Exam attempt 5

Which of the following features of the Indexed Whole Life policy is NOT fixed?

Cash value growth. Under the Indexed Whole Life policy, the premium is fixed, and the death benefit is guaranteed. Cash value is dependent upon the performance of the equity index although a minimum cash value is guaranteed.

How long must producer maintain records of continuing education course completion?

4 years. Producers must maintain records of completion of continuing education courses for 4 years from the date of the course completion.

The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?

30 days. If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order.

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. Investigative consumer reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

If a policyowner surrenders his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay?

A cash surrender value. A life insurance policy must ensure that upon surrender of the policy no later than 60 days after the due date of a premium payment, the company will pay a cash surrender value (instead of a paid-up nonforfeiture benefit) if the premiums have been paid for at least 3 full years for ordinary life insurance policies, or 5 years for industrial life insurance.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal. It is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of

Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

When an individual obtains an insurance license for the primary purpose of writing insurance on him- or herself, or for members of his or her immediate family, or business, this is called

Controlled business. When producers sell policies on themselves, their family, or their coworkers, this is called "controlled business." In this state, at least 25% of a licensee's total volume of premiums in a calendar year must be from business other than controlled business.

According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT

Reduction of premium. Reduction of premium is not a nonforfeiture option (it's a dividend option). The other answer choices are the required nonforfeiture options in life insurance policies issued in this state.

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor. A joint and survivor option pays while either beneficiary is still living.

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

Must be informed of the source of the report. Under the Fair Credit Reporting Act, if an insurance policy is declined or modified because of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency.

A participating insurance policy may do which of the following?

Pay dividends to the policyowner. A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer?

60 days. In the event a credit life insurance policy is terminated, a creditor must provide the insurer with a notice of termination of debt within 60 days of the payoff date.

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

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.

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months. Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.

The regulations regarding replacement apply to which of the following?

Renewable term. Replacement rules apply to all life insurance policies except group life policies, group annuities, credit life or nonconvertible term which will expire in 5 years or less and cannot be renewed. Purchasing additional coverage under the GIR is not a replacement of coverage, simply an addition of coverage.

An applicant for a license in Texas must include a statement with his application that provides information about all the following EXCEPT

Intending to apply for another license. A statement with an application must contain information as to whether the individual has ever been refused a license, held a license or has had a license revoked. The intent to apply for another license is not required.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue. Coverage commences on the date of the application or the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

Sexual orientation. It would be considered unfair discrimination to ask an applicant for their sexual orientation, as well as using sexual orientation as a rating factor to determine insurability.

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. The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits. Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.

Which of the following best describes annually renewable term insurance?

It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

A temporary license holder can receive a commission from a sale made to all of the following EXCEPT

The license holder's sister-in-law. A temporary license holder sale to a family member or an individual the temporary license holder has an employment or business relationship with will not pay commission.