EXAM FX

Which of the following entities must approve all continuing education courses in this state? a) The appointing insurer b) The State Board of Education c) The Commissioner d) The NAIC

The Commissioner All continuing education programs and courses must be approved by the Commissioner.

Which of the following Life Insurance policies would be considered interest sensitive? a) Whole life b) Increasing term c) Universal life d) Adjustable life

Universal life As well as being a flexible premium policy, universal life is also an interest-sensitive policy. The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days

a) 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.

Issue age policy premiums increase in response to which of the following factors? a) Increased benefits b) Increased deductible c) Inflation d) Age

a) Increased benefits The premiums of issue age policies can only increase in response to an increase in benefits.

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as a) Medical expense. b) Critical illness. c) Major medical. d) AD&D.

b) Critical illness. A critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy.

The insurance code identifies all of these as prohibited acts that can cause suspension, revocation or denial of an insurance producer license for a licensee or applicant, with the exception of a) Failing to pay child support obligations. b) Commission of a felony or its equivalent. c) Commission of any misdemeanor. d) Failing to pay state income taxes.

c) Commission of any misdemeanor. Only the commission of misdemeanors that involve the misuse or theft of money or property belonging to others will affect the maintenance or obtaining of an insurance producer license.

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? a) Employee paid premiums may be deducted if certain conditions are met. b) Employee benefits are tax deductible the year in which they were received. c) Benefits received by the employee are free from federal income tax. d) Premiums paid by the employer are deductible as a business expense.

b) Employee benefits are tax deductible the year in which they were received. For group medical and dental expense insurance any premium paid by the employer is deductible as a business expense. However, any premiums provided by the employee are only deductible if certain conditions are met. Group medical and dental expense benefits are received income tax free by the employee.

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 a) Nonforfeiture option. b) Guaranteed insurability rider. c) Paid-up additions option. d) Cost of living provision. 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.

b) 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.

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? a) $0 b) $50,000 (50% of the policy value) c) $100,000 d) $300,000 (triple the amount of policy value)

c) $100,000 The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple indemnity rider is void, but the beneficiary will still receive the policy's death benefit.

Bob purchased a policy to provide coverage on himself, his wife Linda, and their two children, John and Kristen. All of them would need to prove insurability EXCEPT a) Linda. b) John and Kristen. c) Any children born to them after the inception of the contract. d) Bob.

c) Any children born to them after the inception of the contract. New born children need not prove insurability.

Which of the following is NOT a characteristic of a group long-term disability plan? a) The benefit period may be to age 65. b) The benefit can be up to 66 and 2/3% of one's monthly income. c) The benefit can be up to 50% of one's yearly income. d) The elimination period is the same as in the short-term plan's benefit period.

c) The benefit can be up to 50% of one's yearly income. The maximum benefit is based upon monthly income.

Maximum benefits for a major medical plan are usually lifetime a) Open panel. b) Closed panel. c) Minimums. d) Maximums.

d) Maximums. Major medical plans have high maximum benefits such as $1,000,000 or $2,000,000. Maximum benefits are usually lifetime maximums.

Fred and Jody are covered under a group health insurance plan at his place of employment. When Jody gave birth to their first child, what must he do in order to have coverage for their child? num a) Notify the insurer on the anniversary date of the plan b) Notify the employer within 10 days c) Notify the insurer immediately and provide proof of insurability d) Notify the insurer within 31 days in order for coverage to continue without any evidence of insurability

d) Notify the insurer within 31 days in order for coverage to continue without any evidence of insurability Newborn coverage is provided at the moment of birth, and it will continue if the insurance company is notified within 31 days.

In order to become licensed to become a viatical settlement provider, an application must be made with a) The Insurance Department b) The Viatical Settlement Association c) The Governor's Office d) The NAIC

The Insurance Department Viatical settlement providers and brokers can obtain licenses through the Insurance Department. Licenses may be renewed annually on the anniversary month.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a) Telling a client that his first premium will be waived if he purchased the insurance policy today b) Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest c) Charging a client a higher premium for the same policy as another client in the same insuring class d) Making deceptive statements about a competitor

a) Telling a client that his first premium will be waived if he purchased the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) Half the amount b) Lower c) Higher d) As high

b) Lower Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

#37. During replacement, producers must provide a list of insurance policies still in force. In addition, they must list policies sold during the past... a) 6 months. b) 1 year. c) 5 years. d) 10 years.

c) 5 years. During replacement, producers must provide a list of insurance policies still in force. In addition, they must list policies sold during the past 5 years.

#16. What happens if a deferred annuity is surrendered before the annuitization period? a) The insurer can only apply the surrender value toward another annuity. b) Deferred annuities cannot be surrendered prior to the annuitization period. c) The owner will receive the surrender value of the annuity. d) The owner will only receive a refund of premium.

c) The owner will receive the surrender value of the annuity. If a deferred annuity is surrendered prior to annuitization, the surrender value of the annuity is guaranteed according to the nonforfeiture provision.

Which of the following would be considered false advertising? a) Failing to include premiums in sales materials b) Implying that the agent is the insurer c) Stating the differences in benefits between Whole Life Insurance and Term Life Insurance d) Stating that a policy has limitations and exclusions

Implying that the agent is the insurer A person or entity cannot use a name that deceptively suggests it is an insurer. Premiums do not have to be included in sales materials because they will vary depending on the insured's age and health. Most policies have limitations and exclusions, and there is a difference between whole life and term. It is not illegal to note this for applicants.

When the insured initiates the cancellation of a policy, the unearned premium will be refunded on a a) Per occurrence basis. b) Short rate basis. c) Extended term basis. d) Pro rata basis.

b) Short rate basis. When a policy is cancelled at the insured's request, the amount of returned unearned premium will be calculated on the short rate table that the insurer has filed with the insurance department. This allows the insurer to retain some of its cost of issuing the policy and providing service.

Which statement best defines a Multiple Employer Welfare Arrangement (MEWA)? a) A government health plan that provides health care for the unemployed b) A group health plan that covers medical expenses arising from work related injuries c) A joining together by employers to provide health benefits for employee d) A plan that provides hospice care for terminally ill employees

c) A joining together by employers to provide health benefits for employee A MEWA provides benefits for a number of member groups.