Life Only Questions

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How many hours of Ethics must a producer complete as part of continuing education every 2 years A) 2 B) 3 C) 4 D) 5

Which of the following is called a "second-to-die" policy A) Family income B) Juvenile life C) Joint life D) Survivorship life

What is the primary purpose of a 401(k) plan A) Education funds B) To receive dividends over a certain period C) Life insurance distribution D) Retirement

A 403(b) plan, commonly referred to as a TSA, is available to be used by A) Government workers. B) Postal employees. C) Self-employed persons. D) Teachers and not-for-profit organizations

If a beneficiary is NOT named for annuity benefits, to which entity will the benefit be paid? A The insurance company B The annuitant's estate C The next of kin D The state government

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select A) Joint and survivor B) Joint annuity C) Cash refund annuity D) Straight life

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the A) Primary beneficiary. B) Irrevocable beneficiary. C) Revocable beneficiary. D) Secondary beneficiary

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT A Explain the policy provisions, riders, and exclusions. B Collect any premium due. C Explain the rating procedures if the policy is rated differently than applied for. D Disclose commissions earned from the sale of the policy

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT A) Employer contributions are tax deductible as ordinary business expense. B) Funds accumulate on a tax-deferred basis. C) Employee and employer contributions are not counted as income to the employee for income tax purposes. D) At distribution, all amounts received by the employee are tax free

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

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value A) Effect of inflation on income over time. B) Predicted needs of the family after the insured's death. C) Insured's current and future income. D) Insured's annual expenses.

How often may a life settlement provider contract an insured regarding the insured's health status if the insured's life expectancy is more than one year A) Once every 3 months B) Not more often than once a year C) Any time D) Once a month

If a company has a Simplified Employee Pension plan, what type of plan is it A) A qualified plan for a small business B) The same as a 401(k) plan C) The same as an IRA, with the same contribution limits D) An undefined contribution plan for large businesses

If a nonresident producer for this state changes his or her home address, what must the producer do to comply with the Oregon rules A) Notify the Oregon Department of Insurance within 30 days B) Notify the NAIC within 30 days C) Nothing D) Notify the Oregon Department of Insurance within 10 days

If the annuitant dies during the accumulation period, who will receive the annuity benefits? A Insurance company B Estate C Beneficiary D Owner

If the director finds a licensee in violation of the Insurance Code on unfair practices or methods of competition, he/she will issue a A Cease and Desist Order. B Complaint record. C Rebate. D Criminal penalty

Pertaining to insurance, what is the definition of a fiduciary responsibility? a) Helping insureds to file claims b) Performing reviews of insured's coverage c) Offering additional coverage to clients d) Promptly forwarding premiums to the insurance company

The Insurance Director shall examine every authorized insurer. How long must insurers keep records pertaining to the insurance transactions under the license A) 5 years B) 7 years C) 1 year D) 3 years

The authority granted to an agent through the agent's contract is referred to as A) Absolute authority. B) Express authority. C) Apparent authority. D) Implied authority

The death protection component of Universal Life Insurance is always A Whole Life B Adjustable Life C Increasing Term D Annually Renewable Term

The market value adjustment in modified guaranteed annuities refers to which of the following? A The performance of the annuity investments B The percentage the insurer keeps for its services C The difference between the contracted interest rate and the rate at surrender D The penalty for a premature surrender of the annuity

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years A) 1 year B) 2 years C) 5 years D) 7 years

Under an extended term nonforfeiture option, the policy cash value is converted to A) A lower face amount than the whole life policy. B) A higher face amount than the whole life policy. C) The same face amount as in the whole life policy. D) The face amount equal to the cash value

Under the 401(k) bonus or thrift plan, the employer will contribute A) 30% of what the employee contributes. B) 75% of what the employee contributes. C) An undetermined percentage for each dollar contributed by the employee. D) All of the money to the plan

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits A) Variable period B) Variable amount C) Fixed period D) Fixed amount

What is the waiting period on a Waiver of Premium rider in life insurance policies A) 30 days B) 3 months C) 5 months D) 6 months

When an annuity is written, whose life expectancy is taken into account A) Beneficiary B) Life expectancy is not a factor when writing an annuity. C) Owner D) Annuitant

Which of the following applicants would NOT qualify for a Keogh Plan A) Someone who works for a self-employed individual B) Someone who works 400 hours per year C) Someone who has been employed for more than 12 months D) Someone who is over 25 years of age

Which of the following statements is TRUE concerning irrevocable beneficiaries? A They can be changed only with the written consent of that beneficiary. B They may be changed at any time. C They can never be changed. D They may be changed only on the anniversary date of the policy.

Which of the following would not be a violation of State insurance regulations A) Producer C uses her license to write uncontrolled business only. B) Producer D collects premiums due on policies and deposits the funds in his own personal account. C) Producer A uses her license to write only insurance for herself and her immediate family. D) Producer B charges his clients, in addition to the premium, a consulting fee

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured A) Corridor option B) Variable option C) Option A D) Option B

Which policy component decreases in decreasing term insurance A) Face amount B) Cash value C) Dividend D) Premium

An insurance producer moves into a new house. How many days does he have to notify the Director of his address change A) 30 days B) He does not need to notify the Director because the change of address involves his residence, not his business. C) 10 days D) 15 days

Adverse selection is a concept best described as A Risks with higher probability of loss seeking insurance more often than other risks. B Underwriters slanting the odds in favor of the company. C Poor choices of applicants to be covered. D Only offering coverage to good risks

Bob the insurance producer just sold an insurance policy to his sister. What kind of business is this A) Controlled B) Internal C) Fraternal D) Familial

Concerning Juvenile Life insurance, which of the following statements is INCORRECT A) Usually a parent or guardian is the applicant for insurance on the life of a minor. B) It can be a limited premium payment policy. C) Juvenile Life is classified as any life insurance written on the life of a minor. D) Juvenile Life is classified as any life insurance purchased by a minor

Concerning insurance, the definition of a fiduciary is A) A retail clerk. B) A producer who handles insurer funds in a trust capacity. C) A person who handles assets or money belonging to others. D) All of the above

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment A) The annuitant will always receive the current interest rate. B) The annuitant will receive the lower of either the guaranteed minimum rate or current rate. C) The annuitant will only receive the guaranteed minimum specified in the contract. D) The annuitant will receive the higher of either the guaranteed minimum rate or current rate

Life insurance death proceeds are A) Generally not taxed as income. B) Taxable to the extent that they exceed 7.5% of the beneficiaries adjusted gross income. C) Taxed as a capital gain. D) Taxed as ordinary income

The paid-up addition option uses the dividend A) To reduce the next year's premium. B) To accumulate additional savings for retirement. C) To purchase a smaller amount of the same type of insurance as the original policy. D) To purchase a one-year term insurance in the amount of the cash value

The Waiver of Cost of Insurance rider is found in what type of insurance A) Joint and Survivor B) Juvenile Life C) Universal Life D) Whole Life

The annuity owner dies during the accumulation period of his annuity. The cash value of his annuity exceeds the premiums he paid. There is no named beneficiary. Which of the following is true A) The premium value will be paid to the annuitant's estate. B) The state government will receive the amount of premiums paid. C) The state government will receive the cash value of the annuity. D) The cash value will be paid to the annuitant's estate

What is the advantage of having a qualified annuity A) Receiving a lump-sum settlement tax free B) Higher dividends C) Favorable tax treatment D) No filing with the IRS

|Which of the following is NOT a government insurance program? A) Old-age, Survivors and Disability Insurance (Social Security) B) Medicare C) Medicaid D) Federal Deposit Insurance Corporation (FDIC)

A 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay A) 15% penalty tax B) Age-based penalty stipulated in the contract C) No penalties D) 10% penalty tax

A Universal Life insurance policy has two types of interest rates that are called A) Option A and Option B. B) Fixed and Variable. C) Minimum and Target. D) Guaranteed and Current

All advertisements are the responsibility of the A. Advertising agency. B. Department of Insurance. C. Insurer. D. Insured.

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become a) More Active b) Larger c) Smaller d) Older

Death benefits payable to a beneficiary under a life insurance policy are generally A) Exempt from income taxation if over $7,000. B) Not subject to income taxation by the Federal Government. C) Subject to income taxation by the Federal Government. D) Exempt from income taxation if under $7,000

Employer contributions made to a qualified plan A) Are subject to vesting requirements. B) May discriminate in favor of highly paid employees. C) Are after-tax contributions. D) Are taxed annually as salary

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? A It is taxable only if it exceeds the amounts paid for premiums by 50%. B It is automatically taxable. C It is only taxable if the cash value exceeds the amount paid for premiums. D It is not considered to be taxable

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 but 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

Pertaining to insurance, what is the definition of a fiduciary responsibility? A) Offering additional coverage to clients B) Promptly forwarding premiums to the insurance company C) Helping insureds to file claims D) Performing reviews of insured's coverage

The requirement that producers must account for all insurance funds collected, and are not permitted to commingle those funds with their own funds (without the expressed consent of the insurance company) is known as A) Accepted accounting principal. B) Fiduciary responsibility. C) Premium accountability. D) Fiscal responsibility

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called A) Waiver of cost of insurance. B) Payor benefit. C) Waiver of premium. D) Guaranteed insurability

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be A) Installment refund B) Cash refund C) Installments for a fixed period D) Installments for a fixed amount

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income A) Both principal and interest B) Neither principal nor interest C) Principal only D) Interest only

When a producer's residential or office address changes, the Insurance Department must be notified within A 10 days. B 15 days. C 30 days. D 60 days

Which of the following individuals must have insurable interest in the insured? A) Policyowner B) Beneficiary C) Actuary D) Producer

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? A Key person agreement B Split dollar agreement C Buy-sell agreement D Profit and loss agreement

All of the following are characteristics of group life insurance EXCEPT A) Certificate holders may convert coverage to an individual policy without evidence of insurability. B) Premiums are determined by the age, sex and occupation of each individual certificate holder. C) Group life insurance is written as a master policy. D) Individuals covered under the policy receive a certificate of insurance

An applicant wants to buy a policy that has a cash value element. Which type should she buy A) Investment B) Term C) Permanent D) Stock

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A) Experience Rating. B) Group rate. C) Insurer's scheduled rate. D) Attained age

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? A) Because the insured is currently not a drug user, his policy will not be affected. B) The policy will not be affected. C) The policy will be voided. D) The insurer will sue the insured for committing fraud

An insurer invest the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments A) It is paid out as dividends B) It is used to fund executive bonuses C) It is used to increase the death benefit D) It is used to lower premiums

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? A Express B Implied C Assumed D Apparent

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept? A) Nonforfeiture B) Indemnity C) Reasonable expectations D) Cease and desist

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant A Prior to filling out an application for insurance. B With the policy. C Upon issuance of the policy. D Within 30 days after the first premium payment was collected

If an insured changes his payment plan from monthly to annually, what happens to the total premium A) Decreases B) Stays the same C) Doubles D) Increases

In insurance, an offer is usually made when A) The completed application is submitted. B) The insurer approves the application and receives the initial premium. C) The agent hands the policy to the policyholder. D) An agent explains a policy to a potential applicant

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 secondary education. C) The person must not be under the influence of drugs or alcohol. D) The person must be of legal age.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change A) The death benefit can be increased only by exchanging the existing policy for a new one. B) The death benefit can be increased by providing evidence of insurability. C) The death benefit cannot be increased. D) The death benefit can be increased only when the policy has developed a cash value

What does "liquidity" refer to in a life insurance policy A) The policyowner receives dividend checks each year B) The insured is receiving payments each month is retirement C) Cash values can be borrowed at any time D) The death benefit replaces the assets that would have accumulated if the insured not died

Which of the following is the best reason to purchase life insurance rather than annuities A) To create regular income payments B) To liquidate a sum of money over a lifetime C) To create an estate D) To liquidate a sum of money over a period of years

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation A) Needs approach B) Blackout approach C) Lump-sum approach D) Human life value approach

Which of the following premium modes would result in the highest annual cost for an insurance policy A) Monthly B) Quarterly C) Semi-annual D) Annual

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A If the daughter is disabled for any length of time B If the father is disabled for more than 6 months C If the father is disabled for at least a year D If the daughter is disabled for more than 3 months

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision A) Assignment B) Automatic premium loan C) Waiver of premium D) Incontestability period

All other factors being equal, the least expensive first-year premium payment is found in A) Increasing Term. B) Decreasing Term. C) Level Term. D) Annually Renewable Term

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

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy A) Nothing B) $50,000 C) $100,000 D) $200,000

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe A) Flexible Premium B) Reduction of Premium C) Accumulation at Interest D) Cash option

Courts will interpret any ambiguity in an insurance contract A) Based on the prudent person rule. B) In favor of the insured. C) In favor of the insurer. D) Through arbitration

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal A) Both interest and principal are taxed; no other penalties are imposed. B) Neither interest nor principal is taxed, but penalties may be imposed. C) Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½. D) Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½

Equity indexed annuities A) Are more risky than variable annuities. B) Are security instruments. C) Invest conservatively. D) Seek higher returns

Events in which a person has both the chance of winning or losing are classified as A) Speculative risk. B) Insurable. C) Pure risk. D) Retained risk

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? A Transfer B Avoidance C Retention D Reduction

Installing deadbolt locks on the doors of a home is an example of which method of handling risk? A) Reduction B) Avoidance C) Transfer D) Self-insurance

Insurers must keep records associated with a given policy for how many years after the policy expiration A) 20 B) 3 C) 5 D) 10

Peril is most easily defined as A The cause of loss insured against. B An unhealthy attitude about safety. C The chance of a loss occurring. D Something that increases the chance of loss

J transferred his life insurance policy to his son two years before his death. Which of the following is true A) The interest portion of the policy will be included in J's taxable estate. B) The unpaid premiums on the policy will be deducted from J's taxable estate. C) Because the policy has been transferred, it will not be included in J's taxable estate. D) The entire face value of the policy will be included in J's taxable estate

Notice of a hearing for a cease and desist order must be given at least how many days in advance A) 30 B) 7 C) 10 D) 15

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT A Family health history. B Alcohol and tobacco consumption. C Recent surgeries. D Other insurance coverages

Paul is a producer in Washington and wants to become a producer in Oregon. The Director will waive certain examination requirements, provided that Washington would waive these same requirements if an Oregon producer sought licensure in Washington. What term is used to describe this phenomenon A) Fair exchange B) Equanimity C) Reciprocity D) Equality

SIMPLE Plans require all of the following EXCEPT A) No other qualified plan can be used. B) No more than 100 employees. C) Employees must receive a minimum of $5,000 in annual compensation. D) At least 1,000 employees

Something of value exchanged between the insurer and the insured is considered an A) Consideration. B) Offer. C) Acceptance. D) Legal capacity.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A As of the policy delivery date B As of the first of the month after the policy issue C As of the policy issue date D As of the application date

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A) 65 B) 20 1/2 C) 90 D) 100

The mode of premium payment A) Does not affect the amount of premium paid. B) Is defined as the frequency and the amount of the premium payment. C) Is the factor that determines the amount of dividends in a policy. D) Is the method used to compute the cash surrender value of the policy

To sell variable life insurance policies, an agent must receive all of the following EXCEPT A) A securities license. B) A life insurance license. C) A SEC registration. D) A FINRA registration

Traditional IRA contributions are A Deducted based on the income level. B Never tax deductible. C Partially tax deductible depending on the income level. D Tax deductible

What describes the specific information about a policy? A Producer's report B Policy summary C Illustrations D Buyer's guide

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A) Conditional. B) Aleatory. C) Personal. D) Unilateral

When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions A) Distributions are taxable. B) Distributions are nontaxable. C) Distributions cannot begin prior to age 70½. D) There are no distributions

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A) Domestic B) Alien C) Nonadmitted D) Foreign

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT A) The policyholder has the right to withdraw the accumulations at any time. B) The interest is not taxable since it remains inside the insurance policy. C) The annual dividend is retained by the company. D) The interest is credited at a rate specified by the policy

How long must records associated with an insurance policy be kept A) Until the insurance company is no longer in business B) 10 years C) 3 years after the policy terminates D) 5 years after the policy terminates

How long must insurers keep the records of transactions under the license A) 5 years after policy issue B) 7 years C) Permanently D) 3 years after the policy expiration

In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this? a) The right to determine the wording of a policy b) The right refute the rulings c) The right to revoke the policy d) The right to raise premiums as a result of court rulings

What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences A) Section 457 Deferred Compensation Plan B) Section 1035 Policy Exchange C) Modified Endowment Exchange D) 401(k) Plan

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that A) Joint Life Policy B) Survivorship Life Policy C) Second-to-Die D) Family Income Policy

A producer's Life and Health license expired on December 31, 1997; however, his renewal application was not received until March 13, 1998. Which of the following is true regarding the producer's license renewal A) The Director will accept the renewal application because the producer submitted it within 1 year of expiration. B) The Director will not renew the license. C) The Director will renew the license provided that the producer pays the regular renewal fees and passes the licensing exam. D) The Director may accept the application provided that the producer pays twice the amount of regular renewal fees and satisfies his continuing education requirements

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? A A complete medical record B Sworn health affidavit from the applicant C Statement of Continued Good Health D Attending Physician Statement

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually A) $3,000 B) $13,000 C) $10,000 D) $7,000

In a life settlement contract, whom does the life settlement broker represent A) The beneficiary B) The life settlement intermediary C) The owner D) The insurer

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

Which nonforfeiture option has the highest amount of insurance protection A) Conversion B) Decreasing Term C) Reduced Paid-up D) Extended Term

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true A) A corporation can be an annuitant as long as the beneficiary is a natural person. B) The contract can be issued without an annuitant. C) The annuitant must be a natural person. D) A corporation can be an annuitant as long as it is also the owner

The requirement that agents not commingle insurance monies with their own funds is known as A Accepted accounting principal. B Fiduciary responsibility. C Premium accountability. D Express authority.

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages A) 10 B) 3 C) 5 D) 7

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid A) Until the policyowner's age 100, when the policy matures. B) For 20 years or until death, whichever occurs first. C) Until the policyowner's age 65. D) For 20 years

Which two terms are associated directly with the way an annuity is funded? A Immediate or deferred B Renewable or convertible C Single payment or periodic payments D Increasing or decreasing

A key person insurance policy can pay for which of the following? A. Hospital bills of the key employee B. Costs of training a replacement C. Loss of personal income D. Workers compensation

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called A) Inflation adjustment B) Surrender charge C) Termination penalty D) Bail-out charge

All of the following are marketing arrangements used by insurers EXCEPT A Reinsurance System. B General Agency System. C Direct Response Marketing System. D Independent Agency System.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A) An offer of employment. B) Stocks, securities, or bonds. C) An offer to share in commissions generated by the sale. D) Dividends from a mutual insurer

All of the following could own group life insurance EXCEPT A) A group needing low-cost life insurance. B) A group sponsored by an employer. C) An alumni group. D) A debtor group

All of the following employees may use a 403(b) plan for their retirement EXCEPT A) A part-time classroom aide. B) The vice president of a charitable organization. C) The CEO of a private corporation. D) A school bus driver

All of the following entities regulate variable life policies EXCEPT A) The Guaranty Association. B) Federal government. C) The SEC. D) The Insurance Department

All of the following types of distributions are considered exceptions to the early distribution rule and, therefore, are not subject to the penalty tax EXCEPT A) Death of participant. B) A loan from the plan. C) Participant's debt. D) Participant's disability

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover A) $10,000, 30 days B) $8,000, 60 days C) $8,000, 30 days D) $10,000, 60 days

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen A) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. B) The insurer will pay the full death benefit from the group policy to the beneficiary. C) The insurer will pay a reduced death benefit to the beneficiary. D) The insurer will pay the death benefit minus one month's premium

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called A) HR 10 plan B) Profit sharing plan C) 401(k) plan D) Tax-sheltered account plan

An insured has a life insurance 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) Reduction of premiums. B) Paid-up additions. C) One-year term purchase. D) Accumulation at interest

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it A) Variable Life B) Adjustable Life C) Graded Premium Life D) Limited-pay Life

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? A The primary and contingent beneficiaries share death benefits equally B With the primary beneficiary's written consent C If the insured died from accidental means D If the primary beneficiary predeceases the insured

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 the reason a death benefit claim is denied? a) Utmost Hood Faith b) Estoppel c) Material Misrepresentation d) Waiver

If an annuitant dies before annuitization occurs, what will the beneficiary receive A) Cash value of the plan B) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount C) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount D) Amount paid into the plan

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would 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

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A) Require a higher premium. B) Prolong the open enrollment period. C) Increase medical requirements on existing members. D) Require evidence of insurability

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a A) Nonforfeiture option. B) Rollover. C) Settlement option. D) Nontaxable exchange

If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death A) 0% B) 50% C) 25% D) 10%

If the Director requests information regarding a claim, within how many days must the insurer provide a response A) 3 days B) 10 days C) 21 days D) 31 days

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. B The beneficiary will receive the greater of the money paid into the annuity or the cash value. C Because the annuitization period has not started, the owner's estate will receive the money paid into the annuity. D The insurance company will retain the cash value and pay back the premiums to the owner's estate.

The interest earned on policy dividends is A) 40% taxable, similar to a capital gain. B) Taxable. C) Nontaxable. D) Tax deductible

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A Paid-up addition B Accumulation at interest C Cash option D Reduction of premium

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called 1. Avoidance. 2. Transfer. 3. Reduction. 4. Sharing.

The two types of assignments are 1. Absolute and collateral. 2. Absolute and partial. 3. Complete and partial. 4. Complete and proportionate.

To comply with Oregon rules and regulations, producers are required to communicate all of the following changes to the Department of Insurance EXCEPT A) If a nonresident producer changes her residence address. B) If a resident producer changes her business address. C) If a producer decides to close his business. D) If a resident producer changes his business telephone number

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

What is the main purpose of the regulation on life insurance policy illustrations? A To help customers make educated decisions in buying life insurance B To compare life policies C To help producers submit proper reports to the department of insurance D To present a life policy in a visual way

What is the minimum age requirement for applicants for an insurance license A) 19 B) 18 C) 21 D) 16

What is the purpose of establishing the target premium for a universal life policy A) To pay up the policy faster B) To cover all policy expenses C) To keep the policy in force D) To accumulate cash value faster

What is the purpose of key person insurance A) To insure retirement benefits are available to all key employees B) To maintain an account that insures the owner of a company remains solvent C) To lessen the risk of financial loss because of the death of a key employee D) To provide health insurance to the families of key employees

What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary A) Capital gains tax on distributions plus 10% penalty. B) Income tax on distributions and no penalty. C) Income tax on distributions plus 10% penalty. D) Capital gains tax on distributions and no penalty

What limits the amount that a policyowner may borrow from a whole life insurance policy A) Cash value B) Premiums paid C) Amount stated in the policy D) Face amount

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled A) Jumping Juvenile B) Juvenile Premium Provision C) Waiver of Premium D) Payor Benefit

Which of the following best defines target premium in a universal life policy A) The maximum amount the policyowner may pay on a policy B) The minimum amount to make sure the policy is annually renewable C) The corridor of insurance D) The recommended amount to keep the policy in force throughout its lifetime

Which of the following best describes a misrepresentation? A Making a deceptive or untrue statement about a person engaged in the insurance business B Making a maliciously critical statement that is intended to injure another person C Discriminating among individuals of the same insuring class D Issuing sales material with exaggerated statements about policy benefits

Which of the following best describes a pure life annuity settlement option? A Pure life provides payments for as long as the annuitant is alive B Pure life guarantees that all the proceeds will be paid out C Benefits are paid for a fixed period of time, specified when the policy begins to pay D Pure life provides payments for as long as both the annuitant and the spouse are living

Which of the following best describes fixed-period settlement option? A Both the principal and interest will be liquidated over a selected period of time. B Only the principal amount will be paid out within a specified period of time. C The death benefit must be paid out in a lump sum within a certain time period. D Income is guaranteed for the life of the beneficiary

Which of the following is NOT true about a group annuity A) It can be qualified. B) It can be tax deferred. C) It can be owned by individual employees. D) It can be noncontributory

Which of the following is an example of a producer's fiduciary duty? a) The trust that a client places in the producer in regard to handling premiums b) An obligation to state every known fact about the policy the producer is selling c) A duty to base all transactions upon the principle of Utmost Good Faith d) The obligation to tell the truth to the best of one's knowledge

Which of the following is another term for the accumulation period of an annuity A) Premium period B) Liquidation period C) Annuity period D) Pay-in period

Which of the following is true about license reinstatement? A Reinstatement fees may be double the unpaid renewal fee. B A license can only be reinstated within 6 months from the renewal date. C Lapsed licenses cannot be reinstated. D To reinstate a license, a producer must pass a written examination

Which of the following is usually true of a participating life insurance policy A) Pays dividends to policyowners B) May be converted to a term life policy C) Pays dividends to stockholders D) Assesses premiums against stockholders

Which of the following statements about the reinstatement provision is true? A It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. B It permits reinstatement within 10 years after a policy has lapsed. C It provides for reinstatement of a policy regardless of the insured's health. D It guarantees the reinstatement of a policy that has been surrendered for cash

Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT A) Employer contributions are not included in the employee's gross income. B) SEPs are suitable for large companies. C) SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income. D) SEPs have a higher tax deductible contribution limit than an IRA

Which of the following statements is TRUE concerning the Accidental Death Rider A) It is also known as a triple indemnity rider. B) This rider is only available to insureds over the age of 65. C) It is only available in group insurance. D) It will pay double or triple the face amount

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE A) Distributions before age 59 1/2 incur a 10% penalty on policy gains. B) Policy loans are taxable distributions. C) Accumulations are tax deferred. D) Withdrawals are not taxable.

Which of the following terms is used to name the nontaxed return of unused premiums A) Dividend B) Premium return C) Interest D) Surrender

Who can make a fully deductible contribution to a traditional IRA A) Someone making contributions to an educational IRA B) A person whose contributions are funded by a return on investment C) An individual not covered by an employer-sponsored plan who has earned income D) Anybody: all IRA contributions are fully deductible regardless of income level

Who can make changes to the policy once it is in effect? A The agent B An executive officer of the insurer C The insured D The policyowner

Who establishes the fees that must be paid in conjunction with an application for an insurance license A) A group of reinsurers B) The Director C) The insurer D) A group of producers

Who may contribute to an HR-10 plan A) Partner with at least 5% ownership B) Self-employed plumber C) Manager of a store D) Corporate executive

Why is an equity indexed annuity considered to be a fixed annuity A) It has modest investment potential. B) It has a fixed rate of return. C) It is not tied to an index like the S&P 500. D) It has a guaranteed minimum interest rate

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained A) 3 days B) 5 days C) 10 days D) 14 days

Within what time period can a producer reinstate a lapsed license without having to pass a written examination A) 6 months B) 3 years C) 12 months D) 90 days

Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that the annuity owner will have to pay A) Flat fee determined by an index of interest gains, combined with the amount of time the annuity would take to mature B) There are no penalties imposed for surrendering annuities prematurely. C) Guaranteed minimum interest rate stipulated in the contract D) Current interest rate at the time of surrender

Z falls from the roof of his house while fixing it and damages his spinal column enough to render him disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will Z receive A) Payments for life B) Yearly premium waiver and income C) Monthly premium waiver and monthly income D) Percentage of medical costs paid by the insurer

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called A) 1035 exchange. B) Qualified distribution. C) Premature distribution. D) Rollover.

All of the following statements are true regarding tax-qualified annuities EXCEPT A) Employer contributions are not tax deductible. B) Tax accumulation is deferred. C) They must be approved by the IRS. D) Withdrawals are taxed

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders A) 2% B) 2.5% C) 3% D) Whatever interest rate the company deems appropriate

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? A Aleatory B Waiver C Estoppel D Subrogation

An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? A Independent agency marketing B Illegal C Insurance telemarketing D Direct response marketing

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable A) $50,000 B) $18,000 C) $15,000 D) $3,000

Annually renewable term policies provide a level death benefit for a premium that A) Decreases annually. B) Remains level. C) Fluctuates. D) Increases annually

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is A) An endowment. B) A Multiplicative Policy. C) A Modified Endowment Contract. D) An Accelerated policy

If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate? A Full annuity benefit B No benefits C Premiums paid D Accumulated cash value

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? A Unilateral B Adhesion C Conditional D A legal (but unethical) contract

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? A Beneficiary B Insured C Policyowner D The insured and the policyowner

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of A) Concealment. B) Unfair claim practice. C) Rebating. D) Misrepresentation

The advantage of qualified plans to employers is A Taxable contributions. B Tax-deductible contributions. C Tax-free earnings. D No lump-sum payments.

What is the main purpose of the Seven-pay Test A) It ensures that the policy benefits are paid out in 7 years. B) It guarantees interest minimum. C) It determines if the insurance policy is an MEC. D) It requires level premium payments for 7 years

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military A) Military service or war B) Limited C) Aviation D) Hazardous occupation

What is the penalty for IRA distributions that are below the required minimum for the year A) 10% B) 25% C) 50% D) 60%

When must an IRA be completely distributed when a beneficiary is not named A) December 31 of the year following the year of the owner's death. B) Due date of the deceased owner's final tax return including extensions. C) December 31 of the year that contains the fifth anniversary of the owner's death. D) Due date of beneficiary's tax return including extensions

Which of the following are generally NOT considered when underwriting group insurance A) The size of the group B) The insureds' medical history C) The nature of the group D) The group's past claim experience

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income A) Annuitization period B) Pay-out period C) Liquidation period D) Depreciation period

Which of the following is NOT true regarding the annuitant A) The annuitant's life expectancy is taken into consideration for the annuity. B) The annuitant receives the annuity benefits. C) The annuitant must be a natural person. D) The annuitant cannot be the same person as the annuity owner

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? a) Agent's report b) Any federal report c) Consumer report d) Inspection report

Which of the following riders would NOT cause the Death Benefit to increase A) Cost of Living Rider B) Accidental Death Rider C) Payor Benefit Rider D) Guaranteed Insurability Rider

Which of the following scenarios will incur a 10% tax penalty on distributions? A) Distributions are made to the beneficiary. B) Distributions are made as part of a qualified rollover. C) Distributions are made on a policy before age 59½. D) Distributions are made prior to the age of 70½

Which of the following will NOT be an appropriate use of a deferred annuity A) Accumulating funds in an IRA B) Funding a child's college education C) Creating an estate D) Accumulating retirement funds

An individual's tendency to be dishonest would be indicative of a A Pure hazard. B Physical hazard. C Moral hazard. D Morale hazard

What method do insurers use to protect themselves against catastrophic losses? A) Pro rata liability B) Risk management C) Reinsurance D) Indemnity

What must happen when an individual policy or annuity has been personally delivered to the policyowner? A A notary public must witness the exchange. B The policyowner must sign a delivery receipt. C The policyowner must pay the annual premium in full. D The producer must go over the policy with the policyowner

What term best describes the act of withholding material information that would be crucial to an underwriting decision?` a) Withholding b) Leading c) Breach of warranty d) Concealment

Which Universal Life option has a gradually increasing cash value and a level death benefit? A Juvenile life B Term insurance C Option B D Option A

Which of the following types of policies will provide permanent protection? A) Group life B) Whole life C) Credit life D) Term life

All of the following are examples of risk retention EXCEPT A Premiums. B Deductibles. C Copayments. D Self-insurance.

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 nonqualified employee benefit. D) The policy is owned by the company

An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true? A) The policy will remain in force as long as there are no material misrepresentations on the application. B) The policy is legal since the applicant was able to give all required information. C) The policy is not legal; agents cannot sell insurance over the phone. D) The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application

An insurance organization that does not issue insurance policies but provides a meeting place for underwriters to conduct business is known as a... a) Fraternal Society b) Mutual Company c) Capital Stock Company d) Lloyd's Association

The term "illustration" in a life insurance policy refers to A A depiction of policy benefits and guarantees. B Pictures accompanying a policy. C Charts and graphs. D A presentation of non-guaranteed elements of a policy

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a) Assumed b) Express c) Implied d) Apparent

Which is the primary source of information used for insurance underwriting A) Medical records B) Private investigations C) Application D) Applicant interviews

Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination A) An applicant who is a smoker B) An applicant who was born in another country C) An applicant who is legally blind D) An applicant who has been a victim of domestic abuse

Which of the following best describes an insurance company that has been formed under the laws of this state? A Alien B Foreign C Domestic D Sovereign

All of the following are personal uses of life insurance EXCEPT A Buy-sell agreement. B Survivor protection. C Estate creation. D Cash accumulation

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 enure the producer gets paid commission

What documentation grants express authority to an agent? A) Agent's contract with the principal B) Agent's insurance license C) Fiduciary contract D) State provisions

Which of the following best describes gross annual premium A) Basic insurance rate plus commissions B) Expense premium C) Net premium plus expenses D) Annual loading

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

Which of the following is an example of liquidity in a life insurance contract A) The money in a savings account B) The cash value available to the policyowner C) The death benefit paid to the beneficiary D) The flexible premium

Which of the following best describes annually renewable term insurance A) It is level term insurance. B) It requires proof of insurability at each renewal. C) Neither the premium nor the death benefit is affected by the insured's age. D) It provides an annually increasing death benefit

Which services are associated with Standard & Poor's and AM Best? a) Investigating violations of The Fair Credit Reporting Act b) Providing employment histories for investigative consumer reports c) Storing medical information collected by insurance companies d) Rating the financial strength of insurance companies

Which statement regarding insurable risks is NOT correct? A) Insurance cannot be mandatory. B) The insurable risk needs to be statistically predictable. C) An insurable risk must involve a loss that is definite as to cause, time, place and amount. D) Insureds cannot be randomly selected

A Straight Life policy has what type of premium? A) A decreasing annual premium for the life of the insured B) A variable annual premium for the life of the insured C) A level annual premium for the life of the insured D) An increasing annual premium for the life of the insured

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible A) Insurable interest B) Modification clause C) Ownership provision D) Collateral assignment

A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose A) Joint and Survivor B) Joint life C) Life with period certain D) Straight life

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A Her parents' federal income tax receipts B Medical exam and parents' medical history C Proof of insurability is not required. D Medical exam

A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy A) Life with period certain B) Joint limited annuity C) Joint life D) Joint and survivor

A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity A) The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges. B) A deferred annuity cannot be surrendered prior to annuitization. The owner must wait until the annuitization period begins to receive any payments. C) The surrender value will be based on current interest rates. D) The surrender value will not be more than 80% of the cash value in the annuity at the time of surrender

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 insured's 18th birthday. C) Since it is the policyowner, 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 group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why A) The group has not been established for long enough. B) The purpose of the group was to purchase life insurance. C) Their profession poses too high of a risk for the insurer. D) There are not enough people in the group to qualify for group life insurance

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? A Cost of Living Rider B Value Adjustment Rider C Return of Premium Rider D Inflation Rider

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy A) Required a premium increase each renewal. B) Built cash values. C) Required proof of insurability every year. D) Decreased death benefit at each renewal

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as A) Survivorship insurance B) Juvenile protection provision C) Survivor protection D) Life planning

A prospective deferred annuity owner is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following A) The insurance company will apply the money to another annuity or a life insurance policy, but the money cannot be returned. B) It is not possible to surrender an annuity before the annuitization period. C) Nonforfeiture option guarantees that the owner will receive a surrender value of the contract. D) The owner will receive some of the money back, which will depend on the surrender value established by the insurer at the time that the contract is terminated

A provision in a life or health insurance policy that may assist an insurance company in determining the cause of death of an insured is called A) Inspection. B) Attending physician's report. C) Medical exam. D) Autopsy

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called A) Living need rider. B) Payor rider. C) Cost of living rider. D) Accelerated benefit rider.

A tax-sheltered annuity is a special tax-favored retirement plan available to A) Anyone. B) Certain age groups only. C) Certain groups depending on factors such as race, gender, and age. D) Certain groups of employees only

A temporary license in this state is valid for A 90 days. B 180 days. C 30 days. D 60 days

All insurance companies admitted to sell life and/or health insurance contracts in Oregon must, as a condition to maintain their certificate of authority A) Have a branch office located in Oregon. B) Sell both individual and group contracts. C) Maintain membership in the Oregon Life and Health Insurance Guaranty Association. D) None of the above

All of the following are characteristics of a group life insurance plan EXCEPT A) The cost of the plan is determined by the average age of the group. B) There is a requirement to prove insurability on the part of the participants. C) The participants receive a Certificate of Insurance as their proof of insurance. D) A minimum number of participants is required in order to underwrite the plan

All of the following are factors that an underwriter could use to select and classify risk EXCEPT A) Occupation B) Avocation C) National origin D) Morals

All of the following are general requirements of a qualified plan EXCEPT A) The plan must be communicated to all employees. B) The plan must be for the exclusive benefits of the employees and their beneficiaries. C) The plan must be permanent, written and legally binding. D) The plan must provide an offset for social security benefits

All of the following are true of an annuity owner EXCEPT A) The owner is the party who may surrender the annuity. B) The owner must be the party to receive benefits. C) The owner pays the premiums on the annuity. D) The owner has the right to name the beneficiary

All of the following are true regarding a decreasing term policy EXCEPT A) The contract pays only in the event of death during the term and there is no cash value. B) The face amount steadily declines throughout the duration of the contract. C) The payable premium amount steadily declines throughout the duration of the contract. D) The death benefit is $0 at the end of the policy term

All of the following are true regarding rebates EXCEPT A) Rebates are only allowed if specifically stated in the policy. B) Rebating can be anything of economic value, given as an inducement to buy. C) Dividends are not considered to be rebates. D) Rebates are allowed if it's in the best interest of the client

All of the following are true regarding the guaranteed insurability rider EXCEPT A) The insured may purchase additional insurance up to the amount specified in the base policy. B) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. C) This rider is available to all insureds with no additional premium. D) The insured may purchase additional coverage at the attained age

All of the following events will terminate a producer's certificate of appointment EXCEPT A) A producer's license expires and is not renewed. B) A termination is issued by the appointing insurer. C) A producer's license is suspended or revoked by the Department of Insurance. D) A new Director is put into office

All of the following statements about equity index annuities are correct EXCEPT A The annuitant receives a fixed amount of return. B They have a guaranteed minimum interest rate. C The interest rate is tied to an index such as the Standard & Poor's 500. D They invest on a more aggressive basis aiming for higher returns.

All of the following statements are true regarding installments for a fixed amount EXCEPT A) This option pays a specific amount until the funds are exhausted. B) The annuitant may select how big the payments will be. C) The payments will stop when the annuitant dies. D) Value of the account and future earnings will determine the time period for the benefits

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A) The payments are not guaranteed for life. B) The insurer determines the amount for each payment. C) It is a life contingency option. D) It will pay the benefit only for a designated period of time.

All of the following would be different between qualified and nonqualified retirement plans EXCEPT A) Taxation of withdrawals B) Taxation of contributions C) IRS approval requirements D) Taxation on accumulation

All of the following would be eligible to establish a Keogh retirement plan EXCEPT A) A sole proprietor of film development store with no employees. B) A hair dresser who operates her business at her house. C) The president and employee of a family corporation. D) A sole proprietor of a service station who employs four employees

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy A) Half the amount B) Lower C) Higher D) As high

An Adjustable Life policyowner can change which of the following policy features A) The insured B) The coverage period C) The mortality expense D) The investment account

An IRA purchased by a small employer to cover employees is known as a A) Simplified Employee Pension plan. B) 401(k) plan. C) Defined contribution plan. D) 403(b) plan

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay A) 50% tax on the amount not distributed as required B) No penalties, since the owner is older than 59 ½ C) 10% for early withdrawal D) 15%

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) A) Keogh Plan. B) Roth IRA. C) SEP. D) 403(b) Plan (TSA)

An absolute assignment is a 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

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of A Twisting. B Controlled business. C Rebating. D Coercion.

An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur A) The interest will become immediately taxable. B) The premiums will increase. C) The premiums will decrease. D) The interest will continue to accumulate tax deferred

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) A Equity Indexed Annuity. B Variable Annuity. C Flexible Annuity. D Immediate Annuity

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable A) Charitable Organization B) Dependents C) Annuitant D) Spouse

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy A) She will still be covered under the group plan, but will have to pay an individual policy premium. B) She can only convert her coverage without proof of insurability if she has the master policy. C) She must apply for a new policy, which requires her to provide proof of insurability. D) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT A) The premium for individual coverage will be based upon the insured's attained age. B) The insured may choose to convert to term or permanent individual coverage. C) The insured would not need to prove insurability for a conversion policy. D) The insured may convert coverage to an individual policy within 31 days

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 A) $10,000, no tax consequence B) $8,000, no tax consequence C) $8,000, tax on growth only D) $10,000, tax on growth only

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 is issued, what would be the policy's effective date? A The date of application B The date of medical exam C The date of policy delivery D The date of issue

An individual has been contributing to a retirement account after taxes are taken out of his paycheck. His financial advisor told him that he will be allowed to make contributions after age 70½. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it A) Roth IRA B) 403(b) plan C) Simplified Employee Pension Plan D) Traditional IRA

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy A) Dividend options B) Guaranteed renewable option C) Nonforfeiture options D) Guaranteed insurability option

An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? A If the insured dies from an accident B If the primary beneficiary predeceases the insured C The primary and contingent beneficiaries share death benefits equally D With the primary beneficiary's written consent

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 Single premium whole life. B Modified Endowment Contract (MEC). C Level term life. D Graded premium whole life

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium A) It will decrease for the new 5-year term since the insured is now a lesser risk to the company. B) It will increase each year during the next 5 years as the face amount increases each year. C) It will increase because the insured will be 5 years older than when the policy was originally purchased. D) It will remain the same for the new 5-year term

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true A) He will not have to pay a penalty, regardless of his age. B) He cannot withdraw money from his MEC before age 59½. C) He will have to pay a penalty if he is younger than 59½. D) He will have to pay a penalty regardless of his age

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use A) Reduction of premium B) Accumulation at interest C) Paid-up option D) One-year term

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

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? A $20,000 B $25,000 C $50,000 D The face amount will be determined by the insurer

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? a) The policy will be reduced to an extended term option. b) The policy will terminate when the loan amount with interest equals or exceeds the cash value. c) The insurer will increase the interest rate on the loan and charge a penalty. d) The insurer will not permit the policyowner to take out any more loans.

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? A) It is impossible to transfer a policy. B) The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it. C) The insured can transfer the policy to his friend and then notify the insurer of the change. D) The insured will need a written consent of the insurer

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) Waiver of premium provision B) Incontestable clause C) Grace period D) Reinstatement provision

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 Agent's Report B Underwriter's Report C Inspection Report D Medical Information Bureau's report

Are insurance company underwriters allowed to discriminate A) Yes, but not unfairly B) No, higher risks pay higher premium C) No, discrimination is an unfair practice D) Yes, but only for gender

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs A) Single Premium Whole Life B) Interest-sensitive Whole Life C) Decreasing Term D) Adjustable Life

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) Guaranteed insurability. B) Waiver of cost of insurance. C) Supplemental add on. D) Cost of living

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce A) Without receiving written consent from a Federal Judge. B) Without receiving written consent from an insurance regulatory authority. C) Under any circumstances. D) Unless they have served an appropriate prison sentence.

For a retirement plan to be qualified, it must be designed for the benefit of A) IRS. B) Employees. C) Key employee. D) Employer

For the purpose of insurance, risk is defined as A) The certainty of loss. B) The cause of loss. C) An event that increases the amount of loss. D) The uncertainty or chance of loss

For what reason may a life insurance producer backdate a life insurance policy A) To avoid an increase in premium rate for the insured B) To meet sales quotas established by the insurer C) To make a policy effective during a period when the agent's appointment was in force D) To shorten the period of contestability

Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as A Unlawful distribution of dividends. B Coercion. C Rebating. D Twisting

How are contributions to a tax-sheltered annuity treated with regards to taxation A) They are taxed as income for the employee, but are tax free upon withdrawal. B) They are not included as income for the employee, but are taxable upon distribution. C) They are never taxed. D) They are taxed as income for the employee

How often must a producer renew his or her insurance license A) Every 3 years B) Every 10 years C) Annually D) Every 2 years

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a A) Joint and survivor annuity. B) Deferred annuity. C) Pure annuity. D) Joint life annuity

If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined A) The surrender charge is always 7% of the cash value. B) The surrender charge is a flat fee determined by the annuity owner when the annuity is purchased. C) The surrender charge will increase as the accumulation period increases. D) The surrender charge is a percentage of the cash value and decreases over time

If a life insurance policy has an irrevocable beneficiary designation, A The beneficiary cannot be changed for at least 2 years. B The owner can always change the beneficiary at will. C The beneficiary cannot be changed. D The beneficiary can only be changed with written permission of the beneficiary.

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this A) Limited pay whole life policy B) Modified life insurance policy C) Single premium policy D) Jumping juvenile policy

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 Nonforfeiture option. B Guaranteed insurability rider. C Paid-up additions option. D Cost of living provision

If a producer changes locations, what must be done A) Notify the DOI within 30 days B) Notify the DOI within 15 days C) Notify the appointing agency D) Nothing

If a retirement plan or annuity is "qualified," this means A) It accepts after-tax contributions. B) It is noncancellable. C) It is approved by the IRS. D) It has a penalty for early withdrawal

If an IRA annuitant dies after the annuity has been paid up, what effect will this have on the annuitant's estate? A The IRA must be converted to an annuity policy for the listed beneficiary. B The entire value of the contributions and benefits will be included. C Only partial value of the contributions will be included. D IRA funds will be redirected to the federal government

If an agent fails to obtain an applicant's signature on the application, the agent must A) Sign the application, stating it was by the agent. B) Send the application to the insurer with a note explaining the absence of signature. C) Return the application to the applicant for a signature. D) Sign the application for the applicant

If the owner prematurely surrenders his deferred annuity before the annuitization period begins, which of the following is most likely to occur A) The owner will forfeit any premiums he has paid into the account, but will receive any interest earned on the account. B) The owner will receive the premium payments that have been paid into the annuity, plus any interest, minus a surrender charge. C) A surrender charge will be imposed that is equal to 3 of the owner's monthly annuity payments. D) A surrender charge will not be imposed because the account has been open for at least 1 year

In Oregon, how long does a producer have to notify the Director of a change in location or name A) 7 days B) 10 days C) 30 days D) 45 days

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to A) The insurance company. B) The contingent beneficiary. C) The insured's spouse. D) The policyowner

In a direct rollover, how is the money transferred from one plan to the new one A) From the participant to the new plan B) From the original plan to the original custodian C) From trustee to trustee D) From trustee to the participant

In a group life insurance policy, the employer may select all of the following EXCEPT A) The amount of insurance. B) The premium payor. C) The beneficiary. D) The type of insurance

In a survivorship life policy, when does the insurer pay the death benefit A) If the insured survives to age 100 B) Upon the last death C) Upon the first death D) Half at the first death, and half at the second death

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A) The length of coverage. B) The premium. C) The amount of insurance. D) The type of investment

In an annuity, the accumulated money is converted into a stream of income during which time period A) Conversion period B) Annuitization period C) Payment period D) Amortization period

In life insurance policies, cash value increases A) Are only taxed when the owner reaches age 65. B) Grow tax deferred. C) Are income taxable immediately. D) Are taxed annually

In order to get a nonresident license in this state, producers must A) Surrender their license in their state of residence. B) Apply and pay a fee to a nonresident state that reciprocates. C) Pass the nonresident state exam and satisfy their continuing education requirements. D) Represent an agency located in this state

In reference to fixed annuities, what comprises most of a life insurance company's general account A) Conservative investments like bonds B) Aggressive stocks and bonds C) Company stock D) S&P 500 index

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium A The applicant's habits and health do not affect the premiums. B It will likely be lower because the applicant is a preferred risk. C It will likely be higher because the applicant is a substandard risk. D It will likely be the average premium issued to standard risks

Lyle has a $10,000 term life policy. He paid his annual premium on February 1. Lyle fails to renew the policy and dies on February 28 of the following year. Accounting for the $200 of earned premium, how much will the beneficiary receive from Lyle's insurance company A) $200 B) $0 C) $10,000 D) $9,800

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT A) The loss may be intentional. B) The loss must not be catastrophic. C) There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable. D) The loss produced by the risk must be definite

The Ownership provision entitles the policyowner to do all of the following EXCEPT A Designate a beneficiary B Set premium rates C Receive a policy loan D Assign the policy

The equity in an equity index annuity is linked to A) The annuitant's individual stock portfolio. B) The insurance company's general account investments. C) An index like Standard & Poor's 500. D) The returns from the insurance company's separate account

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)

The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say A) The proceeds will be split evenly between the two beneficiaries. B) The policyowner can specify the way proceeds are split in the policy. C) The way proceeds are split between beneficiaries is decided by which type of policy is chosen. D) Life insurance policies may have only one beneficiary

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as A. The previous premium payments were high enough to create an excess of premium. B. The policyowner cannot skip premiums without the policy lapsing. C. The next month's premium is sufficient to cover both the current premium amount and the skipped amount. D. The policy contains sufficient cash value to cover the cost of insurance.

The policyowner 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 policyowner choose? A Fixed amount option B Interest only option C Life income with period certain D Joint and survivor

The purpose of insurance regulation is to A) Keep producers honest. B) Make insurance companies pay taxes. C) Promote the public welfare. D) Make insurance statutes uniform between states

The purpose of the Life and Health Insurance Guaranty Association is to A) Encourage Life insurers to write substandard business. B) Allow producers to continue to solicit insurance, even if the company they represent is financially impaired. C) Protect the reputation of the Insurance Department if it issues a Certificate of Authority to a company that becomes insolvent. D) Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company

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

Two attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose A) Section 457 Deferred Compensation Plan. B) 403(b) plan. C) 401(k) plan. D) HR-10 (Keogh Plan)

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings A) 75% of employee's contributions are taxed. B) They are tax deferred until withdrawn. C) Taxes must be paid in full. D) Employer's matching contribution can be 50% of employee's salary

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

What insurance concept is associated with the names Weiss and Fitch? A Guides describing company financial integrity B Policy dividends C Types of mutual companies D Index used by stock companies

What is the advantage of reinstating a policy instead of applying for a new one? A The cash values have gained interest while the policy was lapsed B The original age is used for premium determination C Proof of insurability is not required D The face amount can be increased

What provision in a life or health insurance policy extends coverage beyond the premium due date A) Free look B) Automatic premium loan C) Waiver of premium D) Grace period

What type of annuity activity will cause immediate taxation of the interest earned A) Changing a settlement option B) Failing to make a planned contribution C) Surrendering the annuity for cash D) Using the contract as collateral for a loan

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

When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by A A paramedic or examining physician at the insurer's expense. B The agent. C A physician of the applicant's choice and at his expense. D A home office underwriter

When Jerry purchased a life insurance policy, the producer dated the application 4 months prior. When asked by Jerry, the producer said he was allowed to backdate policies up to six months if it would A) Help him meet a sales quota for that period. B) Cause the insured to pay a lower premium. C) Shorten the contestability period. D) None of the above

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed A) Forwarded to an investor B) Each contract's separate account C) The annuity owner's account D) The insurance company's general account

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount A) Equal to the original policy for as long a period of time that the cash values will purchase. B) In lesser amounts for the remaining policy term of age 100. C) Equal to the cash value surrendered from the policy. D) The same as the original policy minus the cash value

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) A) Key person policy. B) Fraternal association. C) Aleatory contract. D) Executive bonus

When an individual purchases insurance, what risk management technique is he or she practicing? A Sharing B Retention C Transfer D Avoidance

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy A) Return of premium B) Cost of living C) Decreasing term D) Premature death

When must insurable interest exist in a life insurance policy? A) At the time of application B) At the time of policy delivery C) When there is a change of the beneficiary D) At the time of loss

When would life insurance policy proceeds be included in the insured's taxable estate? A When there are any incidents of ownership at the time of death B If the insured's spouse is the policyowner C If the insured transfers ownership of the policy or makes a gift of the policy 5 years prior to his or her death D When the beneficiary is named in the policy

Which is TRUE about the cash surrender nonforfeiture option A) Funds exceeding the premium paid are taxable as ordinary income. B) After the cash surrender, the insured is covered for a grace period of 1 month. C) The policy remains active for some time after the policyholder opts for cash surrender. D) The policyholder receives the original cash value of the policy

Which of the following Life Insurance policies would be considered interest sensitive A) Whole life B) Increasing term C) Universal life D) Adjustable life

Which of the following best describes taxation during the accumulation period of an annuity A) The annuity is subject to state taxes only. B) The annuity is subject to both state and federal taxation. C) The growth is subject to immediate taxation. D) Taxes are deferred

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? A Warranty B Aleatory C Adhesion D Subrogation

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 name and identity of another person

Which of the following best describes what the annuity period is A) The period of time during which accumulated money is converted into income payments B) The period of time from the accumulation period to the annuitization period C) The period of time during which money is accumulated in an annuity D) The period of time from the effective date of the contract to the date of its termination

Which of the following can surrender a deferred annuity contract A) Only the insurance company for nonpayment of premiums B) The beneficiary after the owner's death C) Deferred annuity cannot be surrendered. D) Only the annuity owner

Which of the following describes the tax advantage of a qualified retirement plan A) The earnings in the plan accumulate tax deferred. B) Distributions prior to age 59½ are tax deductible. C) Employer contributions are deductible as a business expense when the employee receives benefits. D) Employer contributions are not taxed when paid out to the employee

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase A) Withdrawn amounts are taxed on a first in, last out basis. B) Taxes are deferred on withdrawn amounts, but a flat penalty is charged. C) Taxes are deferred on withdrawn amounts. D) Withdrawn amounts are taxed on a last in, first out basis

Which of the following entities is in charge of making sure that producers follow the Insurance Code properly A) Governor B) NAIC C) Director D) State law enforcement

Which of the following insurance providers must be nonprofit and sell insurance only to its members? A) Reciprocal B) Fraternal C) Service D) Mutual

Which of the following is NOT a characteristic of an insurable risk? a) The loss must be catastrophic b) The loss must be due to chance c) The loss must be measurable d) The loss exposure must be large

Which of the following is NOT a goal of risk retention? A) To increase control of claim reserving and claims settlements B) To fund losses that cannot be insured C) To minimize the insured's level of liability in the event of loss D) To reduce expenses and improve cash flow

Which of the following is NOT allowed in credit life insurance? a) Creditor becoming a policy beneficiary b) Creditor requiring that a debtor buys insurance from a certain insurer c) Creditor having a collateral assignment on the policy d) Creditor requiring that a debtor has a life insurance

Which of the following is NOT an allowable 1035 exchange A) A whole life insurance policy is exchanged for a Universal life insurance policy. B) An annuity is exchanged for another annuity. C) A life insurance policy is exchanged for an annuity. D) A whole life insurance policy is exchanged for a term insurance policy

Which of the following is NOT an example of insurable interest? A) Debtor in creditor B) Business partners in each other C) Employer in employee D) Child in parent

Which of the following is NOT the consideration in a policy? A. The promise to pay covered losses B. The application given to a prospective insured C. Something of value exchanged between parties D. The premium amount paid at the time of application

Which of the following is NOT true about a joint and survivor annuity benefit option A) Payments stop after the first death among the annuitants. B) A period certain option may be included. C) This option guarantees income for two or more recipients. D) The surviving annuitant may receive reduced payments

Which of the following is NOT true about an insurance consultant in the State of Oregon A) Consultants offer advice for a fee. B) Individual may act as consultants in both life and health, and property and casualty insurance. C) A consultant must hold a valid license. D) Any attorney-at-law may be considered a consultant

Which of the following is NOT true of Section 1035 Policy Exchanges? A It is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy. B Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days. C It requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy. D It is an IRS Code which permits like kind exchanges of property.

Which of the following is NOT true regarding Equity Indexed Annuities A) The insurance company keeps a percentage of the returns. B) They have guaranteed minimum interest rates. C) They are less risky than variable annuities. D) They earn lower interest rates than fixed annuities

Which of the following is NOT true regarding a nonqualified retirement plan A) It needs IRS approval. B) Contributions are not currently tax deductible. C) It can discriminate in benefits and selecting participants. D) Earnings grow tax deferred

Which of the following is NOT true regarding policy loans A) A policy loan may be repaid after the policy is surrendered. B) Money borrowed from the cash value is taxable. C) Policy loans can be repaid at death. D) An insurer can charge interest on outstanding policy loans

Which of the following is NOT true regarding the accumulation period of an annuity A) It would not occur in a deferred annuity. B) It is the period during which the annuity payments earn interest. C) It is the period over which the annuitant makes payments into an annuity. D) It is also known as the pay-in period

Which of the following is NOT typically excluded from life policies? A Death due to plane crash for a fare-paying passenger B Self-inflicted death C Death that occurs while a person is committing a felony D Death due to war or military service

Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy A) It applies only to term life insurance policies. B) It is optional on all life insurance policies. C) It begins when the policy is delivered. D) It begins when the application is signed

Which of the following is TRUE for both equity indexed annuities and fixed annuities A) They have a guaranteed minimum interest rate. B) They are both tied to an equity index. C) Both are considered to be more risky than variable annuities. D) They invest on a conservative basis

Which of the following is TRUE of a qualified plan A) It has a tax benefit for both employer and employee. B) It does not need to have a vesting schedule. C) It may discriminate in favor of highly paid employees. D) It may allow unlimited contributions

Which of the following is TRUE regarding the accumulation period of an annuity A) It is a period of time during which the beneficiary receives income B) It is limited to 10 years. C) It is a period during which the payments into the annuity grow tax deferred. D) It is also referred to as the annuity period.

Which of the following is TRUE regarding the annuity period A) It is also referred to as the accumulation period. B) It is the period of time during which the annuitant makes premium payments into the annuity. C) It may last for the lifetime of the annuitant. D) During this period of time the annuity payments grow interest tax deferred

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process A) Policy Summary B) Illustrations C) Buyer's Guide D) Insurance Index

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Warranty b) Concealment c) Indemnity d) Representation

Which of the following is an IRS qualified retirement program for the self-employed A) Keogh B) Split Dollar C) Buy and Sell Agreement D) 401(k)

Which of the following is an example of a limited-pay life policy A) Renewable Term to Age 70 B) Level Term Life C) Straight Life D) Life Paid-up at Age 65

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A Making deceptive statements about a competitor B Telling a client that his first premium will be waived if he purchased the insurance policy today C Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest D Charging a client a higher premium for the same policy as another client in the same insuring class

Which of the following is an example of a producer's fiduciary responsibilities A) A producer helping clients to file claims B) A producer doing a review of his client's coverage C) A producer offering additional coverage to his client D) A producer promptly forwarding premiums to the insurance company

Which of the following is licensed solely to advise insureds about their policies A) Actuary B) Consultant C) Agent D) Broker

Which of the following is true about the premium on the children's rider in a life insurance policy? A It remains the same no matter how many children are added to the policy. B It decreases when the oldest child reaches the age of 21. C It increases when a newborn baby is added to the policy. D It decreases when an adopted child is added to the policy.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A The policy covers only the natural children of the insured. B Each child covered must show evidence of insurability. C It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. D It is permanent insurance

Which of the following is true regarding a modified guaranteed annuity A) There are no penalties for a premature surrender of the annuity. B) It provides a level benefit payment. C) The owner is guaranteed a fixed interest rate for a specific period of time. D) The insurer bears all the market risk of changing interest rates

Which of the following is true regarding a single life settlement option? A It provides income the beneficiary cannot outlive. B Payments continue until the entire principal is exhausted. C Proceeds are paid out in a lump sum. D It provides income for a specified period of time

Which of the following is true regarding payment of claims by an insurer A) Upon an inquiry, the insurer must furnish a response to the Director within 30 days. B) If a claim investigation is extended beyond the initial period, the insurer must keep the claimant informed of the progress every 30 days. C) Claims must be either paid or acknowledged within 30 days of notification. D) Insurers must investigate all claims within 30 days of the receipt of notification

Which of the following is true regarding taxation of dividends in participating policies? A Dividends are not taxable. B Dividends are taxable only after a certain amount is accumulated annually. C Dividends are taxable in some life insurance policies and nontaxable in others. D Dividends are considered income for tax purposes

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 A business partner of the insured B The wife of the deceased insured C The former wife of the deceased insured D A minor son of the insured

Which of the following persons is required to hold a producer license A) A person who negotiates insurance contracts B) A person who creates insurance advertisements C) A person who takes messages related to claims D) A person who administers employee benefits

Which of the following policies would be classified as a traditional level premium contract A) Adjustable Life B) Universal Life C) Variable Universal Life D) Straight Life

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium A) Extended term B) Reinstatement C) Reduce-paid up D) Automatic premium loan

Which of the following statements about group life is correct A) The premiums are higher than in an individual policy because there is no medical exam. B) The group sponsor receives a Certificate of Insurance. C) The policy can be converted to an individual term insurance policy. D) The cost of coverage is based on the ratio of men and women in the group

Which of the following statements concerning buy-sell agreements is true A) Benefits received are considered income taxable B) Buy-sell agreements pay in the event of a medical emergency C) Buy-sell agreements are normally funded with a life insurance policy D) Premiums paid are deductible as a business expense

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A) An individual has an insurable interest in his or her own life B) A debtor has an insurable interest in the life of a lender C) Business partners have an insurable interest in each other D) A husband and wife has an insurable interest in their spouse

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors A) Mortality rate B) Risk exposure C) Morbidity D) Life expectancy

Which of the following types of insurance policies would perform the function of cash accumulation A) Credit life B) Increasing term C) Whole life D) Term life

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount A) Variable life B) Adjustable life C) Universal life D) Flexible life

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity A) Investment performance of the insured B) Statewide predetermined annual interest rate C) Insurer's guaranteed minimum rate of interest D) Investment performance of the company

Which of the following will be included in a policy summary? A. Premium amounts and surrender values B. Copies of illustrations and application C. Comparisons with similar policies D. Primary and secondary beneficiary designations

Which of the following would NOT be considered an unfair and deceptive practice A) Defamation B) Misrepresentation C) Controlled business D) Rebating

Which of the following would NOT fall into the category of costs associated with death? A Day to day expenses of maintaining the family B The expense of a vacation for surviving family members C Funeral expenses D Final medical expenses of the insured

Which of the following would be a violation of life policy illustration regulation in Oregon? a) Labeling the document "life insurance illustration" b) Stating that the illustration is not part of the contract c) Providing a customer with an incomplete illustration d) Listing non-guaranteed elements of the policy

Which of the following would be considered an unfair claims settlement practice A) Requesting the insured swear under oath concerning the facts of the claim B) Delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation C) Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered D) Requesting the insured to submit a signed proof of loss statement, after the insured has already verbally advised the insurer of the claim

Which of the following would be considered false advertising? A Stating that a policy has limitations and exclusions B Failing to include premiums in sales materials C Implying that the agent is the insurer D Stating the differences in benefits between Whole Life Insurance and Term Life Insurance

Which of the following would be required to be licensed as an insurance producer A) An insurance company director who performs executive, administrative and managerial duties B) A salaried employee who advertises and solicits insurance C) A person whose activities are limited to producing insurance advertisements D) A salaried full-time employee who furnishes information for group insurance

Which of the following would help prevent a universal life policy from lapsing A) Corridor of insurance B) Target premium C) Face amount D) Adjustable premium

Which type of retirement account allows contributions to continue beyond age 70½ and does not force distributions to start at age 70½ A) Roth IRA B) Flexible IRA C) Standard IRA D) Traditional IRA

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) Life annuity with period certain B) Increasing term C) Limited pay whole life D) Interest-sensitive whole life

Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain A) Individual B) Independent Group Contract C) Single D) Nonqualified

Which statement is NOT true regarding a Straight Life policy A) It has the lowest annual premium of the three types of Whole Life policies. B) Its premium steadily decreases over time, in response to its growing cash value. C) The face value of the policy is paid to the insured at age 100. D) It usually develops cash value by the end of the third policy year

Which type of insurance is based on mutual agreements among subscribers? A) Reciprocal Insurance B) Mutual Insurance C) Limited Liability D) Reinsurance

Who may complete a paramedical report A) An underwriter B) A nursing assistant C) A registered nurse D) A spouse

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