Life Exam
an insured worked for a company that provided group life policy covering each employee for $25,000. twenty days after being terminated from his job, the insured was killed in an auto accident. how much will his beneficiary receive? A. $25,000, less the premium required for 20 days coverage B. $25,000 C. $12,500, less premium required for 20 days coverage D. nothing
A. $25,000, less the premium required for 20 days coverage
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? A. Conditional B. Adhesion C. Personal D. Unilateral
A. Conditional
The premium of a survivorship life policy compared with that of a joint life policy would be A. Lower B. Higher C. As high D Half the amount
A. Lower
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A. Material Misrepresentation B. Waiver C. Utmost Good Faith D. Estoppel
A. Material Misrepresentation
If a life policy develops cash value faster than a seven-pay whole life contract, it becomes a/an A. Modified endowment contract B. Accelerated benefit policy C. Endowment D. Nonqualified annuity
A. Modified endowment contract
The Federal Fair Credit Reporting Act A. Regulates consumer reports B. Protects customer privacy C. Regulates telemarketing D. Prevents money laundering
A. Regulates Consumer Reports
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? A. Unilateral B. Unidirectional C. Aleatory D. Conditional
A. Unilateral
what guarantees that the information explained in the insurance contract is true? A. a warranty B. a representation C. utmost good faith D. a binder
A. a warranty
the minimum interest rate on an equity indexed annuity is often based on A. an index like standard & poor's 500 B. the returns from the insurance company's separate account C. the annuitant's individual stock portfolio D. the insurance company's general account investments
A. an index like standard & poor's 500
all of the following statements are correct regarding credit life insurance EXCEPT A. benefits are paid to the borrower's beneficiary B. the amount of insurance permissible is limited per borrower C. premiums are usually paid by the borrower D. benefits are paid to the creditor
A. benefits are paid to the borrower's beneficiary
Carol is insured under her employer's group life insurance plan at her place of employment. All of the following statements about her coverage are true EXCEPT A. carol could choose what type of insurance her conversion policy provided. (term of permanent) B. carol would not need to prove insurability for a conversion policy C. if carol quits, within 31 days, request that her coverage be converted to an individual policy D. should carol convert her coverage, the premium will be based upon he attained age
A. carol could choose what type of insurance her conversion policy provided. (term of permanent)
which of the following must an insurer obtain in order to transact insurance within a given state? A. certificate of authority B. producer's certificate C. business entity license D. insurer's license
A. certificate of authority
which of the following is TRUE about credit life insurance? A. creditor is the policy owner B. debtor is the annuitant C. creditor is the insured D. debtor is the policy beneficiary
A. creditor is the policy owner
all of the following actions can be described as twisting EXPECT A. explaining to client the advantages of permanent insurance over term and suggesting changing policies B. misrepresenting the terms and conditions of the existing policy to make the new one more attractive C. embellishing the terms of the proposed policy in order to convince the insured to switch D. making an incomplete comparison between the existing and proposed policies
A. explaining to client the advantages of permanent insurance over term and suggesting changing policies
under which of the following conditions would life insurance proceeds be taxable by the federal government? A. if there is a transfer for value B. if collaterally assigned to a lender C. if taken as a lump sum D. if paid to the policy owner
A. if there is a transfer for value
if a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan? A. immediately B. within 10 days C. within 30 days D. within 90 days
A. immediately
which of the following is NOT true regarding a deferred annuity? A. income payments begin within one year from the date of purchase B. it is used to accumulate funds for retirement C. it can be purchased with a single lump sum D. the annuity grows tax deferred
A. income payments begin within one year from the date of purchase
an insured purchased a life insurance policy. the agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. this policy is a/an A. interest-sensitive whole life B. credit life C. annual renewable term D. adjustable life
A. interest-sensitive whole life
Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives? A. medical information B. inspection report C. agent's report D. general information
A. medical information
guaranteeing future dividends is considered to be an unfair or deceptive act known as A. misrepresentation B. twisting C. false financial statements D. rebating
A. misrepresentation
information about a policy's free-look period must appear A. on the first page of the policy B. in any illustrations issued regarding that policy C. in the buyer's guide D. in all sales material for that policy, including audio/visual presentations and printed advertisements
A. on the first page of the policy
what is the major difference between a stock company and a mutual company? A. ownership B. amount of death benefit C. number of producers D. types of whole life policies
A. ownership
which of the following is another term for the accumulation period of an annuity? A. pay-in period B. premium period C. liquidation period D. annuity period
A. pay-in period
Who might receive dividends from a mutual insurer? A. policy holders B. subscribers C. stockholders D. agents
A. policy holders
when the application for life insurance is taken that replaces an existing life insurance policy, the applicant must be give a memorandum that includes all the filling EXCEPT A. premium mode B. the face amount of the policy C. insurer's name D. date of applivation
A. premium mode
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? A. the amount of the distribution is reduced by the amount of 20% withholding tax B. no taxes are due since the plan participant is over age 59 1/2 C. there is a 10% early withdraw penalty D. the amount distributed is subject to ordinary income tax
A. the amount of the distribution is reduced by the amount of 20% withholding tax
if an applicant for a life insurance policy and the person to be insured by the policy are two different people, the underwriter may be concerned about A. whether an insurable interest exists between the individuals B. the gender of the applicant C. the type of policy requested D. which individual will pay the premium
A. whether an insurable interest exists between the individuals
an annuity has accumulated the cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. the beneficiary will receive A. $30,000 B. $70,000 C. $100,000 (combination of cash value and premiums paid) D. a survivor benefit determined by the insurance company
B. $70,000
a producer moves to a new house. within how many days must the producer notify the commissioner of change of address? A. 10 days B. 30 days C. 90 days D. notification is not required for change in residential address
B. 30 days
although the commissioner must examine the affairs, transactions, records and assets of each authorized insurer as often as deemed advisable, each authorized insurer must be examined at least once every A. 3 years B. 5 years C. 7 years D. 10 years
B. 5 years
This state provides for a temporary license for all of the following EXCEPT A. A producer's time in the military service B. A producer's retirement C. The death of a producer D. A producer's disability
B. A producer's retirement
Concerning insurance, the definition of a fiduciary is A. A retail clerk B. A producer/broker who handles insurer funds in a trust capacity C. A person who handles assets or money belonging to others D. All the above
B. A producer/broker who handles insurer funds in a trust capacity
Which of the following is NOT an essential element of an insurance contract? A. Legal Purpose B. Counteroffer C. Consideration D. Agreement
B. Counteroffer
What type of premium do both universal life and variable life policies have? A. Increasing B. Flexible C. Level Fixed D. Decreasing
B. Flexible
Another name for a substandard risk classification is A. Elevated B. Rated C. Controlled D. Declined
B. Rated
All the following are considered unfair trade practices in the business of insurance EXCEPT A. Defamation B. Sharing commissions C. Boycott D. Rebating
B. Sharing commissions
When is the earliest a policy may go into effect? A. After the underwriter reviews the policy B. When the application is signed and a check is given to the agent C. When the first premium is paid and policy has been delivered D. When the insurer approves the application
B. When the application is signed and a check is given to the agent
this state provided for a temporary license for all of the following EXCEPT A. a producer's time in the military service B. a producer's retirement C. the death of a producer D. a producer's disability
B. a producer's retirement
to legally transact insurance in this state, an insurer must obtain which of the follow? A. certificate in insurance B. certificate of authority C. power of attorney D. business entity license
B. certificate of authority
which of the following elements of an insurance contract requires paying premium and providing a statement of good health? A. offer and acceptance B. consideration C. legal purpose D. competent parties
B. consideration
which of the following is paid solely to advise clients? A. advisor B. consultant C. producer D. broker
B. consultant ????
which of the following statements is true regarding SIMPLE plans? A. the employee cannot contribute to the plan B. contributions and earnings are tax-deferred until funds are withdrawn C. the employer cannot contribute to the plan D. the employer can contribute up to 5% of the employee's annual compensation
B. contributions and earnings are tax-deferred until funds are withdrawn
which of the following types of insurance policies is most commonly used in credit life insurance? A. equity index life B. decreasing term C. increasing term D. whole life
B. decreasing term
what does "level" refer to in level term insurance? A. interest rate B. face amount C. premium D. cash value
B. face amount
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A. non-forfeiture option B. guaranteed insurability rider C. paid-up additions option D. cost of living provision
B. guaranteed insurability rider
which of the following is TRUE about the 10-day-free-look period in a Life Insurance policy? A. it is optional on all life insurance policies B. it begins when a policy is delivered C. it begins when the application is signed D. it applied only to term life insurance policies
B. it begins when a policy is delivered
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A. ordinary life B. joint life C. decreasing term D. whole life
B. joint life
which of the following is an IRS qualified retirement program for the self-employed? A. 401(k) B. keogh C. split dollar D. buy and sell agreement
B. keogh
on a participating insurance policy issued by a mutual insurance company, dividends paid to policyholder are A. guaranteed B. not taxable since the IRS treats them as a return of a portion of the premium paid C. paid at a fixed rate every year D. taxable as ordinary income
B. not taxable since the IRS treats them as a return of a portion of the premium paid
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the A. payor rider B. other-insured rider C. change of insured rider D. juvenile rider
B. other-insured rider
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? A. pay the full death benefit and refund excess premium B. pay a reduced death benefit C. pay the full death benefit D. pay nothing; there was a misrepresentation on the application
B. pay a reduced death benefit
which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? A. premiums are taxable to the employee B. premiums are not taxable deductible as a business expense C. premiums are tax deductible by the key employee D. premiums are tax deductible as a business expense
B. premiums are not tax deductible as a business expense
an insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called A. graded premium whole life B. single premium whole life C. modified endowment contract (MEC) D. level term life
B. single premium whole life
If an insurer becomes insolvent, which of the following would pay benefits to policyholders? A. a federal reserve fund B. the Arkansas Life and Disability Insurance Guaranty Association C. The NAIC fund D. The State
B. the Arkansas Life and Disability Insurance
what is the cost of coverage based on for group life insurance? A. the insureds' individual ages B. the average age and the ratio of men to women C. the average age D. the ration of men to women
B. the average age and the ratio of men to women
which of the follow protects consumers against the circulation of inaccurate or obsolete personal or financial information? A. consumer privacy act B. the fair credit reporting act C. unfair trade practices law D. the guaranty association
B. the fair credit reporting act
according to the common disaster clause, if the insured and primary beneficiary killed in the same accident it cannot be determined who died for first, which of the following will be assumed? A. the insured died before the primary beneficiary B. the primary beneficiary dies before the insured C. the deaths occurred at the same time D. the estate of the primary beneficiary and the contingent beneficiary split benefits equally
B. the primary beneficiary dies before the insured
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. rebating B. twisting C. defamation D. misrepresentation
B. twisting
considering the principles of liquidity, how would the policy owner use today's cash values in a life insurance policy? A. fund a retirement B. use it for emergency expense C. secure a car loan next year D. make a down payment on a home in 5 years
B. use it for emergency expenses
how long is the insurance commissioner's term in the office? A. 2 years B. 3 years C. 4 years D. 5 years
C ????
An employee quits her job where she has a balance of $10,000 in her qualified plan. if she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator another and what is the tax consequence of a direct transfer? A. $8,000, tax on growth only B. $10,000, tax on growth only C. $10,000, no tax consequence D. $8,000, no tax consequence
C. $10,000, no tax consequence
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case what will the policy beneficiary receive? A. $0 B. $50,000 (50% of the policy value) C. $100,000 D. $300,000 (triple the amount of policy value)
C. $100,000
an insured purchase a 15 year level term life insurance policy with a face amount of $100,000. The policy contains an accident death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident after two weeks of hospitalization, died from the injuries. What amount would has been officially received as a settlement? A. $0 B. $100,000 C. $200,000 D. $100,000 plus the total of paid premiums
C. $200,000
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 10 days B. 3 days C. 5 days D. 7 days
C. 5 days
what is a foreign insurer? A. An insurer with licensed agents doing business in other countries B. An insurer with licensed agents who are citizens in more than one country C. An insurer with a home office in another state D. An insurer with a home office in another country
C. An insurer with a home office in another state
which of the following entities keeps a file of all of an insurer's advertisements? A. Commissioner B. State government C. The insurer D. State Insurance Board
C. The insurer
according to the life insurance replacement regulations, which of the following would be an example of policy replacement? A. term insurance change to whole life policy B. a lapsed policy resin stated within a specific time frame C. a policy is reissued with a reduction in cash value D. a term policy expires, and the insured buys another term life policy
C. a policy is reissued with a reduction in cash value
insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. what contract characteristic does this describe? A. conditional B. personal C. adhesion D. unilateral
C. adhesion
what happens when a policy is surrendered for its cash value? A. the policy can be reinstated by paying back all policy loans and premiums B. the policy can be converted to term coverage C. coverage ends and the policy cannot be reinstated D. coverage ends but the policy can be reinstated at any time
C. coverage ends and the policy cannot be reinstated
which of the following is an eligibility requirement for all social security disability income benefits? A. have permanent kidney failure B. be at least age 50 C. have attained fully insured status D. be disabled for at least a year
C. have attained fully insured status
what type of insurance would be used for a return of premium rider? A. decreasing term B. annually renewable term C. increasing term D. level term
C. increasing term
all advertisements are the responsibility of the A. advertising agency B. department of insurance C. insurer D. soliciting agent
C. insurer
all of the following are non-forfeiture options EXECEPT A. extended term B. reduced paid-up C. interest only D. cash surrender
C. interest only
which of the following is correct regarding credit life insurance? A. it insured the life of a creditor B. it has a maximum term of 20 years C. it insured the life of the debtor D. it is purchased on an installment basis
C. it insured the life of a debtor
which of the following best describes the unfair trade practice of defamation? A. issuing false advertising material B. refusing to deal with other insurers C. making derogatory oral statements about another insurer's financial condition D. assuming the same and identity of another person
C. making derogatory oral statements about another insurer's financial condition
which statement best describes agreement as it relates to insurance contracts? A. all parties must be capable of entering into a contract B. each party must offer someone of value C. one party accepts the exact terms of the other party's offer D. the intent of the contract must be legally acceptable to both parties
C. one party accepts the exact terms of the other party's offer
which of the following policies would be classified as a traditional level premium contract? A. universal life B. variable universal life C. straight life D: adjustable life
C. straight life
which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs? A. paid-up at 65 insurance B. a variable annuity C. term insurance D. straight whole life
C. term insurance
which of the following information will be stated in the consideration clause of a life insurance policy? A. the time period allowed for the payment of premium B. the conditions for insurability C. the amount of premium payment D. the parties to the contract
C. the amount of premium payment
if an insurer requires a medical examination of an applicant in connect with the application for life insurance, who is responsible for paying the cost of the examination? A. the examiner B. the applicant C. the insurer D. the cost of examination will be waived
C. the insurer
which of the follow best defined target premium in a universal life policy? A. the minimum amount to make sure the policy is annually renewable B. the corridor of insurance C. the recommended amount to keep the policy in force throughout its lifetime D. the maximum amount the policy owner may pay on a policy
C. the recommended amount to keep the policy in force throughout its lifetime
which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy? A. they are taxable to the insurer's estate B. they are tax deductible C. they are received tax free D. they are considered taxable income
C. they are received tax free
insurers must annually pay the divisible surplus, if any, that will accrue to the policyholders on the policy anniversary date. this must occur no later than the end of the A. first policy year B. second policy year C. third policy year D. fifth policy year
C. third policy year
an absolute assignment is A. change of beneficiary B. change of insurer C. transfer of all ownership rights in a policy D. transfer of some ownership rights in a policy
C. transfer of all ownership rights in a policy
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A. $1,000 B. $100 per violation C. Revocation of license D. $2,500
D. $2,500
when a hearing regarding an insurance matter is requested, all parties affected must be notified within what time period of the hearing? A. 15 days B. 60 days C. 30 days D. 10 days
D. 10 days
how long is the licensing period in Arkansas? A. 3 years B. 4 years C. 1 year D. 2 years
D. 2 years ???
Which of the following is an example of a producer's fiduciary responsibilities? A. A producer helping clients file claims B. A producer doing a review of his/her clients coverage C. A producer offering addition coverage to his client D. A producer promptly forwarding premiums to the insurance company
D. A producer promptly forwarding premiums to the insurance company
Which of the following best describes annually renewable insurance? A. It requires prof of insurability at each renewal B. Neither the premium nor the death benefit is affected by the insured's age C. It provides an annually increasing death benefit D. It is term level insurance
D. It is term level insurance
a viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following? A. more than the face value B. a predetermined multiple of the premium C. the face amount of the policy D. a percentage of the face amount of the policy
D. a percentage of the face amount of the policy
if an insurance producer's or consultant's license has lapsed, A. a new written examination is required B. it can be reinstated within 36 months C. it cannot be reinstated D. a reinstatement fee is double the renewal fee
D. a reinstatement fee is double the renewal fee ??
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? A. term insurance only B. permanent insurance only C. universal life insurance only D. any form of life insurance
D. any form of life insurance
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? A. interviews B. state records C. medical records D. application
D. appliaction
how is the commissioner selected for office? A. appointed by the NAIC B. elected by state insurers C. elected by popular vote D. appointed by the governor
D. appointed by the governor
According to the entire contract provision, what document must be made part of the insurance policy? A. buyer's guide B. agent's report C. outline of coverage D. copy of the original application
D. copy of the original application
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? A. variable life B. universal life C. whole life D. decreasing term
D. decreasing term
under what circumstances will the contingent beneficiary receive the death benefit? A. if the tertiary beneficiary dies before the uninsured B. if designated by the insured C. if designated by the primary beneficiary D. if the primary beneficiary dies before the insured
D. if the primary beneficiary dies before the insured
a return of premium term life policy is written as what type of term coverage? A. decreasing B. renewable C. level D. increasing
D. increasing
For a contract to be enforceable by law, the purpose of the contract must be A. for financial gain B. for the benefit of the general public C. of pure intent D. legal and not against public policy
D. legal and not against public policy
an insurance agent visits a potential client and explains various types of policies. the customer displays lack of interest, so the agent guarantees high dividends than he knows would be possible. which term describes what the agent has done? A. rebating B. twisting C. defamation D. misrepresentation
D. misrepresentation
which term describes the benefits of a life insurance policy that the policy owner does not automatically relinquish even if the policy lapses? A. permanent values B. constant values C. nonsurrender values D. nonforfeiture values
D. nonforfeiture values
dividends received on participating life insurance policies are A. taxable because they are a return on your investment B. not taxable because they are a return on your investment C. taxable because they are a return of unused premiums D. not taxable because they are a return of unused premiums
D. not taxable because they are a return of unused premiums
a married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making premium payments due to death or disability. which policy rider should their agent recommend? A. guaranteed insurability B. automatic premium loan C. waiver of premium D. payor benefit
D. payor benefit
what is the difference between a straight life policy and a 20-pay whole life policy? A. the benefit settlement option B. the face amount and cash value C. policy maturity date D. premium payment period
D. premium payment period
i'd a policy is being replaced, the replacement company must be notified by the A. executive offer of the replacing company B. policyholder C. counselor D. producer
D. producer
the purpose of insurance regulation is to A. make insurance statues uniform between states B. keep producers honest C. make insurance companies pay taxes D. promote the public welfare
D. promote the public welfare
all of the following are true regarding the federal Fair Credit Reporting Act EXCEPT A. insurers are not required to give customers a copy of the report B. it applies to credit reports ordered in connection with insurance, banking, and employment C. the customer will be notified if adverse action is taken as a result of a report D. reports may be sent to anyone who requests one
D. reports may be sent to anyone who requests one
If an agent wishes to sell variable life policies, what license must the agent obtain? A. adjuster B. surplus lines C. personal lines D. securities
D. securities
which of the following would help prevent a universal life policy from lapsing? A. face amount B. adjustable premium C. corridor of insurance D. target premium
D. target premium
An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE A. the premium would be returned to the insured's estate because the policy was not issues B. the death claim will be rejected C. the application will be voided D. the beneficiary will receive the full death amount of it is determined that the applicant qualified for the policy
D. the beneficiary will receive the full death amount of it is determined that the applicant qualified for the policy
which of the following is TRUE regarding the insurance amount in a credit life policy? A. the creditor may insure the debtor for an unlimited amount of coverage B. allowable amount of coverage is determined by the state insurance commissioner C. the amount of coverage can be greater than the amount owed D. the creditor can only insure the debtor for the amount owed
D. the creditor can only insure the debtor for the amount owed
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 issued, what would be the policy's effective date? A. The date of policy delivery B. The date of issue C. The date of application D. The date of medical exam
D. the date of medical exam
which of the following insurance arrangements will be appropriate for a parent buying life insurance policy on a child where the parent is a policy owner? A. an irrevocable beneficiary B. a buy-sell agreement C. family term ride D. third-party ownership
D. third-party ownership
all of the following are true regarding the guaranteed insurability rider EXCEPT A. the insured may purchase additional coverage at the attained age B. the insured may purchase additional insurance up to the amount specified in the base policy C. it allows the insured to purchase addition amounts of insurance without providing insurability at specified dates or events D. this rider is available to all insured with no additional premium
D. this rider is available to all insured with no additional premium
which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A. those who have worked in the company for at least 3 years B. those who have dependents C. those who have no history of claims D. those who have been insured under the plan for at least 5 years
D. those who have been insured under the plan for at least 5 years
what is the purpose of the agent's report in the application process? A. to explain policy features and benefits to the applicant B. to provide medical information about the applicant's to the underwriters C. to give disclosure to the applicant D. to provide additional information about the applicant to the underwriters
D. to provide additional information about the applicant to the underwriters
an employee is insured under her employer's group life plan. If she terminated her group coverage, which of the following statements is INCORRECT A. The insured may choose to convert to term or permanent individual coverage B. The insured would not need to prove insurability for conversion policy C. The insured may convert coverage to an additional policy within 31 days D. premium premium for individual coverage will be based upon the insured's attained age
A. The insured may choose to convert to term or permanent individual coverage
What is the purpose of the buyer's guide? A. To allow the consumer to compare the costs of different policies B. To provide the name and address of agents/producer issuing the policy C. To list all policy riders D. To provide information about the issued policy
A. To allow the consumer to compare the costs of different policies
an individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits rider. which of the follow is true regarding taxation of the accelerated benefits? A. a portion of the benefit up to a limit is tax free; the rest is taxable income B. principal is tax free, but interest is taxed C. the entire benefit will be received tax free D. the entire living benefit is considered taxable income
A. a portion of the benefit up to a limit is tax free; the rest is taxable income
what is the term for how frequently a policy owner is required to pay the policy premium? A. mode B. schedule C. grace period D. consideration
A. mode
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT A. other insurance coverage B. family health history C. alcohol and tobacco consumption D. recent surgeries
A. other insurance coverages
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to A. purchase a single premium policy for a reduced face amount B. purchase a term rider to attach to the policy C. Pay back all premiums owed plus interest D. receive payments for a fixed amount
A. purchase a single premium policy for a reduced face amount
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A. signed waiver of premium B. statement of good health C. payment of premium D. delivery receipt
A. signed waiver of premium
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A. the insured's premiums will be waived until she is 21 B. the premiums will become tax deductible until the insurer's 18th birthday C. since it is the policy owner, and not the insured, who has become disabled, the life insurance policy will not be affected D. the insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.
A. the insurer's premiums will be waived until she is 21
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) A. Attending Physician Statement B. Inspection report C. Medical Information Bureau report D. Medical examination
B. Inspection report
What is the main justification for the eco duran (r) of the State Insurance Department? A. To protect the state from harmful practices of companies and producers B. To protect the public C. To protect companies from malicious law suits D. To protect producers from the National Association of Insurance Commission
B. To protect the public
In forming an insurance contract, when does acceptance usually occur? A. When an insured submits and application B. When an insurer's underwriting approved coverage C. When an insurer delivers the policy D. When an insurer receives an applications
B. When an insurer's underwriting approved coverage
Which of the following best describes the aleatory nature of an insurance contract? A. policies are submitted to the insurer on a take-it-or-leave-it basis B. exchange of unequal values C. only one of the parties being legally bound to the contract D. ambiguities are interpreted in favor of the insured
B. exchange of unequal values
the policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should the policy owner choose? A. fixed amount option B. interest only option C. life income with period certain D. joint and survivor
B. interest only option
which is the appropriate action by the insurer is a prospective insured submitted an incomplete application? A. fill in the blanks to the best of the insurer's knowledge B. return the application to the applicant for completion C. issue a policy anyway since the application has been submitted D. ask the producer who solicited the policy to complete and resign the application
B. return the application to the applicant for completion
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than A. prior to filling out an applicator insurance B. with the policy C. upon the issuance of the policy D. within 30 days after the first premium payment was collected
B. with the policy
for how long is an insurance company allowed to defer policy loan requests? A. 30 days B. 60 days C. 6 months D. 1 year
C. 6 months
under which of the following circumstances would ensure pay accelerated benefits? A. An insured is looking for a way to put her daughter through college B. A couple wants to build a house and would like to make a larger down payment C. An insured is diagnosed with cancer and needs help paying for her medical treatment D. A couple is nearing retirement and needs steady stream of income
C. An insured is diagnosed wi cancer and needs help paying for her medical treatment
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT A. Applicant's present physical condition B. Applicant's present occupation C. Applicant's past income D. Applicant's past medical history
C. Applicant's past income
Which of the following best describes fixed-period settlement option? A. The death benefit must be paid out in a lump sum within a certain time period B. Income is guaranteed for the life of the beneficiary C. Both the principal and interest will be liquidated over a selected period of time D. Only the principal amount will be paid south within a specified period of time
C. Both the principal and interest will be liquidated over a selected period of time
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to A. Lower it's insurability standards B. Refuse to issue the policy C. Charge a higher premium D. Require a yearly medical examination
C. Charge a higher premium
All of the following information about the applicant is identified in the General Information section of a life insurance application A. Gender B. Occupation C. Education D. Age
C. Education
which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? A. Stock Company B. Reciprocal Association C. Fraternal Benefit Society D. Mutual Company
C. Fraternal Benefit Society
A life insurance policy has a legal purpose if both of which of the following elements exist? A. Offer and counteroffer B. Policy owners and named beneficiaries C. Insurable interest and consent D. Underwriting and reciprocity
C. Insurable interest and consent
Which of the following best describes a misrepresentation? A. Making a maliciously critical statement that is intended to injure another person B. Discriminating among individuals of the same insurance class C. Issuing sales material with exaggerated statements about policy benefits D. Making a deceptive or untrue statement about a person engaged in the insurance business
C. Issuing sales material with exaggerated statements about policy benefits
if an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practice has been provided, the report may contain all of the following information EXCEPT the applicant's A. habits B. prior insurance C. ancestry D. credit history
C. ancestry
an applicant is denied insurance because of information found on a consumer report which of the following requires of the insurance company supplied up come with the name and address of the consumer reporting company? A. conditional report B. disclosure rule C. fair credit reporting act D. consumer privacy act
C. fair credit reporting act
When would a misrepresentation on the insurance application be considered fraud? A. when the application is incomplete B. any misrepresentation is considered fraud C. if it is intentional and material D. never; statements by the applicant are only representations
C. if it is intentional and material
A person takes out a loan in order to pay off his house. He dies several years later, having paid off only a small portion of the debt. Which of the following is true? A. the lender will not recover this money B. the federal government will pay the balance to the lender C. if the lender has credit insurance, this amount will be paid to the lender D. the state government will pay the balance to the lender
C. if the lender has credit insurance, this amount will be paid to the lender
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A. must be advised that a copy of the report is available to anyone who requests it B. may sue the reporting agency in order to get inaccurate data corrected C. must be informed of the source of the report D. are entitled to obtain a copy of the report from the party who ordered it
C. must be informed of the source of the report
The insured discover that one of the applicants for life insurance missed a couple questions on the application. What must the insurer do with the application? A. acknowledge the missed questions with a signature and continue the policy issue process B. proceed with issuing a policy C. return to the applicant for completion D. answer the missed questions for the applicant
C. return to the application for completion
In insurance, an offer is usually made when A. the agent hands the policy to the policy owner B. an agent explains a policy to a potential applicant C. the applicant submits an application to the insurer D. the insurer approves the application and receives the initial premium
C. the applicant submits an application to the insurer
which of the following names beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death? A. the wife of the deceased insured B. the former wife of the deceased insured C. the minor son of the insured D. a business partner of the insured
C. the minor son of the insured
To maintain an insurance producer license, how many continuing education hours must a producer take for each licensing period? A. 24 B. 12 C. 10 D. 3
A. 24
All of the following could own group life insurance EXECPT A. A group needing low cost life insurance B. An employer group C. An alumni group D. A debtor group
A. A group needing low cost life insurance
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unaavailble to lower echelon employees. this plan would be funded with before tax corporate dollars, and it does not meet government approval standards. This annuity plan is subject to: A. A nonqualified plan B. An executive annuity plan C. Subject to government standards D. Illegal
A. A nonqualified plan
All the following are duties and responsibilities of producer's at the time of application EXCEPT A. Change any incorrect statement on the application by personal initialing next to the corrected statement B. Explain the nature and type of any receipt the producer is giving the applicant C. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information D. Check to make sure that there are no unanswered questions on the application
A. Change any incorrect statement on the application by personal initialing next to the corrected statement
Who assumes control over an insurance company's funds and management if they become insolvent? A. Department of Insurance B. The policyholders or stock owners of the company C. State attorney general D. National Association of Insurance Commissioners
A. Department of Insurance
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? A. Inspection Report B. Medical Information Bureau's Report C. Agent's Report D. Underwriter's Report
A. Inspection Report
Which of the following statements is true, regarding the authority of a lender? A. It can require its borrowers to obtain credit insurance B. It can require its borrowers to obtain credit insurance from a particular source C. The only authority it has is the amount of money that can be borrowed within a given period of time D. 1 & 2
A. It can require its borrowers to obtain credit insurance
Which of the following best describes the MIB? A. It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance B. It is a government agency that collects medical information on the insured from the insurance companies C. It is a member organization that protects insured against insolvent insurers D. It is a rating organization for health insurance
A. It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance
All of the following would be considered an insurance transaction EXECPT A. Negotiating coverage B. Obtaining an insurance license C. Soliciting a policy D. Advising a policyholder regarding a claim
B. Obtaining an insurance license
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a A. Warranty B. Premium Receipt C. Statement of Good Health D. Backdated Receipt
B. Premium Receipt
In which of the following instances would the premium be tax deductible? A. Premiums paid by employer on the life of a key person B. Premiums paid by employer on a $30,000 group life term insurance plan for employees C. Premiums paid individual on his/her own life insurance D. Premiums paid by mother on her sons policy
B. Premiums paid by employer on a $30,000 group life term insurance plan for employees
Which of the following best details the underwriting process for life insurance? A. Reporting and rejection of risks B. Selection. classification, and rating of risks C. Solicitation, negotiation and sale of policies D. Issuance of policies
B. Selection, classification, and rating of risks
In terms of parties to a contract, which of the following does NOT describe a competent party? A. The person must be mentally competent to understand the contract B. The person must have at least completed a secondary education C. The person must not be under the influence of drugs or alcohol D. The person must be of legal age
B. The person must have at least completed a secondary education
what is the purpose of a conditional receipt? A. It serves as proof that applicants has been determined insurable B. It is given only to applicants who fully prepay the premium C. It is intended to provided coverage on a. date prior to policy issue D. It guarantees that a policy will be issued in the amount applied
C. It is intended to provide coverage on a date prior to the policy issue
which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? A. Paid-up additions B. Dividend Accumulation option C. Paid-up option D. Accumulation at Interest
C. Paid-up Option
Which of the following will be included in a policy summary? A. Comparisons with similar policies B. Primary and secondary beneficiary designations C. Premium accounts and surrender values D. Copies of illustrations and applications
C. Premium accounts and surrender values
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 is provided. Which policy provision allows this? A Incontestable clause B. Grace period C. Reinstatement provision D. Waiver of premium provision
C. Reinstatement provision
A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wished to retain all of the rights of ownership. The policy owner should have her husband named as the A. Contingent Beneficiary B. Irrevocable Beneficiary C. Revocable Beneficiary D. Secondary Beneficiary
C. Revocable Beneficiary
which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? A. Standard risk requires extra rating B. Standard risk is also known as high exposure risk C. Standard risk is representative of the of majority people D. Standard risk pays a higher premium than a substandard risk
C. Standard risk is representative of the of majority people
All of the following are true about variable products EXECPT A. The cash value is not guaranteed B. Policy owners bear the investment risk C. The premiums are invested in the insurer's general account D. The minimum death benefit is guaranteed
C. The premiums are invested in the insurer's general account
In the replacement of a policy, who notifies the existing insurer that a policy is being replaced? A. The policyholder B. Notification is not required C. The replacing company D. The Commissioner
C. The replacing company
Which is true about a spouse term rider? A. The rider is decreasing term insurance B. Coverage is allowed up to age 75 C. The rider is usually level term insurance D. Coverage is allowed for an unlimited time
C. The rider is usually level term insurance
What is the purpose of the buyer's guide? A. To list all policy riders B. To provide information about the issued policy C. To allow the consumer to compare the costs of different policies D. To provide the name and address of the agent/producer issuing the policy
C. To allow the consumer to compare the costs of different policies
Why should the producer personally deliver the policy when the first premium has already been paid? A. To find out how the family has been doing since the initial presentation B. To make sure the policy is not stolen or lost C. To help the insured understand all aspects of the contract D. To ensure the producer gets paid commission
C. To help the insured understand all aspects of the contract
Which of the following types of policies allows for a flexible premium and variable investment component? A. Variable Whole Life Insurance B. Whole Life Insurance C. Variable Universal Life Insurance D. Guaranteed Issue Variable Life Insurance
C. Variable Universal Life Insurance
Which of the following are unfair and deceptive practices? A. Misrepresentation B. False advertising C. Boycott, coercion, and intimidation D. All the above
D. All the above
Which of the following would be required to hold a license as an insurance producer? A. A person who receives premiums for existing policies at the insurer's principal office B. A full-time salaried employee who counsels his employer regarding insurance C. A company officer conducting market research and prospecting D. An employee of an insurer who receives commissions only on a few policies a year
D. An employee of an insurer who receives commissions only on a few policies a year
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A. Legal purpose B. Contract of adhesion C. Acceptance D. Consideration
D. Consideration
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called A. Waiver of cost of insurance B. Accelerated benefits C. Cost of living D. Guaranteed insurability
D. Guaranteed insurability
Who makes that the medical information bureau? A. Hospitals B. Former insured C. Physicians and Paramedics D. Insurers
D. Insurers
In the underwriting process, it was determined that the applicant for life insurance is in poor health and have some dangerous habits. Which of the following is true concerning the policy premium? A. It will likely be the average premium issue to standard risks B. The applicants habits and health do not affect the premiums C. It will likely be lower because the applicant has a preferred risk D. It will likely be higher because the applicant is a substandard risk
D. It will likely be higher because the applicant is a substandard risk
A married couple owns a permanent policy which covers both of their lives and pays the benefit only upon the death of the first insured. Which policy is that? A. Survivorship Life Policy B. Second-to-Die C. Family Income Policy D. Joint Life Policy
D. Joint Life Policy
An applicant who lives in a state in which a producer is not licensed travels to the state in which the producer is licensed to apply for a policy. This is considered to be A. Unfair B. A violation of insurance law C. A misdemeanor D. Legal
D. Legal
what is a definition of a unilateral contract? A. two or more parties go into a contract understanding there may be an unequal exchange of value B. one author: the company wrote the contract; the insured must accept it as written C. If one party makes a condition, the other party can counteroffer D. One-sided: only one party makes an enforceable promise
D. One-sided: only one party makes an enforceable promise
An insured has a life incurable policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called A. One-year term purchase B. Accumulation at interest C. Reduction of premiums D. Paid-up additions
D. Paid-up additions
Which of the following individuals must have insurance interest in the insured? A. Beneficiary B. Underwriter C. Producer D. Policy owner
D. Policy owner
Under the Fair Credit Reporting Act, if the consumer challengers the accuracy of the information contained in his or her report, the reporting agency must A. Defend the report of the agency feels it is accurate B. Change the report C. Send an actual copy of the entire report or the consumer D. Respond to the consumer's complaint
D. Respond to the consumer's complaint
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A. Inducing the insured to drop a policy in favor of another woman is not in the insured's best interest B. Charging a client a higher premium for the same policy is another client in the same insuring class C. Making deceptive statements about a competitor D. Telling a client that his first premium will be waived if he purchases the insurance policy today
D. Telling a client that his first premium will be waived if he purchases the insurance policy today
All of the following statements concerning the use of life insurance as an executive bonus are correct EXCEPT A. Any type of insurance policy may be used B. The employer pays a bonus to a selected employee to fund the policy C. It is considered a non-qualified employee benefit D. The policy is owned by the company
D. The policy is owned by the company
which is TRUE about the cash surrender non-forfeiture option? A. after the cash surrender. the insured is covered for a grace period of one month B. the policy remains active for some time after the policyholder opts for cash surrender C. the policyholder receives the original cash value of the policy D. funds exceeding the premium paid are taxableas ordinary income
D. funds exceeding the premium paid are taxableas ordinary income
your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. what would be the right policy for this client? A. interest-sensitive whole life B. life annuity with period certain C. increasing term D. limited pay whole life
D. limited pay whole life
