for a grace period of one month. c) The policy remains active for some time after the policyholder opts for cash surrender. d) The policyholder receives the original cash value of the policy.

a) Funds exceeding the premium paid are taxable as ordinary income.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a) Guaranteed insurability rider. b) Paid-up additions option. c) Cost of living provision. d) Nonforfeiture option.

a) Guaranteed insurability rider.

Stranger-originated life insurance policies are in direct opposition to the principle of a) Insurable interest. b) Law of large numbers. c) Good faith. d) Indemnity.

a) Insurable interest.

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? (2) a) Insuring clause b) Entire contract clause c) Beneficiary clause d) Consideration clause

a) Insuring clause (2)

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) Limited pay whole life b) Interest-sensitive whole life c) Life annuity with period certain d) Increasing term

a) Limited pay whole life

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a) Mutual b) Reciprocal c) Nonprofit service organization d) Stock

a) Mutual

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a) Pay a reduced death benefit b) Pay the full death benefit c) Pay nothing; there was a misrepresentation on the application d) Pay the full death benefit and refund excess premium

a) Pay a reduced death benefit

Which of the following best describes the tax advantage of a qualified retirement plan? a) The earnings in a qualified plan accumulate tax deferred. b) Distributions prior to age 59½ are tax deductible. c) Employer contributions are tax deductible, as long as employee earnings are considered taxable income. d) Employer contributions are taxed as income to the employee.

a) The earnings in a qualified plan accumulate tax deferred.

All of the following are true of key person insurance EXCEPT a) The plan is funded by permanent insurance only. b) There is no limitation on the number of key employee plans in force at any one time. c) The employer is the owner, payor and beneficiary of the policy. d) The key employee is the insured.

a) The plan is funded by permanent insurance only.

Which is true about a spouse term rider? a) The rider is usually level term insurance. b) Coverage is allowed for an unlimited time. c) The rider is decreasing term insurance. d) Coverage is allowed up to age 75.

a) The rider is usually level term insurance.

All of the following are TRUE statements regarding the ___ - The policyholder has the right to withdraw the accumulations at any time. - The annual dividend is retained by the company. - The interest is credited at a rate specified by the policy.

accumulation at interest option

The following is true regarding the ___ - The annuitant receives the annuity benefits. - The annuitant must be a natural person. - The annuitant's life expectancy is taken into consideration for the annuity.

annuitant

The following is true regarding an ___ - It will pay until a fixed amount is liquidated. - There are no life contingencies. - It is a short-term annuity.

annuity certain

Key Person coverage may be funded by ___.

any type of life insurance

The LEAST expensive first-year premium is found in which of the following policies? a) Level Term b) Annually Renewable Term c) Increasing Term d) Decreasing Term

b) Annually Renewable Term

Which of the following is a feature of a variable annuity? a) Securities license is not required. b) Benefit payment amounts are not guaranteed. c) Payments into the annuity are kept in the company's general account. d) Interest rate is guaranteed.

b) Benefit payment amounts are not guaranteed.

All of the following are considered to be misuses of fiduciary funds EXCEPT a) Reflecting a premium received as a business asset on the producer's financial statement b) Collecting interest on customer balances held in a producer's trust account c) Using balances in customer accounts as collateral for a loan to a producer d) Remitting a return premium to an insured 31 days after the producer received it from the insurer

b) Collecting interest on customer balances held in a producer's trust account

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? a) If the daughter is disabled for any length of time b) If the father is disabled for more than 6 months c) If the father is disabled for at least a year d) If the daughter is disabled for more than 3 months

b) If the father is disabled for more than 6 months

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? (2) a) Graded Premium Life b) Limited-pay Life c) Variable Life d) Adjustable Life

b) Limited-pay Life (2)

Which of the following documents must be provided to the policyowner or applicant during policy replacement? a) Policy illustrations b) Notice Regarding Replacement c) Disclosure Authorization Form d) Buyer's Guide and Policy Summary

b) Notice Regarding Replacement

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a) Automatically pay the policy proceeds. b) Pay the policy proceeds only if it would have issued the policy. c) Pay the policy proceeds up to an established limit. d) Not pay the policy proceeds under any circumstances.

b) Pay the policy proceeds only if it would have issued the policy.

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? a) Waiver of Premium b) Payor Benefit c) Jumping Juvenile d) Juvenile Premium Provision

b) Payor Benefit

Which rule would apply when an applicant is going to cash in an old policy and use the funds to purchase a new policy? a) Disclosure b) Replacement c) Reinstatement d) Conversion

b) Replacement

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must a) Send an actual certified copy of the entire report to the consumer. b) Respond to the consumer's complaint. c) Defend the report if the agency feels it is accurate. d) Change the report.

b) Respond to the consumer's complaint.

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a) The contract can be issued without an annuitant. b) The annuitant must be a natural person. c) A corporation can be an annuitant as long as it is also the owner. d) A corporation can be an annuitant as long as the beneficiary is a natural person.

b) The annuitant must be a natural person.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. b) The beneficiary will only receive payments of the interest earned on the death benefit. c) The beneficiary must pay interest to the insurer. d) The beneficiary will receive the lump sum, plus interest.

b) The beneficiary will only receive payments of the interest earned on the death benefit.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a) The customer has no knowledge of this action. b) The customer's associates, friends, and neighbors provide the report's data. c) They provide additional information from an outside source about a particular risk. d) They provide information about a customer's character and reputation.

b) The customer's associates, friends, and neighbors provide the report's data.

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? a) The key employee is the owner and the employer is the beneficiary. b) The employer is the owner and beneficiary. c) The employer is the owner and the key employee is the beneficiary. d) The key employee is the owner and beneficiary.

b) The employer is the owner and beneficiary.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a) The policyholder has the right to withdraw the accumulations at any time. b) The interest is not taxable since it remains inside the insurance policy. c) The annual dividend is retained by the company. d) The interest is credited at a rate specified by the policy.

b) The interest is not taxable since it remains inside the insurance policy.

All of the following are true of key person insurance EXCEPT a) The key employee is the insured. b) The plan is funded by permanent insurance only. c) There is no limitation on the number of key employee plans in force at any one time. d) The employer is the owner, payor and beneficiary of the policy.

b) The plan is funded by permanent insurance only.

Which of the following statements is TRUE concerning irrevocable beneficiaries? a) They may be changed only on the anniversary date of the policy. b) They can be changed only with the written consent of that beneficiary. c) They may be changed at any time. d) They can never be changed.

b) They can be changed only with the written consent of that beneficiary.

The paid-up addition option uses the dividend a) To accumulate additional savings for retirement. b) To purchase a smaller amount of the same type of insurance as the original policy. c) To purchase a one-year term insurance in the amount of the cash value. d) To reduce the next year's premium.

b) To purchase a smaller amount of the same type of insurance as the original policy.

All of the following benefits are available under Social Security EXCEPT a) Death benefits. b) Welfare benefits. c) Old-age and retirement benefits. d) Disability benefits.

b) Welfare benefits.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than a) Prior to filling out an application for insurance. b) With the policy. c) Upon issuance of the policy. d) Within 30 days after the first premium payment was collected.

b) With the policy.

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? a) $0 b) $200 c) $9,800 d) $10,000

c) $9,800

How long is the grace period in group life insurance policies in this state? a) 10 days b) 15 days c) 31 days d) 45 days

c) 31 days

When a policy is replaced, replacing insurers must maintain a replacement register regarding that policy for a) 10 years. b) 3 years. c) 5 years. d) 8 years.

c) 5 years.

Producers in Colorado who intend to sell annuities are required to do which of the following? a) Nothing: the sale of annuities does not require any special education or licensing b) Complete a 4-hour annuity training course annually c) Complete an initial 4-hour annuity training course d) Obtain an annuities license

c) Complete an initial 4-hour annuity training course

Which of the following best describes a misrepresentation? a) Making a maliciously critical statement that is intended to injure another person b) Discriminating among individuals of the same insuring class c) Issuing sales material with exaggerated statements about policy benefits d) Making a deceptive or untrue statement about a person engaged in the insurance business

c) Issuing sales material with exaggerated statements about policy benefits

Which of the following is a requirement for an insurance agency transacting insurance in Colorado? a) It must be a resident agency. b) It must register all its members with the Commissioner. c) It must obtain a producer license. d) All employees must be licensed producers.

c) It must obtain a producer license.

Regarding the free-look provision, the insurance company a) Must issue a free policy for 30/31 days. b) Must issue a free policy for 10 days. c) Must allow the policyowner to return the policy for a full refund. d) Cannot charge a premium after 10 days.

c) Must allow the policyowner to return the policy for a full refund.

Which of the following documents must be provided to the policyowner or applicant during policy replacement? a) Buyer's Guide and Policy Summary b) Policy illustrations c) Notice Regarding Replacement d) Disclosure Authorization Form

c) Notice Regarding Replacement

Which of the following is NOT true about a joint and survivor annuity benefit option? a) This option guarantees income for two or more recipients. b) The surviving annuitant may receive reduced payments. c) Payments stop after the first death among the annuitants. d) A period certain option may be included.

c) Payments stop after the first death among the annuitants.

A policyowner 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 policyowner should have her husband named as the a) Contingent beneficiary. b) Irrevocable beneficiary. c) Revocable beneficiary. d) Secondary beneficiary.

c) Revocable beneficiary.

To sell variable life insurance policies, an agent must receive all of the following EXCEPT a) A securities license. b) A life insurance license. c) SEC registration. d) FINRA registration.

c) SEC registration.

If an insured continually uses the automatic premium loan option to pay the policy premium, a) The cash value will continue to increase. b) The insurer will increase the premium amount. c) The policy will terminate when the cash value is reduced to nothing. d) The face amount of the policy will be reduced by the automatic premium loan amount.

c) The policy will terminate when the cash value is reduced to nothing.

Which is true about a spouse term rider? a) The rider is decreasing term insurance. b) Coverage is allowed up to age 75. c) The rider is usually level term insurance. d) Coverage is allowed for an unlimited time.

c) The rider is usually level term insurance.

Which of the following is a key distinction between variable whole life and variable universal life products? a) Variable whole life allows policy loans from the cash value. b) Variable universal life has a fixed premium. c) Variable whole life has a guaranteed death benefit. d) Variable universal life is regulated solely through FINRA.

c) Variable whole life has a guaranteed death benefit.

If an insurance producer allows his or her license to lapse, within how many months of the due date of the continuation fee may the producer reinstate the license without having to pass a written examination? a) No more than 3 months b) No more than 6 months c) Within 12 months d) Within 24 months

c) Within 12 months

What percentage of a company's employees must take part in a noncontributory group life plan? a) 0% b) 25% c) 75% d) 100%

d) 100%

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a) Unilateral b) Conditional c) Personal d) Adhesion

d) Adhesion

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a) Term insurance only b) Permanent insurance only c) Universal life insurance only d) Any form of life insurance

d) Any form of life insurance

When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called a) Revocable designation. b) Irrevocable designation. c) Stirpes designation. d) Class designation.

d) Class designation.

Producers in Colorado who intend to sell annuities are required to do which of the following? a) Obtain an annuities license b) Nothing: the sale of annuities does not require any special education or licensing c) Complete a 4-hour annuity training course annually d) Complete an initial 4-hour annuity training course

d) Complete an initial 4-hour annuity training course

For a retirement plan to be qualified, it must be designed for the benefit of a) Key employee. b) Employer. c) IRS. d) Employees.

d) Employees.

The automatic premium loan provision is activated at the end of the a) Free-look period b) Elimination period. c) Policy period. d) Grace period.

d) Grace period.

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) Gradually increases each year by the amount that the cash value increases.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? a) Mortality rate b) Risk exposure c) Morbidity d) Life expectancy

d) Life expectancy

Which of the following is NOT true regarding policy loans? a) Policy loans can be repaid at death. b) An insurer can charge interest on outstanding policy loans. c) A policy loan may be repaid after the policy is surrendered. d) Money borrowed from the cash value is taxable.

d) Money borrowed from the cash value is taxable.

To which of the following situations does the Replacement Regulation apply? a) Group life insurance b) Immediate annuities purchased with proceeds from an existing policy c) Coverage under a binding receipt issued by the same company d) Nonrenewable coverage expiring in 8 years

d) Nonrenewable coverage expiring in 8 years

Which Universal Life option has a gradually increasing cash value and a level death benefit? a) Juvenile life b) Term insurance c) Option B d) Option A

d) Option A

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? a) Accumulation at Interest b) Paid-up additions c) Dividend Accumulation option d) Paid-up option

d) Paid-up option

Which rule would apply when an applicant is going to cash in an old policy and use the funds to purchase a new policy? a) Reinstatement b) Conversion c) Disclosure d) Replacement

d) Replacement

If an agent wishes to sell variable life policies, what license must the agent obtain? a) Adjuster b) Surplus Lines c) Personal Lines d) Securities

d) Securities

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) Any type of insurance policy may be used. b) The employer pays a bonus to a selected employee to fund the policy. c) It is considered a nonqualified employee benefit. d) The policy is owned by the company.

d) The policy is owned by the company.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a) The policy will be interpreted as if the insured did not have an answer to the question. b) The policy will be void. c) The insurer may deny coverage later, because of the information missing on the application. d) The policy will be interpreted as if the insurer waived its right to have an answer on the application.

d) The policy will be interpreted as if the insurer waived its right to have an answer on the application.

All of the following are requirements for life insurance illustrations EXCEPT a) They may only be used as approved. b) They must identify nonguaranteed values. c) They must differentiate between guaranteed and projected amounts. d) They must be part of the contract.

d) They must be part of the contract.

If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the ___.

date of application

If the payor (usually a parent or guardian) becomes ___, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

disabled for at least 6 months or dies

The following is considered to be a legal example of an ___ - The insured's stepchildren - The spouse of the insured - A second cousin of the insured

insurable interest in Colorado

The ___ that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party to be covered by the policy and names of the beneficiary who will receive the policy proceeds in the event of the insured's death. If no beneficiary is named, the policy proceeds will be paid to the insured's estate.

insuring clause states

The following is true about a ___ - This option guarantees income for two or more recipients. - The surviving annuitant may receive reduced payments. - A period certain option may be included.

joint and survivor annuity benefit option

All of the following are true of ___ - The key employee is the insured. - There is no limitation on the number of key employee plans in force at any one time. - The employer is the owner, payor and beneficiary of the policy.

key person insurance

All of the following are true of ___ - There is no limitation on the number of key employee plans in force at any one time. - The employer is the owner, payor and beneficiary of the policy. - The key employee is the insured.

key person insurance

Payor benefit only pays if the owner, the father in this example, is disabled for at ___.

least 6 months

All of the following are requirements for ___ - They may only be used as approved. - They must identify nonguaranteed values. - They must differentiate between guaranteed and projected amounts.

life insurance illustrations

In ___, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.

limited-pay policies

All of the following are considered to be ___ - Reflecting a premium received as a business asset on the producer's financial statement - Using balances in customer accounts as collateral for a loan to a producer - Remitting a return premium to an insured 31 days after the producer received it from the insurer

misuses of fiduciary funds

The following is CORRECT concerning a ___ - They help to reduce adverse selection against the insurer. - They require 100% employee participation. - The employer pays 100% of the premiums.

noncontributory group plan

The following is true regarding ___ - Policy loans can be repaid at death. - An insurer can charge interest on outstanding policy loans. - A policy loan may be repaid after the policy is surrendered.

policy loans

An employee is insured under her employer's group life plan. If she ___, the following statements are CORRECT - The insured would not need to prove insurability for a conversion policy. - The insured may convert coverage to an individual policy within 31 days. - The premium for individual coverage will be based upon the insured's attained age.

terminates her group coverage

To sell ___, an agent must receive all of the following - A securities license. - A life insurance license. - FINRA registration.

variable life insurance policies

___ allows all of the following - The purchase of life insurance by a step-parent on a step-child. - Viatical settlements. - The purchase of life insurance by a business owner on a key person of the business.

Colorado's Insurable Interest Act

All of the following statements concerning the use of life insurance as an ___ are correct - Any type of insurance policy may be used. - The employer pays a bonus to a selected employee to fund the policy. - It is considered a nonqualified employee benefit.

Executive Bonus

___ delivered in Colorado must contain all of the following provisions - A copy of the application is considered part of the policy. - A grace period of 31 days. - Incontestability period of 2 years.

Group life insurance policies

The following is true regarding the ___ annuity settlement option (3) - It is a life contingency option. - The beneficiary receives the remainder of the principal amount upon the annuitant's death. - Payments can be made in installments and as a single cash refund.

Life with Guaranteed Minimum (3)

With the ___, if the annuitant dies before the principal amount (the amount paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to his/her beneficiary. Pure life provides the highest monthly benefits for an individual annuitant.

Life with Guaranteed Minimum annuity settlement option

All of the following benefits are available under ___ - Death benefits. - Old-age and retirement benefits. - Disability benefits.

Social Security

An individual seeking a license to sell insurance must complete a prelicensing program that includes how many hours pertaining specifically to state laws related to the line of authority? a) 3 hours b) 4 hours c) 6 hours d) 8 hours

b) 4 hours

Which of the following is NOT considered to be a legal example of an insurable interest in Colorado? a) The insured's stepchildren b) A STOLI agreement c) The spouse of the insured d) A second cousin of the insured

b) A STOLI agreement

What is the advantage of reinstating a policy instead of applying for a new one? a) The face amount can be increased. b) The cash values have gained interest while the policy was lapsed. c) The original age is used for premium determination. d) Proof of insurability is not required.

c) The original age is used for premium determination.

Which of the following best describes fixed-period settlement option? a) Only the principal amount will be paid out within a specified period of time. b) The death benefit must be paid out in a lump sum within a certain time period. c) Income is guaranteed for the life of the beneficiary. d) Both the principal and interest will be liquidated over a selected period of time.

d) Both the principal and interest will be liquidated over a selected period of time.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? (3) a) It is a life contingency option. b) The beneficiary receives the remainder of the principal amount upon the annuitant's death. c) Payments can be made in installments and as a single cash refund. d) It does not guarantee that the entire principal amount will be paid out.

d) It does not guarantee that the entire principal amount will be paid out. (3)

If a producer's license has been suspended, revoked, or terminated for any reason, it must be surrendered or returned to the Commissioner within ___.

15 days

Which of the following is NOT true regarding the accumulation period of an annuity? a) It would not occur in a deferred annuity. b) It is the period during which the annuity payments earn interest. c) It is the period over which the owner makes payments into an annuity. d) It is also known as the pay-in period.

a) It would not occur in a deferred annuity.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? (2) a) Pay a reduced death benefit b) Pay the full death benefit c) Pay nothing; there was a misrepresentation on the application d) Pay the full death benefit and refund excess premium

a) Pay a reduced death benefit (2)

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? a) Reduction of Premium b) Accumulation at Interest c) Cash option d) Flexible Premium

a) Reduction of Premium

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a) Size of each installment b) Predetermined length of time stated in the contract c) Length of income period d) Amount of interest

a) Size of each installment

Which of the following statements is TRUE concerning irrevocable beneficiaries? a) They can be changed only with the written consent of that beneficiary. b) They may be changed at any time. c) They can never be changed. d) They may be changed only on the anniversary date of the policy.

a) They can be changed only with the written consent of that beneficiary.

All of the following are true of an ___ - The owner is the party who may surrender the annuity. - The owner pays the premiums on the annuity. - The owner has the right to name the beneficiary.

annuity owner

When a producer's license is terminated, the producer must remit the license to the Commissioner within how many days? a) 10 b) 15 c) 30 d) 5

b) 15

When a producer's license is terminated, the producer must remit the license to the Commissioner within how many days? (2) a) 10 b) 15 c) 30 d) 5

b) 15 (2)

When an application for an annuity contract is taken face-to-face with the consumer, the producer must give all required disclosure documents a) Within 5 days of application. b) At or before the time of application. c) Upon delivery of the annuity contract. d) Within 24 hours after the application is received.

b) At or before the time of application.

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Accumulation at Interest b) Cash option c) Reduction of Premium d) Annual Dividend Provision

b) Cash option

Insurers must screen all marketing plans to assure that an advertisement does NOT use as the name or title of any kind of an annuity contract any phrase that a) Presents all material information and illustrations in an easily interpreted way. b) Does not include the word "annuity" unless accompanied by other clear language indicating it is an annuity. c) Identifies the name of the insurer as the underwriter for the plan and its administration. d) Does not emphasize investment or tax features to such a degree that prospective buyers believe that the contract is for anything other than insurance purposes.

b) Does not include the word "annuity" unless accompanied by other clear language indicating it is an annuity.

Which statement is NOT true regarding a Straight Life policy? a) It has the lowest annual premium of the three types of Whole Life policies. b) Its premium steadily decreases over time, in response to its growing cash value. c) The face value of the policy is paid to the insured at age 100. d) It usually develops cash value by the end of the third policy year.

b) Its premium steadily decreases over time, in response to its growing cash value.

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive a) The remainder of the principal. b) Nothing; the payments will cease. c) Guaranteed minimum benefit. d) The amount paid into the annuity.

b) Nothing; the payments will cease.

Under an employer-sponsored group plan, if the insurance on a person covered under the policy ceases because of termination of employment, which of the following is true? a) The certificate owner has no further rights for coverage. b) The certificate owner is entitled to convert coverage to an individual policy without evidence of insurability. c) The group sponsor is entitled to policy's cash value. d) The insurer has the right to require evidence of insurability during the conversion period.

b) The certificate owner is entitled to convert coverage to an individual policy without evidence of insurability.

How are contributions to a tax-sheltered annuity treated with regards to taxation? a) They are taxed as income for the employee, but are tax free upon withdrawal. b) They are not included as income for the employee, but are taxable upon distribution. c) They are never taxed. d) They are taxed as income for the employee.

b) They are not included as income for the employee, but are taxable upon distribution.

According to the entire contract provision, what document must be made part of the insurance policy? a) Agent's report b) Outline of coverage c) Copy of the original application d) Buyer's Guide

c) Copy of the original application

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend a) Installment refund. b) Joint and survivor. c) Straight life. d) Life income with period certain.

c) Straight life.

Colorado's Insurable Interest Act allows all of the following EXCEPT a) The purchase of life insurance by a step-parent on a step-child. b) Viatical settlements. c) Stranger-originated life insurance. d) The purchase of life insurance by a business owner on a key person of the business.

c) Stranger-originated life insurance.

Which of the following is NOT true regarding the annuitant? a) The annuitant receives the annuity benefits. b) The annuitant must be a natural person. c) The annuitant cannot be the same person as the annuity owner. d) The annuitant's life expectancy is taken into consideration for the annuity.

c) The annuitant cannot be the same person as the annuity owner.

If a life insurance policy has an irrevocable beneficiary designation, a) The owner can always change the beneficiary at will. b) The beneficiary cannot be changed. c) The beneficiary can only be changed with written permission of the beneficiary. d) The beneficiary cannot be changed for at least 2 years.

c) The beneficiary can only be changed with written permission of the beneficiary.

Under what circumstance will the proceeds payable under an employee's group life be taken to pay to a creditor of the employee? a) When the proceeds are paid to the employee's estate b) When the proceeds are paid to the employee c) When the creditor is named as the beneficiary of the proceeds by the insured employee d) When no other person or entity is named as beneficiary of the proceeds

c) When the creditor is named as the beneficiary of the proceeds by the insured employee

Before marketing an annuity contract to the consumer, an agent has a responsibility to determine whether the annuity is suitable for a client by a) Performing a criminal background check on each applicant. b) Requesting a complete medical exam prior to application. c) Checking for the enforcement of any outstanding judgments against the client prior to the sale. d) Questioning the client regarding her investments and other insurance products.

d) Questioning the client regarding her investments and other insurance products.

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? a) Waiver of premium provision b) Incontestable clause c) Grace period d) Reinstatement provision

d) Reinstatement provision

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a) No taxes are due since the plan participant is over age 59 1/2. b) There is a 10% early withdrawal penalty. c) The amount distributed is subject to ordinary income tax. d) The amount of the distribution is reduced by the amount of a 20% withholding tax.

d) The amount of the distribution is reduced by the amount of a 20% withholding tax.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The beneficiary must pay interest to the insurer. b) The beneficiary will receive the lump sum, plus interest. c) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. d) The beneficiary will only receive payments of the interest earned on the death benefit.

d) The beneficiary will only receive payments of the interest earned on the death benefit.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a) The insured would not need to prove insurability for a conversion policy. b) The insured may convert coverage to an individual policy within 31 days. c) The premium for individual coverage will be based upon the insured's attained age. d) The insured may choose to convert to term or permanent individual coverage.

d) The insured may choose to convert to term or permanent individual coverage.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? (2) a) The insured would not need to prove insurability for a conversion policy. b) The insured may convert coverage to an individual policy within 31 days. c) The premium for individual coverage will be based upon the insured's attained age. d) The insured may choose to convert to term or permanent individual coverage.

d) The insured may choose to convert to term or permanent individual coverage.

An employee is insured under her ___. If she terminates her group coverage, which of the following statements is CORRECT (2) - The insured would not need to prove insurability for a conversion policy. - The insured may convert coverage to an individual policy within 31 days. - The premium for individual coverage will be based upon the insured's attained age.

employer's group life plan