EXAM FX Gurantee Exam Wrong Answers
An insurer must notify the consumer in writing than an investigative consumer report has been requested, within how many days of the initial request?
3 days
How many months can a life insurance policy be backdated?
6 months.
Because of the imposed blackout period, the surviving spouse will not recieve social security benefits until
He or she qualifies for retirement benefit.
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement?
Level
What are the three types of hazards?
Physical, Moral, Morale
The family term rider incorporates
Spouse term and children's term
What is the cost of coverage based on for group life insurance?
The average age
An insured decides to surrender his Whole Life policy. The cash value at surrender is higher than the premiums paid into the policy due to interest. What part of the surrender value would be income taxable?
The difference between the premiums paid and the cash value.
What happens to the face amount of the whole life policy if the insured reaches age 100?
The face amount is paid to the insured.
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
What are viatical settlements?
the sale of a policy owner's existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit.
Which of the following would be considered an example of incorporation by reference in insurance contracts?
A rate amendment is later made part of the original policy
What is the payor benefit rider?
A rider added to a child's policy, stating that if the person paying the premium on the child's behalf dies or becomes totally disabled before the child reaches the age of majority, any premiums are automatically waived.
If an insurance company makes a statement that its policies are guaranteed by the existence of the Wisconsin Insurance Security Fund, that would be considered
A unfair trade practice
An insured brought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes a extended vacation and forgets to pay the premium. Ten day's later, his policy is still in effect and has not lapsed. Which of the following provison allowed for this?
Grace period
Which of the following best describes the difference between joint life and joint and survivor annuity payment options.
In joint life option, the benefits stop after the first death.
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
Pay the death benefit to the estate of the insured.
Which of the following will be eligible for a tax-sheltered annuity?
Public school teachers
All of the following are true about key-person insurance EXCEPT
The death benefit is taxable to the business
The maximum annual billing for any insurer cannot exceed what percentage of net premiums earned?
1%
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
Prior to completing a new application for life insurance or an annuity, the agent must determine
Whether or not replacement is involved
Which of the following would NOT trigger the payment of Accelerated Death Benefit
Being permanently disabled
Which of the following is true regarding pure life annuity settlement option?
It provides the highest monthly benefit
The commissioner may issue a temporary license for an intermediary for the maximum of
1 year.
The commissioner obtains a restraining order against a person who has violated an insurance law. The person must comply with this order within how many weeks?
2 weeks
A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?
A percentage of the face amount of the policy
How many days after passing their state exams does an applicant have to apply for a license?
180 days
The policy summary must state the effective policy loan annual percentage interest rate for at least
20 years
The revised illustration must be signed by the applicant and the agent no later than
At the time of policy delivery.
Which of the following elements of an insurance contract requires paying premium and providing a statement of good health?
Consideration
All of the following are true of a nonqualified deferred compensation plan EXCEPT
Contributions are tax deductible
An insurer recently used an illustration during the sale of an insurance policy. Because of this illustration, the insurer will be required to provide the policyowner with an annual report on the status of the policy. This report must contain all of the following EXCEPT
Dates of the illustration's use
If an insured purchases an insurance policy with a large deductable, what risk management technique is this?
Retention
Which of the following is INCORRECT concerning Modified Endowment Contracts MEC's?
An MEC must always pass the 7 pay test
An adjustable life policy can assume the form of
Either term insurance or permanent insurance
Annuities Certain limit the amount paid by the annuity to a certain fixed
period or fixed amount
Upon the surrender of a life insurance policy, any cash value accumulated in the excess of premiums is
Taxed as ordinary income
A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortage was paid. The most inexpensive type of policy that would accomplish this need would be
Decreasing term
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
Which of the following could reduce the amount of the death benefit?
Failing to repay a policy loan.
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family term
The principle of immunity in cancellation or insurance policies applies to which of the following?
Insurers and their agents.
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs?
Applicants who may require a larger death benefit in the future should buy convertible term insurance.
Which of the following terms refers to the nontaxible portion of each annuity benefit payment?
Cost base
Which of the following is FALSE regarding a proposal for a life policy sold in connection with a security?
It must show all of the policy charges as an aggregate amount.
The guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
Purchase of a new home
Which of the following would NOT be eligible for coverege under a key person?
The owner of a shop
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change, or surrender a life insurance policy or anuity has committed an illegal practice known as
Twisting
An insured has a life insurance policy in the amount of $250,000 naming his wife as beneficiary. Upon death, his beneficiary decides not to recieve the death benefit for some time. When she finally recieves the death benefit check, it's in the amount of $250,530. Is any portion of the proceeds that the beneficiary recieves taxable?
Yes, the proceeds in excess of the face amount are taxable as interest.
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 folowing is a person, other than an officier or employee of the ceding insurer, who solicits, negotiates, or places reinsurance cessions or retro-cessions on behalf of a ceding insurer?
Reinsurance broker
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT
Reports may be sent to anyone who requests one
What does the application of contract of adhesion mean?
Since the insured does not participate in preparing the contract, any ambigutities would be resolved in favor of the insurer
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the shareholders and issue nonparticipating policies.
Considering the principles of liquidity, how would the policyowner use today's cash value in a life insurance policy?
Use it for emergency expenses
The commissoner issued an orde without holding a hearing. The person aggrieved by this order send a demand for a hearing 20 days ago. The hearing must be held within the next
40 days
The commissioner revolkes an intermediary's license because the agent ignored an order of restraint. How much time must pass before the intermediary can reapply for a license?
5 years
If the commissioner disapproves a form by an insurer, the use of the form must be discontinued within the maximum of how many days?
90 days
An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?
Children's term rider.
An individual has a $200,000 convertible term life insurance policy. If he chooses, he can
Convert to a whole life policy for the same face amount without proof of insurability
An individual has a $200,000 convertible life insurance policy. If he chooses, he can
Convert to another term policy with a lower face amount without proof of insurability.
How long is the grace period for an individual life insurance policy?
1 month
