Final Exam - Study!
First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty?
$10,000
a domestic insurance company in Virginia MUST
be formed under Virginia insurance laws
What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?
100%
Carlos' agent license has been suspended due to non-renewal. He may apply for reinstatement within the ______ month period following the date when the license should have been renewed
12 month period
After passing the State exam, an applicant is required to obtain the appropriate license within _________ calendar days.
183 calendar days
A licensee who must complete continuing education as a requirement for license renewal must
2
After an annuity has been in force for ______ year(s), it becomes incontestable
2
An insurance company or agent must respond within _____ days to an insured's request to access personal information collected on him/her by the insurer.
30
If an insurance agency has moved its office to a new location, the Bureau of Insurance MUST be notified within calendar days of the move.
30
If an insurance agent changes his/her address, the Bureau of Insurance must be notified within _______ calendar days
30
In Virginia, an insurer must file a written notice of appointment with the State Corporation Commission within
30 days of the first insurance application submitted by the licensee
In Virginia, a grace period of ______ days is required for a life insurance policy paid on an annual basis
31
An agent must maintain customer records for _______ year(s) following the completion date of the insurance transaction.
5 Years
With whom may an agent share commissions with?
A licensed agent with the same license type
Tim is retired and has recently separated from his wife. He receives benefits from a qualified retirement plan through his former employer. The plan's trustee has decided to split these benefit payments between Tim and his estranged wife. This decision is likely in violation of which IRS rule?
Alimentation of benefits
Which of these is NOT considered advertising?
An AM best company rating
In what situation could an insurance policy's coverage be modified?
Applicant is a substandard risk
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic premium loan
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policyowner when policy has been surrendered
An agent who attempts to intimidate is engaging in
Coercion
Which of these life insurance policies does NOT contain a cash value provision?
Decreasing term life
In a speech to a local association, an agent incorrectly stated that XYZ Insurance Company is in financial difficulty and not paying claims. The agent may be guilty of
Defamation
Which of these is NOT an underwriting responsibility of a life insurance agent?
Determining the final rate classification
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
When an applicany applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement?
Eye examination
Which of the following would be a valid reason for the Bureau of Insurance to deny an insurance license?
Failing to report a felony or any criminal history
Which of the following is considered an unfair claims settlement practice?
Failure to investigate or pay legitimate claims
Which benefit supplement added to a life insurance policy insures an entire family
Family term rider
Tori has an annuity that pays her a $500 per month income benefit for life or for ten years, whichever is longer. What kind of annuity is this?
Fixed life annuity with period certain
Which of the following is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
XYZ Insurance Company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums?
Implied authority is authority not specifically granted to the agent in the agency contract
A policyowner has just borrowed from a life insurance policy's cash value. Which of these statements is true?
In the event of death, the loan amount is deducted from the policy proceeds
Which statement regarding whole life insurance is accurate?
Insurance coverage can continue for life
The initial premium for a life insurance policy is typically paid in what way?
It is typically obtained by the producer and forwarded to the insurer
A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?
Kept by the insurance company
What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?
Less than the policy's face amount
Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?
Long-term care benefit rider
What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?
Minors are normally not capable of handling money in a reasonable manner
J the agent makes false statements to a prospective client about the projected dividends for a policy. J may be found guilty of ...
Misrepresentation
Which of the following is NOT used as selection criteria in the underwriting process of a life insurance application?
National Origin
Which of these would likely be considered an Unfair Claims Settlement Practice?
Offering settlements that are less than the fair value to offset insurer expenses
Which statement regarding an adjustable life insurance policy is NOT true?
Policy loans are not permitted
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
Policy will no longer be in force
Which statement regarding the life insurance premium for a children's ride is true?
Premium remains the same no matter how many children
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
Producer
Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?
Protection against long-term inflation
Which of the following would NOT be a reason for purchasing life insurance on a child's life?
Provide benefits for the child if the parents die
Which of these occurrences could improver an insurer's ability to reduce premiums?
Rate of earnings on investments increase
Which of the following actions may result in an agent's license being suspended?
Rebating a portion of the commission to the insured
Which of the following is NOT a dividend option for a life insurance policy?
Receiving the entire policy cash value
A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?
Reduction of premium payment
Which of these actions by an agent would NOT likely result in license suspension of revocation?
Sharing commission with another similarly-licensed agent
What is Old Age and Survivors Health Insurance (OASDHI) also known as?
Social Security
How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?
Survivorship life policy is lower
What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
The cash value
When a producer acts within the scope of his/her contractual authority, which of the following is legally responsible for these actions?
The insurer
Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT for
The policy is surrendered for less than what was paid into it
An advantage of owning a flexible premium life insurance policy would be
The policyowner can make policy changes without difficulty
Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?
The premium to purchase the coverage comes from the policy's cash value
Who typically makes the purchase payments in an individual annuity?
The purchase payments for an individual annuity are normally made by the owner
Which type of coverage is exempt to the rules pertaining to senior-specific certifications and professional designations?
Title Insurance
A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death
Total premiums paid plus the policy face amount
After an applicant reads and signs an insurance application, he/she should be conscious of the fact that
a false statement could lead to loss of coverage
When must a licensee provide insurance records to the SCC (State Corporation Commission)?
Upon request for examination
During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n)
Warranty
Which situation does NOT require an agent to provide a suitability statement to the annuity company?
When an agent discusses annuities in general with a client, but no specific recommendation is made
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
When the conditions of the receipt are met
Proceeds of a life insurance policy claim may be issued to a minor ONLY if
a guardian has been appointed to receive proceeds on behalf of the minor
A life insurance policy provision that has the ability to reduce the death benefit is called the
accelerated (living) benefit
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
If replacement was involved in the sale of a life insurance policy, an agent must provide a replacement notice no later than the
application date
A source of supplemental income for a life insurance policyowner can be derived from the
cash value
An agent does NOT need to notify the Bureau of Insurance of a
change in financial status
An agent MUST notify the Bureau of Insurance for
conducting business under an assumed name
The courts will normally interpret a policy in favor of the insured when the meaning of the policy is not clear. This is because an insurance policy is a(n)
contract of adhesion
Al surrenders his life insurance policy for its cash value. The total of premiums paid into the policy minus total dividends received in cash or used to offset premiums is referred to as the
cost basis
According to the needs approach, an emergency reserve fund's primary purpose is to
cover the cost of unexpected expenses
An employer has a group life coverage for his employees. How would an employee in poor health be treated in this situation?
eligible for the same type of coverage as the other employees
Replacement can be defined as
exchanging an existing policy for a new policy
An example of misrepresentation is
falsifying the terms, benefits, advantages, or conditions of an insurance policy
A life annuity with period certain is characterized as
guaranteeing benefit payments for a stated minimum number of years
With life insurance, the needs approach is used primarily in determining
how much life insurance a client should apply for
IF an administration fee is charged by an agent, the customer's written signature is REQUIRED
in every occurrence
The _______ is required to notify the State Corporation Commission in the event of appointment termination.
insurer
When premiums are determined, one factor would be the expenses of the
insurer
In Virginia, an insurance agent's appointment
is in effect until termination
The insurance coverage in a variable life insurance policy may vary based on the value of
its underlying investments
The death proceeds of a credit life insurance policy are typically paid to the ..
lender
During the early years of a whole life insurance policy, the cash value will normally be
less than the total premiums paid
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
James the agent has sold a life insurance contract to a client without using an illustration, even though his insurer offers one. For this particular transaction, the applicant
must sign a statement that no illustration was provided
When an insurer discovers (during the claim process) that the insured's age was accidentally misstated on the life insurance application, the insurer will likely
pay an amount the premiums would have purchased at the insured's actual age
In Virginia, any person acting as an agent for an unlicensed insurer is
permissible only if acting as a licensed surplus lines broker
An agent offers an applicant something of value not mentioned in the contract as an inducement to purchase an insurance policy. This illegal act is called
rebating
The Rules Governing Life Insurance and Annuity Replacements were created to
reduce the opportunity for misrepresentation and incomplete disclosure
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n)
single premium deferred annuity
The Virginia Life, Accident, and Sickness Insurance Guaranty Association protects an insured in the event of
the insurer's insolvency
The reason for backdating a policy is ...
to obtain a premium rate based on an earlier age
Persuading an insured, to the insured's detriment, to switch policies is called
twisting