Questions I got wrong on examfx practice

Which of the following is a presentation that includes nonguaranteed elements of a policy over a period of years?

Illustration

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?

It does not guarantee that the entire principal amount will be paid out.

Which of the following settlement options in life insurance is known as straight life?

Life income

An insurance organization that does not issue insurance policies but provides a meeting place for underwriters to conduct business is known as a

Lloyd's association.

Life insurance policy illustration rules apply to which of the following types of policies?

Whole life insurance

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association.

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

continue to increase

The termination of marital property rights may be reversed for all of the following reasons EXCEPT

The spouse named as beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation.

How long must a life insurance policy be in force before the owner can enter into a viatical settlement contract?

2 years

In a variable life insurance policy, all of the following assets are held in the insurance company's general account except

Cash surrender values

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

All of the following are true regarding the Policy Summary EXCEPT

The policy summary may show dividends.

If the Commissioner issues an order and the person who is the object of the order demands a hearing within 30 days, within how many days must the hearing be held?

60 days

Which of the following would benefit the most from a straight life immediate annuity?

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

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?

A minor son of the insured

The two types of assignments are

Absolute and collateral.

Which of the following is not a characteristic of variable insurance and annuities?

Benefits are determined solely based on the policy premium.

Which of the following is NOT fundable by annuities?

Death benefits

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation Period

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.

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and Current.

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 of the following statements regarding deferred compensation funds is INCORRECT?

They are usually qualified plans.

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract.

The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place?

10 days after the notice was delivered to the policyholder

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

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

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal.

The death protection component of Universal Life Insurance is always

Annually Renewable Term

Universal Life Insurance policy is best described as a/an

Annually Renewable Term policy with a cash value account.

Which of the following is not an allowable reason for policy cancellation prior to its expiration date?

Any misrepresentation by the insured

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000.

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit?

Consumer report

which of the following terms refers to the nontaxable portion of each annuity benefit payment?

Cost base

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

Guaranteed insurability rider.

Which of the following is an intermediary who acts in the procuring of insurance on behalf of an applicant for insurance or an insured?

Insurance Broker

Which of the following does NOT apply to variable contracts?

Insurers do not have to provide any financial information or history of the company.

Which of the following is true regarding a risk retention group?

It is a liability insurance company owned by its members.

An agent is selling a client a Variable Life Insurance policy and as an inducement shows the client a projection based upon shares or dividends paid on a similar policy. This is

Misrepresentation.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

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?

Payor Benefit

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

Premium amounts and surrender values

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.

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

Reasonable expectations

All of the following are marketing arrangements used by insurers EXCEPT

Reinsurance System.

Which of the following is a person, other than an officer or employee of the ceding insurer, who solicits, negotiates, or places reinsurance cessions on behalf of a ceding insurer?

Reinsurance broker

Which of the following is FALSE regarding the life insurance replacement rules?

Replacement forms must be kept on file for 7 years.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option.

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value.

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.

In a defined contribution plan,

The contribution is known and the benefit is unknown.

What determines the penalty for surrendering a market value adjusted annuity prematurely?

The current interest rate at the time of surrender

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.

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?

The insured's premiums will be waived until she is 21.

An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?

The interest will continue to accumulate tax deferred.

Which of the following is true regarding a market value adjusted annuity?

The owner is guaranteed a fixed interest rate for a specific period of time.

All of the following statements are true regarding installments for a fixed amount EXCEPT

The payments will stop when the annuitant dies.

Which of the following best describes what the annuity period is?

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

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

Which of the following is NOT a goal of risk retention?

To minimize the insured's level of liability in the event of loss

What is the purpose of the Wisconsin State Life Insurance Fund?

To offer low-cost life insurance to the state residents

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

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

Which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value?

Variable whole life

When is the earliest a policy may go into effect?

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

A Buyer's Guide must be presented

When the application is taken.

When do full Social Security retirement benefits begin?

When the worker reaches age 65 and has earned the required amount of work credits.

When would life insurance policy proceeds be included in the insured's taxable estate?

When there are any incidents of ownership at the time of death

Suitability of annuity sales to senior consumer requirements would apply to all of the following except

a direct response solicitation

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

number of beneficiaries

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

period or fixed amount

The needs approach to calculating the amount of life insurance needed is based on

predicted needs of a family after the premature death of the insured

with adjustable life, the owner can change all of the following except

the insured

if the annuitant dies before the annuity start date, which is true?

the interest is taxable

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

Which of the following statements concerning the Medical Information Bureau is correct?

The MIB assists underwriters in evaluating and classifying risks

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person.

Any licensed 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

10 years.

In insurance transactions, fiduciary responsibility means

Handling insurer funds in a trust capacity.

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

Human life value approach (HLVA)

An intermediary's license remains in effect for how long?

Indefinitely

An insured purchased an individual life insurance policy with a face amount of $15,000. The insured pays a premium each month directly to the insurance company. What type of policy is that?

Ordinary life

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

Paid-up option

Key Person Insurance can provide protection for all of the following economics losses to a business except?

Pay death benefits to the estate of the insured

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

Pay the death benefit

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

Reduced paid-up

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

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?

Inspection Report

Which of the following best describes annually renewable term insurance?

It is level term insurance.

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

a policy reissued with a reduction in cash value

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

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?

Interest only option

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called?

Blackout Period

Which of the following characteristics applies to defined benefit plans but not defined contribution plans?

The amount of contributions made by the employer is determined by an actuarial formula.

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment.

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?

He will have to pay a penalty if he is younger than 59½.

Employer contributions made to a qualified plan

Are subject to vesting requirements.

What is the name of the insured who enters into a viatical settlement?

Viator

Life settlements sold in Wisconsin must allow for the rescission of the contract within

30 days.

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

A full death benefit

What does "level" refer to in level term insurance?

Face amount

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?

Need is predicted using the number of years until the insured's retirement.

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?

Payments for 15 years

An insurance company receives an application with some information missing and issues the policy anyway. What is this called?

Waiver

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.