life insurance questions for exam

What is an insurance contract that identifies individuals by relationship to a specific organization?

Group insurance

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

Which statement regarding whole life insurance is accurate?

Insurance coverage can continue for life

What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?

Less than the policy's face amount

All of the following is information that is reasonably appropriate to determine the suitability of an annuity recommendation EXCEPT

Level of education

Laura added a children's rider to her life insurance policy. What type of coverage was added?

Level term

Which of the following is a syndicate established by a group of insurers to share underwriting duties?

Lloyd's organization

When determining the suitability of an annuity for a consumer, the insurance provider is obligated to

Make reasonable efforts to fit the annuity with the consumer's needs

What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual?

Management of proceeds would be provided

Why do insurers require a minimum number of employees participate in a group insurance plan?

Minimize adverse selection

During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT

Misstatement of age in the application

Which of the following is TRUE about a qualified retirement plan that is "top heavy"?

More than 60% of plan assets are in key employee accounts

Life insurance premiums are computed on what three factors?

Mortality, interest, expenses

When is it permissible for a producer to provide an incomplete illustration in the sale of a life insurance policy?

Never under any circumstances

Which of the following is a TRUE statement regarding universal life insurance?

Policy indicates how much of each premium is used toward company expenses

Straight whole life insurance can be accurately described in all of these statements EXCEPT

Policy protection normally expires at age 65

Dividends from a mutual insurance company are paid to whom?

Policyholders

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premium payments are waived in the event the premium payor dies or becomes disabled

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?

Producer

Under Federal Law, which of the following actions may result in a producer becoming imprisoned?

Producer embezzling funds from an insurer

What is considered interstate travel under the Federal Fraud and False Statements Act?

Puerto Rico

Which of these occurrences could improve an insurer's ability to reduce premiums?

Rate of earnings on investments increase

Which of these statements is NOT a characteristic of the law of large numbers?

Rates can be calculated to compensate for losses

Which of the following is NOT a dividend option for a life insurance policy?

Receiving the entire policy cash value

Which of the following will facilitate nonresident licensing in the state of Connecticut?

Reciprocity agreement

Which of the following can be defined as "the potential for loss"?

Risk

A life insurance producer licensed in their state is authorized to

Solicit, receive and forward applications to the insurer

Licensed producers in Connecticut are authorized to

Solicit, receive, and forward applications to the insurer

What type of risk involves the potential for loss AND the possibility for gain?

Speculative

Which one of these is NOT considered to be an element of an insurable risk?

Speculative risk

XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this?

Split-dollar

Who regulates an insurer's claim settlement practices?

State insurance departments

Which of these is a true statement regarding survivor benefits under a qualified retirement plan?

Survivor benefits can only be waived with the written consent of a married employee's spouse

Which group is the Do Not Call Registry designed to protect against?

Telemarketers

Under the Fair Credit Reporting Act, which statement is true?

The consumer who was investigated must be advised that credit, insurance, or employment was denied because of an unfavorable report

A temporary insurance license may be issued without examination to

The executor of the estate of a deceased licensed producer

Which of the following is true regarding a person receiving a waiver of premium benefit?

The insured must be disabled for a period of time

Which of these must be disclosed in a universal life policy?

The policy's surrender charges

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?

The premium to purchase the coverage comes from the policy's cash value

When does the owner's contractual rights begin under an individual annuity contract?

Time of purchase

When an individual buys insurance under a threat made by a producer, a violation has occurred under

Unfair Trade Practice Act

When does the producer give a premium receipt for a life insurance application?

When the initial premium has been paid with the application

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a false statement could lead to loss of coverage

A producer working for an insurance company may be personally liable for

acts performed which are prohibited in the agency contract

The absolute assignment of a life insurance policy results in

all incidents of ownership transferred to the assignee

An insurer operating in the U.S. but headquartered outside the U.S. is

an alien insurer

In a qualified retirement plan, the yearly contributions to an employee's account

are restricted to maximum limits set by the IRS

Voluntarily terminating an insurance policy is also known as

cancellation

An employee welfare plan exempt from ERISA regulations would be

church plans

The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of

consideration

An annuity's accumulation period may

continue after the purchase payments stop

When a sum of money undergoes capital liquidation, that sum will

decrease in size

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as

defamation

A qualified profit-sharing plan is designed to

distribute a portion of company earnings to its employees

The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called

nonforfeiture options

Employers often purchase life insurance on a key employee in order to

pay for finding and training a replacement if the employee dies prematurely

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to

periodically purchase additional insurance

A signed good health statement may be requested by a life producer at the time of

policy delivery

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a

profit-sharing plan

Pointing out to a prospective client that the life insurance policy you are presenting is covered by the Connecticut Life and Health Insurance Guaranty Association is

prohibited by law

A cease and desist order issued by the Commissioner against a producer

prohibits a specific practice listed in the order

The automatic premium loan provision can be accurately described as a

provision that provides a policy loan to pay any premiums by the end of the grace period

When a lapsed policy's premium has been paid current, it has the potential of being

reinstated

The interest credited to the cash values of personally-owned non-qualified annuities is considered

tax-deferred

A producer must be given how many days notice for a scheduled hearing?

30

A producer must report to the Commissioner any administrative action taken against her by any governmental agency within

30 days

A producer must report to the Commissioner any administrative action taken against her by any governmental agency within

30 days after the final disposition

Which of these is NOT an advantage of term life insurance?

A cash benefit will be provided if the insured is alive at the end of the policy period

Which of the following combinations best describe a universal life insurance policy?

A flexible premium deposit fund and a monthly renewable term insurance policy

An insurance company writing business in a state other than the one in which it is domiciled is called

A foreign

Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy?

A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy

The highest mortality rate belongs to which group?

Age 70 males

Which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and 100% survivor annuity?

Ages 71 and 73

Which is an accurate description of the premium in a graded premium life insurance policy?

Annual increases in premium for a stated number of years then remains level

An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?

Applicant has a right to receive a copy of the report

Traditional individual retirement annuity (IRA) distributions must start by

April 1st of the year following the year the participant attains age 70 1/2

In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

Automatic premium loan

Which activity requires an individual to be licensed as a consultant, rather than as a producer?

Charging a fee for contracted insurance advisory services

Which of the these is NOT a true statement of the war exclusion?

Civil insurrections apply

Licensed insurance consultants derive their income from

Clients

In Connecticut, continuing education courses must be approved by the

Commissioner

What must be given to a life insurance applicant when the agent receives an application and the initial premium?

Conditional receipt

Which report contains information regarding an individual's general reputation and credit standing?

Consumer report

An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using this criteria, an insurance policy is considered what type of contract?

Contract of utmost good faith

Proceeds of a life settlement contract could be subject to the claims of

Creditors

Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners?

Cross-purchase agreement

What effect does interest income have upon insurance premiums?

Decreases premium

What kind of life policy typically offers mortgage protection?

Decreasing term

Connecticut law requires the Human Immunodeficiency Virus (HIV) consent form to

Disclose the types of individuals or organizations that may receive a copy of the test results

Which statement about group life insurance is INCORRECT?

Each participant requires evidence of insurability

When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT

Employee benefits

Which is a prohibited insurance practice?

Failing to remit premiums to the insurance company

Which of the following would be considered a violation of Connecticut insurance law?

Failure to remit premium in a timely manner

When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement?

Final contract settlement will be reduced

An insurance policy that can also be classified as a securities product is called

variable life

A life insurance policy in Connecticut becomes incontestable after it has been in force for

2 years

What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?

100%

The maximum prison sentence given under federal law for unfair and deceptive insurance practices is

15 years

A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?

$16,000 was received tax-free and $4,000 as ordinary income

An individual working part-time has a gross income of $5,000 for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

$5,000

The free look period provided in a life insurance policy is usually

10 days

A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of

10%

In Connecticut, a producer cannot use his/her license principally for writing controlled business. In order to conform to this requirement, annual premiums collected on controlled business cannot exceed ___ of total premiums.

10%

A temporary license may be issued for no longer than

180 days

Which of the following is generally a form of group credit life insurance?

Decreasing term insurance

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?

Extended term nonforfeiture option

When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement?

Eye examination

Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?

Fluctuate with changes in the cash account

An accelerated (living) benefit rider in a life insurance policy may provide funds to an insured who

Is expected to remain in a nursing home for life

The amount received for a life insurance policy in a life settlement is

Less than the death benefit

What does a fixed life annuity offer protection against?

Savings depletion due to longevity

Which of these factors does NOT influence an individual's need for life insurance?

Self-maintenance expenses

Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company?

Spendthrift clause

Sales material used in the marketing of market value adjusted annuities in Connecticut must clearly illustrate

That the market value adjustment can be either upward or downward

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

The participating employee

Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate

for federal income tax reasons

The Insurance Commissioner does NOT have authority to examine the business affairs and financial conditions of

group policyowners

An annuity which starts paying monthly benefits within a month after issuance is called a(n)

immediate annuity

A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the

insured is expected to be confined to a nursing home for life

In Connecticut, a domestic insurance company is defined as a company that

is incorporated and formed in Connecticut

If a producer sells a life insurance policy without using an illustration, even though one is available from the insurer, then

the applicant must sign a statement that no illustration was provided

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The transfer of Rick's IRA account balance to his surviving spouse qualifies for

the marital deduction

A material change in a modified endowment contract (MEC) results in

the seven pay test, adjusted for cash value, applies again