Life Insurance - Exam Simulation - Wrong Answers to Study 3......

In which of the following scenarios would a producer be allowed to obtain insurance through an unauthorized insurer? A - Under no circumstances B - If the producer had no knowledge that the company is unauthorized C - If there are no authorized insurers for a specific type of coverage in this state D - If the insurer needs to investigate insurance claims

If there are no authorized insurers for a specific type of coverage in this state

Jane was granted a temporary license for her deceased's husband's agency on March 1st. On May 1st she processed an application for life insurance on a new applicant. A - Jane's license had expired B - The application is valid as submitted C - The application was processed without a valid license D - The application is not valid as submitted

The application was processed without a valid license

An IRA contribution can be made from which of the following? A - Stocks and bonds B - Cash C - Life Insurance D - Collectibles

Cash

Which of the following losses would likely be covered under the Accidental Death rider? A - Death resulting from a long-term disability B - Death caused by a head-on collision C - Suicide D - Mountain-climbing accident

Death caused by a head-on collision

All of the following are descriptions that group life insurance policies must conform to, EXCEPT A - Debtor B - Seekers of insurance C - Employer D - Professional Association

Seekers of Insurance

All of the following are advantages of a qualified retirement plan EXCEPT A - The income at retirement is tax free B - The contribution is deductible to the employer C - The contribution is not taxable to the employee when made D - The funds grow tax deferred

The income at retirement is tax free

Which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy? A - They are tax deductible B - They are received tax free C - They are considered taxable income D - They are taxable to the insured's estate

They are received tax free

When must a producer notify the Commissioner of Insurance of a change of place of business address? A - 3 days B - 10 days C - 30 days D - 60 days

10 days

In a replacement situation, all of the following are prohibited practices EXCEPT A - Not providing the client with the sales materials used in the solicitation B - Borrowing 50% of a policy's cash value to fund a new life insurance contract C - Not listing an existing policy that will be surrendered on the new policy application D - Submitting a list of replaced policies only after the new policy is delivered

Borrowing 50% of a policy's cash value to fund a new life insurance contract

All of the following are required for HIV testing EXCEPT A - If HIV is present, the applicant's Physician must be notified B - The applicant must be notified that HIV testing will be done C - If HIV is present, the person may be rated, but they cannot be declined.

If HIV is present, the person may be rated, but they cannot be declined. (A person with HIV can be declined)

The manner and or frequency that the policyowner pays the policy premium is called? A - Premium mode B - The grace period C - Premium Clause D - Premium consideration

Premium mode

Which of the following individuals would be a likely candidate to purchase a deferred annuity? A - Payor benefit B - Reinstatement C - Return of premium D - Guaranteed insurability

Reinstatement

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT A - It builds cash value B - If the insured lives to age 100, the policy matures, and the face amount is paid to the insured C - It does not have a guaranteed death benefit D - It is funded by a level premium

It does not have a guaranteed death benefit

An agent delivers a policy to an applicant, who pays the initial premium but refuses to submit a statement of good health. Which of the following terms best describe what the applicant has violated? A - Consideration B - Representation C - Adhesion D - Contractual Agreement

Consideration

All of the following are true of a nonqualified deferred compensation plan EXCEPT A - It can be discretionary B - Contributions are tax deductible C - It is a contractual agreement whereby the employee agrees to defer receipt of a portion of his compensation until retirement, disability or death D - It does not require IRS approval

Contributions are tax deductible

According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT A - If an applicant is declined for an insurance policy, he or she has no right to know what was in the report B - It protects consumers against the circulation of inaccurate information. C - It ensures that consumer reporting agencies are fair in their treatment of consumers. D - Investigative consumer reports can be used to obtain information on the applicants character and reputation

If an applicant is declined for an insurance policy, he or she has no right to know what was in the report

Where are premiums from fixed annuities invested? A - A hedge fund B - A separate account C - A general account D - A variable annuity

A general account

What does the application of contract of adhesion mean> A - The insurer may go to another for representation B - It makes sure that the insured does not get more than the value of the loss C - Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured D - The holder of the contract has the ultimate power of promise.

Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? A - Both guarantee payments for the life of the beneficiary B - Both guarantee that the principal and interest will be fully paid out. C - The amount of payments is based on the recipients life expectancy

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

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be A - Increasing term B - Flexible term C - Level Term D - Decreasing Term

Decreasing Term

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sound worse that it is. This is an example of? A - Twisting B - False advertising C - Controlled business D - Defamation

Defamation

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. They beneficiary will receive? A - $30,000 B - $70,000 C - $100,000 D - A survivor benefit determined by the insurance company

$70,000

Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? A - Applicants who may require a larger death benefit in the future should buy convertible term insurance B - Applicants concerned with the increasing cost of living should purchase increasing term C - Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan D - Employers looking to provide effective group life insurance for their employees may choose annual renewable term

Applicants who may require a larger death benefit in the future should buy convertible term insurance

When a whole life policy is surrendered for it's nonforfeiture value, what is the automatic option? A - Paid up additions B - Cash surrender value C - Reduced paid up D - Extended term

Extended term

if employees can no longer participate in group insurance, they are allowed to move to an individual life policy without proving insurability. this is due to? A - Reinsurance B - Conversion Rights C - Replacement D - Labor union groups

Conversion Rights

Dividends received on participating life insurance policies are? A - Not Taxable because they are a return on your investment B - Taxable because they are a return of unused premiums C - Not taxable because they are a return of unused premiums D - Taxable becuase they are a return on your investment

Not taxable because they are a return of unused premiums

Information about a policy's free-look period must appear? A - In the buyer's guide B - In all sales materials for that policy C - On the first page of the policy D - In any illustrations issued regarding that policy

On the first page of the policy

An insured worked for a company that provided a 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 the 20 days of coverage B - $25,000 C - $12,500, less the premium required for 20 days of coverage D - Nothing

$25,000, less the premium required for the 20 days of coverage

Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy? A - Use it for emergency expenses B - Secure a car loan next year C - Make a down payment on a home in 5 years D - Fund a returement

Use it for emergency expenses

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will? A - Reduce to the pre-surrender value B - Continue to increase C - Remain the same D - Decrease over time

Continue to increase

According to Life Insurance replacement regulations, which of the following would be an example of policy replacement? A - A lapsed policy is reinstated within a specific timeframe B - A policy is reissued with a reduction in cash value C - A term policy expires, and the insured buys another term life policy D - Term insurance is changed to a Whole Life policy

A policy is reissued with a reduction in cash value

The reduction of premium option uses the dividend to reduce? A - The premium on any other policy owned by the policyowner B - Next year's premium C - This year's premium D - The previous year's premoum

Next year's premium

The purpose of the Fair Credit Reporting Act is to? A - Ensure coverage for all applicants B - Protect consumers against the circulation of innacurate or obsolete personal or financial information. C - Protect the insurer from adverse selection D - Ensure the consumers receive a copy of investigative consumer reports

Protect consumers against the circulation of innacurate or obsolete personal or financial information.

In whole-life insurance, when is the policy cash value scheduled to equal the face amount? A - When the insured paid up all policy loans B - It depends on the type of whole policy C - At the insured's age 100 D - By the policy's 10th year

At the insured's age 100

Which statement is an accurate description of life insurance policy dividends? A - They are guaranteed to be paid and they are taxable as income B - They are likely to be larger in nonparticipating policies C - They are not taxable and are not guaranteed D - They are paid as return of premium to policyowners by stock insurers

They are not taxable and are not guaranteed