Life Licensing Review Questions

Every 2 years

How often must producer licenses be renewed

To create an estate

Annuities can be used for all of the following reasons EXCEPT a. To accumulate retirement finds b. To liquidate an estate c. To fund a child's education d. To create an estate

Employees

For a retirement plan to be qualified, it must be designed for the benefit of the

Tax free

For personal life insurance, the lump-sum death benefit is received

Not tax deductible

Generally, the premium paid for personal life insurance is

Securities

If an agent wishes to sell variable life policies, what license must the agent obtain in addition to a life insurance license?

Conditional receipt

If an applicant for insurance submits the application and pays the premium at the same time, the insurer must give which of the following to the applicant

SEC, FINRA, and Departments of Insurance

Variable insurance and variable annuities are regulated by

Indemnity

Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Life annuity

Which type of annuity settlements stops when the annuitant dies?

1035 exchange

A policy owner cancels his life policy but instructs the insurance company to transfer the cash value of the policy to an annuity. This nontaxable transaction is called a

Universal Life, Option B

A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is

An appointment with the company

A producer CANNOT act as agent of an insurer without which of the following? a. A signed contract b. A certificate of insurance c. An appointment with the company d. A posted bond

A higher premium

A substandard risk compared to a standard risk would pay

Insurance company

According to agency law, an insurance producer always represents the

7 years

According to the Fair Credit Reporting Act, consumer reports are prohibited from reporting negative information about a customer after how many years?

Suggesting negotiations in settling the claim

All of the following are unfair claims settlement practices EXCEPT a. Refusing to pay claims without conducting a reasonable investigation b. Failing to adopt and implement reasonable standards for settling claims c. Failing to acknowledge pertinent communication pertaining to a claim d. Suggesting negotiations in settling the claim

Straight life

All other facts being equal, which of the following types of annuities will provide the highest monthly income? a. Installment refund b. Joint and survivor c. Straight life d. Life with a 10-year period

Single premium immediate annuity

An annuity begins payments to the annuitant one month after it is purchased. What type is it?

Fixed annuity

An annuity that guarantees a minimum rate of return is known as a

A domestic insurer

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered

Deferred

Annuities may be purchased with all of the following payment methods EXCEPT a. Single b. Level c. Flexible d. Deferred

6%

Excess contributions to a Roth IRA are subject to what tax penalty?

$3,000

If $100,000 of life insurance proceeds were used in a settlement option which is paid $13,000 per year for 10 years, which of the following amounts would be taxable annually?

Require evidence of insurability

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

25%

In a 12-month period, commissions earned from controlled business must NOT exceed what portion of producer's aggregate commissions?

Policyowners

Mutual companies are owned by

100

The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

Utmost good faith

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

The accumulation period

The time period during which an annuitant contributes that annuity is called

Money borrowed from the cash value is taxable

Which of the following is NOT true regarding policy loans? a. Money borrowed from the cash value is taxable b. Policy loans can be repaid at death c. An insurer can charge interest on outstanding policy loans. d. A policy loan may be repaid after the policy is surrendered

Remains constant over time

With a traditional WHOLE LIFE policy, the death benefit

Promptly forwarding premiums to the insurer

Which of the following is an example of an agent's fiduciary responsibilities? a. Reviewing the client's insurance coverage b. Offering additional coverage to a client c. Promptly forwarding premiums to the insurer d. Helping a client to file claims

Premium is based on the average age of the insureds.

Which of the following is true regarding a joint life policy?

If the insured dies after the end of the term, there is no death benefit to the beneficiary

Which of the following is true regarding term insurance? a. If the insured dies during the term, the policy only the accumulated cash value b. If the insured dies after the end of the term, there is no death benefit to the beneficiary c. The policy provides the smallest amount of coverage for the highest premium d. It cannot be renewed or converted to a permanent policy.

$1,000

A producer didn't realize that he had committed an act in violation of the Insurance Code. What would be the producer's penalty?

3 hours

What is the minimum required number of continuing education credits in ethics every licensing period? a. 2 hours b. 3 hours c. 5 hours d. 12 hours

30 days

A producer receives a written notification regarding a Commissioner's order against the producer. Within how many days must the producer request a hearing?

180 days

A temporary license is normally valid for

Rebating

An agent who offers a cash reward to a prospect for buying a policy is guilty of

Living longer than expected

What does an annuity protect the contract owner against?

Needs approach

The approach is determining the amount of personal life insurance that an applicant needs that considers such factors as the cost associated with death, costs of education children, and costs of housing is called the

Apparent

An agent's actions show what kind of authority?

Renews each year with an increased premium

An annually renewable term policy...

Policy delivery

If no receipt is issued at the time of application, a statement of good health is usually required at the time of

Master contract

In a single employer group plan, what is the name of a document that is issued to the employer?

Exchange of something of value by both parties

In an insurance contract, consideration refers to

Statement that must be true

In insurance contracts, a warranty is a

The uncertainty of financial loss

Risk insurance terminology refers to

A source of medical information to alert insurers to adverse medical history

The Medical Information Bureau (MIB) is

Annually renewable term

What type of life insurance is most commonly used for group plans?

The death benefit can be increased by providing evidence of insurability

An individual owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding this change? a. The death benefit cannot be increased b. The death benefit can only be increased when the policy has developed cash value c.The death benefit can only be increased by exchanging the existing policy for a whole life. d. The death benefit can be increased by providing evidence of insurability.

Foreign

An insurance company that is formed under the laws of another state is known as what type of insurer?

Hazards

Conditions that increase the chances of an insured loss occurring are referred to as

Life paid-up at age 65

Which of the following is an example of a limited-pay life policy?

The agent is disabled and the disability keeps him from working

A temporary license may be issued for which of the following reasons? a. The agent is disabled and the disability keeps him from working b. The agent is taking an extended vacation out of the country c. The agent's license has been temporarily suspended d. The agent has retired and is selling the business

Premiums

All of the following are examples of risk retention EXCEPT a. Self-Insurance b. Premiums c. Deductible d. Copayments

Blackout period

Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches the retirement age. What is the time period called during which the surviving spouse does not receive benefits?

Catastrophic medical expenses

The 10% early withdrawal penalty from an IRA can be waived for

Only the annuity owner

Which of the following has the RIGHT to surrender a deferred annuity contract? a. Only the annuity owner b. Only the insurance company for nonpayment of premiums c. The beneficiary after the owner's death d. Deferred annuity cannot be surrendered

Insured's close friend

All the following may have an insurable interest in the insured EXCEPT a. The spouse b. Insured's children c. The employer d. Insured's close friend

Underwriting

Which division of an insurance company is responsible for the selection, evaluation, and classification of risks?

Agent

Who acts on behalf of the principal?

Occupation

Among the applicants in the same class and life expectancy, which of the following factors can be used codetermine premium rates? a. Race b. Occupation c. Marital status d. Ancestry

Benefits stop at the annuitant's death

Which of the following is NOT true regarding an annuity certain? a. There are no life contingencies. b. It is a short-term annuity c. Benefits stop at the annuitant's death d. It will pay until a fixed amount is liquidated

Variable

An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have?

Beneficiary's consent

An insurance contract must contain all of the following elements to be considered legally binding EXCEPT a. Offer and acceptance b. Competent parties c. Beneficiary's consent d. Consideration

Single premium whole life

An insurance policy requires A PAYMENT of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called

Coercion

A person who attempts to unreasonably restrain or monopolize the business of insurance is guilty of

8am until 9pm

According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls?

Stop committing a particular violation

If the Commissioner issues a cease and desist order, that means the insurer must

If it is intentional and material

When would a misrepresentation on the insurance application be considered fraud

The plan is funded by permanent insurance only.

All of the following are true of key person insurance EXCEPT a. The employer is the owner, payor and beneficiary of the policy b. The key employee is the insured c. The plan is funded by permanent insurance only d. There is no limitation on the number of key employee plans in force at any one time

The life expectancy of the proposed insured

Life insurance companies use mortality tables to predict

Survivor Protection

Life insurance death benefits can be used to fund funeral and other expenses that could be otherwise difficult to fund with a loss of the insured's income. Which term is most closely associated with this?

Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction

All of the following violations may result in agent's imprisonment EXCEPT a. Embezzling funds from the insurer b. Knowingly obtaining information about a customer under false pretenses c. Engaging in the business of insurance after being convicted of breach of trust d. Failing to reports to the department a criminal prosecution taken against the agents in another jurisdiction

Defamation

An agent who deliberately makes a malicious statement about another insurance company is guilty of an illegal trade practice is called

The Fair Credit Reporting Act

Consumers are protect against the distribution of incorrect and obsolete information through which of the following? a. HIPPAA b. The Consumer Protection Credit Act c. The Fair Credit Reporting Act d. The Medical Information Bureau

Tax-sheltered Annuity 403(b)

Which of the following retirement plans is for nonprofit, charitable, education or religious organizations? a. 401 (k) b. SIMPLE Plan c. Tax-Sheltered Annuity 403(b) d. Simplified Employee Pension (SEP)

They can provide a lifetime income

Which of the following statements is true about annuities? a. They are never subject to income tax b. They use the same mortality tables as life insurance c. They are a type of life insurance d. They can provide a lifetime income

The insurance company

Who bears the investment risk in a fixed annuity

Tax deferred

In life insurance policies, cash value increases are

Decreasing Term

When the insured purchased a new home he wanted 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

Race

Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? a. Age b. Medical History c. Gender d. Race

Dividend

Which of the following terms is used to name the nontaxable return of unused premiums? a. Interest b. Surrender c. Dividend d. Cash Value

In benefits on the basis of different life expectancies

Which of the following types of underwriting discrimination would be considered legal a. In rates for persons within the same class b. In premiums for persons within the same life expectancy c. In benefits on the basis of different life expectancies d. In policy benefits on the basis of marital status

Deferred

An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet the need?

Setting premium rates

The Commissioner of Insurance is responsible for all of the following actions EXCEPT a. Issuing or suspending insurance licenses b. Enforcing the Insurance Code c. Issuing cease and desist orders d. Setting premium rates

Date of application

When must insurable interest exist in life insurance?

30 days

When producers change the address of their residence or office, the Insurance Department must be notified within

Earned Income

What qualifies an individual to contribute to an IRA?

On the date of the application

An insured submits the full premium along with a completed application for life insurance. Once the policy is issued, when does the coverage begin?

Accumulation of retirement funds

What is the primary purpose of a 401(k) plan? a. Accumulation of education funds b. Accumulation of retirement funds c. Distribution of dividends d. Distribution of life insurance proceeds

Direct rollover from one plan to the other

Avoiding tax consequences when transferring assets from one IRA to another can be accomplished by which of the following? a. Withholding of 20% of the funds b. Partial distribution c. Waiting until after 60 days to deposit funds in a new plan d. Direct rollover from one plan to the other

Annuitant

When an annuity is written, whose life expectancy is taken into consideration? a. Owner b. Annuitant c. Beneficiary d. Life expectancy is not a fact in annuities

To protect the public

What its the main justification for the existence of the State Insurance Department?

Interest only

When a beneficiary in a life insurance policy receives payments consisting of both principal and interest portions, what will be taxed as income?

Transfer

Which method of dealing with risk is applied when a person purchases insurance?

The insurer will be obligated to pay the claims regardless of its certificate of authority

An insurer conducts business in Louisiana without a certificate of authority. The Department of Insurance issued a cease a desist order for the insurer to suspend its operations in this state. Which of the following is true regarding payment of claims on the policies issued by the insurer? a. The insurer will void all the policies b. Because the insurer is not authorized, the Guaranty Association will pay the claims c. Because the insurer is not authorized, it is not required to pay the claims d. The insurer will be obligated to pay the claims regardless of its certificate of authority

Monthly

Which of the following premium payment modes would result in the highest overall premium for life insurance?