Montana Life Review 2

The premium of a survivorship life policy compared with that of a joint life policy would be

lower

Which of the following would help prevent a universal life policy from lapsing?

target premium

According to the law of agency, the acts of an agent are deemed to be acts of

the Insurer

All of the following are benefits of a qualified retirement plan EXCEPT

the income at retirement is tax free

Who bears all of the investment risk in a fixed annuity?

the insurance company

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

An insurance applicant accidentally states her age in a life insurance application as 53 when she is actually 55. Five years later the mistake is discovered when she dies and her husband applies for the death benefit. How will the policy respond?

The death benefit will be adjusted based on the correct age

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death

What is the benefit of choosing extended term as a nonforfeiture option?

it is the highest amount of insurance protection

Which of the following is TRUE regarding the annuity period?

it may last the lifetime of the annuitant

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

joint and survivor

Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?

joint and survivor

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

credit life

An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered

delivered

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

fixed amount

Unless waived by the Commissioner, what must a person obtain before becoming an insurer's administrator?

Certificate of Registration

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?

$50,000

An annuity contract can be reinstated at any time within how many years of the default date, assuming that the cash surrender value has not been paid?

1

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?

100% participation of members is required in noncontributory plans.

If an individual willfully violates provisions in the Fair Credit Reporting Act, what is the max civil penalty?

2,500

How long must an insurer keep a copy of each authorized form used in solicitation of life insurance?

3 years

Insurance transaction records must be maintained for at least

3 years

Within how many days of the effective date may an insured return a replacement life insurance policy for a full refund of the premiums?

30 days

For life insurance policies, a written statement may fulfill the policy summary requirement, but only if the policy's death benefit does not exceed

5,000

All of the following will be considered for a temporary license except?

A 17 year old daughter of a producer entering the armed forces

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

The death protection component of Universal Life Insurance is always

Annually Renewable Term

Which of the following components must a life insurance policy have to allow policy loans?

Cash value

Which of the following is NOT true regarding a producer's place of business?

Both resident and nonresident producers must have a place of business in this state

All of the following statements concerning dividends are true EXCEPT

Dividend amounts are guaranteed in the policy.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will purchase.

All of the following actions can be described as twisting EXCEPT

Explaining to client the advantages of permanent insurance over term and suggesting changing policies

Which policy component decreases in decreasing term insurance?

Face amount

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

An annuity owner receives the same guaranteed payment every month. What type of annuity is this?

Fixed

In which case does the insurer NOT have the power to retain proceeds?

In order to fund replacement policies

Life income joint and survivor settlement option guarantees

Income of 2 or more recipients until they die

Which of the following statements about the reinstatement provision is true?

It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had misstated information during the application process. What can they do?

Pay the death benefit

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?

Reduction of Premium

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

Revocable beneficiary

If a life insurance policy is purchased by someone who has no insurable interest in the insured, it is considered

STOLI

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor Protection

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?

Term Rider

Which of the following regarding HIV testing is NOT true?

Test results must be sent to the Dept of Insurance

Which of the following is true regarding a nonresident insurance producer license?

The applicant's home state must license Montana residents.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit to the beneficiary.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy.

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract.

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Which of the following must be considered in a life insurance presentation that compares the cost of two life insurance policies?

The time value of money and interest adjustment

Which of the following is an example of a producer's fiduciary duty?

The trust that a client places in the producer in regard to handling premiums.

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit.

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

Which risk classification is representative of the majority of the people with similar lifestyles?

standard

Which of the following information will be stated in the consideration clause of a life insurance policy?

amount of premium payment

In credit life insurance, who is responsible for paying the premiums?

borrower only

Which of the following would be TRUE of both fixed period and fixed amount settlement options?

both guarantee that the principal and and interest will be fully paid out

An IRA contribution can be made from which of the following?

cash

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

cash option

When issuing group life insurance, an insurer must provide each covered individual with a(n)

certificate of coverage

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?

children's term rider

A whole life policy is surrendered for a paid up policy. The cash value of the new policy will

continue to increase

Cash values guarantees in a whole life policy are called

nonforfeiture values

An Equity Indexed Annuity will grow based on

performance of a recognized index

How do premiums in variable life policies vary from those in variable whole life policies?

premiums are flexible

If a life insurance company uses HIV testing as part of its underwriting, when must an applicant be notified of the procedure?

prior to the performance of the test

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT

purchase of a new home

Fair Credit Reporting Act

regulates consumer reports

Rate and form regulations in this state apply to all of the following EXCEPT

reinsurance policies

All of the following are eligible groups under group life insurance EXCEPT

religious groups

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

settlement options

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?

size of each installment

Which of the following is NOT true of life settlements?

the seller must be terminally ill

All of the following are requirements for life insurance illustrations EXCEPT

they must be part of the contract

Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes

waiver of premium rider