Insurance

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?

Replacement rule

All life insurance and health insurance contracts contain all of the following EXCEPT

Representations

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability

Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries ?

loan based on the They are MORE likely to receive a expectations of the proceeds .

Which of the following is true about the mandatory free

look period in a life insurance policy? - It commences when the policy is delivered.

All of the following are classifications of risk EXCERT

non - nicotine .

Which of the following is an example of a limited

pay life policy? - Life paid up at 65

In order to reinstate a life insurance policy the insured must do all the following except

pay next year's premium in advance

Which of the following is characteristic of a nonqualified plan ?

plan does not meet federal guidelines for tax benefits

If no receipt is issued at the time of application, a statement of good health is usually required at the time of

policy delivery

How might someone cover the extra expenses of child care and home - related costs ?

purchasing family term insurance

Which of the following is an example of a non

qualified retirement plan? - Section 457 deferred compensation

Which of the following is an IRS

qualified retirement program for the self-employed? - Keogh/HR-10

In which of the following must a beneficiary change request be filed in writing to the insurer and is made effective by the insurance company recording the change in its records ?

recording method

In order to AVOID being classified as an MEC , a policy must pass which of the following ?

seven - pay test

Which of the following would be most likely to start a tax

sheltered annuity? - Public school teachers

An insurance policy that only requires a payment of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called

single premium whole life

All of the following persons who does not have an employer

sponsored retirement plan would be eligible to set up contributions to a Traditional IRA EXCEPT - Arlene, age 72, a nurse

What is the order in which beneficiaries receive proceeds from a life insurance policy ?

succession of beneficiaries

All of the following are ownership rights EXCEPT

switching the policy from one insured M to another

All of the following are features of the spendthrift clause EXCEPT

the beneficiary may encumber the proceeds

The time period during which an annuitant contributes to an annuity is called

the deferred growth

Group AD & D policies may be deducted by whom and i under which deduction category ?

the employer under business expenses

When the courts look at a contract to determine intent of the parties which of the following is considered ?

the entire contract

All of the following are TRUE regarding incomplete applications EXCEPT

the incomplete application can be accepted with the missing information added later .

Life insurance companies use mortality tables to predict

the life expectancy of the proposed insured

All of the following are required signatures on a life insurance application EXCEPT

the minor in a juvenile policy .

What is the purpose of Stranger - originated life insurance ( STOLI ) ?

the policy is originated primarily or solely for the purpose of resale

If the insurer wishes to share an applicant's HIV status , the applicant must be given full notice of all of the following EXCEPT

the treatment procedures that are covered by the policy .

Which of the following occurs immediately after the application is submitted and the initial premium paid ?

the underwriting process begins

Which of the following statements is tru about annuities

they can provide a lifetime income

Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account ?

variable

Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit

variable universal life

How long is the grace period in individual life insurance policies?

30 days

In a traditional IRA plan, at what age may the plan owner begin withdrawing funds without incurring a penalty:

59 1/2

Which of the following is not an essential element of an insurance contract?

A Counteroffer In order for insurance contracts to be legally binding, they must have four essential elements: agreement (offer and acceptance), consideration, competent parties, and legal purpose. Counteroffer is not required.

If a company has a simplified employee pension (SEP) plan, what type of plan is it?

A defined contribution plan for a small business

An annuity that guarantees a minimum rate of return is known as a/an

A fixed annuity

A substandard risk compared to a standard risk would pay

A higher premium

the Medical Information Buereau (MIB) is

A source of medical information to alert insurers to adverse medical history

An annually renewable term policy

Renew each year with an increased premium.

A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is

Universal life option B

With a traditional whole

life policy, the death benefit - remains constant over time

The insured is also the policy owner of a whole

life policy. What age must the insured attain in order to receive the policy's face amount? - 100

Which of the following is the time limit on certain defenses after which the policy becomes incontestable ?

2 years

What is the primary purpose of a 401(k) plan?

Accumulation of retirement income

Insurance policies are not drawn up through negotiations, and an insured has little to say about his provisions. What contract characteristics does this describe?

Adhesion. A contract of adhesion is prepared by only the insurer. The insured's only option is to accept or reject the policy as it is written.

What documentation gives express authority to an agent?

Agents contract with the principal

What is reinsurance?

An agreement between a crediting insurer, and assuming insurer

What type of life insurance is most commonly used for group plans?

Annual Renewable term

When an annuity is written, whose life expectancy is taken into consideration?

Annuitant

Which of the following is the basic source of information used by the company in the risk selection process?

Application

Which of the following terms refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another?

Assignment

All of the following are nonforfeiture options in life insurance except

Automatic premium loans

Which of the following entities is not an insurer but an organization form to provide insurance benefits for members of an affiliate lodge or religious organization

Fraternity benefit society

Illegally transact insurance in the state insure must obtain which of the following

Certificate of authority

If an applicant for insurance submits the application and pays the premium at the same time. the insurer must give which of the following to the applicant?

Conditional reciept

Because an insurance policies are legal contract. It must conform to the state laws, governance contracts, which require all of the following elements, except.

Conditions. Conditions are part of the policy structure considerations is an essential part of a contract

Which of the following terms means something of value for each party gifts to the other under an insurance contract?

Consideration

Representations are written, or oral statements, made by the applicant that are

Considered true to the best of the applicant's knowledge

Which of the following is TRUE of the limited pay whole life policy ?

Coverage continues after the policy is paid - up .

Which of the following would be the beneficiary in credit life insurance

Creditor

Which of the following is NOT allowed in credit life insurance?

Creditor requiring that a debtor buys insurance from a certain insurer

When must insurable interest exist in life insurance?

Date of application

When must an IRA be completely distributed when a beneficiary is not named?

December 31 of the year that contains the 5th anniversary of the owners death

When the insured purchased a new home he wanted to purchase a life insurance policy that would protect his family against losing the home should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be

Decreasing term.

An individual inherited a large sum of money at the age of 40 and wanted to use it to provide a guaranteed income after his retirement at 60. Which of the following types of annuities would best meet his need?

Deferred

Annuities may be purchased with all of the following payment methods except

Deferred

Which of the following is not a standard exclusion in life insurance policies?

Disability

What qualities an individual to contribute to an IRA?

Earned income

For a retirement plan to be qualified, it must be designed for the benefit of

Employees

The authority granted to an agent through the agents contract is referred to as

Express authority: express powers are written into the contract between the insurer and the agent

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

An agent selling variable annuities must be registered with

FINRA and hold a securities license as well

Obtaining consumer information reports under false pretenses is prosecutable by which of the following ?

Fair Credit Reporting Act

A spouse receives $5,000 a month until the principal and interest on her husband's life insurance policy have been paid out. Which settlement option did this beneficiary choose?

Fixed amount

Which policy provision permits the policyowner to take a specified number of days to examine the contract , and allows for cancellation and a full refund if the policyowner rejects the terms or costs ?

Free look

Which of the following features allows an insurance policy to remain in force for a specific number of days beyond the premium due date?

Grace period provision

Events or conditions that increase the chances of insured loss occurring our referred to as

Hazard

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

Human life value approach {HLVA}

Which of the following is true regarding term insurance?

If the insured dies after the end of the term. there is no death benefit to the beneficiary.

Under what circumstances will the contingent beneficiary receive the death benefit?

If the primary beneficiary dies before the insured

the life insurance policy clause that prevents an insurance company from denying payment of death claim after a specified period of time is known as

Incontestability clause

A life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestable clause

What type of insurance would be used for a Return of Premium rider?

Increasing Term

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

Inspection report

Which of the following is not true regarding a certificate of authority

Issued to Group insurance participants

Which of the following is common in an increasing term life policy ?

It begins with little or no insurance protection .

Which of the following is TRUE of an equity - indexed annuity ?

It has a guaranteed minimum interest rate

Which of the following is correct regarding credit life insurance?

It insures the life of the debtor

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?

It is a percentage of the cash value and decreases over time

Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs ?

It is financially insufficient to cover end of life expenses ..

Which of the following IS NOT a requirement of a qualified plan?

It must be temporary

Why is the accidental death benefit referred to as double indemnity ?

It provides twice the face value in the policy for death due to accident .

If a retirement plan or annuity is qualified,

It satisfies he requirements of the Internal Revenue Service for favorable tax treatment.

Which of the following is TRUE about a policy assignment?

It transfers rights of ownership from the owner to another person.

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase because the insurer will be 5 years older than when the policy was originally purchased

Which statement is TRUE concerning the accidental death rider?

It will pay double or triple the face amount

Which annuity settlement option provides a stated monthly amount to the annuitant and upon the annuitant ? s death the same or a lesser amount paid for the lifetime of the survivor ?

Joint and survivorship option

Which type of annuity settlement stops when the annuitant dies?

Life Annuity

The form used to establish the terms for both parties when a person sells his life insurance policy to a 3rd unrelated person is called

Life settlement Contract

What does an annuity protect the contract owner against?

Living longer than expected

In a single employer group plan, what is the name of a document that is issued to the employer?

Master contract

Which of the following premium payment modes would result in the highest overall premium for life insurance?

Monthly

An insured purchase an insurance policy five 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. Fund is not paid out after paying claims, and other operating costs are returned to the policy owners in the form of a dividend. If all funds are paid out no dividends are paid.

The approach to determining the amount of personal life insurance that an applicant needs that considers such factors as the costs associated with death, costs of educating children, and costs of housing is called the

Needs approach

What is the requirement for a number of employees in a SIMPLE plan?

No more than 100

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation be federal government

An insured submits the full premium along with a completed application for life insurance. Once the policy is issued when does the coverage begin?

On the date of the application

When a death claim is submitted, the insurer discovered that the insured understated her age on the application for a life policy. What action will the insurer take?

Pay a reduced death benefit based on the insured's actual age

Which of the following is NOT true about a joint and survivor annuity benefit option?

Payments stop after the first death among the annuitants

Which of the following is a characteristic of revocable beneficiary designation?

Policy owners can change beneficiary designation anytime without the consent of the beneficiary.

Based on human life value approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death

Which of the following will be included in a policy summary

Premium amounts and surrender value

Which of the following is true regarding a joint life policy?

Premium is based on the average age of the insureds

All of the following are examples of risk retention except

Premiums

All of the following are examples of risk retention except

Premiums. Retention is a planned assumption of risk or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments or self insurance

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit sharing

Retirement plans can be broadly divided into which of the following categories?

Qualified and non-qualified

Which of the following factors is not considered by an underwriter when determining the premium rates for an individual seeking insurance?

Race

Which of the following factors is not considered by underwriter when determining the premium rates for an individual seeking insurance?

Race

The insured pays $1,200 annually for her life insurance premium. This year, she has accumulated $17 worth of dividends, which she applies to her next premium, thus reducing it to $1,025. What dividend option has the insured chosen?

Reduction of premium.

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. which policy provision allow this?

Reinstatement Provision

Adverse selection is a concept best described as

Risks with higher probability of law, seeking insurance more often than other risks. Every selection means that there are more risk with higher probability of loss seeking to purchase and maintain insurance, and a risk of lower probability underwriters must guard against us.

Variable insurance and annuities are regulated by

SEC, FINRA, and the department of insurance

All of the following are tax qualified retirement plans EXCEPT

Section 529 plan .

EXCEPT All of the following are tax qualified retirement plans

Section 529 plan .

If an agent wishes to sell variable life policies, what license must the agent obtain in addition to a life insurance license?

Securities

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

What type of life insurance policies generates immediate cash value?

Single premium

All other factors being equal, which of the following types of annuities will provide the highest monthly income?

Straight life

A producer is helping a married couple determine the financial needs of their children in the event one or both should die. This is a personal use of life insurance known as

Survivor protection

Life insurance death benefits can be used to fund funeral and other expenses that could be otherwise difficult to fund with a loss of the insured's income. Which term is most closely associated with this?

Survivor protection

Which of the following retirement plans is for nonprofit, charitable, educational, or religious organizations?

Tax-sheltered annuity 403(b)

What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application ?

The applicant and possibly the agent initial any changes made .

Which of the following is not the consideration in a policy?

The application given to a prospective insured

Peril is most easily defined as

The cause of loss insured against

Who bears the investment risk in a fixed annuity?

The insurance company

excluding life insurance, under what condition may a policy owner transfer their personal insurance policy to another person

The insured will need a written consent of the insurer.

Which entity determines the amount of accelerated death benefits that will be paid to an insured?

The insurer

Which of the following is NOT a characteristic of an insurable risk?

The loss must be catastrophic

What will happen if the insured stops making payments on a loan taken from the cash value policy?

The policy will terminate when the loan amount with interest equals or exceeds the cash value

The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policyowner UNLESS which of the following is true ?

The policyowner has named an irrevocable beneficiary .

How does the per capita rule apply to proceeds from a life insurance policy ?

The proceeds are divided equally among living primary beneficiaries .

Which of the following is TRUE for a flexible premium annuity ?

The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount .

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

Apparent authority, also known as perceived authority is the assumption of authority based on actions, words, or deeds of the principle, or because of circumstances the principle created

True

Which division of an insurance company is responsible for the selection, evaluation, and classification of risks?

Underwriting

I've only one party to an insurance contract has made a legal enforceable promise. What kind of contract is this?

Unilateral

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay that was cleaned in the forming of an insurance contract. This is referred to as

Utmost good faith

An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have?

Variable

Which of the following lists the three common types of permanent individual life insurance ?

Variable Life , Whole Life , Universal Life

An insurance company receives an application with some information missing and issues of policy anyway, what is this called?

Waiver. in insurance policies, a waiver is giving up one's known right or privilege*

Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes

Wavier of premium rider

Informing an insurance contract when does acceptance usually occur

When an insurer underwriter approves coverage

How do warranties differ from representations ?

a warranty is guaranteed to be true a representation is believed to be true to the best of one's knowledge .

For an individual long - term care policy there is an annual dollar limit for tax deductions that is based on which of the following ?

age

Which of the following is an example of a premium payment mode ?

annual premium payment

Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy ?

any exclusions

Under the misstatement of at at age provision what happens if it is determined death death that that , the the insured's age or gender was misstated on a life insurance policy application ?

benefits are adjusted to an amount that the premium would have purchased at the correct age or gender

Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches the retirement age. What is the time period called during which the surviving spouse does not receive benefits?

blackout period

Which of the following statements is true of both fixed period and fixed amount settlement options?

both guarantee that the principal and interest will be fully paid out.

An insurance producer who by contract is bound to write insurance for only one company is classified as a/an

captive agent

All of the following Forel are common exclusions from loss found in disability income policies EXCEPT for that incurred while

commiting a misdemeanor

An insured and the beneficiary are both killed in a fatal accident . Which provision presumes the insured survived the beneficiary ?

common disaster clause

Which whole life policy premium type is the most common ?

continuous premium

Which of the following term insurance types provides temporary protection that can be changed to some type of permanent protection without evidence of insurability ?

convertible

In a level term life policy , which ALWAYS remains constant

death benefit

The group conversion option is allowed for all of the following EXCEPT

during the annual benefits enrollment period .

Which is a common approach to addressing the problems a minor as a beneficiary inherent in naming to a life insurance policy ?

establishing a trust to administer proceeds

Which of the following is exempted from the incontestability provision in insurance policies ?

fraudulent misstatements

Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms ?

insuring clause

Current assumption whole life policies are sensitive to which of the following ?

interest rates

All of the following are true rearguing the guaranteed insurability rider except

it is available automatically, for no extra premium

What type of insurance should a company purchase if it wants to insure the life of its CEO ?

key person insurance