Miscellaneous Kansas Life

Per Capita is defined as

"by the head". Under this class designation, only the living heirs receive a portion of the policy proceeds.

How many quarters of coverage are required for currently insured status under Social Security? Select one: a. 6 b. 10 c. 20 d. 40

A covered worker who has accrued at least six quarters of coverage over the past 13 quarters ending with the quarter of disability onset, death or retirement, is currently insured. The correct answer is: 6

A fully insured individual must have which of the following? Select one: a. 40 quarters of credit b. 20 quarters of credit c. 10 quarters of credit d. 4 quarters of credit

A fully insured individual must have 40 quarters of credit, for a total of 10 years of work. The correct answer is: 40 quarters of credit

What type of life insurance policy is the waiver of cost of insurance rider used for? a. Universal life b. Variable life c. Straight life d. Modified whole life

A. Universal life. The waiver of cost of insurance rider is used for universal life policies. It allows a disabled policyowner to waive the cost of death protection, but does not waive the cost of premium required to build cash value in the policy.

Advertising including printed and published material must be kept on file and be submitted for review at least how much time prior to publication? Select one: a. 7 days b. 14 days c. 30 days d. 60 days

Advertising including printed and published material must be kept on file and be submitted for review at least 30 days prior to publication. The correct answer is: 30 days

Maria and her employer share in the cost of her group life insurance premiums. Which of the following is true? Select one: a. Maria's premiums are tax-deductible. b. The employer's premiums are not tax-deductible. c. Both the employer's and Maria's premiums are tax-deductible. d. Only the employer's premiums are tax-deductible.

For group life insurance, employer-paid premiums are tax-deductible as a business expense. Premiums paid by the employee are not tax-deductible. The correct answer is: Only the employer's premiums are tax-deductible.

Edward purchases a life insurance policy as a gift for his aunt. Which of the following is true? Select one: a. Edward's premiums are always tax-deductible. b. Edward pays the gift tax. c. Edward's aunt pays the gift tax. d. There is no tax on gifts.

Gift tax is paid by Edward, the giver of the gift. The correct answer is: Edward pays the gift tax.

Individual life insurance policies may provide interest rates on policy loans with an adjustable maximum interest rate to be determined at least once every: Select one: a. 6 months b. 12 months c. 18 months d. 24 months

Individual life insurance policies may provide interest rates on policy loans, as long as they do not exceed a maximum interest rate of 8% per annum or an adjustable maximum interest rate to be determined at least once every 12 months. The correct answer is: 12 months

Under which insured Social Security insured status are most benefits paid? Select one: a. Fully insured b. Currently insured c. Disability insured d. None of the above

Most Social Security benefits are paid to fully insured individuals. The correct answer is: Fully insured

Replacement rules do not apply to: Select one: a. Group life or credit life insurance b. Group life or whole life insurance c. Individual life or credit life insurance d. Individual life or industrial life insurance

Replacement rules do not apply to group life or credit life insurance. The correct answer is: Group life or credit life insurance

Regarding Social Security, PIA, stands for ____________, the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age.

The "primary insurance amount" (PIA).

What is the basis for a person's Social Security insured status? Select one: a. Primary insurance amount b. Age c. Quarters of credit d. None of the above

The number of quarters of credit an individual has earned determines their Social Security insured status. The correct answer is: Quarters of credit

How long is the waiting period for disability benefits under Social Security? Select one: a. 5 months b. 6 months c. 12 months d. 29 months

The waiting period for disability benefits is five months with benefits beginning in the sixth month. The correct answer is: 5 months

Upon receipt of proof of loss, a valid claim settlement must be paid: Select one: a. Immediately b. Within 7 days c. Within 21 days d. Within 30 days

Upon receipt of proof of loss, a valid claim settlement must be paid immediately. The correct answer is: Immediately

Immediate annuities must be purchased with: a. A single premium b. Level premiums c. Flexible premiums d. A single premium only after the annuitant reaches the age of 59

a. A single premium. Immediate annuities must be purchased with a single premium.

What policy year does cash value begin to accumulate in a whole life policy? Select one: a. 1st b. 2nd c. 3rd d. 4th

c. 3rd. Due to the amount of the agent's commission in the first years and the expenses associated with effectuating a life insurance policy, permanent policies do not accrue cash value until the third policy year.

The ____________ clause states that the insurance coverage is in place on application and the payment of the first premium. a. Payment of premium b. Insuring c. Consideration d. Applicant control

c. Consideration. The consideration clause grants coverage when the application has been made and the first premium paid.

The cash value of Pete's annuity is invested in securities. What type of annuity does Pete have? a. Immediate b. Deferred c. Fixed d. Variable

d. Variable. With a variable annuity, the cash value is invested in securities.

In life insurance, which one of these allow insured's estate may be named as beneficiary: a. This designation is used in cases where: b. There are no living beneficiaries, c. The policyowner did not name any beneficiaries, or d. The beneficiary is found guilty of murdering the insured. e. All of these

e. All of these.

What are the tax implications when personal life insurance is given as a gift and the recipient owns the policy, but the gift-giver pays the premiums? Select one: a. No party pays tax. b. Both parties pay tax. c. The gift-giver pays tax, but only up to the amount exceeding the federal gift limit. d. The recipient pays tax, but only up to the amount exceeding the federal gift limit.

Individuals may also make a gift of a life insurance policy by paying premiums. The policy is owned by the done, but premiums are paid by the donor. The premium payments are taxable only up to those amounts exceeding the federal gift limits. The correct answer is: The gift-giver pays tax, but only up to the amount exceeding the federal gift limit.

All of the following are true regarding business life insurance, EXCEPT: Select one: a. Premiums are not tax-deductible as a business expense. b. Proceeds are tax-free. c. If a business uses a life insurance policy for business purposes, premiums are paid with after-tax dollars. d. If a business purchases group insurance for the benefit of its employees, employer-paid premiums are not tax-deductible.

Life insurance policy premium payments are not tax-deductible as a business expense if the company is using the policy for business purposes; however, the proceeds are tax-free. The exception to this is when a business purchases group insurance for the benefit of its employees. The correct answer is: If a business purchases group insurance for the benefit of its employees, employer-paid premiums are not tax-deductible.

How are premiums for group life insurance taxed? Select one: a. Premiums paid by the employer and the employee are tax-deductible. b. Employer-paid premiums are tax-deductible as a business expense, but employee-paid premiums cannot be deducted from taxes. c. Premiums paid by the employer and employee are not tax-deductible. d. None of the above

Premiums for group life insurance paid by the employee are not tax-deductible, but the employer can deduct premiums it pays as a business expense. The correct answer is: Employer-paid premiums are tax-deductible as a business expense, but employee-paid premiums cannot be deducted from taxes.

Which type of assignment is partial and temporary? a. Absolute b. Collateral c. Involuntary d. None

b. Collateral. A collateral assignment is a partial and temporary transfer of ownership rights and is usually used for securing a loan.

In regards to Life Insurance, Lee names his four children - Mike, Julie, Karra and Broch - as per capita beneficiaries. Jason has two children of his own. Julie, Karra and Broch are single and do not have any children. If Mike and Broch were predeceased upon Lee's death, then Julie and Karra each would receive ½ of the policy proceeds based on:

The per capita stipulation that prohibits Mike's beneficiary designation to be passed on to his children, according to the Per Capita beneficiary concept

Which of the following is one of the replacing insurer's duties in a life insurance policy replacement transaction? Select one: a. Inform the Commissioner of the requirements for replacement regulations b. Obtain from the agent a list of all current life insurance policies c. Get an order for replacement from the applicant d. Notify the insurer whose insurance is being replaced

The replacing insurer's duties include informing the agents of the replacement regulations, obtaining from the agent a list of all current life insurance policies, and verifying the applicant's information in the proposal. Getting an order for replacement from the applicant is the agent's duty. The correct answer is: Obtain from the agent a list of all current life insurance policies

How much is the Social Security disability benefit payable to a covered worker? Select one: a. 1/4 their PIA b. 1/2 their PIA c. 3/4 their PIA d. Their PIA

Under Social Security disability benefits, the covered worker will receive monthly payments in the amount of their PIA. At the earliest, the disabled covered worker may be eligible to receive Social Security disability benefits upon the sixth month of disability. The correct answer is: Their PIA

What is the maximum amount that the Kansas Life and Health Insurance Guaranty Association will pay to a person for a health insurance benefit from an insolvent insurer? a. $100,000 b. $200,000 c. $300,000 d. $500,000

a. $100,000. The Kansas Life and Health Insurance Guaranty Association will pay a maximum of $100,000 for a health insurance benefit.

How long is the waiting period for the waiver of premium rider in life insurance policies? a. 3 to 6 months b. 9 months c. 12 months d. 24 months

a. 3 to 6 months. In most life insurance policies with the waiver of premium rider, the insured must be disabled for 3 to 6 months before the premium will be waived.

Which life insurance rider is also referred to as the living benefit rider and allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness? a. Accelerated benefit rider b. Substitute insured rider c. Multiple indemnity d. AD&D

a. Accelerated benefit rider. The accelerated benefit rider, also referred to as a living benefit rider, allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness.

The aviation clause excludes all of the following accidents, EXCEPT: a. Individual who dies while flying in a commercial aircraft as a fare-paying passenger b. Individual who dies while performing as an acrobatic pilot in an air show c. Charter pilot who loses control of the plane in a thunderstorm, and dies d. Air Force pilot whose jet aircraft explodes

a. Individual who dies while flying in a commercial aircraft as a fare-paying passenger. The aviation exclusion states that the insurer will not pay the claim if the insured dies due to involvement with aviation, such as a military pilot flying a jet aircraft. Individuals flying in commercial aircraft as fare-paying passengers would not be excluded from coverage. The correct answer is: Individual who dies while flying in a commercial aircraft as a fare-paying passenger

Which of the following is a situation where the insurance company refunds premiums paid? a. Insured commits suicide during the suicide clause period b. Insured cancel the policy because he found a better deal c. Insured files a fraudulent claim d. None of the above

a. Insured commits suicide during the suicide clause period. If an insured commits suicide during the suicide clause period, the insurer will refund the premiums to the beneficiary. The insurer is not required to pay the policy's cash value (premiums plus interest) to the beneficiary.

Which settlement option pays the growth on the principal in installments? a. Interest-only b. Fixed-period installments c. Fixed-amount installments d. Life income

a. Interest-only. The interest-only settlement option invests the principal (the death benefit) and pays out the growth on the principal in installments to the beneficiary.

During the annuity phase of a variable annuity, how does the number of annuity units affect a variable annuity contract owner? a. It determines the contract owner's dollar value investment in the separate account. b. It determines the contract owner's dollar value investment in the general account. c. It determines the contract owner's fixed annuity payment amount. d. It determines the contract owner's fixed premiums.

a. It determines the contract owner's dollar value investment in the separate account. During the annuity phase, annuity units are used in lieu of accumulation units to determine the amount of each annuity payment. Annuity payments are not fixed, and vary based on the value of each annuity unit from day to day. The number of annuity units is fixed and is based on the contract's dollar value investment in the separate account, and how much the first annuity payment will be.

Which of the following annuity payout options pays benefits to two annuitants, where payments will be made to the surviving annuitant for life upon the first annuitant's death? a. Joint and survivor b. Period certain c. Straight life d. None of the above

a. Joint and survivor. A joint and survivor annuity payout option pays annuity benefits to two annuitants. If either of the two annuitants dies, payments will be made to the surviving annuitant for life. Payments stop upon the death of the surviving annuitant.

If this annuity is surrendered prior to annuitization, the contract owner must pay a surrender fee if the interest rate has increased: a. Market value adjusted annuity b. Equity indexed annuity c. Fixed annuity d. FPDA

a. Market value adjusted annuity. A market value adjusted annuity stipulates that the annuity will incur a surrender charge if the contract is surrendered prior to annuitization. Contracts earning higher rates will require the contract owner to pay a surrender charge because the insurer is losing income on a profitable contract.

What will the insurance company do if an insured commits suicide after the suicide clause expires? a. Pay the death benefit b. Refund the premiums paid to the beneficiary c. Refund the premiums paid with interest, to the beneficiary d. Void the policy

a. Pay the death benefit. The insurance company will pay the death benefit if the insured commits suicide after the suicide clause lapses. The correct answer is: Pay the death benefit

Which of the following is not a payout option that pays the annuitant for life? a. Period certain option b. Cash refund c. Installment refund d. Life annuity with period certain

a. Period certain option. Unlike a life annuity, the period certain option does not guarantee income for life. Instead, it provides income for a fixed time period, such as 10 or 15 years.

Adrian bought an annuity for herself. After a few years, she begins to receive annuity payments. When she dies, her best friend will receive the balance of principal. Which of the following annuities best describes the annuity Adrian bought? Adrian bought an annuity for herself. After a few years, she begins to receive annuity payments. When she dies, her best friend will receive the balance of principal. Which of the following annuities best describes the annuity Adrian bought? Select one: a. Refund life b. Straight life c. Joint and survivor life d. All of the above

a. Refund life. The refund life annuity pays for the entire life of the annuitant. If the annuitant dies before the premiums in the annuity have been paid out, then a beneficiary will receive the balance.

Susan purchases an annuity with a $40,000 lump-sum payment on July 15. She begins to receive monthly annuity payments on August 15. What type of annuity did she buy? a. SPIA b. SPDA c. Deferred d. None of the above

a. SPIA . Susan purchased a single premium immediate annuity (SPIA). A single premium is used to purchase the immediate annuity, and the payment period begins one payment period from the date the annuity was purchased.

______________ allow the policy proceeds to be retained by the insurer and paid out gradually. Select one: a. Settlement options b. Policy loan provisions c. Policy exclusions d. Premium payment modes

a. Settlement options. Settlement options allow the policy proceeds to be retained by the insurer and paid out gradually.

All of the following are part of the entire contract provision, EXCEPT: a. States that the insurer's promise to pay benefits is contingent upon the policyowner's premium payments b. States who can make changes to the contract c. Policy d. Application

a. States that the insurer's promise to pay benefits is contingent upon the policyowner's premium payments. The insurer's promise to pay benefits in exchange for the policyowner's premium payments is part of the consideration clause.

Of the basic types of whole life insurance, which policy has the lowest premium payment? a. Straight life b. Limited payment c. Single premium d. None of the above

a. Straight life. Compared to limited payment and single premium policies, straight life has the lowest premium payment.

Which life insurance rider allows the policyowner to waive premium payments during a disability, while keeping the policy in force? a. Waiver of premium rider b. Waiver of cost of insurance c. Disability income benefit d. Payor rider

a. Waiver of premium rider. The waiver of premium rider in a life insurance policy permits the policyowner to waive premium payments during a disability, while keeping the policy in force. Typically, the policy requires that the disability is total and permanent.

What is the maximum aggregate penalty for having intentionally engaged in an unfair method of competition? a. $1,000 b. $5,000 c. $10,000 d. $50,000

b. $5,000. The Commissioner may also issue a monetary penalty not to exceed $1,000 for each violation, not to exceed an aggregate amount of $10,000. If the person intentionally violated the act, the penalty is increased to $5,000 per violation, with a maximum aggregate of $50,000

Judith wants her life insurance policy to grow cash value quickly. Which policy would you recommend to her? a. Straight life b. 25-pay life c. Convertible term d. Reentry term

b. 25-pay life. Limited pay whole life policies grow cash value faster than ordinary (straight) whole life policies because the premium paying period is restricted to a limited number of years. In this example, the premium paying period is restricted to 25 years.

What is the term of office of the Commissioner of Insurance? a. 2 years b. 4 years c. 5 years d. 6 years GEN-1002-KS

b. 4 years. The Commissioner is the head of the department of insurance and is elected every 4 years.

All of the following actions might lead to a suspended license, EXCEPT: a. An individual has failed to pay child support b. An individual is affiliated with an insurer who has a certificate of authority c. An individual cheated on an examination d. An individual had an insurance producer license suspended in another jurisdiction

b. An individual is affiliated with an insurer who has a certificate of authority. An individual who is affiliated with an insurer who does not have a certificate of authority may have their license suspended.

During the payout period of a variable annuity, the amount of each payment is based on: a. Accumulation units b. Annuity units c. Insurer's general account d. Death benefit

b. Annuity units. Once a variable annuity is annuitized, accumulation units are converted into a fixed number of annuity units. The value of an annuity unity varies depending on the investment experience in the separate account.

Which of the following riders pays back the premiums paid into a life insurance policy as long as the insured dies within the time as specified in the policy? a. Return of cash value b. Automatic premium loan c. Excess interest provision d. Automatic premium loan

b. Automatic premium loan. Return of cash value allows a whole life policy's cash value to be included in the death benefit. The automatic premium loan allows the insured to automatically use cash value to pay an overdue premium. The excess interest provision pertains to a policy's interest rate and the ability of the policy to build excess cash value. Return of premium pays back premiums paid into the policy.

Why are STOLI arrangements ethical dilemmas? a. Because the insured receives a lump-sum payment from a third party when the policy is sold to the stranger/investor b. Because the investor/stranger does not have an insurable interest in the insured c. Because life insurance cannot be sold to third parties d. All of the above

b. Because the investor/stranger does not have an insurable interest in the insured. STOLI and IOLI arrangements are ethical dilemmas because the investor or stranger does not have insurable interest in the continued life and well being of the insured. They want the insured to die very soon, so that they will receive the policy death benefits. Often times, once the policy has been sold to a stranger/investor, the insured will be contacted several times a year to see if he/she has died.

All of the following are true regarding deferred annuities, EXCEPT: a. Deferred annuities have a payout period that begins after one year, or after many years from the annuity's purchase date. b. Deferred annuities must be purchased with multiple premium payments. c. During the accumulation period, the principal earns compound interest on a tax deferred basis. d. Deferred annuities are frequently used to build retirement funds.

b. Deferred annuities must be purchased with multiple premium payments.Deferred annuities can be purchased with a single premium or with multiple premiums.

This fixed annuity has a minimum interest rate and a current interest rate that is tied to the S&P 500: a. Market value adjusted annuity b. Equity indexed annuity c. Fixed annuity d. FPDA

b. Equity indexed annuity. An equity indexed annuity will earn a guaranteed minimum interest rate up to a current interest rate that is tied to an equity index, such as the S&P 500.

Any incorporated society, order or supreme lodge without capital stock and not for profit, but having a representative form of government, and which provides benefits in accordance with the insurance regulations of Kansas is called a (an): a. Insured Corporation b. Fraternal benefit society c. Non-stock insurer d. Mutual insurer

b. Fraternal benefit society. A fraternal benefit society means any incorporated society, order or supreme lodge without capital stock and not for profit, but having a representative form of government, and which provides benefits in accordance with the insurance regulations of Kansas.

What part of the insurance contract contains the insurer's promise to pay benefits? a. Consideration clause b. Insuring clause c. Payment of claims d. Execution clause

b. Insuring clause. The insuring clause contains the insurer's promise to pay benefits in the event of a covered loss. The consideration clause states that a policyowner must pay premium in exchange for the insurer's promise to pay benefits.

Annette and John are married and have an annuity in which payments will reduce to 2/3 of the original amount upon the death of the first annuitant. What annuity do they have? a. Joint life annuity b. Joint and 2/3 life annuity c. Joint and 1/2 life annuity d. Joint and survivor annuity

b. Joint and 2/3 life annuity. The joint and 2/3 life annuity will pay the full benefit amount while both annuitants are alive. Upon the death of the first annuitant, the annuity benefit will reduce to 2/3 that of the original payment amount.

Compared to straight life, a limited payment life insurance policy is characterized by all of the following, EXCEPT: Select one: a. Policy is paid up before the age of 100. b. Premium-paying period is longer. c. Cash value accrues more quickly. d. Premiums are higher.

b. Premium-paying period is longer. As the name indicates, a limited payment life insurance policy has a shorter premium-paying period compared to a straight life policy.

Which of the following best describes the benefit provided by a payor benefit rider? a. Permanent waiver of the policy premium b. Temporary waiver of the policy premium c. Monthly disability income benefit d. Triple indemnity death benefit

b. Temporary waiver of the policy premium. A payor benefit rider provides a temporary waiver of the policy premium if the premium payor dies, until the minor insured reaches the age stated in the policy (usually 18 or 21).

An insurer's general account is: a. Used to invest premiums for variable insurance products and variable annuities b. Used to invest premiums for fixed annuities c. Characterized by high risk investments d. Characterized by high yield interest rates

b. Used to invest premiums for fixed annuities. An insurer's general account is used to invest premiums for fixed insurance products and annuities. It is comprised of conservative assets such as bonds, with conservative yields.

Which of the following is not a living benefits option for using cash value in a life insurance policy? a. Accelerated benefits b. Viatical settlements c. 1035 policy exchange d. Life Settlement

c. 1035 policy exchange. Section 1035 of the Internal Revenue Code allows for certain exchanges without recognizing a gain or loss for tax purposes. 1035 exchanges are not living benefit options.

To prevent individuals intending to commit suicide from purchasing life insurance, policies include a suicide clause. How long is the suicide clause in effect. a. 3 months b. 1 year c. 2 years d. 5 years

c. 2 years. The suicide clause specifies that if death is by suicide during the first two years, no death benefit is paid.

All of the following are true of the straight life income option for annuities, EXCEPT: a. The straight life income option provides the largest periodic benefit. b. Payments stop upon the annuitant's death. c. A beneficiary will receive any balance of the annuity upon the annuitant's death. d. Payments consist of principal and interest.

c. A beneficiary will receive any balance of the annuity upon the annuitant's death. The annuitant receives annuity payments for their entire life. Upon the annuitant's death, the annuity payments stop. The insurer retains any balance on the annuity.

Which of the following statements incorrectly describes cash value in an ordinary whole life policy? a. Cash value can be used to pay premiums. b. Cash value grows on a tax-deferred basis. c. Cash value may be used as a policy loan, without affecting the death benefit. d. Cash value is a nonforfeiture value.

c. Cash value may be used as a policy loan, without affecting the death benefit. Unpaid policy loans are deducted from the policy death benefit upon maturation.

______________ whole life policies provide a lower initial premium that can fluctuate up to a maximum premium as stated in the policy. Select one: a. Continuous premium b. Straight c. Indeterminate premium d. Limited premium

c. Indeterminate premium. Indeterminate premium whole life policies provide a lower initial premium that can fluctuate up to a maximum premium as stated in the policy.

Which of the following in not an annuities classification that fits into the structure and design of an annuity? a. Funding method b. Date income payments begin c. Law of large numbers d. Investment configuration

c. Law of large numbers. The Law of Large Numbers is not a classification that is part of the structure and design of an annuity. The correct answer is: Law of large numbers

Which provision in a life insurance policy provides the insurer with the right of medical examination and autopsy? a. Excess interest provision b. Modifications c. Medical examination and autopsy d. APL

c. Medical examination and autopsy. Insurers may require the proposed insured undergo a medical examination prior to issuing coverage at the insurer's expense, if necessary, such as for large amounts of coverage. The insurer may also request a deceased insured to undergo autopsy for good cause, if not prohibited by state law, while a claim is pending.

Which of the following is a provision that requires any change to a life insurance policy be made by an executive officer of the insurer, and attached to the policy? a. Cash loan b. APL c. Modifications d. Excess interest provision

c. Modifications. Modifications are policy changes and must be made by an authorized officer of the insurer and attached to the policy. Only the policyowner has the right to request changes. Insurance producers cannot make any policy change. Changes to the policy can only be implemented by an executive officer of the insurer.

What are the two types of war/military service exclusions? a. Suicide and aviation b. Aviation and jet aircraft c. Status clause and results clause The two kinds of war/military service exclusions are: status clause and results clause. d. Airplane clause and passenger clause

c. Status clause and results clause The two kinds of war/military service exclusions are: status clause and results clause.

Sometimes an insurance rider is needed for a non-family member such as a key employee in an organization. Which of the following riders would be used in this circumstance? a. Guaranteed insurability rider b. Annuity rider c. Substitute insurance rider d. None of the above

c. Substitute insurance rider. Your answer is incorrect The substitute insurance rider allows the policy to remain in force when an employee changes jobs or retires and a new employee is substituted on the policy.

Accelerated benefits fall into the same category as death benefits. Which of the following is NOT true about the accelerated death benefit? a. The insured is certified by a physician to have an illness or condition that will result in death. b. The benefit paid is tax free. c. There is no deduction from the death benefit. d. The benefits can be paid weekly or monthly.

c. There is no deduction from the death benefit. If accelerated benefits are paid, there is a deduction of that amount paid from the death benefit.

Inducing a policyholder to switch insurance companies without regard to bad consequences is: a. Boycott b. Churning c. Twisting d. Defamation

c. Twisting, NOT Defamation! Twisting is knowingly making misleading representations or incomplete or fraudulent comparisons of insurance policies in order to induce a person to lapse, forfeit, surrender, terminate, retain, assign, or convert a policy in order to sell a policy for another company.

Paul has a $50,000 whole life insurance policy. At the time of his death he has an outstanding policy loan in the amount of $10,000. The insurer will deduct the outstanding loan from the: a. cash value b. surrender value c. policy proceeds d. withdrawal amount

c. policy proceeds. The loan amount is deducted from the policy proceeds.

A long-term care rider provides qualifying individuals with funds to pay long-term expenses while the insured is still alive. What is the typical maximum percentage of the death benefit that can be paid by this rider? a. 75% b. 50% c. 25% d. 80%

d. 80%. A long-term care rider can pay up to 80% of the death benefit.

How many accumulation units are in the separate account? a. 100 b. 1,000 c. 100,000 d. A set number

d. A set number. The separate account has a certain total number of accumulation units.

The amount of each monthly payment for a straight life annuity is based on the annuitant's: a. Age b. Sex c. Age and sex d. Age, sex, and amount of money in the annuity upon annuitization

d. Age, sex, and amount of money in the annuity upon annuitization. For life annuities, the amount of each periodic payment is based on the annuitant's age and sex and the amount of money in the annuity upon annuitization.

Which of the following statements is true about the guaranteed insurability rider (GIR)? a. The insured can buy additional life insurance at specific times in the future. b. If the option is not exercised within 90 days of the specific time, the option is forgone. c. The guaranteed insurability rider usually drops off at age 40. d. All of the above

d. All of the above. All of the statements are true. The options offer the opportunity to buy additional life insurance at specific times, and if not exercised within 90 days of the specified time, the insured loses the option. The rider usually drops off at age 40.

Of the following, who will receive the largest monthly annuity benefit from a $100,000 single premium immediate annuity with 5-year period certain: John, age 35; Paulina, age 59 1/2; or Corina, age 70? a. Paulina b. John c. Corina d. Each receives the same amount

d. Each receives the same amount. With a period certain annuity payout option, the monthly periodic benefit is based on the amount of the annuity upon annuitization and the length of the period certain. The annuitant's age and sex are not factors.

All of the following statements are true regarding the interest rate guarantees of fixed annuities, EXCEPT: a. Premiums grow at a fixed interest rate during the accumulation phase. b. Benefits are paid at a fixed interest rate. c. Fixed annuities earn the insurer's current interest rate, which cannot drop below the quoted fixed interest rate. d. If the insurer's current interest rate drops below the quoted fixed interest rate, the insurer will pay the lower current interest rate.

d. If the insurer's current interest rate drops below the quoted fixed interest rate, the insurer will pay the lower current interest rate. Fixed annuities will earn the insurer's current interest rate. However, contract owners are quoted a guaranteed minimum interest rate (around 4%) that the annuity will earn, at a minimum. If the current interest rate drops below the guaranteed minimum interest rate stated in the contract, the insurer is obliged to pay the guaranteed minimum interest.

With respect to whole life insurance, which of the following statements is false? a. Whole life insurance cash values may be withdrawn in part, or in whole. b. A policyowner may stop paying premiums and surrender the policy for its cash value. c. If the policy cash values are depleted and no more premium payments are made, the policy will lapse. d. None of the above

d. None of the above. Whole life insurance cash values are a nonforfeiture value that the policyowner may withdraw in part or in whole. If all policy cash values are withdrawn and no further premium payments are made, the policy will lapse. The policyowner may cease paying premiums and surrender the policy for its cash value.

Barney dies during the grace period of a life insurance policy. The insurer will: a. Void the policy b. Pay half the death benefit c. Pay the full death benefit d. Pay the death benefit minus the overdue premium

d. Pay the death benefit minus the overdue premium. Coverage is still in force during the grace period. The insurer will deduct the overdue premium from the death benefit if the insured dies during the grace period.

Which disability income rider is typically attached to a juvenile life insurance policy? a. Waiver of premium b. Waiver of cost of insurance c. Disability income benefit d. Payor rider

d. Payor rider. The payor rider waives premiums if the premium-payor of a juvenile life policy becomes disabled before the child reaches a certain age.

At a hearing, the Commissioner has all the following powers, EXCEPT: a. Administer oaths b. Receive documentary evidence c. Subpoena witnesses d. Send a person to jail

d. Send a person to jail. At a hearing, the Commissioner has the power to administer oaths, examine witnesses, receive documentary evidence, and subpoena witnesses.

Barry begins to receive periodic annuity payments. Upon Jacob's death all annuity payments cease and the balance in the annuity is retained by the insurer. What annuity does Barry have? a. Refund life annuity b. Life annuity with period certain c. Installment refund life annuity d. Straight life

d. Straight life. The straight life annuity pays for the entire life of the annuitant only. If the annuitant dies before the balance of the annuity is paid out, that sum is forfeited to the insurer.

All of the following statements are true regarding the APL provision in a life insurance policy, EXCEPT: a. APL stands for automatic premium loan. b. The APL provision allows the insurer to automatically use policy cash value to pay an overdue premium. c. The APL provision prevents policies from unintended lapse caused by nonpayment of premium. d. The APL is unlike other policy loans, and if not repaid, it will not reduce the death benefit by the amount of the premium loan with interest.

d. The APL is unlike other policy loans, and if not repaid, it will not reduce the death benefit by the amount of the premium loan with interest. An APL is like any other policy loan, and if not repaid will reduce the death benefit by the amount of the premium loan with interest.

The definition of what constitutes accidental death is defined in each policy. The accidental death benefit usually excludes deaths from accidents that occur while committing a crime, non-commercial aviation, and acts of war. How long does the accidental death benefit remain part of the policy? a. The benefit does not expire. b. The benefit expires when the insured reaches 50 years of age. c. The benefit expires when the insured becomes disabled. d. The benefit expires when the insured reaches a certain age, usually 65.

d. The benefit expires when the insured reaches a certain age, usually 65. The date that the accidental death benefit expires is stated in the policy, and is usually 65.

Which of the following does NOT happen if an insured dies during the grace period of a policy? a. The face amount of the policy is paid to the beneficiary. b. The overdue premium is deducted from the paid benefit. c. Any interest due on the overdue premium is deducted from the benefit. d. The insurance company is relieved of any responsibility to pay a benefit.

d. The insurance company is relieved of any responsibility to pay a benefit. The insurance company is NOT relieved of the responsibility to pay a benefit in the event the insured dies during the grace period.

Period Certain is the same as:

the Fixed period