Life Insurance for ExamFX second set
Max fine for violating insurance code
$25,000
Max agent licensing fee
$50
Time the results of a licensing exam are valid
12 months
An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?
90
After license renewal date for agents to pay fees and complete Continued Education before license expires
90 days
All of the following are nonforfeiture options EXCEPT A.) Extended Term B.) Reduced paid-up C.) interest only D.) Non-qualified IRA
C.) Interest only
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured , and to whom the benefits will be paid.
Insuring clause
What document must be provided when replacing a policy?
Notice regarding replacement
Nonforfeiture options must offer one of the three choices. What are the three choices ?
Reduced paid-up, Extended-term, shortened benefit period
In the executive bonus plan, who is the owner and who pays the premium?
The executive
The usage of words or symbols that are similar to what entity is forbidden?
The federal government
In terms of parties to a contract, which of the following does NOT describe a competent party?
The person must have at least completed secondary education
regulations regarding replacement apply to which type of policy?
renewable
regulations regarding replacement apply to ?
renewable term
statements of an applicant on an application are called
representations
a rated policy is issue to which risk class
substandard
An agent discovers his new client was from a referral, the only thing he/she can do is ?
thank them
regarding credit life insurance who is responsible for reporting termination of debt to the creditor?
the creditor
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 to another and what is the tax consequence of a direct transfer?
$10,000, no tax consequence
how long do you have after receiving a request from the commissioner to hold a hearing
10 days
Amount of Administration, attorney or CPA experience required before applying to be a commissioner?
5 years
What percentage of Continued Education has to be in a classroom?
50%
The minimum number of credits for partially insured status for Social Security Benefits is ?
6 hours
Max duration of a temp license issued per person
6 months
How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer?
60 days
According to the state nonforfeiture law, insurers must offer one of the following nonforfeiture options EXCEPT A.) Reduction of premium B.) REduced paid-up C.)Extended Term D.) Shortened benefit period
A.) Reduction of premium
What is another term for an authorized insurer?
Admitted
Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insureds death? A.) The wife of the deceased insured B.) The former wife of the deceased insured C.) A minor son of the insured D.) A business partner of the insured
C.) A minor son of the insured
An insurance professional advises a client regarding the benefits of her life insurance policy, in exchange for a fee. What is she called?
Counselor
All of the following are true EXCEPT A.) Annuity earnings are tax deferred B.) They must be approved by the IRS C.) Withdrawals are taxed D.) Employer contributions are not tax deductible
D.) Employer contributions are not tax deductible
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
In insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the insurance company to apply the dividends to increase the death benefit. What is this referred to as?
Paid-up additions
An insured purchased a life policy in 2010 and died in 2020. She misstated info on her policy. What will the insurance company do?
Pay the full benefit (because it's after 2 years of the application)
What nonforfeiture option provides coverage for the longest period of time?
Reduced- paid up
According the state nonforfeiture law for life insurance policies, insurers must offer ?
Reduction of premium
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
Which type of retirement account does not require the owner to start taking distributions at age 72?
Roth IRA
fixed annuities guarantee what?
a fixed rate of return
An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely
adjust the premium
applicants with fluctuating income may benefit the most by purchasing which policy?
adjustable whole life
who must be licensed as an insurance producer?
anyone who solicits insurance and receives commissions from insurance transactions
Employer contributions made to a qualified plan
are subject to vesting requirements
Contracts that are prepared by one party and submitted to another party on a take-it or leave-it basis are?
contracts of adhesion
What is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?
cost comparison methods
the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is?
credit life
what is another name for interest sensitive whole life insurance?
current assumption life
the term "fixed" in a fixed annuity refers to the?
death benefit
The insured chose his wife as his beneficiary and chose the life income settlement option. What will the insurance company not take into account?
his age at his death
Name some unfair trade practices that insurance agents should avoid at all costs.
misrepresentation, rebating, defamation, unfair discrimination
Commissioner must conduct annual exams of authorized insurers
o or before every 5 years
During replacement of life insurance, a replacing insurer must do what?
obtain a list of all life insurance policies that will be replaced
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner. What dividend option could she use?
paid-up option
Temporary licenses may NOT be renewed.
true
The accumulation at interest option is taxable
true
The application given to a prospective insure is NOT a consideration in an insurance policy
true
The minimum interest rate on an Equity Index policy is often based on the S&P 500.
true
dividends received by the owner of a mutual policy are NOT taxable
true
dividends received by the owner of a stock in a company are taxable
true
examples of third party ownership include key person and partnership insurance, as well as a policy written on the life of a child or spouse.
true
The main difference between immediate and deferred annuities is?
when the income payments begin
Upon the submission of a death claim, the insurer must pay the policy within what timeframe?
2 months
Commissioners term of office
2 years
duration of reporting period
2 years
An agent completed a CE course in 2019. Until what year must the agent keep the records of completion?
2023 (record keeping is required 4 years)
CE (continued education) to be completed during each reporting period
24 hours
During any calendar year, how much total volume of a licensed agents business must come from business other than controlled business?
25%
cease and desist was issued. How many days does the agent have to make the request
30
How long an agent has to request a hearing after receiving a cease and desist order
30 days
How long is the Grace period in extended policies
31 Days
How long must a producer keep continuing education records?
4 years
Equity indexed annuities do NOT earn lower interest rates.
true
IRA's can be funded with annuities but not with whole life policies.
true
If a policy lapses, the insured has 60 days to select a nonforfeiture option
true
It is the face amount that decreases on a decreasing term policy, not the premium
true
Taxation of qualified and nonqualified plans during accumulation is the same
true
extended term is the automatic nonforfeiture option chosen by the insurer
true
if the beneficiary selects the interest option, the taxable interest payments will vary, but the beneficiary can withdraw the principal at any time.
true
in the cash surrender nonforfeiture option, funds exceeding the premium paid are taxable as ordinary income
true
regarding credit life insurance, benefits are paid to the borrowers beneficiary
true
the paid up nonforfeiture option may be taken anytime there is a cash value
true
Someone who works 400 hours per year would NOT qualify for Keogh
true. a person has to work 1,000 hours.
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 to another and what is the tax consequence of a direct transfer?
$10,000, taxed on growth only
An insurer must acknowledge notice of a claim within how many days?
15 days
min required age for licensing
18
Min requirement for ethics training
2 hours
An insurance company is domiciled in one state and transacts in another, what is the best term for this?
foreign
In Texas, the commissioner of insurance is appointed by?
the governor
Whom do insurance agents represent?
the insurer
A "fixed period" payout does not guarantee payments for life of the beneficiary
true
A certificate of Authority is issued to group insurance participants
true
A participating policy can Pay Dividends to the Policy holder
true
An annuitant cannot outlive the income from an annuity
true
Being an insurance agent will NOT directly help to become an Insurance commissioner
true
Borrowed money from the cash value is NOT taxable
true
An absolute guarantee of truth on an application is called
warranty
The paid up addition option uses the dividend for?
To purchase a smaller amount of the same type of insurance as the original policy.
All of the following are mandatory life insurance policy provisions EXCEPT A.) Grace period B.) Policy backdating C.) Misstatement of age D.) Incontestability
B.) Policy backdating
An individual covered under a group life insurance policy may convert to any of the following EXCEPT A.) Level term B.) Universal life C.) Variable universal life D.) Whole life
A.) Level term
The automatic premium loan provision is activated when?
At the end of the GRACE period
A universal life policy has a. choice of 2 options. Option A and option B
True