Primerica Practice Test

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

What Settlement Option is the only option that is temporary or changeable?

Interest Only

How long is the grace period for an individual life insurance policy?

1 month

if a group life policy ends insurance for any class of insured individuals, an individual policy must be ordered to every individual who has been insured for ...

5 years

What is an Equity Indexed Annuity?

A fixed annuity that invest on a relatively aggressive basis to aim for higher returns.

Is there valid insurable interest between a debtor in the life of a creditor?

No. There is no valid insurable interest

Cash value guarantees in a whole life policy are called...

Nonforfeiture values

Which of the following is NOT a component of an insurance policy premium?

Number of beneficies

In case of loss, the indemnity provision in insurance policies....

Restores an insured person to the same financial state as before the loss

Wagering on a sporting event is known as what type of risk?

Speculative

When a whole life policy lapses or is surrender prior to maturity the cash value can be used to...

Purchase a single premium policy for a reduced face amount

What Settlement Option is paid over a number of years and will be paid in full?

Fixed Period

Traditional IRA contributions are tax deductible based on...

...Owner's income

What is true about credit life insurance?

Creditor is the policyowner.

What type of annuity can be purchased with a single premium and provide benefit payments immediately?

Immediate

What are the components of a Cash Nonforfeiture Option?

Loan with 8% interest but still have the insurance, or if you surrender (cancel) and lose 6%.

Annuities Certain limit the amount paid by the annuity to a certain fixed...

Period or fixed amount

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as....

Utmost Good Faith

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....

Entire contract

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

Fixed

What Settlement Option is paid in a fixed amount and will be paid in full?

Fixed Amount

The insurer must be able to reply on the statements in the application, and the insured must be able to reply on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as...

Utmost good faith

What is the purpose of the surrender charge in a deferred annuity?

To compensate the company for loss of investment value

What kind of policy allows withdrawals or partial surrenders?

Universal life

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to...

...to purchase a single premium policy for a reduced face amount

List 3 statements regarding tax-qualified annuities.

1. Annuity earnings are tax deferred 2. The must be approved by the IRS 3. Withdrawals are taxed

Any insurance person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to....

5 years

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed.

Which component increases in the increasing term insurance?

Death benefit

How often must producer licenses renew in Louisiana?

Every 2 years

What is not considered a personal use for life insurance?

buy-sell agreement

Paid-up Insurance allows you to...

...Pay up the policy early

Upon policy delivery, the producer may be required to obtain...

...signed waiver of premium

What kind of Dividend Options creates a saving account that earns taxable interest?

Accumulation at Interest

When must insurable interest exist in a life insurance policy?

At the time of application

If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices?

At the time of policy delivery

What documents are used in the underwriting process containing specific medical details about an applicant?

Attending Physician's Statement (APS)

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

Continue to increase

What type of an interest rate is guaranteed in universal life policies?

Contract interest rate

The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. What is the insurance company's course of action?

Deny any payment of death benefit

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

Prior to performance of the test

What type of plan has a tax benefit for both employer and employee?

Qualified plan

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

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

Define a loss.

The reduction, decreasing or disappearance of value of the person or property

How are fixed annuities and equity indexed annuities similar?

They both have guarantees

The paid-up addition option uses the dividend

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

True or False - Positive HIV test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant.

True

An aleatory contract is based on what kind of exchange?

Unequal exchange of values

which of the following policies would have an IRA required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

What is the time limit of an immediate annuity?

Within 12 months

What best depicts the law of large numbers?

question - 44 The larger the pool of risk under study, the more accurate the predictions will be

What is the difference between a straight life policy and a 20-pay whole life policy?

question 38 - Premium payment period

Policy loan request, except for loan requests for payment of due premiums, many be deferred for a period of up to...

question 42 - 30 days

All of the following are true of the survivorship life policy except

the premium is based on the age of the insured

What is the time limit of a Deferred annuity?

After 12 months

What is not used to provide group life insurance?

Age, sex and occupation of each individual certified holder

Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was cased by an accident as defined in the policy?

An accidental death rider

In a deferred annuity, the difference between the accumulation value and the surrender value is the...

Surrender charge

List three statements regarding an annuitant.

1. the annuitant must be a natural person 2. the annuitant's life expectancy is taken into consideration for the annuitant 3. the annuitant receives the annuity benefits

The widower of an agent was issued a temporary license 30 days ago. How much longer can be legally serve under this license?

150 Days

A temporary license is good for...

180 days

Describe a Hazard.

A warning

You never back track from a ________________ to a _________________

Annuity to a 401k plan

Which of the following would NOT trigger the payment of Accelerated Death Benefits? 1. Requiring an organ transplant for the insured to survive 2. Being permanently institutionalized 3. Being permanently disabled 4. Terminal illness

Being permanently disabled

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material

the medical information bureau was created to protect

Insurance companies from adverse selection by high risk persons.

which ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

What best describes annuity renewable term insurance?

It is level term insurance

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

It is only taxable if the cash value exceeds the amount paid for the premium

What Settlement Option provides income for life and you may receive more than the death benefit?

Life Income

Which of the following is NOT a component of an insurance policy premium? 1. Insurer expenses 2. Investment return 3. Number of Beneficiaries 4. Mortality cost

Number of beneficiaries

During replacement of life insurance, a replacing insurer must do what?

Obtain a list of all life insurance policies that will be replaced.

What statement best describes agreement as it relates to insurance contracts?

One party accepts the exact terms of the other party's offer

What Dividend Option increases the death benefit for 1 year?

One-Year Term Dividend Option

A prospective insured receives a condition receipt but dies before the policy is issued. The insured will...

Pay the policy proceeds only if it would have issued the policy

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

List 3 characteristics of insurable risk.

The loss must be measurable, large, and due to chance.

Describe what the annuity period is.

The period of time during which accumulated money is converted into income payments

What is not true regarding a Straight Life Policy

The premium steadily decreases over time, in response to its growing cash value

The annuitant assumes the risks on investments in a what type of annuity?

Variable

What insurance policy allows a Policyowner to take out a loan from the policy's cash value?

Variable annuity

Which of the following products requires a securities license?

Variable annuity

What life insurance policy allows a Policyowner to take out a loan from the policies cash value?

Variable universal life

Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?

Variable universal life

What is not fixed in a Indexed Whole Life Policy?

cash value growth

The interest earned on policy dividends is...

taxable

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

$50,000

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1st; however, the insured failed to pay the premium. He died on February 28th. How much would the beneficiary receive from the policy?

$9,800

What options are under the Settlement Options?

1. Cash Payment 2. Life Income 3. Interest Only 4. Fixed Period 5. Fixed Amount

How many hour of continuing education credits are required in order for a producer to renew his/her license?

24 hours

When a resident producer changes his residence address, the insurance department must be notified within...

30 days

What producers will be required to complete continuing education hours to renew his license?

A producer licensed 4 years ago who holds only one line of authority

This state provided for a temporary license for all of the following EXCEPT

A producer's retirement.

Under the 401(k) bonus or thrift plan, the employer will contribute

An undetermined percentage for each dollar contributed by the employee.

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, tat would be considered...

An unfair trade practice

The death benefit protection component of universal life insurance is always...

Annually Renewable Term

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as a requested. When does the policy coverage become effective?

As of the application date.

What is not true about the federal tax advantages of a qualified plan?

At distribution, all amounts received by the employee are tax free.

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

Cash Option

What kind of dividend option sends policy owners checks?

Cash payment

What settlement option provides cash payment to the annuitant at annuitization?

Cash refund annuity settlement option

What limits the amount that a policyowner may borrow from a whole life insurance policy?

Cash value

What does "liquidity" refer to in a life insurance policy?

Cash value can be borrowed at any time

What report has information regarding a person's credit, character, reputation and habits.

Consumer report

Which of the following includes information regarding a person's credit, character, reputation and habits?

Consumer report

Which of the following statements is true regarding SIMPLE plans?

Contributions and earnings are tax deferred until funds are withdrawn

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index such as the Consumer Price Index, is called...

Cost of Living Rider

What happens when a policy is surrender for its cash value?

Coverage ends and the policy cannot be reinstated.

An adjustable life policy can assume the form of...

Either term insurance or permanent insurance

When the insured elected 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

John would like to allocate a portion of his monthly paycheck into the annuity, and would like to start the payouts at retirement, what kind of annuity should he purchase?

Flexible premium deferred annuity

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?

Guaranteed insurability option

If a life policy allows the policyowner to make periodic additions to the face amount at a standard rates, without providing insurability the policy includes a...

Guaranteed insurability rider

A fixed annuity provides the following features:

Guaranteed minimum rate of interest - payments that do not vary - guarantees the specified dollar amount for each payment and the length of the period of payments

A father purchases a life insurance policy on his teenage daughter and adds the payor benefit rider. in which of the following scenarios will the rider waive the payment premium?

If the father is disabled for more than 6 months

What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?

Income tax on distributions.

What type of insurance would be used for a Return of Premium Rider?

Increasing Term

The mode of premium payment...

Is defined as the frequency and the amount of the premium payment.

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death?

Joint Life

A Louisiana insurance company ran an advertisement in June 2008. When could the company discard the file on this A.D.?

June 2012

Which of the following best defines the unfair trade practice of rebating? 1. Making false statements that are maliciously critical and intended to insure another person in the business of insurance 2. Offering an inducement of something of value not specified in the policy 3. Making statements that misrepresent an insurance policy in order to indue an insured to replace the policy 4. Charing premium amounts in excess of the amount stated in the policy

Offering an inducement of something of value not specified in the policy

The dividend option in which the Policyowner uses dividends to purchase a term policy for one year is referred to as the...

One-year term option

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?

Paid-up Additions

What type of interest rate is guaranteed in universal life policies?

Question 6

Equity Indexed Annuities

Seek higher returns

List 3 components of Reduced Paid-Up Nonforfeiture Option.

Substandard risk - Builds cash value - Whole Life

If a producer is suspected of acting in violation of the insurance code, what authority would preside over a legal hearing regarding the matter?

The Commissioner

Who has the authority to issue cease and desist orders?

The Commissioner

What entity cannot regulate variable life policies?

The Guaranty Association

What would provide an underwriter with information concerning an applicant's health history?

The Medical information Bureau

J transferred his life insurance policy to his son two years before his death. What happens?

The entire face value of the policy will be included in J's taxable estate

What statement is true about a spouse term rider?

The rider is usually level term insurance.

In order to reinstate a life insurance policy the insured must do all of the following except...

pay next years premiums in advance

Which of the following is required to provide a notice of information practices to applications and policyholders?

question 11 - the underwriter

What is a Reduction of Premium?

A down payment on next year's premium.

Define Exposure.

A unit of measure used to determine rates of charge for insurance coverage.

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?

Accumulation Period

what is the time period called during which the surviving spouse of the insured does not receive Social Security income benefits?

Blackout Period

Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?

Buy-Sell Agreement

What Settlement Option excludes paying interest?

Cash Payment

The owner of an IRA dies without having named a beneficiary, by what point must the interest be distributed?

December 31st of the calendar year that contains the fifth anniversary of the owner's death

When must an IRA be completely distributed when a beneficiary is not named?

December 31st of the year that contains the fifth anniversary of the owner's death

What type of insurance policy is most commonly used in credit life insurance?

Decreasing term

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

Delivered

Which policy component decreases in decreasing term insurance?

Face amount

True or False - Insurers are barred from requesting HIV testing

False

What is payment called for an annuity?

Premium

What would be included in a policy summary?

Premium amounts and surrender values

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Who can request changes in premium payments, face values, loans and policy plans?

The Policyowner

With the cash refund option, when the annuitant dies, what would the beneficiary receive?

The refund of the original amount minus payments already made.

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?

Universal life

Cash value guarantees in a whole life policy are called...

nonforfeiture values

What is included in a policy summary?

the premium amount and surrender values

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

the same face amount as in the whole life policy

what is true regarding statistics used in an advertisement?

the source must be identified.

True or false - in group life, the cost of coverage is based on the ration of men and women in the group.

true

The paid-up addition option uses the dividend...

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

List 3 characteristics of insurable risk.

1. The loss must be due to chance 2. the loss must be measurable 3. the loss exposure must be large

A licensed life producer has completed 12 of his continuing education hours for this period. How many more will be have to finish?

12

What Settlement Option gives a lump sum and is not taxable?

Cash Payment

What are the two components of a Universal policy?

Insurance and cash account

A whole life policy that will generate immediate cash value is a...

Single premium policy

A variable annuity serves...

...as a hedge against inflation

Which of the following is true regarding a waiver of a surrender charge on an annuity contract

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to...

The contingent beneficiary

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

What allows an insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

Sam set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does Sam have?

Simplified Employee Pension (SEP)

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?

false advertising

What is featured in a single premium immediate annuity?

income payments start within one year

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.

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

fixed amount

Mortality - Interest + Expense =

gross premium

A return of premium term life policy is written as what type of term coverage?

increasing

If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?

inform the insurance company

According to the Common Disaster cause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

question - The primary beneficiary died before the insured

A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of the premium paid exceeds the amount that would have provided paid-up insurance in how many years?

question 12 - 3 years

Which of the following would NOT be eligible for coverage under key person? 1. The pharmacist in a drug store 2. the manager of a small store 3. the owner of a shop 4. the executive officer of a company

question 22 - the owner of a shop

How long is the period of time in which a licensee must renew his or her license?

question 25 - 30 days prior to expiration

If the Commissioner issues a cease and desist order, that means the insurer must...

question 26 - Suspend all insurance transactions in this state

During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is...

question 29 - lower

A whole life policy is surrender for a reduced-paid up policy. The cash value in the new policy will...

question 30 - Continue to increase

If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?

question 35 - Within 30 days

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT: 1. Pay next year's premium in advance 2. Pay back premiums 3. Pay any interest due on back premiums 4. Repay any outstanding loans and interest

question 41 - Pay any interest die on back premiums

Which of the following is NOT an example of the company's location of incorporation? 1. Alien 2. Authorized 3. Domestic 4. Foreign

question 46 - Authorized

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?

Fixed amount

What dividend option will increase the death benefit?

Paid-up addition

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT... 1. Pay any interest due on back premiums 2. Repay any outstanding loans and interest 3. Pay next year's premiums in advance 4. Pay back premiums

Pay next year's premiums in advance

An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at the time that the insured has misstated information about her insurance history on the application. What will the insurer do?

Pay the death benefit

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy

All of the following statements about indexed whole life insurance are correct EXCEPT: 1. The cash value depends on the performance of the equity index 2. The policy face amount reminds level throughout the life of the policy. 3. The premium is fixed 4. There is a guaranteed minimum interest rate

Question 2

Which of the following is true regarding pure life annuity settlement option? 1. It guarantees that all the proceeds will be paid out 2. The beneficiary will receive a refund of the principal 3. It guarantees income for a specified period of time 4. It provides the highest monthly benefits

Question 47 - it provides the highest monthly income

An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. There answer is considered to be...

Representation

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 rights of ownership. The policyowner should have her husband named as the...

Revocable beneficiary

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

Size of each installment

Which of the following would be likely to establish a SEP? 1. Military personnel 2. The elderly 3. Low-Income individuals and families 4. Small employers

Small employers

The national DO NOT CALL Registry was created to regulate

Telemarketers

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

What entities regulate variable life policies?

The SEC, The Insurance Department, and the Federal government.

A 60 year old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. What happens?

The amount of the distribution is reduced by the amount of the 20% withholding tax

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distributions is reduced by the amount of 20% withholding tax

In a fixed annuity, what is true regarding the guaranteed interest rate on the investment?

The annuitant will receive the higher of either the guaranteed minimum rate of currant rate

The period of time during which accumulated money is converted into income payments is called...

The annuity period

What is the cost of coverage based on for group life insurance?

The average age and ration of men to women

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

Who does the spendthrift clause in a life insurance policy protect?

The beneficiary

Peril is most easily defined as...

The cause of loss insured against

In comparison to consumer reports, describe a unique characteristic of investigative consumer reports?

The customer's associates, friends and neighbors provide the report's data.

an individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

After a hearing, if the Commissioner finds a licensee is using Unfair Methods of Competition, the Commissioner may issue a Cease and Desist order against that person and levy a fine of how much?

Up to $1,000 for each violation

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

$10,000 no tax consequence.

Listy 3 things regarding Straight Life Policy.

1. Lowest annual premium 2. Premium steadily decreasing over time, in response to its growing cash value. 3. Develops cash value by the end of the third policy year

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-pouncer plan who has earned income

How are state Insurance Guaranty Associations funded?

By their members - authorized insurers

Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC?

She must be appoint specifically by CGIC

Which settlement option provides a single beneficiary with income for the rest of his/her life?

Single Life

Which statement option provides a single beneficiary with income for the rest of his/her life?

Single Life

A producer is charged with committing several crimes in Louisiana. Who is required to report the charges to the Commissioner?

The producer

An insured as 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 is a statement that is guaranteed to be true. and if untrue, may breach a insurance contract?

Warranty

Upon policy delivery, the producer will not receive...

sign of waiver of premium

Upon policy delivery, the producer should not require....

signed waiver of premium

The paid up addition option used the dividend...

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

Insurance policies are not drawn up through negotiations, and an insured as little to say about its provisions. what contract characteristic does this describe?

Adhesion.

Employer contributions made to a qualified plan

Are subject to vesting requirements

A California insurer wants to transact business in Louisiana. What document must it first receive?

Certificate of Authority

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to...

Charge a higher premium

Insurance companies that hold a Certificate of Authority to transact insurance in Louisiana must be examined how often?

Every five years or as often as the commissioner feels is necessary.

Under which installment option does the annuitant select the amount of each payment and the insurer determines how long the will pay benefits?

Fixed amount

The annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is known as which type of annuity?

Flexible premium Deferred Annuity

An individual purchasing a 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 additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

What is true about the premium on the children's rider in a life insurance policy

It remains the same no matter how many children are added to the policy.

What is the exception that an underwriter could use to select and classify risk for a potential client?

National origin

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

Reduced Paid-up

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

The insured will need a written consent of the insurer.

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

A producer's license has been revoked for a violation of the insurance code. When can the producer apply for a new license?

Within 1 year of the revocation

Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?

The employer is the owner and beneficiary.

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

The borrower only

Describe a Peril.

The causes of loss

The type of term insurance that provides increasing death benefits as the insured ages is called...

increasing term

A fixed annuity is...

Conservative - low risk - guarantees - general account - bonds

What is considered a physical hazard?

Diabetes

j applied for a life insurance policy one January. the policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid?

February 28th, or 10 days after the time the policy is delivered

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

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?

life income with period certain

If $100 000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

$3,000

An insurance owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will...

Pay the policy proceeds only if it would have issued the policy

What option are under the Dividend Options?

1. Cash Payment 2. Reduction Premium 3. Accumulation of Interest 4. Paid-Up Additions 5. Paid-up Insurance 6. One-year term

List 3 statements regarding a non qualified retirement plan?

1. Contributions are not currently tax deductible 2. It can discriminate in benefits and selecting participants 3. Earnings grow tax deferred

List 3 unfair claims settlement practices.

1. Failing to adopt and implement reasonable standards for settling claims. 2. Failing to acknowledge pertinent communication pertaining to a claim 3. Refusing to pay claims without conducting a reasonable investigation

List 3 characteristics of Group Life insurance.

1. Individuals receive a certificate of authority. 2. Amount of coverage is determined according to nondiscriminatory rules. 3. Certificate holders ma convert coverage to an individual policy without evidence of insurability.

What options are under the Nonforfeiture Options?

1. Reduced Paid up 2. Extended Term 3. Cash

If a producer allows his license to lapse, within what time period may the producer reinstate the same license?

2 years

If a resident producer or solicitor has a change of residential or business address, how soon must the licensee notify the Commissioner of these changes?

30 days

Insurers must keep files of all advertisements used in Louisiana for how many years?

4

The Commissioner is elevated to a term that lasts for how many years?

4 years

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teacher is a(n)...

403(b) Plan (TSA)

What kind of person would benefit most from a straight life immediate annuity?

A 60 year old man who needs as much retirement income as possible

If a company has a simplified employee pension plan what type of plan is it?

A qualified plan for a small business

If a producer's license was revoked for a violation of the Insurance Code, when can the producer apply for a new license?

After 1 year

With a Single Premium Deferred Annuity (SPDA), when are the benefits paid?

After more than 1 year

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

Because an agent is using stationary with the logo of an insurance company, applicant's for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

In order to get a nonresident license in Louisiana, producers must...

Apply and pay a fee to a nonresident state that reciprocates

What is a feature of a variable annuity?

Benefit payment amounts are not guaranteed

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age what type of policy is this?

Jumping juvenile policy

What term best describes the act of withholding material information that would be crucial to an underwriting decision

Concealment

The proposed insured makes the premium 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

All of the following are true non qualified deferred compensation plan EXCEPT... 1. It is a contractual agreement whereby the employee agrees to defer receipt of a portion of his compensation until retirement, disability or death 2. It does not require the IRS approval. 3. Contributions are tax deductible 4. it can be discretionary

Contributions are tax deductible

What is another word for Single Payments?

Lump sum

What is another word for Flexible Payments?

Periodic

If the Policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has ownership rights?

Policyowner

Based on a Human Life Value Approach, what is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death

If you surrendered your annuity, what are you entitled too?

Premiums + plus interest - the surrender charges =

The purpose of the Fair Credit Reporting Act is to...

Protect consumers against the circulation of inaccurate of obsolete personal or financial information

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT... 1. Birth of child 2. Marriage 3. Purchase of a new home 4. Approximately every 3 years between the ages of 25 and 40

Purchase a new home

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT: 1. Purchase of a new home 2. Approximately every 3 years between the ages of 25 and 40 3. Birth of a child 4. Marriage

Purchase of a new home

Key person insurance can provide protection for all of the following economic losses to a business except...

pay the death benefit to the estate of the insured...

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

question 19 - premiums are flexible

All of the following are true regarding a cash refund annuity settlement option EXCEPT: 1. It is considered a refund life annuity 2. it provides a lump-sum payment to the beneficiary 3. It provides a cash payment to the annuitant at the annuitization 4. It guarantees a refund of the principal

question 40 - it is considered a refund life annuity

Premiums collected on behalf of the insurance company by an agent will be held in what capacity?

Fiduciary

What are the 3 investment options that help the annuity grow?

Fixed Annuity - Equity Indexed Annuity - Variable Annuity

if a beneficiary wants a guarantee that benefits paid from the principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed Period

List 2 components of Paid-Up Additions Dividend Options.

Automatic Option - Paid up coverage increases the death benefit

List 2 components of Extended Term Nonforfeiture Option.

Automatic option - Keeps the same coverage by switching to term

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable

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

How often must producer license renew in Louisiana?

Every 2 years

All of the following information needs to be included on an application for life insurance EXCEPT... 1. The agent's statement, if applicable 2. Medical information about the applicant 3. Health insurance policies in force 4. Life insurance with other insurers

Health insurance policies in force

What type of annuity can be purchased with a single premium and provides benefit payments immediately?

Immediate

if a loan request if for payment of due premiums of the policy, how soon must the insurer issue a loan?

Immediately

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

Inception report

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Whole would be allowed catch-up contributions?

Individuals age 50 or older

What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuitant will refund the remaining payments to a beneficiary?

Installment refund annuity

What are the two components of a universal policy?

Insurance and cash account

All of the following are considerations under the needs approach planning for life insurance EXCEPT... 1. Debt cancellation 2. Education Fund 3. Insured's income 4. Emergency Reserve funds

Insured's income

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

when i applied for insurance and paid the initial premium on august 14 he was issued a conditional receipt. during the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will...

Issue the policy anyway, and pay the face value to the beneficiary.

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT: 1. It builds cash value 2. If the insured lives to age 100, the policy matures, and the face amount is paid to the insured 3. It does not have a guaranteed death benefit 4. It is funded by a level premium

It does not have a guaranteed death benefit

If a contact provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a...

Joint Life Annuity

When comparing Joint Life Policy to two individuals life policies of the same amount on the same insureds, which condition is true?

Joint Life has a lower premium than the total of two individual policies

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 select?

Joint and Survivor

What Settlement Options involve installments with interest?

Life Income - Interest Only - Fixed Period - Fixed Amount

Guaranteeing future dividends is considered to be an unfair or deceptive act known as...

Misrepresentation

A Equity Indexed Annuity is....

Moderate - some risk (4%-8%) - some guarantees - bonds - S&P500

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an...

Modified endowment contract

What is another word for Level Payments?

Monthly

Under the Fair Credit Report Act, individuals rejected for insurance due to information contained in consumer report...

Must be informed of the source of the report

An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?

The difference between the premium paid and the cash value

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

The income at retirement is tax free

With Adjustable Life, the owner can change all of the following EXCEPT... 1. Premium 2. The length of time the coverage will last 3. The insured 4. The death benefit

The insured

When a life insurance policy was issued, the Policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Who receives the death benefit?

The insured's contingent beneficiary

All of the following statements about indexed whole life insurance are correct EXCEPT

The policy face amount remains level throughout the life of the policy

All of the following statements about indexed whole life insurance are correct EXCEPT... 1. Premium is fixed 2. There is a guaranteed minimum interest rate 3. The cash value depends on the performance of the equity index 4. The policy face amount reminds level throughout the life of the policy

The policy face amount reminds level throughout the life of the policy

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

Which of the following is TRUE regarding premium in a 10-year level premium policy? 1. The premium will be level for the first few years of the policy, but will increase by the 10th year 2. The premium will remain level for 10 years 3. The premium will remain the same at renewal 4. The premium will decrease at the end of the term

The premium will remain level for 10 years

According to the Common Disaster clause if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

The primary beneficiary died before the insured?

Which of the following is required to provide a notice of information practices to applicants and policy holders? 1. The department of insurance 2. The NAIC 3. The underwriter 4. The producer

The producer

Which of the following is required to provide notice of information practices to applicants and policyholders?

The producer

What is the disadvantage of a fixed annuity?

The purchasing power buy over time will be eroded due to inflation

If a policy includes a free-look period of at least 10 days, the Buy's Guide may be delivered to the applicant no later than...

With the policy

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant

With the policy

If during the underwriter process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices?

At the time of policy delivery.


Ensembles d'études connexes

Engage Fundamentals RN: Vital Signs

View Set

Roll of Thunder, Hear My Cry Chapter 10-12

View Set

Chapter 12 NCLEX Review (website)

View Set

PK0-003 Chapter 4: Schedule Planning

View Set

Chapter 7 - Axial Skeleton Bonus A&P

View Set