Exam FX Life Missed Questions

a producer was found guilty of a 3rd violation of the insurance code. what would be the monetary penalty he will have to pay?

$10,000 any person violating an insurance law or regulation is liable to a penalty of no more than $5,000 for a first offense and no more than $10,000 for each subsequent offense

if an individual willfully violates provisions of the fair credit reporting act, what is the maximum civil penalty?

$2,500

what is the maximum penalty of habitual willful noncompliance with the fair credit reporting act?

$2,500

By how many days does the discontinuance of a group insurance policy reduce the time limit for providing notice of claim or proof of loss?

0 days

an insurance producer dies, and his wife takes over his business temporarily through an agreement with another producer. what is the maximum time tat she can do this?

180 days

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

what is the waiting period on a waiver of premium rider in life insurance policies?

6 months

Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to

6 months while the insurer may defer requests for other loans for a period of up to 6 months, loan requests for payment of due premiums must be honored immediately

Credit Life Insurance

A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor. creditor is the policyowner and the beneficiary, debtor is the insures

what is reinsurance?

An agreement between a ceding insurer and assuming insurer

an applicant may challenge information discovered as a result of an investigative consumer report under what act?

Fair Credit Reporting Act regulates consumer investigative reports that are ordered in connection with applications for credit, insurance or employment. if an insurer takes adverse action against an applicatn based upon incorrect information received in a credit report, the act contains procedures for the applicant to follow in order to get it corrected without the need to file a lawsuit

If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?

Immediately Loan request for payment of due premiums must be fulfilled immediately. Requests for any other reason may be deferred up to 6 months

When term insurance is added to the main policy to enhance the policy or provide added benefit or coverage, it is called a

Term rider term riders are used when an insured adds term insurance to the main policy to modify or enhance the policy

The supreme court states that insurance is interstate commerce and is therefore subject to regulation by the federal government in the decision of what case?

The US vs. the south eastern underwriters association

what is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

an insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of

a client

an applicant for surplus lines authority must do all of the following EXCEPT a- possess a certificate of authority in this state b- hold a property and casualty license c- be allowed to write business in this state d- be considered a resident of this state

a- possess a certificate of authority in this state surplus line agent is a person or organization that is allowed to write business in NJ for insurance companies that do not possess a certificate of authority in NJ if no authorized insurers in NJ offer the specific type of insurance in question. a property and casualty license is required

guaranteed insurability option

allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability

your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. what kind of policy would you recommend?

an endowment policy b/c the cash value in an endowment has to build up faster since the funds are intended to be used while the insured is alive, the premium for an endowment is considerably more expensive than an ordinary straight life policy

the entire contract includes all of the following EXCEPT a- any riders or amendments b- a buyer's guide c- the insurance policy d- a copy of the application

b- a buyer's guide the entire contract includes 1)the policy 2)copy of application 3) any riders or amendments

which of the following losses would likely be covered under the accidental death rider? a- death resulting from a long term disability b- death caused by a head on collision c- suicide d- mountain climbing accident

b- death caused by a head on collision accidental death rider pays some multiple of the face amount if death is the result of an accident as defined in the policy; it would not however include death that results from any health problem or disability, self inflicted injuries, war, or dangerous hobbies or avocations

all of the following are abilities of the NJ life and health guaranty association in the event of insurer insolvency EXCEPT a- assumption of payment of insurer's contractual obligations b- guardianship of all physical properties, documents and effects of insurer c- issuing moratoriums on payment d- imposition of contract liens

b- guardianship of all physical properties, documents and effects of insurer

which of the following riders would NOT cause the Death Benefit to increase? a- accidental death rider b- payor benefit rider c- guaranteed insurability rider d- cost of living rider

b- payor benefit rider it only pays the premium if the payor is disabled or dies. with guaranteed insurability rider, the policyowner can increase death benefit at specified ages or events, (ie. marriage or birth of a child), cost of living rider increases death benefit to keep pace with inflation, in accidental death rider, if the insured dies from an accident, death benefit is a multiple of the face amount

who can request changes in premium payments, face value, loans and policy plans? a- producer b- policyowner c- beneficiary d- contingent beneficiary

b- policyowner mandatory ownership provision gives these rights to the policyowner

when an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as an

broker

According to the life insurance replacement regulations, which of the following would be an example of policy replacement? a- term insurance is changed to a whole life policy b- a lapsed policy is reinstated within a specific timeframe c- a policy is reissued with a reduction in cash value d- a term policy expires and the insured buys another term life policy

c- a policy is reissued with a reduction in cash value replacement refers to any transaction in which new life insurance or an annuity is purchased, resulting in reduced paid-up insurance, continuation of extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values

which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy? a- guaranteed insurability rider b- covered peril rider c- accidental death rider d- double indemnity rider

c- accidental death rider pays some multiple of the face amount if death is the result of an accident as defined in the policy

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose? a- interest only b- joint and survivor c- fixed amount d- fixed period

c- fixed amount the fixed amount option pays a fixed, specified amount in installments until the proceeds (principal and interest) are exhausted. The recipient selects a specified fixed dollar amount to be paid until it is gone. If the beneficiary dies before the proceeds are exhausted, installments will continue to be paid to a contingent beneficiary until all proceeds have been paid out

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

cash option allows an insurer to send the policyholder an annual, nontaxable dividend check

what is true about the taxation of cash value in a business life insurance policy?

cash values grow tax deferred

a whole life policy is surrendered for a reduced paid up policy. the cash value in the new policy will

continue to increase the new policy continues to build its own cash value and will remain in force until the insured's death or maturity

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

the type of policy that can be changed from one that does not accumulate cash value to the one that does is a

convertible term policy

which of the following will NOT be an appropriate use of a deferred annuity? a- accumulating retirement funds b- accumulating funds in an IRA c- funding a child's college education d- creating an estate

d- creating an estate

Which nonforfeiture option has the highest amount of insurance protection?

extended term has the same face amount as the original policy, but for a shorter period of time

if a 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 rates for the additions are based upon attained age

what is included in the term "insurance-related conduct'?

includes act related to insurance transactions, such as selling, solicitating, negotiating and binding insurance policies, processing claims or transmitting funds between the insured, producers, premium finance companies and insurance companies

Paul vs. Virginia

insurance was not interstate commerce and could not be regulated by the federal government

when a reduced paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

it is reduced to the amount of what the cash value would buy as a single premium the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original. the new policy accumulates in cash value until its maturity or the insured's death

what significance did U.S. vs. South-Eastern Underwriters have on the insurance industry?

it reversed the decision of Paul vs. Virginia, determining that insurance is interstate commerce and should be regulated federally

a married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. which policy is that?

joint life policy joint life policies cover the lives of two insureds; rates are blended. upon the death of the first insured, the policy ends

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

what is the other term for the cash payment settlement option?

lump sum

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called

material misrepresentations

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. What is the company guilty of?

misrepresentation

if an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answers to those questions?

never the insurer has waived its right to those answer by issuing the policy

the dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

one year term option

buyer's guide

provides generic information about life insurance policies and allows the consumer to compare the costs of different policies

policy summary

provides specific information about the issued policy, as well as the insurer's information

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

rebating

An inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

rebating

any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

rebating

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. which policy provision allow this?

reinstatement provision a lapsed policy may be reinstate within 3 yrs by paying back premiums, with interest and proving insurability

which rider is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

substitute insured rider the substitute insured rider, or change of insured rider, allows the policyowner to change the insured listed under the policy subject to insurability. the rider is often used in business life insurance policies

a father owns a life insurance policy on his 15 yr old daughter. the policy contains the optional payor benefit rider. if the father becomes disabled, what will happen to the life insurance premiums?

the insured's premiums will be waived until she is 21 if the payor becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21

an applicant for a producer's license has successfully completed all of the steps necessary to obtain the license. the soon-to-be producer does not want to wait until he receives his license in order to begin working

the person can obtain a temporary work authority

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

the producer must provide the applicant with Notice Regarding Replacement

Under an extended term nonforfeiture option, the policy cash value is converted to

the same face amount as in the whole life policy the insurer used the policy cash value to convert the term insurance for the same ace amount as the former permanent policy

what kind of policy allows withdrawals or partial surrenders?

universal life

when is the earliest a policy may go into effect?

when the application is signed and a check is given to the agent

If a policy contains an unconditional refund offer provision of at least 10 days, the buyer's guide and policy summary can be delivered at what latest possible point?

when the policy is delivered

If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?

when the policy is delivered

Solicitation rules would apply to which of the following types of coverage?

whole life solicitation rules do not apply to annuities, credit life insurance, group policies, variable life insurance, or life insurance policies issued in connection with pension and welfare plans (ERISA)