simulation test

How long must a complaint record be maintained?

5 years

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

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 a settlement?

$200,000

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

$3,000

What is a foreign insurer?

An insurer will a home office in another state

Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is

An unfair trade practice.

All other factors being equal, the least expensive first-year premium payment is found in

Annually Renewable term

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

Collateral assignment

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.

Which of the following is TRUE about credit life insurance?

Creditor is the policyowner

Which of the following are NOT fundable by annuities?

Death benefits

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?

Decreasing term

All of the following statements concerning dividends are true EXCEPT

Dividend amounts are guaranteed in the policy.

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

Dividends are not taxable.

Which of the following is NOT a characteristic of universal life insurance?

Fixed premium

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

A Return of Premium term life policy is written as what type of term coverage?

Increasing

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

Increasing Term

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Insuring clause

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

In Modified Life Policies, what happens to the premium?

It is level at the beginning and increases after the first few years

An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments?

It is used to lower premiums.

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

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

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

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

One of the advantages of a family life insurance policy that provides coverage for children is that it

May be converted to permanent insurance for the children without requiring evidence of insurability.

What is the definition of a unilateral contract?

One-side: only one party makes an enforceable promise

An agent in Ohio wants to become an agent in North Carolina. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a North Carolina agent sought licensure in Ohio. What term does this describe?

Reciprocity

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?

Surrender charge

A 27-year-old professional has limited income and can only budget $15 per month for life insurance. Which of the following life insurance policies would provide the largest face amount for that amount of premium?

Term insurance

Which of the following means having an illness or sickness that can reasonably be expected to result in death in 24 months or less?

Terminal illness

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

The annuity owner dies during the accumulation period of his annuity. The cash value of his annuity exceeds the premiums he paid. There is no named beneficiary. Which of the following is true?

The cash value will be paid to the annuitant's estate.

An Adjustable Life policyowner can change which of the following policy features?

The coverage period

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.

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 describe what will happen?

The insurer will pay the full death benefit from the group policy to the benefiiary

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

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

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

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

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance.

The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?

The policyowner can specify the way proceeds are split in the policy

which is true about a spouse term rider?

The rider is usually level term insurance

All of the following identify purposes of the insurance Information and privacy Act EXCEPT

To establish fair and marketable advertisement procedures

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

What is a license suspension period for a second offense of violating state rules regarding records and reports?

Up to 1 year

When would a 20-pay whole life policy endow?

When the insured reaches age 100

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about

Whether an insurable interest exists between the individuals.