pre licensing state exam NOVEMBER
fraud would be considered a felony if the monetary amount is
300$ or greater
Which nonforfeiture option provides coverage for the longest period of time?
reduced paid-up
in terms of parties to a contract, which of the following does NOT describe a competent party?
the person must have at least completed secondary education
How are contributions to a tax-sheltered annuity treated with regards to taxation?
they are not included as income for the employee, but are taxable upon distribution
how are contributions to a tax-sheltered annuity treated with regards to taxation?
they are not included as income for the employee, but are taxable upon distribution
when an individual purchase insurance, what risk management technique is he or she practicing?
transfer
agents selling which of the following types of insurance are exempt from the state licensing requirement?
travel insurance
a 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. what penalties, if any, will she have to pay?
no penalties
which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
only written statements can be considered fraud.
which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance?
race
how many days after the completion of an examination must the commissioner prepare a final report of its results?
60 days
in insurance, an offer is usually made when
An applicant submits an application to the insurer
After a client leaves his office, an agent makes corrections to the client's application, but forgets to tell her. Two weeks later, the client is in an accident. The insurer will be settling the claim based on the corrected form. This is
a violation of the insurance code
Events or conditions that increase the chances of an insured loss occurring are referred to as
hazards
the national conference of insurance legislators was created to
help legislators make informed decisions on insurance issues
Courts will interpret any ambiguity in an insurance contract
in favor of the insured
Within how many days of requesting an an investigative consumer report must an (insurer) notify the consumer in writing that the report will be obtained?
3 days
pertaining to insurance, what is the definition of a fiduciary responsibility?
Promptly forwarding premiums to the insurance company
an insurance company sells an insurance policy over the phone in response to a TV ad. which of the following best describes this act?
direct response marketing
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
The authority granted to an agent through the agent's contract is referred to as
express authority
which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?
insurance guaranty association
which of the following is TRUE of a qualified plan?
it has a tax benefit for both employer and employee
when calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?
outstanding loans and interest
a participating insurance policy may do which of the following?
pay dividends to the policyowner
which of the following is NOT a required provision in group life insurance policies?
policy territory
Pertaining to insurance, what is the definition of a fiduciary responsibility?
promptly forwarding premiums to the insurance company
the ownership provision entitles the policyowner to do all of the following EXCEPT
set premium rates
all of the following are considered unfair trade practices in the business of insurance EXCEPT
sharing commissions
which of the following applicants would NOT qualify for a keogh plan?
someone who works 400 hours per year
Events in which a person has both the chance of winning or losing are classified as
speculative risk
In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this?
the right to determine the wording of a policy
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce
without receiving written consent from an insurance regulatory authority.
Which of the following statements concerning a simplified employee pension plan (SEP) is INCORRECT
SEP's are suitable for large companies
which of the following statements concerning a simplified employee pension plan (SEP) is INCORRECT?
SEPs are suitable for large companies
A hazard is best described as:
Something that increases the chance of loss
an insurer has been found guilty of participating in the unfair claims settlement practices. the commissioner may order all of the following EXCEPT
a fine up to 3 times the amount of economic damage
which of the following would authorize the commingling of premiums with the agents personal funds?
a letter of consent from the principal
if a company has a simplified employee pension plan, what type of plan is it?
a qualified plan for a small business
which of the following is another term for an authorized insurer?
admitted
which of the following is TRUE regarding a policy issued to a labor union insuring members of the organization for the benefit of persons other than the union of organization?
all of the above are true
an applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. this is an example of
concealment
What method do insurers use to protect themselves against catastrophic losses?
reinsurance
which of the following CANNOT insurance companies do when creating advertisements for their products issued in this state?
use caveats as often as possible
which of the following is the basis for a claim against an insurance policy?
loss
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
consideration
a life insurance policy has a legal purpose if both of which of the following elements exist?
insurable interest and consent
which of the following is the most common way to transfer risk?
purchase insurance
the annuity owner dies during the accumulation period without naming a beneficiary. annuity's cash value exceeds premiums paid. which of the following is TRUE?
the cash value will be paid to the annuitant's estate.
in comparison to consumer reports, which of the following describes a unique characteristics of investigative consumer reports?
the customer's associates, friends, and neighbors provide the report's data.
who is the owner and who is the beneficiary on a key person life insurance policy?
the employer is the owner and beneficiary
what happens if a deferred annuity is surrendered before the annuitization period?
the owner will receive the surrender value of the annuity
in the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. which of the following is true concerning the policy premium?
it will likely be higher because the applicant is a substandard risk
which of the following is NOT true regarding the accumulation period of an annuity?
it would not occur in a deferred annuity.
which of the following is an IRS qualified retirement program for the self-employed?
keogh plan
which services are associated with standard & poor's and AM best?
rating the financial strength of insurance companies
which of the following is NOT true regarding a nonqualified retirement plan?
it needs IRS approval
For the purpose of insurance, risk is defined as
the uncertainty or chance of loss
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
HR-10 (keogh plan)
what is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue
Peril is most easily defined as
The cause of loss insured against
the paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
what happens when a policy is surrendered for its cash value?
coverage ends and the policy cannot be reinstated
which of the following is NOT the consideration in a policy?
the application given to a prospective insured
to what organization must all admitted insurers belong?
the guaranty association
an individual applies for a life policy. two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. he has also been hospitalized for drug abuse, but does not remember this when applying for insurance. the insurer issues the policy and learns of his history one year later. what will probably happen?
the policy will not be affected
which is generally true regarding insureds who have been classified as preferred risks?
their premiums are lower
Annuity contracts grow tax deferred. That means that
there is no current income taxation upon the growth in the annuity
under what type of group life insurance policy may coverage be provided for eligible family members and dependents?
any group approved by the commissioner
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
apparent
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
authorized insurer
How are state Insurance Guaranty Associations funded?
by their members -authorized insurers
the formation and recommendation of model insurance legislation and regulations designed to bring uniformity from state to state is one of the purposes of
the NAIC
all the following are examples of violations of regulations pertaining to replacement EXCEPT
unintentionally recording incorrect information
all of the following would be considered rebating EXCEPT
an agent misrepresents policy benefits to convince a policyowner to replace policies
which of the following organizations defends a states rights to oversee the insurance industry?
national conference of insurance legislators
what is a foreign insurer?
An insurer with a home office in another state
if an insurance company makes a statement that its policies are guaranteed by the existence of the insurance guaranty association, that would be considered
an unfair trade practice.
which of the following best describes fixed-period settlement option?
both the principal and interest will be liquidated over a selected period of time.
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
conditional
the proposed insured makes the premium payment on a new insurance policy. if the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. this is an example of what kind of contract?
conditional
because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
conditions
contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
contracts of adhesion
an insurance company is domiciled in montana and transacts insurance in wyoming. which term is best describes the insurers classification in wyoming?
foreign
insurance companies in maryland must submit forms to the insurance commissioner in duplicate. what is the one exception to this rule?
if the forms are filed electronically
What type of insurance would be used for a Return of Premium rider?
increasing term