fx practice

#18. All of the following entities regulate variable life policies EXCEPT

)The Guaranty Association. Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.

21. Which of the following best defines target premium in a universal life policy?

)The recommended amount to keep the policy in force throughout its lifetime The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

#64. All of the following actions can be described as twisting EXCEPT

a)Explaining to client the advantages of permanent insurance over term and suggesting changing policies Twisting is a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from one to another.

19. Which nonforfeiture option provides coverage for the longest period of time?

b)Reduced paid-up The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.

#45. An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

a)The date of medical exam If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.

#60. Who is responsible for the cost of examinations conducted by the Commissioner?

b)The insurer being examined The person being examined is responsible for the cost of the examination.

#87. Who is a person, other than a viator, that enters into a viatical settlement contract?

c)Provider "Viatical settlement provider" means a person, other than a viator, that enters into or effectuates (makes effective) a viatical settlement contract.

#70. The mechanism used by individuals to transfer their risk of loss to a larger group of individuals that have similar exposures to loss, is called

d)Insurance. Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

61. 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?

d)Replacement rule Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

#41. Which of the following would help prevent a universal life policy from lapsing?

d)Target premium The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

#77. What is the minimum number of persons that can be covered by a group insurance plan?

a)2 Group insurance plans must cover at least 2 persons, and are formed for a purpose other than obtaining insurance.

#50. Life income joint and survivor settlement option guarantees

a)Income for 2 or more recipients until they die. The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

#59. The owner of a viatical settlement contract rescinds the contract 5 days after receiving the payment, and then unexpectedly dies 2 days later. This life settlement contract is considered to be

a)Rescinded, subject to repayment of the life settlement proceeds. Nevada sets the rescission period at 30 days, during which time the owner may change his/her mind. If the insured dies during the rescission period, the viatical settlement contract will be deemed to have been rescinded, subject to repayment of the listed items.

#89. Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

a)Twisting. Twisting is a misrepresentation that persuades an insured or a policyowner, to their detriment, to cancel, lapse, or switch policies.

#42. All of the following are examples of third-party ownership of a life insurance policy EXCEPT

b)An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. A collateral assignment is the transfer of some or all of the death benefits of the policy to a creditor as security for a loan, but does not give the creditor the rights of ownership. In the event of the insured's death, the creditor would only be able to recover that portion of the policy's proceeds equal to the creditor's remaining interest in the loan.

#86. The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

b)Credit life. Credit life is most often sold by lenders and is term insurance written with a face amount and term that is matched to the amount and length of the loan period. Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor.

38. Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

b)For 20 years or until death, whichever occurs first. Under a 20-pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years; however, if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit.

13. What is the other term for the cash payment settlement option?

b)Lump sum Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.

#88. What is the name for the owner of a life insurance policy who enters into a viatical settlement contract?

b)Viator "Viator" means the owner of a life insurance policy who enters or seeks to enter into a viatical settlement contract.

#68. What is a penalty for transacting insurance without a proper license?

c)$1,000 Anyone that transacts insurance without a license is subject to an administrative fine of $1,000 for each violation.

#75. The Commissioner must give reasonable notice to all interested parties as to the time, place and purpose of a hearing within the minimum of how many days of the hearing?

c)20 days The Commissioner shall give reasonable notice to all interested parties, by registered mail, as to the time, place and purpose of a hearing within 20 days.

#56. All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

c)At distribution, all amounts received by the employee are tax free. Funds in a qualified plan accumulate on a tax-deferred basis; however, at distribution any amount received by the employee will be treated as ordinary income for tax purposes.

#49. Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

c)Cost comparison methods Cost comparison methods are used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced.

#53. Which of the following is true regarding taxation of dividends in participating policies?

c)Dividends are not taxable. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. The interest earned on the dividends, however, is subject to taxation as ordinary income.

22. A Return of Premium term life policy is written as what type of term coverage?

c)Increasing Return of premium (ROP) life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

#1. The type of term insurance that provides increasing death benefits as the insured ages is called

c)Increasing term. Increasing term insurance provides an increase in the death benefit each year. The coverage is usually structured to provide a death benefit equal to the amount of premium paid on a permanent life insurance policy, or to provide a death benefit equal to the cash value accumulation in a permanent policy; however, it can be written as a stand-alone policy for the individual that has a need for increasing amounts of insurance.

#31. In term policies, what happens to the premium throughout the term of the policy?

c)Premium always remains level. There are three basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: Level, Increasing, and Decreasing. Regardless of the type of term insurance purchased, the premium is often level throughout the term of the policy.

#35. In a life settlement contract, whom does the life settlement broker represent?

c)The owner Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.

#67. For purpose of determining its financial condition, fulfillment of its contractual obligations and compliance with Nevada law, the Commissioner will examine the affairs of each insurer as often as deemed necessary. Each domestic insurer must be examined at least

d)Every five years. The purpose and time parameters for insurance company examinations is established by the Insurance Code.

#52. 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 this situation?

c)Decreasing term A decreasing term policy's face amount decreases as the amount of debt is reduced.

#78. How many days after the death of an insured does an insurer have to pay group life insurance policy benefits?

d)30 days An insurer must pay the proceeds of any benefits under a group life insurance policy no more than 30 days after the death of the insured.