Combo with General Insurance and 5 others
4. Increases annually
24.Annually renewable term policies provide a level death benefit for a premium that (Choose from the following options) 1. Decreases annually. 2. Remains level 3. Fluctuates 4. Increases annually.
3. LEVEL
30.A man wants to buy a life insurance policy in which he can count on guaranteed minimum benefits. Which type should he buy? (Choose from the following options) 1. Solid 2. Fixed 3. Level 4. Variable
1. An index like Standard & Poor's 500
30.The equity in an equity index annuity is linked to (Choose from the following options) 1. An index like Standard & Poor's 500 2. The returns from the insurance company's separate account 3. The annuitant's individual stock portfolio 4. The insurance company's general account investments.
b)Express Authority Express powers are written into the contract between the insurer and the agent.
31. The authority granted to an agent through the agent's contract is referred to as a)Absolute Authority b)Express Authority c)Apparent Authority d)Implied Authority.
What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion.
If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?
Send the application back to the applicant for signature.
1. Twisting
11.Agents who induce insureds to drop a policy in favor of another policy when it might not be in the insured's best interest to do so are guilty of (Choose from the following options) 1. Twisting 2. Defamation 3. Misrepresentation 4. Rebating
3. Revocable beneficiary.
#10. Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. Bonnie should have her husband named as thea)Tertiary beneficiary.b)Irrevocable beneficiary.c)Revocable beneficiary.d)Secondary beneficiary. If her husband is named as the revocable beneficiary, Bonnie would be the policyowner and could make changes to the contract. Her husband would receive the death benefit.
d)Business Entity Business entity means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.
#15. Which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer? a)Natural Group b)Stock Company c)Mutual Company d)Business Entity
2. Option B
16.Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? (Choose from the following options) 1. Option A 2. Option B 3. Corridor option 4. Variable option
4. A new Commissioner or Director is put into office. An appointment by an insurer is based upon the person maintaining a valid insurance license. Although the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.
48. All of the following events will terminate a producer's certificate of appointment EXCEPTa)A producer's license expires and is not renewed.b)A termination issued by the appointing insurer.c)A producer's license is suspended or revoked by the Department of Insurance.d)A new Commissioner or Director is put into office. An appointment by an insurer is based upon the person maintaining a valid insurance license. Although the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.Next
2. A new Commissioner or Director is put into office.
48.All of the following events will terminate a producer's certificate of appointment EXCEPT (Choose from the following options) 1. A producer's license is suspended or revoked by the Department of Insurance 2. A new Commissioner or Director is put into office 3. A producer's license expires and is not renewed 4. A termination issued by the appointing insurer.
2) Fraud.
An agent is trying to convince a potential insured to buy a policy from him, so he misrepresents the benefits of the policy. This is an example of (Choose from the following options)1. Indemnity.2. Fraud.3. Defamation.4. Concealment.
An employer provides a group life plan for its employees; it is $50,000 of term to age 65. When one of the employees was hired 10 years ago, he misstated his age and told the employer he was 50, when in fact he was 56 years old. The insured employee died last week. His beneficiary will receive (Choose from the following options) 1. The amount of death benefit the premium would have purchased at his correct age. 2. Nothing, due to the misstatement of age. 3. $50,000. 4. Nothing, due the insured's reaching the maximum age.
An employer provides a group life plan for its employees; it is $50,000 of term to age 65. When one of the employees was hired 10 years ago, he misstated his age and told the employer he was 50, when in fact he was 56 years old. The insured employee died last week. His beneficiary will receive (Choose from the following options)1. The amount of death benefit the premium would have purchased at his correct age.2. Nothing, due to the misstatement of age.3. $50,000.4. Nothing, due the insured's reaching the maximum age.
Which of the following is true regarding the annuity period? a)It is also referred to as the accumulation period. b)It is the period of time during which the annuitant makes premium payments into the annuity. c)It may last for the lifetime of the annuitant or for a shorter period of time. d)During this period of time the annuity payments grow interest tax deferred.
C. It may last for the lifetime of the annuitant or for a shorter period of time. The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.
A state-issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of Authority
In order to transact insurance within a given state, an alien insurer must first obtain what?
Certificate of Authority
Insurance is a contract that protects the insured from what?
Loss
3. Fiduciary responsibility
The requirement that agents not commingle insurance monies with their own funds is known as (Choose from the following options) 1. Express authority 2. Accepted accounting principal 3. Fiduciary responsibility 4. Premium accountability.
For the purpose of insurance, what is risk?
Uncertainty of loss.
What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?
Underwriting
D. Insurer While acting under the authority of the contract given by the insurer, the acts of an agent/producer are considered to be the acts of the insuer.
When agents are acting within the scope of their contract, their actions will be assumed to be acts of the A. Policy owner B. Department of Insurance C. Insured D. Insurer
B. ownership mutual company are owned by policyholders while stock companies are owned by stockholders
what is the major difference between a stock company and a mutual company? A. Types of ppolicies B. Ownership C. Amnt. Of death benefit D. Number of producers
4. The period of time during which accumulated money is converted into income payments The "annuity period" is the time during which accumulated money is converted into an income stream.
Which of the following best describes what the "annuity period" is? (Choose from the following options) 1. The period of time spanning from the accumulation period to the annuitization period 2. The period of time during which money is accumulated in an annuity 3. The period of time spanning from the effective date of the contract to the date of its termination 4. The period of time during which accumulated money is converted into income payments
A. The aggent should change an incorrect stament on the application by personally initialing next to the correct statement
Which of the following is INCORRECT regarding the agents duties and responsibilities at the time of the application. A. The aggent should change an incorrect statement on the application by personally initialing next to the correct statement B. the agent should explain the nature and type of any receipt he/she is giving to the applicant. C. The applicant should make sure there are no unanswered questions on the application. Any changes to information on an application must be initialed by the applicant.
4. Telling a client that his first premium will be waived if he purchased the insurance policy today
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? (Choose from the following options) 1. Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest 2. Charging a client a higher premium for the same policy as another client in the same insuring class 3. Making deceptive statements about a competitor 4. Telling a client that his first premium will be waived if he purchased the insurance policy today
d)Creditor is the policyowner.
Which of the following is true about credit life insurance? (Choose from the following options) 1. Debtor is the annuitant 2. Creditor is the insured 3. Debtor is the policy beneficiary 4. Creditor is the policyowner.
2)The annuitant assumes the risks on investment.
Which of the following is true regarding variable annuities? (Choose from the following options) 1. A person selling variable annuities is required to have only a life agent's license 2. The annuitant assumes the risks on investment 3. The funds are invested in the company's general account 4. The company guarantees a minimum interest rate.
2. The annuitant assumes the risks on investment.
Which of the following is true regarding variable annuities? (Choose from the following options) 1. A person selling variable annuities is required to have only a life agent's license 2. The annuitant assumes the risks on investment 3. The funds are invested in the company's general account 4. The company guarantees a minimum interest rate.
1. An insured and his child are injured in the same accident, and the uninjured, nonworking spouse wants to collect hardship benefits from the cash value of the life policy
Which of the following situations would be addressed by The Uniform Simultaneous Death with a Common Disaster provision? (Choose from the following options) 1. An insured and his child are injured in the same accident, and the uninjured, nonworking spouse wants to collect hardship benefits from the cash value of the life policy 2. The insured and primary beneficiary are injured in the same car accident, and the beneficiary dies within 30 days of the insured 3. Two beneficiaries of a life insurance policy are both killed in the same car accident. Because there are no remaining beneficiaries, the insured must select new ones 4. Both the insured and beneficiary are severely injured and want to request advanced benefits to pay for hospitalization and subsequent medical treatment.
4)Option B
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? (Choose from the following options) 1. Corridor option 2. Variable option 3. Option A 4. Option B
C. a limited pay policy
a policy owner of an adjustable life policy can increase premium payments and have which of the following? A. a higher cash value interest rate B.a higher face amount without proof of insurability C.a limited pay policy D.a lower nonforfeiture option
D.non participating policy In a nonparticipating the policy pays dividends not to policy owner as with (mutual insurers) but to stockholders (stock insurers)
a policy that does not pay dividends to policy owner is a? A. participating policy B. whole life policy C. mutual life policy D. not participating policy
D. the spouse of a retiring insurance producer
a temporary producer license could be issued without examination to all the following EXCEPT? A. the spouse or legal representative of a deceased insurance producer B. the designee of a licensened insurance producer who enters active duty in the US Armed Forces C. the employee of a disabled licensed a producer D.the spouse of a retiring insurance producer
All other factors being equal, the least expensive first-year premium payment is found in a)Annually Renewable Term. b)Increasing Term. c)Decreasing Term. d)Level Term.
a. Annually Renewable Term Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.
45. If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days of the date that the contract is executed? a)45 days b)7 days c)15 days d)30 days
c)15 days The insurer has 15 days to file a notice of producer appointment.
#40. An agent is trying to convince a potential insured to buy a policy from him, so he misrepresents the benefits of the policy. This is an example of a)Concealment b)Indemnity c)Fraud d)Defamation .
c)Fraud Fraud is the intentional misrepresentation used to induce another party to make or refrain from making a contract, or to deceive or cheat a party
D. 5yrs Ech. Agent and agency must keep a file of all advertising printed published or prepared for 5yrs
for how many years is insurer required to maintain a complete file of its advertisements
B. until the beneficiary death
how long will the beneficiary receive payments under the single life settlement option A. Until the insureds age 100 B. Until the beneficiary's death C. Until the beneficiary's death D. For a specific period of time
D. 15 days
if an insurer wishes to appoint a producer it must file a notice of appointment within how many days of the date that the contract is executed
#39. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority? a)Express b)Implied c)Assumed d)Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power.
#39. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?a)Express b)Implied c)Assumed d)Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power.
d)Gradually increases each year by the amount that the cash value increases. Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases
#44. Universal Life Option B includes the annual increase in cash value; the death benefit under this option a)Decreases by the amount that the cash value increases. b)Increases for the first few years of the policy, and then levels off. c)Remains level. d)Gradually increases each year by the amount that the cash value increases
b)Fraud False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading
#46. An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a)False advertising b)Fraud c)Embellishment d)Defamation
13. Which type of authority is based on the actions, words, or deeds of the principal?a)Apparent b)Express c)Lingering implied d)Implied
1. Apparent Apparent authority is the appearance of, or the assumption of, authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
1. The period of time during which accumulated money is converted into income payments
1.Which of the following best describes what the "annuity period" is? (Choose from the following options) 1. The period of time during which accumulated money is converted into income payments 2. The period of time spanning from the accumulation period to the annuitization period 3. The period of time during which money is accumulated in an annuity 4. The period of time spanning from the effective date of the contract to the date of its termination
c)Concealment In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision.
10. An applicant who knowingly fails to communicate a fact that would help an underwriter make a sound decision regarding coverage is guilty of a)Fraud b)Misrepresentation c)Concealment d)Lying.
1. Specified
10.All of the following are beneficiary designations EXCEPT (Choose from the following options) 1. Specified 2. Tertiary 3. Contingent 4. Primary.
3. It provides income the beneficiary cannot outlive
12.Which of the following is true regarding a single life settlement option? (Choose from the following options) 1. Proceeds are paid out in a lump sum 2. It provides income for a specified period of time 3. It provides income the beneficiary cannot outlive 4. Payments continue until the entire principal is exhausted.
3. Both a life insurance license and a securities license
13.What license or licenses are required to sell variable annuities? (Choose from the following options) 1. Only a securities license 2. No license is required 3. Both a life insurance license and a securities license 4. Only a life insurance license
2. Transfer
14. When a homeowner purchases insurance on his home, what risk management technique is he practicing?a)Retentionb)Transferc)Avoidanced)Sharing When insurance is purchased, the insured is, in return for the payment of the premium, transferring the risk of financial loss by certain perils to the insurance company.
4. Revocable beneficiary.
14.Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. Bonnie should have her husband named as the (Choose from the following options) 1. Secondary beneficiary 2. Tertiary beneficiary 3. Irrevocable beneficiary. 4. Revocable beneficiary.
1. A presentation of nonguaranteed elements of a policy
15.The term "illustration" in a life insurance policy refers to (Choose from the following options) 1. A presentation of nonguaranteed elements of a policy 2. A depiction of policy benefits and guarantees 3. Pictures accompanying a policy 4. Charts and graphs.
2. Require evidence of insurability.
16. If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer maya)Increase medical requirements on existing members.b)Require evidence of insurability.c)Require a higher premium.d)Prolong the open enrollment period. In group underwriting the evidence of insurability is usually not required of each participant unless he or she is enrolling for coverage outside of the normal enrollment period.
2. Warranty
17.Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? (Choose from the following options) 1. Representation 2. Warranty 3. Concealment 4. Indemnity
4. Apply and pay a fee to a nonresident state that reciprocates.
18.In order to get a nonresident license is this state, producers must (Choose from the following options) 1. Pass the non-resident state exam and satisfy their continuing education requirements 2. Represent an agency located in this state 3. Surrender their licenses in their state of residence 4. Apply and pay a fee to a nonresident state that reciprocates.
3. 12 months
19.Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the Commissioner? (Choose from the following options) 1. 30 days 2. 90 days 3. 12 months 4. 2 years
4. An application on which the medical information is completed by the applicant and the agent only
2.Which of the following would be considered a nonmedical insurance application? (Choose from the following options) 1. An application that does not ask any questions about the applicant's medical history 2. An agent's report 3. An application for life insurance 4. An application on which the medical information is completed by the applicant and the agent only
4. Apparent
20.An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority? (Choose from the following options) 1. Express 2. Implied 3. Assumed 4. Apparent
3. Cash value
21.What limits the amount that a policyowner may borrow from a whole life insurance policy? (Choose from the following options) 1. Amount stated in the policy 2. Face amount 3. Cash value 4. Premiums paid
2. 30 days
22.A flexible premium universal life insurance policy must provide a grace period of (Choose from the following options) 1. 10 days. 2. 30 days. 3. 60 days. 4. 90 days.
4. Only the annuity owner
22.Which of the following can surrender a deferred annuity contract? (Choose from the following options) 1. Only the insurance company for nonpayment of premiums 2. The beneficiary after the owner's death 3. Deferred annuity cannot be surrendered. 4. Only the annuity owner
4. Agent
23.According to the Law of Agency, a principal is represented by a/an (Choose from the following options) 1. Insurer 2. Broker 3. Insured 4. Agent.
c)The board of directors is chosen by a state-based election board In a stock company, the board of directors is elected by the stockholders.
25. All of the following attributes are found in stock insurance companies EXCEPT a)Earnings from operations may be kept as retained earnings b)The Stockholders may receive a dividend at the end of the year c)The board of directors is chosen by a state-based election board d)The company is owned by the stockholders. In a stock company, the board of directors is elected by the stockholders.
4. The surviving beneficiary will continue receiving this 2/3 of the benefit paid when both beneficiaries were alive.
25.An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? (Choose from the following options)1. The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.2. The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.3. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies.4. The surviving beneficiary will continue receiving this 2/3 of the benefit paid when both beneficiaries were alive.
4. An unfair trade practice.
26.If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association that would be considered (Choose from the following options) 1. A misrepresentation 2. An accurate statement 3. A legal representation of the Association 4. An unfair trade practice.
4. Pays dividends to policyowners.
26.Which of the following is usually true of a participating life insurance policy? (Choose from the following options) 1. May be converted to a term life policy. 2. Pays dividends to stockholders.3. Assesses premiums against stockholders. 4. Pays dividends to policyowners.
3. It has a guaranteed minimum interest rate
28.Why is an equity indexed annuity considered to be a fixed annuity? (Choose from the following options) 1. It has a fixed rate of return 2. It is not tied to an index like the S&P 500 3. It has a guaranteed minimum interest rate 4. It has modest investment potential.
3. Increase medical requirements on existing members
29.If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may (Choose from the following options) 1. Require a higher premium 2. Prolong the open enrollment period 3. Increase medical requirements on existing members 4. Require evidence of insurability.
2. Investing in the stock market.
3.All of the following actions by a person could be described as risk avoidance EXCEPT (Choose from the following options) 1. Taking a flu shot each year 2. Investing in the stock market. 3. Refusing to scuba dive 4. Never flying in an airplane.
3. Until the beneficiary's death
32.How long will the beneficiary receive payments under the single life settlement option? (Choose from the following options) 1. For a specified period of time 2. Until the insured's age 100 3. Until the beneficiary's death 4. Until the insured's death
3. A mutual insurer
4.Insurance companies may be classified according to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders is (Choose from the following options) 1. A fraternal insurer 2. A stock company 3. A mutual insurer 4. A reciprocal company.
2. Non-participating policy
40.A policy that does not pay dividends to policyowners is a (Choose from the following options) 1. Mutual life policy 2. Non-participating policy 3. Participating policy 4. Whole life policy.
2. Reciprocity
43.A producer in Ohio wants to become a producer in Michigan. The Department will waive certain examination requirements, provided that Ohio would waive these same requirements if a Michigan producer sought licensure in Ohio. What term is used to describe this phenomenon? (Choose from the following options) 1. Equanimity 2. Reciprocity 3. Equality 4. Fair exchange
b)Option B
44. Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a)Option A b)Option B c)Corridor option d)Variable option Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.
3. Single Premium
45.Which type of life insurance policy generates immediate cash value? (Choose from the following options) 1. Decreasing Term 2. Continuous premium 3. Single Premium 4. Level Term
a) It may last for the lifetime of the annuitant or for a shorter period of time.
46. Which of the following is true regarding the annuity period? a)It may last for the lifetime of the annuitant or for a shorter period of time. b)During this period of time the annuity payments grow interest tax deferred. c)It is also referred to as the accumulation period. d)It is the period of time during which the annuitant makes premium payments into the annuity. The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.
3. Automatic premium loan
46.A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? (Choose from the following options) 1. Incontestability period 2. Assignment 3. Automatic premium loan 4. Waiver of premium
c)A copy of the original application for insurance.
47. To meet the Entire Contract provision, a policy must contain a)Buyer's guide to life insurance b)Listing of the insured's former insurer(s) for incontestability provisions c)A copy of the original application for insurance d)A declarations page with a summary of insureds. An insurance contract must contain a copy of the original application.
d)A new Commissioner or Director is put into office.
48. All of the following events will terminate a producer's certificate of appointment EXCEPT a)A producer's license expires and is not renewed. b)A termination issued by the appointing insurer. c)A producer's license is suspended or revoked by the Department of Insurance. d)A new Commissioner or Director is put into office. An appointment by an insurer is based upon the person maintaining a valid insurance license. Although the appointment is made by the head of the Insurance Department, that person leaving the office does not terminate existing appointments.
2. Option B
5.Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? (Choose from the following options) 1. Option A 2. Option B 3. Corridor option 4. Variable option
3. 3%
6.An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholders? (Choose from the following options) 1. 3% regardless of what the investment draws since that's the guaranteed rate 2. 2.5% 3. 3% 4. 3% this payment. The overpayment this time will be subtracted from the next time the rate exceeds 3%.
4. Reduction
7.Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? (Choose from the following options) 1. Transfer 2. Avoidance 3. Retention 4. Reduction
3. It has a guaranteed minimum interest rate
8.Why is an equity indexed annuity considered to be a fixed annuity? (Choose from the following options) 1. It has a fixed rate of return. 2. It is not tied to an index like the S&P 500 3. It has a guaranteed minimum interest rate 4. It has modest investment potential.
2. Annually Renewable Term
9.All other factors being equal, the least expensive first-year premium payment is found in (Choose from the following options) 1. Level Term 2. Annually Renewable Term 3. Increasing Term 4. Decreasing Term.
What are the most common penalties for violations of insurance statutes?
A cease and desist order, a fine, and license suspension or revocation.
2. Waiver
An insurance company receives an application with some information missing and issues the policy anyway. What is this called? (Choose from the following options) 1. Aleatory 2. Waiver 3. Estoppel 4. Subrogation
1. Fraternal insurer
An organization that, in addition to other activities, provides a formal insurance plan to its members is classified as a (Choose from the following options) 1. Fraternal insurer 2. Mutual company 3. Stock company 4. Reciprocal association.
What are the three types of agent authority?
Express, implied, and apparent.
Insurance is used to transfer what to the insurance company?
Financial responsibility for loss.
4) Reduction
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? (Choose from the following options) 1. Transfer 2. Avoidance 3. Retention 4. Reduction
An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer's classification in Nevada?
Foreign
An insurance company that is formed under the laws of another state is known as what type of insurer?
Foreign
What type of insurer is a voluntarily formed organization that provides insurance benefits for members of an affiliated lodge or religious organization with a representative form of government?
Fraternal insurer
Conditions that increase the chance of a loss are known as what?
Hazards
1. The policy will terminate when the cash value is reduced to nothing.
If an insured continually uses the automatic premium loan option to pay the policy premium, (Choose from the following options) 1. The policy will terminate when the cash value is reduced to nothing 2. The face amount of the policy will be reduced by the automatic premium loan amount 3. The cash value will continue to increase 4. The insurer will increase the premium amount.
What type of report provides information about the applicant's hobbies, habits, and financial status?
Inspection report.
What do individuals use to transfer their risk of loss to a larger group?
Insurance
What law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?
Loss
1)6 years.
Michigan insurance policies can specify a time limit during which legal action against the insurer can be taken. This time limit, however, has to be at least (Choose from the following options) 1. 6 years 2. 3 years 3. 4 years 4. 5 years.
1.It allows for up to 15 excess credit hours to be carried forward to the next reporting period.
Michigan's continuing education requirement has each of the following characteristics EXCEPT (Choose from the following options) 1. It allows for up to 15 excess credit hours to be carried forward to the next reporting period 2. At least 3 hours must cover ethics 3. It requires satisfactory completion of at least 24 hours of approved training every biennium 4. Other than the 3 hours of ethics, licensees may take courses in any line.
An applicant conceals relevant health information on the application. The applicant present what type of hazard?
Moral
A person who does not lock the doors to his or her house shows an indifferent attitude. This person present what type of hazard?
Morale
2. Premium receipt
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a (Choose from the following options) 1. Warranty 2. Premium receipt 3. Statement of good health 4. Backdated receipt.
An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?
Mutual
The type of insurance company organized to return any surplus money to its policyholders is known as what?
Mutual Company
D. Other insurance coverage Part II of the application contains questions regarding the applicants health history. Part I of the application incluudes questions regarding current coverage being applied for as well as any insurance coverage with the same or other insures.
Part II of the application provides questions regarding all of the following EXCEPT? A. family health history B. alcohol and tobacco consumption C. recent surgeries D. other insurance coverage
What is the term for the causes of loss insured against in an insurance policy?
Peril
What are the three types of hazards?
Physical, moral, and morale.
If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?
Provide the applicant a Disclosure Authorization Notice
What type of risk is insurable?
Pure
A situation in which a person can only experience a loss and no gain presents what type of risk?
Pure risk
An insurer organized to return a profit to the stockholders is what type of insurer?
Stock company
Who owns stock companies?
Stockholders
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
If an applicant does not receive his or her insurance policy, who would be held responsible?
The agent
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agents
3. An index like Standard & Poor's 500.
The equity in an equity index annuity is linked to (Choose from the following options) 1. The annuitant's individual stock portfolio 2. The insurance company's general account investments 3. An index like Standard & Poor's 500 4. The returns from the insurance company's separate account.
#43. An insured misstates her age at the time the life insurance application is taken. This misstatement may result in a)Adjustment in the amount of death benefit. b)No change whatsoever c)Automatic lapse d)Recession of the policy
a)Adjustment in the amount of death benefit. If the applicant has misstated his or her age or gender on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age or gender would have otherwise purchased.
37. An individual applied for an insurance policy. The payment for the first premium was included with the application. Which of the following statements is correct?a)With a conditional receipt, the policy is in effect as of the date of application. b)The underwriting process is complete and coverage is issued automatically. c)The coverage would be in effect for accidental death only. d)Coverage cannot be in effect until a policy is issued and the applicant accepts the policy.
a)With a conditional receipt, the policy is in effect as of the date of application If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.
C. Premiums
all of the following are examples of risk retention EXCEPT? A. co-payments B. Self-insurance C. Premiums D. deductibles
B. if the primary beneficiary predeceases the insured
an individual purchased a life insurance policy on his life naming his wife is primary beneficiary, and their daughter as contingent beneficiary. under what circumstance could the daughter collect the death benefit. A. if the insured dies from an accident B. if the primary beneficiary predeceases the insured C. the primary and contingent beneficiaries share death benefits equally
D. 3% insurance companies promise guaranteed minimum on the fixed annuities ( 3% in this scenario) this means that if the investments draw less than 3 % the company will have to pay 3 percent anyway. if the investments earn 3 % the company will pay the excess.
an insurance company forwards fixed annuity premium to their general account, where the money is invested. The guaranteed minimum interest is 3%. During an economic downswing the investments only drew 2.5 % what interest rate will the insurance pay to the policy holders. A. 3% this payment. The overpayment this timewill be subtracted from the next time the rate exceeds 3 % B. 3% regardless of what the investment Dr since that's the guaranteed rate C. 2.5% D. 3%
B. represent the client an agents license authorizes the licensee to represent the insuer not the client
and insurance agents responsibilities include: all of the following EXCEPT A. perform professionally B. represent the client C. perform faithfully D. represent the insuer
Retention
planned assumption of risk or acceptance of responsibility for the lossb by an insured through the use of deductibles, co-payments or self insurance
representation
statements are true to the best of the applicants knowledge
D. set premium rate the insurer sets premium rates upon underwriting consideration
the ownership provision entitles the policyowner to do all the following EXCEPT A. receive a policy loan B. assigned the policy C. designate a beneficiary D. Set premium rates
C. Limited pay policy
the policy owner of an adjustable life policy can increase premium payments and have which of the following? A. a higher cash value interest rate B. a higher face amount without proof of insurability C. Limited pay policy D. a lower nonforfeiture
B. avoidance
the risk management technique that is used to prevent a specific loss by not exposing yourself too that activity is called? A. sharing B. avoidance C. transfer D. reduction
cash value the amount available to the policyowner for a loan is the policies cash value. If there are any outstanding loan that amount will be reduced by the amount of the unpaid loan interest
what limits the amount of policy owner can borrow from the whole life insurance policy
D. It is Level Term insurance
which of the following best describes annually renewable term insurance? A. it requires proof of insurability at each renewal B. Neither the premium nor the death benefit is affected by the insureds age C. It provides annually increasing death benifits D. It is level Term insurance
C. warranty a warranty for insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract the statements he or she makes are generally not warranties but representations.
which of the following is a statement that is guaranteed to be true and if untrue May breach insurance contract
which of the following is true regarding a single life settlement option? A. payments continue until the entire principal is exhausted B. proceeds are paid out in a lump sum C. it provides income for a specific Period of time D. it provides income the beneficiary cannot outlive
which of the following is true regarding a single life settlement option? A. payments continue until the entire principal is exhausted B. proceeds are paid out in a lump sum C. it provides income for Pa specific Period of time D. it provides income the beneficiary cannot outlive
C. Universal Life option A universal life aoption A (level death benefit option) policy must maintain a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS. If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and consequently loses most of the tax advantages that have been associated with life insurance.
which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit. A. Equity Indexed Universal Life B. Variable Universal Life C. Universial life option A D. Universial Life Option B
D. The insurers guaranteed minimum rate of interest with fixed annuities the company is required to pay at least a guaranteed minimum rate of interest to the owners if the company investments perform well the company will pay a higher interest rate but since the interest rate can never fall below the guaranteed minimum that's what ultimately determines what the company will pay
which of the following ultimately determines the interest rate pay to the owner of a fixed annuity. A. investment performance of the company B. investment performance of the insured C. statewide predetermined annual interest rate D. Insurers guaranteed minimum rate of interest
A. Option B
which option for universal life allows the beneficiary to collect both the death benefit and cash value apon the death of the insured? A. option B B. Corridor option C. Variable option D. Option A
b)The guardian may or may not be accountable for assets The guardian and trustee may be the same person or different people. The primary difference in function is that the trustee is accountable for assets, whereas the guardian may or may not be accountable for assets.
#14. Life insurance benefits for minors must be placed in the hands of either a guardian or a trustee. Which of the following is true? a)The trustee is not accountable for assets b)The guardian may or may not be accountable for assets c)The guardian must also be the trustee d)The guardian and trustee cannot be the same person
c)4 years Each agent and agency must keep a file of all advertising printed, published or prepared by the agency along with records of the advertising's distribution. Files must be maintained for a period of 4 years.
#18. For how many years is an insurer required to maintain a complete file of its advertisements? a)1 year b)2 years c)4 years d)5 years
d)The annuitant's life expectancy is taken into consideration for the annuity. While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken into consideration, the annuitant must be a natural person
#19. Which of the following is NOT true regarding the annuitant? a)The annuitant receives the annuity benefits. b)The annuitant must be a natural person. c)The annuitant cannot be the same person as the annuity owner. d)The annuitant's life expectancy is taken into consideration for the annuity.
a)Annuitant The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.
#23. When an annuity is written, whose life expectancy is taken into account?a)Annuitant b)Beneficiary c)Life expectancy is not a factor when writing an annuity d)Owner
a)Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.
#29. Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Option A b)Juvenile life c)Term insurance d)Option B
b)Transfer When insurance is purchased, the insured is, in return for the payment of the premium, transferring the risk of financial loss by certain perils to the insurance company.
#32. When a homeowner purchases insurance on his home, what risk management technique is he practicing?a)Retention b)Transfer c)Avoidance d)Sharing
d) Apparent
#5. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?a)Express b)Implied c)Assumed d)Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power.
d)$50,000 The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee.
#6. An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds a)$10,000 b)$15,000 c)$25,000 d)$50,000
#6. 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?a)Limited pay whole life insurance b)10-year endowment c)Life annuity, period certain d)Increasing term insurance
#6. 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?a)Limited pay whole life insuranceb)10-year endowmentc)Life annuity, period certaind)Increasing term insurance Premium payments will cease at her age 65, but coverage will continue to her death or age 100.
d)Business Entity Business entity means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.
#8. Which of the following could be used when a corporation, association, partnership, or limited liability partnership acts as a producer? a)Natural Group b)Stock Company c)Mutual Company d) business entity
While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate. c)It has a guaranteed minimum interest rate
#9. Why is an equity indexed annuity considered to be a fixed annuity? a)It has a fixed rate of return b)It is not tied to an index like the S&P 500 c)It has a guaranteed minimum interest rate d)It has modest investment potential.
a)Limited pay whole life insurance
#9. 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? a)Limited pay whole life insurance b)10-year endowment c)Life annuity, period certain d)Increasing term insurance Premium payments will cease at her age 65, but coverage will continue to her death or age 100.
a)They earn lower interest rates than fixed annuities Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities.
10. Which of the following is NOT true regarding Equity Indexed Annuities? a)They earn lower interest rates than fixed annuities b)The insurance company keeps a percentage of the returns c)They have guaranteed minimum interest rates d)They are less risky than variable annuities.
d)Increases annually.
11. Annually renewable term policies provide a level death benefit for a premium that a)Decreases annually b)Remains level c)Fluctuates d)Increases annually. Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.
d)They are expensive to administer. The major disadvantage of trusts is that they are expensive to administer.
16. What is a major problem with naming a trust as the beneficiary of a life insurance policy? a)The insurance company will not pay the proceeds to a nonliving beneficiary. b)It is illegal to name a trust as the beneficiary. c)The insured must have the Superintendent's permission to name a trust as the beneficiary. d)They are expensive to administer
4. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
19.In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? (Choose from the following options) 1. The annuitant will always receive the current interest rate. 2. The annuitant will receive the lower of either the guaranteed minimum rate or current rate. 3. The annuitant will only receive the guaranteed minimum specified in the contract. 4. The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
a)Pay dividends to the policyowner A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.
24. A participating insurance policy may do which of the following? a)Pay dividends to the policyowner b)Provide group coverage c)Pay dividends to the stock holder d)Require 80% participation
d)Apparent An agent who accepts a premium after the end of the grace period appears to the client to have the authority to prevent the policy from lapsing. In fact, the agent has no such power.
27. An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?a)Express b)Implied c)Assumed d)Apparent
a)Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.
28. Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Option A b)Juvenile life c)Term insurance d)Option B
d)Warranty A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicant's knowledge.
3. Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?a)Concealment b)Indemnity c)Representation d)Warranty
3. Apparent Authority
31.The authority granted to an agent through the agent's contract is referred to as (Choose from the following options) 1. Absolute Authority 2. Express Authority 3. Apparent Authority 4. Implied Authority.
1. It is a level term insurance
32.Which of the following best describes annually renewable term insurance? (Choose from the following options) 1. It is a level term insurance 2. It requires proof of insurability at each renewal 3. Neither the premium nor the death benefit is affected by the insured's age. 4. It provides annually increasing death benefit.
1. An index like Standard & Poor's 500
33.The equity in an equity index annuity is linked to (Choose from the following options) 1. An index like Standard & Poor's 500 2. The returns from the insurance company's separate account 3. The annuitant's individual stock portfolio 4. The insurance company's general account investments.
2. The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges
34.A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity? (Choose from the following options) 1. The surrender value will not be more than 80% of the cash value in the annuity at the time of surrender 2. The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges 3. A deferred annuity cannot be surrendered prior to annuitization. The owner must wait until the annuitization period begins to receive any payments 4. The surrender value will be based on current interest rates.
a)Grace period Provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force
35. The automatic premium loan provision is activated at the end of the a)Grace period b)Time period c)Ending period d)Policy period
4. Until the beneficiary's death The Single Life Option can provide a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop.
36.How long will the beneficiary receive payments under the single life settlement option? (Choose from the following options) 1. Until the insured's death 2. For a specified period of time 3. Until the insured's age 100 4. Until the beneficiary's death
2. Policyowner
37.Who controls changes in premium payments, face value, loans, and policy plans? (Choose from the following options) 1. Agent 2. Policyowner 3. Insurer 4. Beneficiary
4. Only the annuity owner If the need arises, a deferred annuity contract may be surrendered only by the annuity owner. At surrender the owner receives the value of the annuity minus a surrender charge.
38.Which of the following can surrender a deferred annuity contract? (Choose from the following options) 1. Only the insurance company for nonpayment of premiums 2. The beneficiary after the owner's death 3. Deferred annuity cannot be surrendered 4. Only the annuity owner
4. Misrepresentations Making false or misleading statements with the intent to defraud another is misrepresentation.
39.A producer who omits a statement which may mislead or deceive the persons addressed has committed (Choose from the following options) 1. Defamation 2. Twisting 3. Coercion 4. Misrepresentation.
2. Indemnity
40.Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? (Choose from the following options) 1. Reasonable Coverage Expectations 2. Indemnity 3. Loss-at-Cost 4. Limited Benefits Provision
4. Beneficiary
41.If the annuitant dies during the accumulation period, who will receive the annuity benefits? (Choose from the following options) 1. Owner 2. Insurance company 3. Estate 4. Beneficiary
4.The type of investment. Typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection.
42.In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT (Choose from the following options) 1. The length of coverage 2. The premium 3. The amount of insurance 4. The type of investment.
3. Changing Michigan Insurance Code
43.Which of the following functions may a producer with a temporary insurance license NOT perform? (Choose from the following options) 1. Collect premiums 2. Countersign policies 3. Changing Michigan Insurance Code 4. Solicit applications of insurance
4)The illustration must stay exactly as it is. If an agent uses the illustrations of an insurer, it must first be approved, and the agent may not alter the illustrations in any way.
44.An agent wants to include an illustration written by his insurance company. Which of the following best describes the conditions under which he may use the illustration? (Choose from the following options) 1. The illustration can only be used for a month before it requires re-approval 2. Illustrations must accurately portray what would be included in a potential contract 3. All changes must be submitted to the insurer before approval 4. The illustration must stay exactly as it is.
1. They earn lower interest rates than fixed annuities. Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities
46.Which of the following is NOT true regarding Equity Indexed Annuities? (Choose from the following options) 1. They earn lower interest rates than fixed annuities 2. The insurance company keeps a percentage of the returns 3. They have guaranteed minimum interest rates 4. They are less risky than variable annuities.
2. The policyowner can specify the way proceeds are split in the policy
47.The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? (Choose from the following options) 1. The proceeds will be split evenly between the two beneficiaries 2. The policyowner can specify the way proceeds are split in the policy 3. The way proceeds are split between beneficiaries is decided by which type of policy is chosen 4. Life insurance policies may have only one beneficiary.
When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?
Adverse selection
According to the Law of Agency, a principal is represented by whom?
Agent or producer.
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose.
What type of insurer is formed under the laws of another country?
Alien
What document is required for an insurance company to transact insurance?
Certificate of Authority
When a change needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application.
Insurers are classified according to their domicile. What are the three types of insurers?
Domestic, foreign, and alien.
2. Obtain a list of all life insurance policies that will be replaced
During replacement of life insurance, a replacing insurer must do which of the following? (Choose from the following options) 1. Send a copy of the Notice Regarding Replacement to the Department of Insurance 2. Obtain a list of all life insurance policies that will be replaced 3. Guarantee a replacement for each existing policy 4. Designate a new producer for a replaced policy
What two elements are necessary for a life insurance contract to have legal purpose?
Insurable interest and consent.
Whom does an insurance agent represent?
Insurance Company
In the agent/insurer relationship, who is considered the principal?
Insurer
When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
Insurer
What entities make up the Medical Information Bureau?
Insurers
What are the strategies used by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate.
Wagering on a sporting event is known as what type of risk?
Speculative
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material.
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted.
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application.
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid.
4. Implied
Which type of authority is based on the actions, words, or deeds of the principal? (Choose from the following options) 1. Apparent 2. Express 3. Lingering implied 4. Implied
15. A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a)Decreased death benefit at each renewal b)Required a premium increase each renewal c)Built cash values d)Required proof of insurability every year
b)Required a premium increase each renewal Annually Renewable Term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.
