Insurance Final Exam 2

c. Go back to the customer to have them initial changes Contacting the customer to verify the information is the first step. Modifying an application without the customer's initials or signature is a violation of rules.

Agent Uma has completed an application for insurance on a new customer. When she returns to the office, she notices that a few items have been left blank. Uma should: Select one: a. Submit the application and let the underwriters correct it b. Initial the application where she made changes c. Go back to the customer to have them initial changes d. Have her manager initial the changes

a. Mississippi Alien insurers are insurers formed under the laws of a country other than the United States of American, its states, districts, territories, and commonwealths.

Alien insurers are insurers formed under laws of which jurisdiction? Select one: a. Mississippi b. Any U.S. state or territory c. Any place besides Mississippi d. Any country other than the U.S.

c. 60 days If placed under administrative supervision, the insurer will have 60 days to comply with the requirements of the Commissioner.

An insurer placed under administrative supervision has how long to comply with the requirements of the Commissioner? Select one: a. 30 days b. 45 days c. 60 days d. 90 days

c. The NAIC A buyer's guide prepared by the NAIC is provided to all purchasers of insurance.

Who prepares the Buyer's Guide given to all purchasers of insurance? Select one: a. The Commissioner b. The Insurance Producer c. The NAIC d. The Insurance Company

a. Survivorship policy The survivorship policy pay benefits only after both the insureds have died.

A policy on 2 people that pays benefits only after both of the insureds have died is called a: Select one: a. Survivorship policy b. Joint life policy c. Family policy d. Endowment policy

b. Once every 3 years The Commissioner will carefully examine the financial ability of each domestic company at least once every 3 years.

How often must the Commissioner examine the financial ability of each domestic company? Select one: a. Once every 2 years b. Once every 3 years c. Once every 4 years d. Once every 5 years

d. All of the above Before approving the license application, the Commissioner must find that all of the above are true of the individual.

A person applying for a resident insurance producer license must: Select one: a. Be at least 18 years of age b. Not have committed any act that is a ground for denial c. Have successfully passed the examinations for the relevant lines of authority d. All of the above

b. Ethics Every individual seeking renewal of an insurance producer license, which has been in effect for a term of more than 18 months will satisfactorily complete 24 hours of study in approved continuing education courses, of which three hours will have a course concentration in ethics.

Every individual seeking renewal of an insurance producer license that has been in effect for a term of more than 18 months must have at least three hours of a course concentration in which subject? Select one: a. Law b. Ethics c. Accounting d. Political science

a. One year No licensee whose license has been revoked will be entitled to file another application for a license as a producer within one year from the effective date of such revocation

No licensee whose license has been revoked will be entitled to file another application for a license as a producer within: Select one: a. One year b. Once every 2 years c. Once every 3 years d. Once every 4 years

c. Illegal inducement Illegal inducement is when a producer puts undue pressure upon an applicant or the insured to purchase or replace a policy.

Putting undue pressure upon an applicant or insured to purchase or replace a policy is which type of unfair practice? Select one: a. Improper receipts b. Discrimination c. Illegal inducement d. Defamation of an insurer

d. All of the above A whole life policy is called permanent insurance, builds cash value and the policy endows at age 100.

Which of the following statements is true about whole life policies? Select one: a. Also called permanent insurance b. Builds cash value c. Policy endows at age 100 d. All of the above

b. The premium will vanish after 7 years The premiums will not vanish in 7 years. The other options apply to adjustable life policies.

An adjustable life policyowner may do any of the following, EXCEPT: Select one: a. Pay varying premiums each year b. The premium will vanish after 7 years c. Pay a minimum amount as long as he funds the mortality cost d. Pay a higher premium if he wants to build cash faster

c. Representation The answers an applicant provides on his application are considered representations. A representation is a statement that this is the truth as far as the applicant knows.

An answer an applicant provides on an application is considered a: Select one: a. Warranty b. Fraud c. Representation d. Concealment

d. Other insureds Mark's wife and children could be primary, contingent or irrevocable beneficiaries.

Mark names his wife and children as beneficiaries on his life policy. They would not be considered: Select one: a. Irrevocable beneficiaries b. Contingent beneficiaries c. Primary beneficiaries d. Other insureds

b. The deceased's wife was the beneficiary. The proceeds are taxable if the deceased was the policyowner, the deceased's estate was the named beneficiary and / or the deceased transferred the policy to another person within 3 years of his/her death.

Which of the following is not a case in which life insurance proceeds would be included in the deceased's estate? Select one: a. The deceased was the policyowner. b. The deceased's wife was the beneficiary. c. The estate was the named beneficiary. d. The policy was transferred to another person within 3 years of the deceased's death.

b. The premiums on the new/converted policy will be higher than the premiums on the original policy. A convertible term policy can be converted without proof of insurability. The premiums are higher, but the insured is now older.

Which of the following is true about a convertible term life policy? Select one: a. The policy cannot be converted to a permanent policy without providing proof of insurability. b. The premiums on the new/converted policy will be higher than the premiums on the original policy. c. The premium will be based on the age of the insured when the policy was issued. d. All of the above

a. Mississippi Domestic insurers are insurers formed under the laws of Mississippi.

Domestic insurers are insurers formed under laws of which jurisdiction? Select one: a. Mississippi b. Any U.S. state or territory c. Any place besides Mississippi d. Any country other than the U.S.

c. The date of the application or medical exam If the insurer accepts the coverage as applied for, the coverage would take effect the date of the application or the medical exam whichever is later.

Agents issue a conditional receipt to the applicant after the application and premium have been collected. If an insurer accepts the coverage as applied for, when does coverage begin? Select one: a. When the agent collects the first premium b. When the premium and application are presented to the insurer c. The date of the application or medical exam d. The date the policy is delivered

d. Loss must be catastrophic Losses must not be catastrophic risking insurer insolvency.

All of the following are elements of insurable risks, EXCEPT: Select one: a. Loss must occur by chance or accident b. Large number of homogenous units c. Loss must be predictable d. Loss must be catastrophic

c. The existing insurance is to be reissued with any increase in cash value Replacement transactions may occur if the existing life insurance is to be reissued with any reduction in cash value.

All of the following might result in a replacement transaction, EXCEPT: Select one: a. The existing life insurance has been forfeited b. The existing insurance has been converted to reduced paid-up insurance c. The existing insurance is to be reissued with any increase in cash value d. The existing life insurance has been pledged as collateral or subjected to borrowing

d. Deferred annuity Minimum guaranteed payouts are benefits of the life, refund and temporary annuities. The deferred annuity postpones benefits until a later, specified date, such as a retirement date.

All of the following programs quell the fear that some people have of losing their investment if they were to die after only receiving a few payments from their annuity, EXCEPT: Select one: a. Life with period certain b. Installment refund c. Period certain d. Deferred annuity

c. Decreasing term is useful for people wishing to purchase life insurance for an investment. Because the policy is worth-0- at the end of the policy period, it is not a type of insurance that would be considered useful for someone looking to fund an investment.

All of the following statements are true about decreasing term, EXCEPT: Select one: a. Decreasing term policies are sometimes convertible b. When the policy period expires, the term insurance is worth 0-. c. Decreasing term is useful for people wishing to purchase life insurance for an investment.

c. Twisting Twisting is making any written or oral statements that deliberately and literally represent the terms, conditions, or benefits of a policy for the purpose of inducing a policyholder to lapse on his current insurance and to purchase a new policy.

An agent sought to sell policies to a client who already had similar policies with another insurer by saying the policy he was selling offered far broader basic coverage than it actually offered. He suggested letting the older policy lapse and purchasing a policy from him. His practice in this case is called: Select one: a. Rebating b. Unfair claims and practices c. Twisting d. Misrepresentation

b. 35% Committing an act of controlled business will be considered to be probable if the Commissioner finds that during any 12-month period total commissions or other compensations accruing in favor of the applicant with respect to his own interests or those of his family, relatives, employers, employees or business associates, have exceeded or will exceed 35% of the total amount of commissions accruing to him as agent or his agency during such period of time.

An insurance producer has only committed an act of "controlled business" if during any 12-month period, the total commissions or other compensations with respect to his own interests or those of his family have exceeded what percentage of the total amount of commissions accruing to him as agent? Select one: a. 10% b. 35% c. 50% d. 75%

b. STOLI Investor-originated life insurance (IOLI) is a type of STOLI. With IOLI, investors solicit elderly people to purchase life insurance, and an agent or broker agrees to loan insureds money to pay the premiums for a period of time, with the agreement that after two years in paying premiums the investors become the policyowners, and receive the policy death benefits upon the insured's death.

IOLI is a type of: Select one: a. HIPAA b. STOLI c. MEC d. All of the above

b. He can use the cash value of his group policy to purchase paid-up insurance An annually renewable term policy builds no cash value; consequently there will be no cash values available to purchase paid-up insurance.

If Charlie is laid off, which of the following is not a consideration in converting from a group to an individual plan with his insurance? Select one: a. He can convert to an individual plan without providing evidence of insurability. b. He can use the cash value of his group policy to purchase paid-up insurance c. He can purchase whole life, flexible premium life, or term insurance. d. The cost of the individual policy can be substantially higher.

a. Representations The entire contract clause provides that statements made by the insured, in the application are considered representations.

In a life insurance policy, the entire contract clause provides that all statements made by the insured, in the application are: Select one: a. Representations b. Warranties c. Permission to amend the policy d. All of the above

b. 25% Replacement involves any transaction in which existing life insurance or annuity has been or is to be pledged as collateral or subjected to borrowing, whether in a single loan or under a schedule of borrowing over a period of time for amounts in the total exceeding 25% of the loan value set forth in the policy.

Replacement involves any transaction in which existing life insurance is to be pledged as collateral for amounts in the total exceeding what percentage of the policy's loan value? Select one: a. 15% b. 25% c. 40% d. 50%

d. The insured loses the sight in an eye as a result of an accident The AD&D policy rider covers the loss of a limb, or eyesight due to an accident

The AD&D (accidental death and dismemberment) rider provides additional benefits if: Select one: a. The insured is involved in an accident and loses two toes b. The insured loses a finger in a drill press at work c. The insured slices his wrists d. The insured loses the sight in an eye as a result of an accident

c. An individual's character Consumer reports are reports about the characteristics of an individual, including the individual's general character and reputation, employment history, living arrangements, and credit worthiness

The Fair Credit Reporting Act states that generally, consumer reports cannot contain the following information, EXCEPT: Select one: a. Adverse information about an individual that dates back over seven years b. Tax liens older than seven years c. An individual's character d. An individual's criminal history

a. 15 days To appoint a producer as its agent, the appointing insurer will file, in a format approved by the Commissioner, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted. An insurer may also elect to appoint a producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request.

To appoint a producer as its agent, the appointing insurer must file a notice of appointment within how many days from the date the agency contract is executed or the first insurance application is submitted? Select one: a. 15 days b. 20 days c. 30 days d. 45 days

a. Policy Summary The policy summary is provided to policy owners of life insurance. This document describes the elements of the policy, such as the riders, benefits and costs.

What is the name of the life insurance document that describes the elements of the policy, such as the riders, benefits and costs? Select one: a. Policy Summary b. Buyer's Guide c. Outline of Coverage d. Acceleration Clause

b. The insurer The Commissioner may conduct examinations of the financial ability of each domestic company as frequently as he sees fit.

When the Commissioner examine the financial ability of an insurance company, who pays for the examination? Select one: a. The Commissioner b. The insurer c. The state of Mississippi d. The Commissioner and the insurer split the cost

b. Any officer, director or employee of an insurer or of an insurance producer who receives a commission on policies written or sold A license as an insurance producer will not be required of an officer, director or employee of an insurer or of an insurance producer, if the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state.

A license as an insurance producer will always be required when: Select one: a. The officer, director or employee's function relates to underwriting, loss control or inspection of insurance b. Any officer, director or employee of an insurer or of an insurance producer who receives a commission on policies written or sold c. The officer, director or employee is acting in the capacity of a special agent and the person's activities do not include the sale, solicitation or negotiation of insurance d. A salaried full-time employee who counsels or advises his or her employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer

c. Marital status Mortality the rate at which a specific population dies, interest earnings, and expenses incurred by the insurer all are major factors for determining premiums. Marital status is not a major factor.

All of the following are major factors in the determination of premiums for life insurance, EXCEPT: Select one: a. Interest earnings b. Mortality c. Marital status d. Expenses

c. Mississippi An insurer may be subject to administrative supervision by the Commissioner if upon examination or at any other time it appears in the Commissioner's discretion that the insurer has failed to comply with the insurance laws of Mississippi.

An insurer may be subject to administrative supervision by the Commissioner if the insurer has failed to comply with the insurance laws of: Select one: a. Another state b. A foreign country c. Mississippi d. All of the above

d. A condition that occurs prior to making an application for insurance An underwriter should be informed about any conditions that existed prior to an application for insurance.

An underwriter will consider which of the following conditions in making their decision to approve an application for insurance? Select one: a. A condition that is contracted after the first premium is paid b. A condition that occurs after the policy is issued c. A minor childhood sickness d. A condition that occurs prior to making an application for insurance

b. May 1st The Commissioner must submit an annual report to the governor by May 1st.

By which date must the Commissioner submit his annual report to the governor? Select one: a. March 31st b. May 1st c. August 31st d. December 1st

b. Yes, the interest can be paid annually, or added to the loan. Yes, the loan does accrue interest. The interest can be paid annually, or added to the loan.

Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled? Select one: a. No, the loan does not accrue interest, he is borrowing his own money. b. Yes, the interest can be paid annually, or added to the loan. c. Yes, the interest is added to the premium payment. d. None of the above

c. Any place besides Mississippi Foreign insurers are insurers formed under the laws of a jurisdiction other than Mississippi and include alien insurers.

Foreign insurers are insurers formed under laws of which jurisdiction? Select one: a. Mississippi b. Any U.S. state or territory c. Any place besides Mississippi d. Any country other than the U.S.

a. General election The Commissioner is elected by general election.

How is the Commissioner of the Mississippi insurance department elected? Select one: a. General election b. Primary election c. Nomination d. Caucus The Commissioner is elected by general election.

c. Up to 180 days The Commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination.

How long does a temporary insurance producer license last? Select one: a. Up to 30 days b. Up to 90 days c. Up to 180 days d. Up to 360 days

b. 20 hours per line of insurance The amount of prelicensing insurance education required is 20 hours per line (total of 40 hours for life and health).

How many hours are required for prelicensing insurance education? Select one: a. 10 hours per line of insurance b. 20 hours per line of insurance c. 30 hours per line of insurance d. 40 hours per line of insurance

c. $25,000 The Commissioner must provide a corporate bond to the state in the amount of $25,000 for the faithful performance of the duties of said office during his term.

How much must the Commissioner pay to the state in a corporate bond? Select one: a. $500 b. $10,000 c. $25,000 d. $50,000

b. Only when there is a complaint The Commissioner may conduct examinations of the financial ability of each domestic company as frequently as he sees fit.

How often can the Commissioner examine the financial ability of a domestic company? Select one: a. As much as he wants b. Only when there is a complaint c. No more than once every 6 months d. No more than once every year

d. All of the above The Commissioner may place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license or may levy a civil penalty in an amount not to exceed $1,000 per violation and such penalty will be deposited into the special fund of the State Treasury designated as the "Insurance Department Fund" for any one or more of the above causes.

In which case can the Commissioner place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license? Select one: .a. When the producer violates any insurance laws b. When the producer obtains a license through misrepresentation or fraud .c. When the producer improperly withholds any monies or properties received d. All of the above

c. 30 days Licensees will inform the Commissioner by any means acceptable to the Commissioner of a change of address within 30 days of the change. Failure to timely inform the Commissioner of a change in legal name or address will result in a penalty.

Licensees must inform the Commissioner of a change of address within how many days of the change? Select one: a. 10 days b. 20 days c. 30 days d. 40 days

c. Mr. Baker's risk classification will be substandard. His premium will be higher. Mr. Baker's risk classification will be substandard. His premium will be higher.

Mr. Baker has a chronic medical condition. What will his risk classification be and how will his premium be affected? Select one: a. Mr. Baker's risk classification will be preferred. His premium will be higher. b. Mr. Baker's risk classification will be standard. His premium will be lower. c. Mr. Baker's risk classification will be substandard. His premium will be higher. d. Mr. Baker will be denied coverage.

c. If the applicant's home state awards nonresident licenses to residents of this state on the same basis The Commissioner will waive any requirements for a nonresident license applicant with a valid license from his or her home state, if the applicant's home state awards nonresident licenses to residents of this state on the same basis.

The Commissioner will waive any requirements for a nonresident license applicant with a valid license from their home state: Select one: a. Never b. If the applicant pays an additional fee c. If the applicant's home state awards nonresident licenses to residents of this state on the same basis d. None of the above

d. Name of the beneficiary The insuring clause of a policy contains the amount of the coverage, the name of the insurance company, the name of the insured, but does not contain the name of the beneficiary to the policy.

The insuring clause on the face of a life insurance policy contains all the following, EXCEPT: Select one: a. Amount of the coverage b. Name of the insurance company c. Name of the insured d. Name of the beneficiary

d. The contingent beneficiary The contingent beneficiary is person that receives the proceeds of a life insurance policy if the primary beneficiary predeceases the insured.

The person that receives the proceeds of a life insurance policy if the primary beneficiary predeceases the insured is called the: Select one: a. Irrevocable beneficiary b. The tertiary beneficiary c. The revocable beneficiary d. The contingent beneficiary

c. Automatic conversion option The automatic premium loan provision authorizes the insurance company to make a policy loan automatically when a premium that is due is not paid.

The provision that will prevent a whole life policy from lapsing is: Select one: a. Waiver of premium b. Accelerated death benefit c. Automatic conversion option d. Automatic premium loan

d. Within 30 - 90 days of the accident Most policies state that the death of the primary beneficiary must occur within 30 - 90 days of the accident to fall under the common disaster provision.

To fall under the common disaster provision, most policies specify that the death of the primary beneficiary must occur: Select one: a. Immediately b. Within 10 days of the accident c. Within 30 days of the accident d. Within 30 - 90 days of the accident

b. Replacement regulations The purpose of replacement regulations is to set forth standards for producers in dealing with replacement transactions, and to assure that unfair trade practices (such as twisting) are not practiced.

To set forth standards for producers in dealing with replacement transactions, and to assure that unfair trade practices (such as twisting) are not practiced is the purpose of: Select one: a. Retention limits b. Replacement regulations c. Subrogation d. Underwriting

b. Prospective buyers Producers must disclose their commission rates to prospective buyers of insurance policies.

To whom must producers disclose their commission rates? Select one: a. Their spouses b. Prospective buyers c. The general public d. All of the above

c. Troy's risk classification There are many factors that go into determining the insured's premium. These include the insured's medical history and smoking status. Perhaps Troy is overweight and smokes - these are factors that would likely cause his premium to be higher, despite all other identical factors with Trevor.

Troy and Trevor, identical twins, each apply for the exact same type of policy with the same face amount. The insurance company issues the policies as applied for, but charges Troy a 15% higher premium. Which of the following best explains the higher premium charged to Troy? Select one: a. Insuring clause b. Longer free look period c. Troy's risk classification d. Troy had to undergo a medical examination

a. Both provide death protection and cash value Both a whole life policy and a universal life policy provide death protection and cash value. The similarities end there.

Universal life policies are similar to whole life in that they: Select one: a. Both provide death protection and cash value b. Both provide flexibility c. Both treat cash withdrawals as a partial surrender d. Both provide fixed and guaranteed benefits

d. All of the above. All of the above are reasons for Karl to purchase a straight life policy.

What are the advantages of purchasing a straight life policy? Select one: a. The face amount and the premiums are level, and payable over the life of the insured, up to 100 years of age. b. The cash value and death benefits are guaranteed by the insurer. c. The premium can be lower than limited payment and single premium polices. d. All of the above.

a. Premium payment mode The premium payment mode determines the timing of premium payments, i.e., how often do you want to pay your premiums. Examples: monthly, quarterly, semi-annual (twice a year) or annually (once a year).

What defines the timing of the payments on a life insurance policy? Select one: a. Premium payment mode b. Payor benefit c. Owner's rights d. Settlement options

c. Nonforfeiture provision The nonforfeiture provision protects a policyowner from losing their investment. If a policy is cancelled, surrendered or premiums are not paid, the nonforfeiture provision provides the policyholder access to the cash value of the policy.

What guarantee states that if the policyholder discontinues payment of premiums, the policyholder can have access to the cash value of the policy? Select one: a. Policy loan provision b. Conversion option c. Nonforfeiture provision d. Settlement option

c. Insurance policies issued to a producer or to his relatives "Controlled business" means policies of insurance to be issued to a producer, agent or solicitor or to his relatives, business associates, employers or employees, or in which they or either of them have an interest.

What is "controlled business"? Select one: a. A deferred commission b. Extra fees for services approved in writing c. Insurance policies issued to a producer or to his relatives d. None of the above

d. All of the above If a member insurer should fail, the maximum amount of protection provided by the association is as follows: Life insurance death benefit: $300,000 per insured life. Life insurance cash surrender: $100,000 per insured life. Health insurance benefit: $500,000 per insured life for major medical policies; $100,000 per insured life for other medical claims, including long-term care contracts. Annuity benefits (present value): $100,000 per contract owner.

What is the maximum amount of protection provided by The Mississippi Life and Health Insurance Guaranty Association? Select one: a. Life insurance death benefit: $300,000 per insured life b. Annuity benefits (present value): $100,000 per contract owner c. Health insurance benefit: $500,000 per insured life for major medical policies d. All of the above

c. $1,000 The Commissioner may place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license or may levy a civil penalty in an amount not to exceed $1,000 per violation and such penalty will be deposited into the special fund of the State Treasury designated as the "Insurance Department Fund."

What is the maximum fine per violation the Commissioner may impose on an insurance producer? Select one: a. $250 b. $500 c. $1,000 d. $1,500

c. Outline of Coverage In health insurance, an outline of coverage is provided to policy owners of health insurance. Similar to the policy summary provided to policy owners of life insurance. This document describes the elements of the policy, such as the riders, benefits and costs.

What is the name of the HEALTH insurance document that describes the elements of the policy, such as the riders, benefits and costs? Select one: a. Policy Summary b. Buyer's Guide c. Outline of Coverage d. Acceleration Clause

d. A misdemeanor plus a $200-$500 fine Every person who, either as principal or agent or pretending to be such, will solicit, examine, or inspect any risk, or will examine into, adjust, or aid in adjusting any loss, or will receive, collect, or transmit any premiums of insurance, or will do any other act in the soliciting, making will be guilty of a misdemeanor and, on conviction, pay a fine of at least $200 but no more than $500, or be imprisoned not less than one nor more than two years, or both penalties.

What is the penalty for soliciting without a license? Select one: a. Just a felony b. Just a misdemeanor c. A felony plus a $200-500 fine d. A misdemeanor plus a $200-$500 fine

c. Long-term care rider A long-term care rider normally allows the policyholder to utilize some or all of the policy's specified amount, or death benefit, for long-term care costs, either for a period of time or until the available coverage amount has been exhausted, under stated terms. The long-term care rider can reduce the death benefit if the decrease is incorporated into a life insurance policy.

What rider can decrease the death benefit when utilized? Select one: a. Payor rider b. Waiver of premium rider c. Long-term care rider d. Cost of living rider

a. A limited pay life policy A limited pay life plan is one that provides the same benefits as a standard whole life plan, but has a shorter premium paying period.

What type of policy provides coverage for life, but the premiums are not due beyond age 65, has guaranteed premium, accumulates cash value and the coverage will never decrease? Select one: a. A limited pay life policy b. An endowment at age 65 policy c. A term to age 65 policy d. A variable life policy

c. A term life plan A term life plan is not designed to accumulate cash value and it will expire or renew at a specified date or age.

What type of policy will never build cash value, and will terminate automatically at age 65? Select one: a. A whole life paid up at 65 plan b. A group life plan c. A term life plan d. A fixed life plan

b. An immediate annuity purchased with a lump sum Someone should buy a single premium deferred annuity that will produce enough income to cover their basic expenses.

What would be best for someone who received a large lump sum from their company retirement and wants to be sure their basic living needs are always covered? Select one: a. A deferred annuity b. An immediate annuity purchased with a lump sum c. A deferred annuity funded with periodic deposits d. An immediate annuity that is payable for 10 years only

d. All of the above The authority of a domestic or foreign insurance company may be revoked if the insurer violates or neglects to comply with any law or regulation, and whenever its condition is unsound, or its assets above its liabilities, exclusive of capital and inclusive of unearned premiums, are less than the amount of its original capital or required unimpaired funds.

When can the license of a domestic or foreign insurance company be revoked? Select one: a. Whenever its condition is unsound b. If the insurer violates or neglects to comply with any law or regulation c. If its assets above its liabilities, are less than the amount of its original capital d. All of the above

d. The applicant, insurance producer, and the replacing insurer If replacement insurance is involved, then the applicant and insurance producer will sign a 'Notice Regarding Replacement;' obtain a detailed list of all existing life insurance and/or annuity to be replaced; give the applicant a copy of all written or printed communication that was presented to the applicant; and submit to the replacing insurer a copy of the replacement notice.

When receives a copy of the 'Notice Regarding Replacement'? Select one: a. Just the applicant b. Just the insurance producer c. Just the replacing insurer d. The applicant, insurance producer, and the replacing insurer

d. The applicant and original insurance producer If replacement insurance is involved, then the applicant and insurance producer will sign a 'Notice Regarding Replacement;' obtain a detailed list of all existing life insurance and/or annuity to be replaced; give the applicant a copy of all written or printed communication that was presented to the applicant; and submit to the replacing insurer a copy of the replacement notice.

When replacement insurance is involved, who signs the 'Notice Regarding Replacement'? Select one: a. Just the applicant b. Just the original insurance producer c. The replacing insurer d. The applicant and original insurance producer

b. State Treasury The Commissioner may place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license or may levy a civil penalty in an amount not to exceed $1,000 per violation and such penalty will be deposited into the special fund of the State Treasury designated as the "Insurance Department Fund."

When the Commissioner levies a civil penalty on an insurance producer, that money is deposited into a special fund for which department of the government? Select one: a. Transportation b. State Treasury c. Governor's Office d. State legislature

a. The benefits can go directly to the estate of the insured. In the event that the only logical beneficiary for a life policy is a minor, the guardian, trust and insurance company holding the proceeds are all options available.

When the only logical beneficiary is a minor, all of the following options are available, EXCEPT: Select one: a. The benefits can go directly to the estate of the insured. b. A trust can be established. c. The insurance company can hold the proceeds until the

d. Cash payment With the cash payment dividend option, the policyholder is sent a check for the amount of the dividend, which does not increase the policy's cash value.

Which life insurance dividend option does not increase a policy's cash value? Select one: a. Accumulate at Interest b. Paid-up insurance c. Paid-up additions d. Cash payment

b. Unknowingly accepting insurance business from an individual who is not licensed The Commissioner may place on probation, suspend, revoke or refuse to issue or renew an insurance producer's license if he/she knowingly accepts insurance business from an individual who is not licensed.

Which of the following actions of an insurance producer would NOT be deemed an offense worthy of punishment by the Commissioner? Select one: a. Failing to comply with an administrative or court order imposing a child support obligation b. Unknowingly accepting insurance business from an individual who is not licensed c. Forging another's name to an application for insurance d. Refusing to pay state income tax

a. Agreement, Consideration, Competent parties, Legal purpose Agreement (also offer and acceptance), consideration, competent parties and legal purpose are required elements of every contract. Reasonable expectations and indemnity are legal interpretation by the courts.

Which of the following contains elements that are part of every legal contract? Select one: a. Agreement, Consideration, Competent parties, Legal purpose b. Offer and Acceptance, Consideration Competent parties c. Consideration, Competent parties, Legal purpose, Reasonable Expectations d. Agreement, Indemnity, Consideration, Legal purpose

a. Being convicted of a misdemeanor The Commissioner may levy a civil penalty in an amount not to exceed $1,000 per violation for an insurance producer who has been convicted of a felony.

Which of the following is NOT considered a violation that the Commissioner can punish with up to a $1,000 fine? Select one: a. Being convicted of a misdemeanor b. Using fraudulent, coercive or dishonest practices c. Forging another's name to an application for insurance d. Knowingly accepting insurance business from an individual who is not licensed

a. Offering to settle claims for an amount greater than the amount otherwise reasonably due Offering to settle claims for an amount less than the amount otherwise reasonably due or payable is deemed an unfair claims practice.

Which of the following is NOT considered improper and unfair claims practices by a producer? Select one: a. Offering to settle claims for an amount greater than the amount otherwise reasonably due b. Failing to adopt reasonable standards for prompt investigation and settlement of claims c. Knowingly misrepresenting to claimants pertinent facts relating to coverage d. Threatening a client in order to discourage them and reduce the claim

b. A person who purchases insurance for their own benefit "Insurer" means and includes every person engaged as indemnitor, surety or contractor in the business of entering into contracts of insurance or annuities including: Any insurer performing insurer business, or has transacted insurance in this state, and against whom claims arising from that transaction may exist now or in the future. Any fraternal benefit society or larger fraternal benefit society or larger fraternal benefit society. All corporate bodies organized for the purpose of carrying on the business of mutual insurance. All HMOs.

Which of the following is NOT considered to be an 'insurer'? Select one: a. HMOs b. A person who purchases insurance for their own benefit c. Any person engaged as indemnitor in the business of entering into contracts of insurance d. Corporate bodies organized for the purpose of carrying on the business of mutual insurance

a. No one is exempt from taking it. A resident individual applying for an insurance producer license will pass a written examination unless exempt. The examination will test the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer and the insurance laws and regulations of this state. Each individual applying for an examination will pay a nonrefundable fee.

Which of the following is NOT true about the written examination taken by a resident individual applying for an insurance producer license? Select one: a. No one is exempt from taking it. b. An individual must pay a nonrefundable fee to take it. c. It tests the duties and responsibilities of an insurance producer. d. It tests the knowledge of the individual concerning the lines of authority for which application is made.

d. All of the above Retirement plans that meet the requirements of the Internal Revenue Code Section 401(a) and ERISA (Employee Retirement Income Security Act) are tax qualified, thus eligible for favorable tax treatment. All of the items listed are benefits of a qualified retirement plan.

Which of the following is a benefit of a qualified retirement plan? Select one: a. Employers can deduct contributions for each participant. b. Contributions, and earning on the contributions are tax deferred until withdrawn. c. Transferring the contributions into a different IRA can further defer taxes. d. All of the above

d. All of the above Interest - Sensitive ( Current Assumption) Whole Life has flexible premiums, a guaranteed minimum death benefit, and a guaranteed minimum rate of return.

Which of the following is a characteristic of an interest sensitive whole life policy? Select one: a. Flexible premiums b. Guaranteed minimum death benefit c. Guaranteed minimum rate of return. d. All of the above

d. All of the above The Commissioner's duties include each of those in addition to other duties.

Which of the following is a duty of the Commissioner? Select one: a. Issue producer licenses to qualified applicants b. Conducting required examinations and investigations of insurance companies c. Supervise the business of insurance in Mississippi and assure that all laws are followed d. All of the above

a. The disability must be permanent and total. In order for the waiver of premium rider to take effect, the disability of the policyholder must be permanent and total.

Which of the following is a true statement about the waiver of premium rider? Select one: a. The disability must be permanent and total. b. The disability cannot be the result of an accident. c. The disability must not be permanent. d. The disability must not be total

d. They operate on a lodge system. Fraternals, or Fraternal benefit societies, are incorporated societies, orders, or supreme lodges, without capital stock, which are conducted solely for the benefit of its members and their beneficiaries. Fraternals are nonprofit, are operated on a lodge system with ritualistic form of work, have a representative form of government, and make provisions for the payment of benefits.

Which of the following is characteristic of fraternal benefit societies? Select one: a. They are for profit. b. They have capital stock. c. They are not incorporated. d. They operate on a lodge system.

c. They are excess and surplus lines insurers. An authorized insurer is one that holds a certificate of authority, issued by the Commissioner, permitting the insurer to transact insurance in Mississippi. The certificate of authority is the authorization issued by the Commissioner to the insurer granting permission to transact insurance in Mississippi. An unauthorized insurer does not hold a certificate of authority. Unauthorized insurers that are permitted to transact insurance in Mississippi are excess and surplus lines insurers.

Which of the following is characteristic of unauthorized insurers? Select one: a. They hold a certificate of authority. b. They have a permit to transact insurance in Mississippi. c. They are excess and surplus lines insurers. d. All of the above

d. Any person who, as an independent contractor, investigates or adjusts losses on behalf of an insurer "Adjuster" means any person who, as an independent contractor, or as an employee of an independent contractor, adjustment bureau, association, insurance company or corporation, managing general agent or self-insured, investigates or adjusts losses on behalf of either an insurer or a self-insured, or any person who supervises the handling of claims.

Which of the following is considered to be an 'adjuster'? Select one: a. An attorney at law who adjusts insurance losses from time to time b. A salaried employee of an insurer who is regularly engaged in the adjustment c. Persons employed only for the purpose of furnishing technical assistance to a licensed adjuster d. Any person who, as an independent contractor, investigates or adjusts losses on behalf of an insurer

c. Individual selection of benefits Group life insurance is available at lower rates than individual insurance because the administrative, operational and selling costs associated with group life insurance are less than those of individual plans. These savings are passed on to group policyholders in the form of lower premiums.

Which of the following is not a characteristic of a group life insurance plan? Select one: a. Minimum participation standards b. Lower overall costs c. Individual selection of benefits d. Master policy for all employees

c. Extended term option The interest only, life income and fixed amount options are all settlement options. The extended term option is an option - not a settlement option.

Which of the following is not a settlement option for a life policy? Select one: a. Interest only option b. Life income option c. Extended term option d. Fixed amount option

c. A woman that owns a policy on an ex-boyfriend A woman owning a policy on an ex-boyfriend would not be allowed, and consequently not be an example of a third party ownership situation.

Which of the following is not an example of a plausible third party ownership situation? Select one: a. A husband who owns a policy on his wife b. A corporation that owns the policy of an officer of the corporation. c. A woman that owns a policy on an ex-boyfriend d. A parent who is the owner of a policy on their child

b. Set up a tertiary beneficiary to receive the proceeds A tertiary beneficiary is one that receives the proceeds of a policy if the primary and secondary beneficiaries die. A tertiary beneficiary is not set up to administer policy proceeds for minor children.

Which of the following is not an option for handling the designation of minor beneficiaries on a life policy? Select one: a. Set up a trust to receive and administer the proceeds of the policies b. Set up a tertiary beneficiary to receive the proceeds c. Instruct the insurance company to hold the proceeds until the children are of a competent age d. Appoint a guardian to administer the proceeds

d. Changing the irrevocable beneficiary An irrevocable beneficiary is just that irrevocable. The policy can change a revocable beneficiary, but if a beneficiary is set us as irrevocable, they cannot.

Which of the following is not an ownership right of a life insurance policy? Select one: a. Naming the beneficiaries b. Choice of premium payment mode c. Borrowing funds from the cash value d. Changing the irrevocable beneficiary

c. With the limited payment option, there is immediate cash value. Cash value accumulates more quickly than it does with a continuous premium policy, but it is not immediately.

Which of the following is not true about the limited payment option insurance option? Select one: a. With the limited payment option, the policy is paid up prior to the age of 100. b. With the limited payment option, the premium-paying period is shorter than continuous premium. c. With the limited payment option, there is immediate cash value. d. With the limited payment option, the premiums tend to be a bit higher.

d. New life insurance Credit life insurance, group life and group annuities are not subject to replacement regulations, while new life insurance or new annuities are subject to replacement regulations.

Which of the following is subject to replacement regulations? Select one: a. Credit life insurance b. Group annuities c. Group life d. New life insurance

c. The policy has been expired no more than 3 years Most states allow reinstatement up to 3 years after the lapse of a policy.

Which of the following statements is true about conditions to reinstate a lapsed life insurance policy? Select one: a. On a reinstatement, the policyowner does not need to provide proof of insurability. b. The reinstated policy will use the insured's attained age at the time of the reinstatement. c. The policy has been expired no more than 3 years d. Policy loans and interest are forgiven.

d. All of the above A licensee involved in the selling of an insurance contract must report to the insurer the exact amount of premium charged for the contract. All money representing premiums received by a licensee must be received by the licensee as a fiduciary and must be promptly accounted for and paid to the entitled person. Money held by the licensee as a fiduciary may not be commingled with other money held by the licensee.

Which of the following statements is true about the money for premiums received by a licensee? Select one: a. It must be promptly accounted for. b. It must be paid to the entitled person. c. It must be received by the licensee as a fiduciary. d. All of the above

a. Lapsed life insurance Credit life insurance, group life and group annuities are not subject to replacement regulations.

Which of the following types of insurance is subject to replacement regulations? Select one: a. Lapsed life insurance b. Group annuities c. Group life insurance d. Credit life insurance

d. All of the above Policy replacement is defined as an insurance transaction in which a new life insurance policy or annuity contract is to be purchased, and the producer or insurer is aware or should be aware that an existing life insurance policy or annuity contract is to be: lapsed, forfeited, surrendered or terminated; converted to reduced paid-up insurance, continued as extended term life insurance, or reduced in value due to utilization of nonforfeiture benefits or policy cash values; modified causing a reduction in benefits; or reissued with a reduction in cash value.

Which of the following would be a situation where an insurance policy is considered replaced? Select one: a. An existing life insurance policy is lapsed, forfeited, surrendered or terminated b. Converted to reduced paid-up insurance c. Reissued with a reduction in cash value d. All of the above

c. Because the investor/stranger does not have an insurable interest in the insured STOLI and IOLI arrangements are ethical dilemmas because the investor or stranger does not have insurable interest in the continued life and well being of the insured. They want the insured to die very soon, so that they will receive the policy death benefits.

Why are STOLI arrangements ethical dilemmas? Select one: a. Because the insured receives a lump-sum payment from a third party when the policy is sold to the stranger/investor b. Because life insurance cannot be sold to third parties c. Because the investor/stranger does not have an insurable interest in the insured d. All of the above