Exam practice
Which is the function of a Certificate of Authority?
It allows an insurer to transact insurance in Georgia
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation
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?
Mutual
Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses?
Nonforfeiture values
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
Payments for 15 years
What describes the specific information about a policy?
Policy summary
If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?
Policyowner
The Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution.
Whenever agents submit applications to insurers, they must also submit statements, signed by the applicant and agent, disclosing the involvement of
Replacement
Which of the following determines the length of time that benefits will received under the Fixed-Amount settlement option?
Size of each installment
The duties of an agent where replacement is involved include all the following EXPECT
Splitting the commission with the agent who originally sold the policy being replaced
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
Which of the following types of annuities will generally provide the highest monthly income?
Straight life
All of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only
Which of the following is an example of a producer's fiduciary duty
The trust that a client places in the producer in regard to handling premiums
What is the maximum period of time a temporary license can be in force?
15 months
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 Days
Insurers must keep files of all advertisement used in Georgia for the minimum of how many years?
4 years
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?
A policy summary
What percentage of a company's employees must take part in a noncontributory group life plan?
100%
Which of the following products requires a section license?
Variable annuity
If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement?
"Paid endorsement"
The maximum penalty that may be assessed for a single nonwillful violation of the Insurance Code is
$1,000
The violation of a cease and desist order may result in a fine line of
$10,000
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of a life insurance policy would be best suited to the situation?
Decreasing term
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
In the underwriting process, it was determined that the applicant for life insurance is in poo health and has some dangerous habits. Which of the following is true concerning the policy premium?
It will likely be higher because the applicant is a substandard risk
Which of the following statement is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
Which of the following explains the policyowner's rights to change beneficiaries, choose options, and receive proceeds of a policy?
Owners Rights
State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT
Inviting prospective clients to the grand opening of the company's new office
Which of the following statements are TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person
An insured owns $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
The term "illustration" policy refers to
A presentation on nonguaranteed elements of a policy
An agent is acting ethically in all the of following situations EXCEPT a. working within the conditions of his/her contract b. representing the insurer, not the insured c. keeping customers' best interests in mind d. always representing the insured
Always representing the insured
Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?
An annuity
Employer contributions made to a qualified plan
Are subject to vesting requirements
Which of the following must an insurer obtain in order to transact insurance within a given state?
Certificate of authority
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral assignment
An insured and his wife are both involved in a head-on0collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
Which of the following would be considered an illegal inducement to produce insurance?
Confirming future dividends in a life insurance proposal
Contracts that are prepared by one party and submitted to the other party an take-it-or-leave-it basis are classified as
Contracts of adhesion
Which of the following types of licensees is solely responsible for offering advice on insurance policies for a fee?
Counselor
Jay applied for a life insurance policy on Jan. 10th. The policy was issued on Jan. 31st. Jay's agent was vacationing at the time the policy was issued, so Jay did not receive the policy until Feb. 18th. Jay decides that he does not want the policy. When would Jay need to return the policy to the insurer in order to receive a full refund of premium. a) The time varies from one policy to another b) It was already to late when Jay received the policy because the 10 day free-look period c) Anytime, because the agent did not deliver the policy promptly d) Feb. 28th, or 10 days after the time the policy is delivered
D
The provision which states that both with policy and a copy of the application form the contract between the policyowner and the insurer is called the
Entire contract
All of the following are business uses of life insurance EXCEPT
Funding against company's general financial loss
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
Which of the following is TRUE of a qualified plan?
It has a tax benefit for both employer and employee
When a whole policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount
Which of the following best details the underwriting process for life insurance?
Selection, classification, and rating of risks
Methods used to pay the death benefits to a beneficiary upon the insured's death are called
Settlement options
Which of the following would help prevent a universal life policy from lapsing?
Target premium
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation and accumulation
Which of the following would provide an underwriter with information concerning an applicant's health history?
The Medical Information Bureau
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA with 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% withholding tax
Who bears all of the investment risk in a fixed annuity?
The insurance company
Which of the following is true about nonforfeiture values?
They are required by state law to be included in the policy
Which of the following terms refers to the act of soliciting insurance, making an insurance contract effective, and dealing with matters arising from that contract?
Transacting insurance
When would a 20-pay whole life policy endow?
When the insured reaches age 100
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. The insurer is hoping that this advertising will help to eliminate the competition and therefore create a monopoly. Which of the following best describes this act?
Illegal
Which of the following is NOT a responsibility of an insurance agent?
Underwriting the contract