Missed Life Insurance Questions
How many days do you have to report a change of name an address?
30 days
after a hearing for the commissioner to give a copy of the order to all parties
30 days
Commissioners term of office
4 years
ethics continuing education requirements per licensing period
3 hrs
examination of insurance must be taken every _______ years.
5 years
the insurance commissioner is appointed by the _____ for ____ yrs.
governor for 4 yrs
insurers are required to complete investigation of a claim within how many calendar days?
45 days
An insured has a life insurance policy with a face amount of $500. He pays premiums each week to the agent who sold him the policy. What kind of policy does the insured have? a. Industrial Life b. Credit life c. Ordinary Life d. Franchise Life
a. Industrial Life
Maximum penalty for intentional violations that result in a suspended license
$5,000
maximum duration of a temporary license?
180 days
Who bears all of the investment risk in a fixed annuity? a. the beneficiary b. the annuitant c. the insurance company d. the owner
c. the insurance company
If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? a. the examiner b. the applicant c. the insurer d. the cost of the examination will be waived
c. the insurer
a person who violates a cease and desist order has a to pay up to $_____ for each violation, suspension, or revocation of license
up to $10,000
an absolutely true statement upon which the validity of the insurance policy depends
warranty
a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals
Medical Information Bureau (MIB)
Eligible groups for group life insurance
Employee groups Debtor groups Labor Union groups Trustee groups Association groups
insurer is an insurance company that is incorporated in another state, the District of Columbia, or a territorial possession
Foreign
payment of proceeds: upon the insureds death, the insurer must pay all due benefits within a reasonable time. In no case, can this period exceed 30 days from the date proof of death of the insured
30 days
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is a. personal b. unilateral c. conditional d. aleatory
c. conditional
Replacing policies for the sole purpose of making commissions
churning
which of the following is NOT a type of whole life insurance? a. limited payment b. level term c. single premium d. straight life
b. level term
Insurers must mail or deliver claim checks to claims within ____ working days.
10 days
amount of notice that all parties to the hearing must receive
10 days
to reinstate a license after it lapses without retaking the state exam
12 months
within how many months does a producer have to reinstate their license after it has lapsed without having to retake the insurance exam and what is the penalty?
12 months and the penalty is paying double the renewal fee
The premium of a survivorship life policy compared with that of a joint life policy would be a. half the amount b. lower c. higher d. as high
b. lower
for an insurer to file a notice of termination of appointment
30 days
maximum suspension period for an insurance license
3 yrs. (36 months)
Which of the following premium payment modes will incur the lowest overall payment/ a. annual b. semi-annual c. quarterly d. monthly
a. annual
When an annuity is written, whose life expectancy is taken into account? a. annuitant b. beneficiary c. life expectancy is not a factor when writing an annuity d. owner
a. annuitant
An insured committed suicide one year after his life insurance policy was issued. The insurer will a. refund the premiums paid b. pay the policy's cash value c. pay the full death benefit to the beneficiary d. pay nothing
a. refund the premiums paid
which of the following is correct regarding credit life insurance? a. it has a maximum term of 20 years b. it insures the life of a debtor c. it is purchased on an installment basis d. it insured the life of a creditor
b. it insures the life of a debtor
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 premiums will become tax deductible until the insured's 18th birthday b. since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. c. the insured will 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. d. the insured's premiums will be waived until she is 21
d. the insured's premiums will be waived until she is 21
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a. concealment b. indemnity c. representation d. warranty
d. warranty
defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy.
rebating
$______ maximum penalty for violations that result in a suspended license
$1,000
$ _______ for each violation of the insurance code (limited to $ ______in a _____ month period)
$1,000 $50,000 in a 6 month period
Guaranty Associations limited in covering individual claims
$300,000
failing to report anyone engaged in the business of insurance who knows about a fraudulent insurance act to the commissioner will be considered a _________
Class A misdemeanor
to require as a condition to a loan, that the applicant purchase insurance from a specific insurer.
Coercion
it is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc
Misrepresentation
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a. 5 days b. 7 days c. 10 days d. 3 days
a. 5 days
The term "fixed" in a fixed annuity refers to all of the following EXCEPT a. Death benefit b. Guaranteed rate of interest c. Equal annuity payments d. Amount and length of payments
a. Death benefit
An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. cash option b. reduction of premium c. annual dividend provision d. accumulation at interest
a. cash option
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a. replacement rule b. reinstatement rule c. conversion rule d. disclosure rule
a. replacement rule
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
b. the owner must be the party to receive benefits
Variable Whole Life insurance is based on what type of premium? a. Flexible b. graded c. Level fixed d. Increasing
c. Level fixed
Children's riders attached to whole life policies are usually issued as what type of insurance? a. Adjustable life b. Whole life c. Term d. Variable life
c. Term
Which of the following, when attached to a premium life insurance policy, allows the policy owner to customize the policy to proved an additional amount of temporary insurance on the insured, or allows amounts to temporary insurance to cover other family members? a. guaranteed insurability rider b. Change of insured rider c. Term rider d. Accidental death and dismemberment rider
c. Term rider
All of the following entities regulate variable life policies EXCEPT a. The SEC b. The Insurance Department c. The Guaranty Association d. Federal government
c. The Guaranty Association
Which of the following entities keeps a file of all of an insurer's advertisements? a. Commissioner b. State government c. The insurer d. State Insurance Board
c. The insurer
who is a third-party owner? a. an employee in a group policy b. an irrevocable beneficiary c. a policyowner who is not the insured d. an insurer who issues a policy for two people
c. a policyowner who is not the insured
To legally transact insurance in this state, an insurer must obtain which of the following? a. business entity license b. certificate of insurance c. certificate of authority d. power of attorney
c. certificate of authority
When is the earliest a policy may go into effect? a. when the first premium is paid and the policy has been delivered b. when the insurer approves the application c. after the underwriter reviews the policy d. when the application is signed and a check is given to the agent
d. when the application is signed and a check is given to the agent
only one of the parties to the contract is legally bound to do anything
unilateral contract
for an insurer to file a notice of appointment
15 days
upon receipt of any inquiry from the Arkansas Insurance Department regarding a claim, insurers must provide the Department with a reasonably adequate response within how many working days?
15 days
minimum age to apply for a license?
18 yrs
The licensing period for insurance licenses?
2 years
continuing education requirements per licensing period
24 hrs
Investigative Consumer Reports cannot be made unless the consumer is advised in writing about the report within _______days of the date the report was requested. To request additional information, the insurer or reporting agency has ______ days to provide the consumer with the additional information.
3 days 5 days
Commissioner must grant a hearing to those aggrieved by insurance matters
30 days
to appeal the commissioner's decisions?
30 days
The commissioner may suspend for up to ________ months, revoke, refuse to continue or place on probationary status any license if any illegal issues occur?
36 months
Insurance companies may defer a policy loan request for up to
6 months
what is the maximum period for temporary license in this state? a. 180 days b. 365 days c. 60 days d. 90 days
a. 180 days
how long must an insurer's advertisement be kept on file? a. 4 years b. 5 years c. permanently d. 3 years
a. 4 years
in order to get a nonresident license in this state, producers must a. apply and pay a fee to a nonresident state that reciprocates b. pass the nonresident state exam and satisfy their continuing education requirements c. represent an agency located is this state d. surrender their license in their state of residence
a. apply and pay a fee to a nonresident state that reciprocates
How is the commissioner selected for the office? a. appointed by the Governor b. appointed by the NAIC c. elected by state insurers d. elected by popular vote
a. appointed by the governor
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. decreasing term b. variable life c. universal life d. whole life
a. decreasing term
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 a tax purposes
a. dividends are not taxable
Which nonforfeiture option has the highest amount of insurance protection? a. extended term b. conversion c. decreasing term d. reduced paid-up
a. extended term
the life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the a. incontestability clause b. reinstatement clause c. insuring clause d. misstatement of age clause
a. incontestability clause
which of the following best describes MIB? a. it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance b. it is a government agency that collects medical information on the insured from the insurance companies c. it is a member organization that protects insured against insolvent insurers d. it is a rating organization for health insurance
a. it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance
which of the following is NOT true regarding a Certificate of Authority? a. it is issued to group insurance participants b. it may be necessary for transacting business in a specific state c. it is equivalent to an insurance license d. it is issued by the state department of insurance
a. it is issued to group insurance participants
Which of the following statements is TRUE about a policy assignment? a. it transfers rights of ownership from the owner to another person b. it is the same as a beneficiary designation c. it permits the beneficiary to designate the person to receive the benefits d. it authorizes an agent to modify the policy
a. it transfers rights of ownership from the owner to another person
which of the following is NOT a type of whole life insurance? a. level term b. single premium c. straight life d. limited pay
a. level term
What is the term for how frequently a policyowner is required to pay the policy premium? a. mode b. schedule c. grace period d. consideration
a. mode
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a. must be informed of the source of the report b. are entitled to obtain a copy of the report from the party who ordered it c. must be advised that a copy of the report is available to anyone who requests it d. may use the reporting agency in order to get inaccurate data corrected
a. must be informed of the source of the report
what is the official name for the social security program? a. old age survivors disability insurance b. social insurance program c. defined benefit retirement insurance d. qualified pension plan
a. old age survivors disability insurance
in which of the following instances would the premium be tax deductible? a. premiums paid by an employer on a $3,000 group term life insurance plan for employees b. premiums paid by an individual on his/her own life insurance c. premiums paid by a mother on her son's policy d. premiums paid by an employer on the life of a key person
a. premiums paid by an employer on a $3,000 group term life insurance plan for employees
which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a. term rider b. accidental death and dismemberment rider c. guaranteed insurability rider d. change of insured rider
a. term rider
which is NOT true about beneficiary designations? a. the beneficiary must have insurable interest in the insured b. the beneficiary may be a natural person c. the policy does not have to have a beneficiary named in order to be valid d. trusts can be valid beneficiaries
a. the beneficiary must have insurable interest in the insured
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 increase by providing evidence of insurability b. the death benefit cannot be increased c. the death benefit can be increased only when the policy has developed a cash value d. the death benefit can be increased only by exchanging the existing policy for a new one
a. the death benefit can be increase by providing evidence of insurability
All of the following statements concerning an employer sponsored nonqualified plan are true except ? a. the employer can receive a current tax deduction for any contributions made to the plan b. the plan is a legal method of accumulating money for retirement needs c. the plan can discriminate as to who may participate d. the plan is not approved for favorable tax treatment by the IRS
a. the employer can receive a current tax deduction for any contributions made to the plan
All of the following are true regarding a decreasing term policy EXCEPT a. the payable premium amount steadily declines throughout the duration of the contract b. the death benefit is $0 at the end of the policy term c. the contract pays only in the event of death during the term and there is no cash value d. the face amount steadily declines throughout the duration of the contract
a. the payable premium amount steadily declines throughout the duration of the contract
Under extended term nonforfeiture option the policy cash value is converted to a. the same face amount as in the whole life policy b. the face amount equal to the cash value c. a lower face amount than the whole life policy d. a higher face amount than the whole life policy
a. the same face amount as in the whole life policy
which of the following insurance arrangements will be appropriate for a parent buying life insurance policy on a child where the parent is the policy owner? a. third-party ownership b. an irrevocable beneficiary c. a buy-sell agreement d. family term rider
a. third-party ownership
All of the following are true regarding the guaranteed insurability rider EXCEPT a. this rider is available to all insureds with no additional premium b. the insured may purchase additional coverage at the attained age c. the insured may purchase additional insurance up to the amount specified in the base policy d. it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events.
a. this rider is available to all insureds with no additional premium
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. universal life b. flexible life c. variable life d. adjustable life
a. universal life
In a survivorship life policy, when does the insurer pay the death benefit? a. upon the last death b. upon the first death c. half at the first death, and half at the second death d. if the insured survives to age 100
a. upon the last death
When would a 20-pay whole life policy endow? a. when the insured reaches age 100 b. at the insured's age 65 c. after 20 payments d. medical information bureau report
a. when the insured reaches age 100
an insurance company authorized and licensed to transact business in a particular state
admitted (authorized) insurer
an exchange of unequal amounts or values
aleatory
insurer is an insurance company that is incorporated outside the U.S
alien
a producer moves to another state and terminates her residency in Arkansas. The Arkansas producer's license must be returned to the commissioner within how many days? a. 3 days b. 10 days c. 30 days d. 45 days
b. 10 days
what is a required advance notice for a hearing held by the Commissioner of Insurance? a. 5 days b. 10 days c. 15 days d. 30 days
b. 10 days
what is required advance notice for a hearing held by the commissioner of insurance? a. 5 days b. 10 days c. 15 days d. 30 days
b. 10 days
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
b. 2 years
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
b. 2 years
a purchaser of an individual long-term care insurance policy has the right to return the policy for a full refund of the premium if done within a. 30 days of its issue b. 30 days of its delivery c. 45 days of its delivery d. 45 days of its issue
b. 30 days of its delivery
Which of the following is a feature of a variable annuity? a. Securities license is not required b. Benefit payment amounts are not guaranteed c. Payments into the annuity are kept in the company's general account d. Interest rate is guaranteed
b. Benefit payment amounts are not guaranteed
Who assumes control over an insurance company's funds and management if they become insolvent? a. National Association if Insurance Commissioners b. Department of Insurance c. The policyholders or stock owners of the company d. State attorney general
b. Department of Insurance
All of the following statements concerning dividends are true EXCEPT a. Favorable investment results generate higher dividends b. Dividend amounts are guaranteed in the policy c. Lower insurance company costs generate higher dividends d. They stem from favorable underwriting experience
b. Dividend amounts are guaranteed in the policy
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. Graded premium life b. Limited-pay life c. Variable life d. Adjustable life
b. Limited-pay life
Which nonforfeiture option provides coverage for the longest period of time? a. Accumulated at interest b. Reduced paid-up c. Extended term d. Paid-up option
b. Reduced paid-up
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
b. SEPs are suitable for large companies
Which of the following statement is TRUE concerning irrevocable beneficiaries? a. They may be changed only on the anniversary date of the policy b. They can be changed only with written consent of that beneficiary c. They may be changed at any time d. They can never be changed
b. They can be changed only with written consent of that beneficiary
which of the following entities ultimately determines if an advertisement is deceptive or confusing? a. federal advertising board b. commissioner c. consumer protection agency d. state insurance board
b. commissioner
which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a. slandering b. defamation c. undercutting d. twisting
b. defamation
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? a. unauthorized b. foreign c. alien d. domestic
b. foreign
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
b. its premium steadily decreases over time, in response to its growing cash value
Credit insurance protects which of the following? a. borrowers against inflation b. lenders c. borrowers against creditor insolvency d. patients who have prepaid for medical care
b. lenders
During replacement of life insurance, a replacing insurer must do which of the following? a. send a copy of the Notice Regarding Replacement to the Department of Insurance b. obtain a list of all life insurance policies that will be replaced c. Guarantee a replacement for each existing policy d. designate a new producer for a replaced policy
b. obtain a list of all life insurance policies that will be replaced
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a. payor rider b. other-insured rider c. change of insured rider d. juvenile rider
b. other-insured rider
A participating insurance policy may do which of the following? a. require 80% participation b. pay dividends to the policyowner c. proved group coverage d. pay dividends to the stockholder
b. pay dividends to the policyowner
another name for a substandard risk classification is a. elevated b. rated c. controlled d. declined
b. rated
All of the following entities regulate variable life policies EXCEPT a. the insurance department b. the guaranty association c. federal government d. the SEC
b. the Guaranty Association
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT a. the plan is not approved for favorable tax treatment by the IRS b. the employer can receive a current tax deduction for any contributions made to the plan c. the plan is a legal method of accumulating money for retirement needs d. the plan can discriminate as to who may participate
b. the employer can receive a current tax deduction for any contributions made to the plan
What is the purpose of a suicide provision within a life insurance policy? a. to protect the policyowner b. to protect the insurer from persons who purchase life insurance with the intention of committing suicide c. to limit the insurer's liability after the 2 year waiting period d. to deter the policyowner from committing suicide
b. to protect the insurer from persons who purchase life insurance
What is the maximum fine for violating the Commissioner's cease and desist order? a. $1,000 b. $5,000 c. $10,000 d. $15,000
c. $10,000
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
c. $100,000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a. $100 per violation b. revocation of license c. $2,500 d. $1,000
c. $2,500
an insured purchased a 15 year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. the insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. what amount would his beneficiary receive as as settlement? a. $0 b. $100,000 c. $200,000 d. 100,000 plus the total of paid premiums
c. $200,000
What is the maximum fine for a single violation of the Insurance Code if a person knew or should have known that an act would result in a violation? a. $500 b. $1,000 c. $5,000 d. $10,000
c. $5,000
if an insurance producer allows his license to lapse, within how many months of the due date of the continuation fee may the producer reinstate the license without having to pass a written examination? a. 3 months b. 6 monts c. 12 months d. 24 monts
c. 12 months
How long is the Insurance Commissioner's term in the office? a. 2 years b. 3 years c. 4 years d. 5 years
c. 4 years
How long is the Insurance Commissioner's term in the office? a.2 years b. 3 years c. 4 years d. 5 years
c. 4 years
All of the following are personal uses of life insurance EXCEPT a. Estate creation b. Cash Accumulation c. Buy-sell agreement d. Survivor protection
c. Buy-sell agreement
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. Joint and survivor b. Fixed amount option c. Interest only option d. Life income with period certain
c. Interest only option
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 term 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
c. an individual not covered by an employer-sponsored plan who has earned income
According to the entire contract provision, what document must be made part of the insurance policy? a. agent's report b. outline of coverage c. copy of the original application d. buyer's guide
c. copy of the original application
which of the following types of insurance policies is most commonly used in credit life insurance? a. whole life b. equity indexed life c. decreasing life d. increasing term
c. decreasing life
all of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a. stocks, securities, or bonds b. an offer to share in commissions generated by the sale c. dividends from a mutual insurer d. an offer of employment
c. dividends from a mutual insurer
For a retirement plan to be qualified, it must be designed for whose benefit? a. employer b. IRS c. employees d. key employees
c. employees
Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? a. stock company's b. reciprocal association c. fraternal benefit society d. mutual compay
c. fraternal benefit society
Fixed annuities provide all of the following EXCEPT a. minimum guaranteed rate of interest b. future income payments c. hedge against inflation d. equal monthly payments for life
c. hedge against inflation
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? a. unfair discrimination b. defamation c. illegal d. a legal advertising strategy
c. illegal
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) a. medical examination b. attending physician statement c. inspection report d. medical information bureau report
c. inspection report
what does the life and disability insurance guaranty association guard against? a. double indemnity b. rebating c. insurer insolvency d. insurance fraud
c. insurer insolvency
Why is an equity indexed annuity considered to be a fixed annuity? a. it has a fixed rate of return b. it is not tied to an index like the S&P 500 c. it has a guaranteed minimum interest rate d. it has modest investment potential
c. it has a guaranteed minimum interest rate
an applicant who lives in a state in which a producer is not licensed travels to the state in which the producer is licensed to apply for a policy. this is considered to be a. a violation of insurance law b. a misdemeanor c. legal d. unfair
c. legal
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a. ordinary life policy b. limited pay whole life c. level term d. term to specified age
c. level term
a policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a. ordinary life policy b. limited pay whole life c. level term d. term to specified age
c. level term
which of the following settlement options in life insurance is known as straight life? a. life with period certain b. fixed amount c. life income d. single life
c. life income
Which of the following conditions is NOT necessary for becoming a nonresident producer in this state? a. being licensed as a resident producer b. paying appropriate fees c. passing the licensing examination d. being a resident producer in good standing in the home state
c. passing the licensing examination
Who might receive dividends from a mutual insurer? a. stockholders b. agents c. policyholders d. subscribers
c. policyholders
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. tax-sheltered account plan b. HR-10 plan c. profit sharing plan d. 401(k) plan
c. profit sharing plan
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
c. settlement option
all of the following are unfair claims settlement practices EXCEPT a. failing to adopt and implement reasonable standards for settling claims b. failing to acknowledge pertinent communication pertaining to a claim c. suggesting negotiations in settling the claim d. refusing to pay claims without conducting a reasonable investigation
c. suggesting negotiations in settling the claim
which of the following information will be stated in the consideration clause of a life insurance policy? a. the time period allowed for the payment of premium b. the conditions for insurability c. the amount of premium payment d. the parties to the contract
c. the amount of premium payment
insurers must annually pay the divisible surplus, if any, that will accrue to the policyholders on the policy anniversary date. this must occur no later than the end of the a. the first policy year b. second policy year c. third policy year d. fifth policy year
c. third policy year
requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligation
conditional contract
Whenever the agent collects premiums, the agent must issue a _________.
conditional receipt
the most common type of receipt is a _______, which is used only when the applicant submits a prepaid application
conditional receipt
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. $8,000, no tax consequence b. $8,000, tax on growths only c. $10,000, tax on growth only d. $10,000, no tax consequence
d. $10,000, no tax consequence
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a. 7 days b. 10 days c. 3 days d. 5 days
d. 5 days
All of the following statements are true regarding tax-qualified annuities EXCEPT a. Annuity earnings are tax deferred b. They must be approved by the IRS c. Withdrawals are taxed d. Employer contributions are not tax deductible
d. Employer contributions are not tax deductible
The LEAST expensive first-year premium is fond in which of the following policies? a. increasing term b. decreasing term c. level term d. annually renewable term
d. annually renewable term
The death protection component of Universal Life Insurance is always a. whole life b. adjustable life c. decreasing term d. annually renewable term
d. annually renewable term
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 buy 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
d. any form of life insurance
Which of the following INCORRECT regarding a $100,00020-year level term policy? a. the policy premiums will remain level for 20 years b. if the insured dies before the policy expired, the beneficiary will receive $100,000 c. the policy will expire at the end of the 20- year period d. at the end of 20 years, the policy's cash value will equal $100,000
d. at the end of 20 years, the policy's cash value will equal $100,000
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. waiver of premium b. incontestability period c. assignment d. automatic premium loan
d. automatic premium loan
Which of the following is true regarding taxation of dividends in participating policies? a. dividends are taxable only after a certain amount is accumulated annually b. dividends are taxable in some life insurance policies and nontaxable in others c. dividends are considered income for tax purposes d. dividends are not taxable
d. dividends are not taxable
Which nonforfeiture option has the highest amount of insurance protection? a. conversion b. decreasing term c. reduced paid-up d. extended pay
d. extended pay
Which of the following best describes annually renewable term insurance? a. it requires proof of insurability at each renewal b. neither the premium nor the death benefit is affected by the insured's age c. it provides an annually increasing death benefit d. it is level term insurance
d. it is level term insurance
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a. joint and survivor b. single life c. fixed-amount d. life income with period certain
d. life income with period certain
A failure to report insurance fraud to the Commissioner is considered a/an a. felony b. concealment c. unfair trade practice d. misdemeanor
d. misdemeanor
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
d. option A
a producer in another state wants to become a producer in Arkansas. the other state gives the same privileges to Arkansas producers wanted to be licensed in that state as it does its own producers. Arkansas therefore extends the privileges of its producers to the prospective producer of the other state. what is this called? a. fair exchange b. equanimity c. equal privilege d. reciprocity
d. reciprocity
A policy owner who is also the insured want to name her husband as the beneficiary of her life insurance policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the a. secondary beneficiary b. contingent beneficiary c. irrevocable beneficiary d. revocable beneficiary
d. revocable beneficiary
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. secondary beneficiary b. contingent beneficiary c. irrevocable beneficiary d. revocable beneficiary
d. revocable beneficiary
If an insurer becomes insolvent, which of the following would pay benefits to policyholders? a. the NAIC fund b. the state c. a federal reserve fund d. the Arkansas Life and Disability Insurance Guaranty Association
d. the Arkansas Life and Disability Insurance Guaranty Association
The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case? a. the benefit must be paid in lump sum b. the insurance company c. the court d. the beneficiary
d. the beneficiary
if the annuitant dies during the accumulation period, who will receive the annuity benefits? a. the annuity owner b. the insurance company c. the annuitant's estate d. the beneficiary
d. the beneficiary
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 insured would not need to prove insurability for a conversion policy b. the insured may convert coverage to an individual policy within 31 days c. the premium for individual coverage will be based upon the insured's attained age d. the insured may choose to covert to term or permanent individual coverage
d. the insured may choose to covert to term or permanent individual coverage
the regulation of the insurance industry primarily rests with a. the NAIC b. private insurers c. the federal government d. the state
d. the state
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a. the beneficiary will receive 2/3 of the lump sum of the lump sum up front, and the remaining 1/3 will be paid over time b. the beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies c. one of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies d. the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
d. the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
What is the purpose of establishing the target premium for a universal life policy? a. to accumulate cash value faster b. to pay up the policy faster c. to cover all policy expenses d. to keep the policy in force
d. to keep the policy in force
which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a. universal life option B b. equity indexed universal life c. variable universal life d. universal life option A
d. universal life option A
In forming an insurance contract, when does acceptance usually occur? a. when an insurer delivers the policy b. when an insurer receives an application c. when an insured submits an application d. when an insurer's underwriter approves coverage
d. when an insurer's underwriter approves coverage
What is the timeframe for filing relevant Suspicious Activity Reports? a. within 30 days of the suspicious transaction b. within 90 days of initial discovery c. within 90 days of the suspicious transaction d. within 30 days of initial discovery
d. within 30 days of initial discovery
when an oral or written statement is made that is intended to injure a person engaged in the insurance business.
defamation
Insurer is an insurance company that is incorporated in this state
domestic
Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it.
false advertising
information obtained through an investigation and interviews with associates, friends, and neighbors of the consumer.
investigative consumer report
statements that are believed to be true to the best of one's knowledge, but they are not guaranteed to be true
representation
stock companies are owned by?
stock holders
under the Reduced Paid-up Insurance, what is the policies cash value used for?
to purchase a completely paid-up permanent policy that has a reduced face amount from the former policy
a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out a policy with another insurer.
twisting
A universal Life Insurance policy is best described as a/an a. Annually renewable Term policy with a cash value account b. Variable life with a cash value account c. Whole life policy with two premiums: target and minimum d. Flexible premium variable life policy
a. Annually renewable term policy with a cash value
Two attorneys 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. HR-10 (Keogh Plan) b. Section 457 Deferred Compensation Plan c. 403(b) plan d. 401(k) plan
a. HR-10 (Keogh Plan)
The minimum interest rate on an equity indexed annuity is often base on a. an index like Standard & Poor's 500 b. the returns from the insurance company's separate account c. the annuitant's individual stock portfolio d. the insurance company's general account investments
a. an index like Standard & Poor's 500
The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a a. convertible term policy b. renewable term policy c. decreasing term policy d. whole life policy
a. convertible term policy
what is another name for interest-sensitive whole life insurance? a. current assumption life b. variable life c. term life d. adjustable life
a. current assumption life
which of the following terms is used to name the nontaxed return of unused premiums? a. dividend b. premium returns c. interest d. surrender
a. dividend
What does "level" refer to in level term insurance? a. face amount b. premium c. cash value d. interest rate
a. face amount
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a. fixed period b. life with period certain c. fixed amount d. interest only
a. fixed period
what type of premium do both universal Life and Variable Universal Life policies have? a. flexible b. level fixed c. decreasing d. increasing
a. flexible
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. guaranteed insurability option b. dividend options c. guaranteed renewable option d. nonforfeiture options
a. guaranteed insurability option
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a. option B b. corridor option c. variable option d. option A
a. option B
Equity Indexed Annuities a. seek higher returns b. are more risky than variable annuities c. are security instruments d. invest conservatively
a. seeking higher returns
all of the following are considered unfair trade practices in the business of insurance EXCEPT a. sharing commission b. boycott c. rebating d. defamation
a. sharing commission
which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a. size of each installment b. predetermined length of time stated in the contract c. length of income period d. amount of interest
a. size of each installment
Which of the following is NOT true regarding Equity Indexed Annuities? a. the earn lower interest rates than fixed annuities b. the insurance company keeps a percentage of the returns c. they have guaranteed minimum interest rates d. they are less risky than variable annuities
a. the earn lower interest rates than fixed annuities
which of the following statements is correct regarding a whole life policy? a. the policyowner is entitles to policy loans b. cash values are not guaranteed c. the policy premium is based on the attained age d. the death benefit may increase or decrease during the policy period.
a. the policyowner is entitles to policy loans
A Universal Life Insurance policy is best described as a/an a. flexible premium variable life policy b. annually renewable term policy with a cash value account c. variable life with a cash value account d. whole life policy with two premiums: target and minimum
b. annually renewable term policy with a cash value account
which of the following only provides professional advice regarding insurance policies? a. nonresidential producer b. consultant c. producer d. broker
b. consultant
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? a. the same as the original policy minus the cash value b. equal to the original policy for as long as the cash values will purchase c. in lesser amounts for the remaining policy term of age 100 d. equal to the cash value surrendered from the policy
b. equal to the original policy for as long as the cash values will purchase
What does "level" refer to in level term insurance? a. interest rate b. face amount c. premium d. cash value
b. face amount
all of the following are dividend options EXCEPT a. paid-up additions b. fixed-period installments c. accumulated at interest d. reduction of premium
b. fixed-period installments
what type of premium do both Universal Life and Variable Life policies have? a. increasing b. flexible c. level fixed d. decreasing
b. flexible
Which of the following is an eligibility requirement for all Social Security Disability Income benefits? a. be at least age 50 b. have attained fully insured status c. be disabled for at least 1 year d. have a permanent kidney failure
b. have attained fully insured status
What type of insurance would be used for a Return of Premium rider? a. annually renewable term b. increasing term c. level term d. decreasing term
b. increasing term
Which of the following statements is TRUE concerning the Accidental Death Rider? a. it is only available in group insurance b. it will pay double or triple the face amount c. it is also known as a triple indemnity rider d. this rider is only available to insureds over the age of 65
b. it will pay double or triple the face amount
Variable Whole Life insurance is based on what type of premium? a. graded b. level fixed c. increasing d. flexible
b. level fixed
an insured purchased an individual life insurance policy with a face amount of $15,000. he pays a premium each month. what type of policy is that? a. commercial life b. ordinary life c. industrial life d. home service insurance
b. ordinary life
in the replacement of a policy, who notifies the existing insurer that a policy is being replaced? a. notification is not required b. the replacing company c. the commissioner d. the policyholder
b. the replacing company
The paid-up addition options uses the dividend a. to accumulate additional savings for retirement b. to purchase a smaller amount of the same type of insurance as the original policy c. to purchase a one-year term insurance in the amount of the cash value d. to reduce the next years premiums
b. to purchase a smaller amount of the same type of insurance as the original policy
an insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out? a. $10,000 b. $40,000 c. $50,000 d. $60,000
c. $50,000
a disabled producer's spouse was issued a temporary license 30 days ago. how much longer can the spouse legally serve under this license? a. 0 days b. 30 days c. 150 days d. 335 days
c. 150 days
A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default? a. 15 days b. 30 days c. 60 days d. 90 days
c. 60 days
a paid-up nonforfeiture benefit will become effective as specified in the policy unless the entitled party elects another available option within how many days after the due date of the premium in default? a. 15 days b. 30 days c. 60 days d. 90 days
c. 60 days
What required provision protects against unintentional policy lapse? a. Payment of premiums b. Reinstatement c. Grace period d. Assignment
c. Grace period
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
c. Increasing Term
if an insurance producer's. or consultant's license has lapsed, a. it can be reinstated with 36 months b. it cannot be reinstated c. a reinstatement fee is double the renewal fee d. a new written examination is required
c. a reinstatement fee is double the renewal fee
SIMPLE Plans require all of the following EXCEPT a. no more than 100 employees b. employees must receive a minimum of $5,000 in annual compensation c. at least 1,000 employees d. no other qualified plan can be used
c. at least 1,000 employees
A tax-sheltered annuity is a special tax-favored retirement plan available to a. certain age groups only b. certain groups depending on factors such as race, gender, and age c. certain groups of employees only d. anyone
c. certain groups of employees only
Which nonforfeiture option has the highest amount of insurance protection? a. decreasing term b. reduced paid up c. extended pay d. conversion
c. extended pay
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a. coercion b. misrepresentation c. false advertising d. defamation
c. false advertising
which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? a. exaggerating the benefits provided in the policy b. stating that the competitors will arbitrarily increase their premiums each year c. making comparisons between different policies d. stating that the insurance policy is a share of stock
c. making comparisons between different policies
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is a. endowment b. non-qualified annuity c. modified endowment contract d. accelerated benefit policy
c. modified endowment contract
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a. nonprofit service organization b. stock c. mutual d. reciprocal
c. mutual
which of the following riders would NOT cause the death benefit to increase? a. cost of living rider b. accidental death rider c. payer benefit rider d. guaranteed insurability rider
c. payer benefit rider
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as a. false advertising b. coercion c. rebating d. twisting
c. rebating
which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a. guaranteed insurability rider b. change of insured rider c. term rider d. accidental death and dismemberment rider
c. term rider
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy? a. the key employee is the owner and beneficiary b. the key employee is the owner and the employer is the beneficiary c. the employer is the owner and beneficiary d. the employer is the owner and they key employee is the beneficiary
c. the employer is the owner and beneficiary
all of the following entities regulate variable life polices EXCEPT a. the SEC b. the insurance department c. the guaranty association
c. the guaranty association
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a. the interest is credited at a rate specified by the policy b. the policyholder has the right to withdraw the accumulations at anytime c. the interest is not taxable since it remains inside the insurance policy d. the annual dividend is retained by the company
c. the interest is not taxable since it remains inside the insurance policy
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
c. to create an estate
which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? a. equity indexed universal life b. variable universal life c. universal life- Option A d. universal life- Option B
c. universal life- Option A
which of the following types of policies allows for a flexible premium and a variable investment component? a. variable whole life insurance b. whole life insurance c. variable universal life insurance d. guaranteed issue variable life insurance
c. variable universal life insurance
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? a. spouse rider b. Children's rider c. Additional insured rider d. Family term rider
d. Family term rider
To sell variable life insurance policies, an agent must receive all of the following EXCEPT a. FINRA registration b. a securities license c. a life insurance license d. SEC registration
d. SEC registration
an individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits rider. which of the following is true regarding taxation of the accelerated benefits? a. principal is tax free, but interest is taxed b. the entire benefit will be received tax free c. the entire living benefit is considered taxable income d. a portion of the benefit up to a limit is tax free; the rest is taxable income
d. a portion of the benefit up to a limit is tax free; the rest is taxable income
what happens when a policy is surrendered for its cash value? a. coverage ends but the policy can be reinstated at anytime b. the policy can be reinstated by paying back all policy loans and premiums c. the policy can be converted to term coverage d. coverage ends and the policy cannot be reinstated
d. coverage ends and the policy cannot be reinstated
the provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the a. total contract b. aleatory contract c. complete contract d. entire contract
d. entire contract
the automatic premium loan provision is activated at the end of the a. free-look period b. elimination period c. policy period d. grace period
d. grace period
A Return Premium term life policy is written as what type of term coverage? a. decreasing b. renewable c. level d. increasing
d. increasing
what are the two components of a universal policy? a. insurance and investments b. mortality cost and interest c. separate account and policy loans d. insurance and cash account
d. insurance and cash account
in a single employer group plan, what is the name of the policy issued to the employer? a. certificate of insurance b. employer- insurer contract c. certificate of authority d. master contract
d. master contract
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
d. payor beneift
the purpose of insurance regulation is to a. make insurance statutes uniform between states b. keep producers honest c. make insurance companies pay taxes d. promote the public welfare
d. promote the public welfare
which of the following applicants would NOT qualify for a Keogh plan? a. someone who has been employed for more than 12 months b. someone who is over 25 years of age c. someone who works for a self-employed individual d. someone who works 400 hours per year
d. someone who works 400 hours per year
which of the following would be considered a non-qualified retirement plan? a. 401(k) b. keogh plan c. roth IRA d. split-dollar plan
d. split-dollar plan
which of the following determines the cash value of a variable life policy? a. the company's general account b. the policy's guarantees c. the premium mode d. the performance of the policy portfolio
d. the performance of the policy portfolio
which of the following statements is correct regarding a whole life policy? a. cash values are not guaranteed b. the policy premium is based on the attained age c. the death benefit may increase or decrease during the policy period d. the policyowner is entitled to policy loans
d. the policyowner is entitled to policy loans
which is true about a spouse term rider? a. coverage is allowed for an unlimited time b. the rider is decreasing term insurance c. coverage is allowed up to age 75 d. the rider is usually level term insurance
d. the rider is usually level term insurance
which is true about a spouse term rider? a. coverage is allowed for an unlimited time b. the rider is decreasing term insurance c. coverage is allowed up to the age 75 d. the rider is usually level term insurance
d. the rider is usually level term insurance