Exam FX - Wisconsin Life (quiz questions)
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a)The insured's premiums will be waived until she is 21. b)The premiums will become tax deductible until the insured's 18th birthday. c)Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. d)The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.
a
All of the following are true regarding a decreasing term policy EXCEPT a)The payable premium amount steadily declines throughout the duration of the contract. b)The death benefit is $0 at the end of the policy term. c)The contract pays only in the event of death during the term and there is no cash value. d)The face amount steadily declines throughout the duration of the contract.
a
In insurance, an offer is usually made when a)An applicant submits an application to the insurer. b)The insurer approves the application and receives the initial premium. c)The agent hands the policy to the policyholder. d)An agent explains a policy to a potential applicant.
a
Jack and Jill are twins. When their grandfather died, he left each of them $100,000, which they each used to purchase an annuity. When they retire, since each select the life income option, which will receive the larger monthly annuity payment? a)Jack's payment will be larger. b)Jill's payment will be larger. c)Their payments will be based upon their health condition at the time payments begin. d)Because they are the same age, the payments will be the same.
a
The Commissioner may issue a temporary license for an intermediary for a period of up to a)12 months .b)24 months. c)3 months. d)6 months.
a
The Interstate Insurance Product Regulation Compact is a contract between a)Member states. b)Commissioners of Insurance in different states. c)Reciprocal states. d)Insurers and insureds.
a
The authority granted to an agent through the agent's contract is referred to as a)Express authority. b)Apparent authority. c)Implied authority. d)Absolute authority.
a
The maximum civil penalty that may be assessed to a person for a willful violation of the Insurance Code of this state is a)$5,000. b)$10,000. c)$50,000. d)$100,000.
a
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a)Consideration b)Legal purpose c)Contract of adhesion d)Acceptance
a
When replacing a policy, an insurer must maintain a file containing copies of all statements for a)5 years. b)10 years. c)As long as the insurer remains in business. d)3 years.
a
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
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? a)Insurance telemarketing b)Direct response marketing c)Independent agency marketing d)Illegal
b
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary? a)The face amount minus the premiums that would have been collected until the insured reached the age of 100 b)A full death benefit c)A death benefit equal to the cash value of the policy d)50% of the death benefit
b
The XYZ Insurance Company markets standard accident and health policy as a Medicare supplement policy. The company is guilty of a)Nothing. b)Misrepresentation. c)Coercion. d)Rebating.
b
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE? a)The cash value will be paid to the state government. b)The cash value will be paid to the annuitant's estate. c)The premium value will be paid to the annuitant's estate. d)All benefits will be forfeited.
b
Within how many days of the original hearing and final issuance of an order (regarding an order issued by the Commissioner) may an aggrieved person request a re-hearing? a)0 b)10 c)20 d)30
c
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? a)Express b)Implied c)Assumed d)Apparent
d
How is the Commissioner of Insurance placed in office? a)By NAIC nomination b)Through a bid process c)An election at the same time that other state officials are selected d)An appointment by the Governor
d
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? a)It is always 7% of the cash value. b)It is a flat fee determined by the annuity owner when the annuity is purchased. c)It will increase as the accumulation period increases. d)It is a percentage of the cash value and decreases over time.
d
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may a)Require a higher premium. b)Prolong the open enrollment period. c)Increase medical requirements on existing members. d)Require evidence of insurability.
d
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? a)Company is the owner, but the executive pays the premium. b)Board of directors is the owner, and the board of directors pays the premium. c)Company is the owner, and the company pays the premium. d)Executive is the owner, and the executive pays the premium.
d
The Commissioner conducts an examination of a domestic insurer and believes that the costs of examination places an unreasonable financial burden on the insurer. Which of the following will happen? a)The federal government will absorb the full cost. b)The federal government will absorb part of the cost, and the state government will absorb the rest of the cost. c)The costs will be reduced to the amount that the examinee can reasonably pay; the rest will be paid by the federal government. d)The Commissioner's office may pay all or part of the costs.
d
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? a)The owner's estate will receive the money paid into the annuity. b)The insurance company will retain the cash value and pay back the premiums to the owner's estate. c)The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. d)The beneficiary will receive the greater of the money paid into the annuity or the cash value.
d
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must a)Defend the report if the agency feels it is accurate. b)Change the report. c)Send an actual certified copy of the entire report to the consumer. d)Respond to the consumer's complaint.
d
When an employee terminates coverage under a group insurance policy, coverage continues in force a)For 60 days. b)Until the employee can obtain coverage under a new group plan. c)Until the employee notifies the group insurance provider that coverage conversion policy is issued. d)For 31 days.
d
Which of the following are generally NOT considered when underwriting group insurance? a)The nature of the group b)The group's past claim experience c)The size of the group d)The insureds' medical history
d
Which of the following is NOT true regarding a nonqualified retirement plan? a)Contributions are not currently tax deductible. b)It can discriminate in benefits and selecting participants. c)Earnings grow tax deferred. d)It needs IRS approval.
d
Which of the following is the best reason to purchase life insurance rather than annuities? a)To liquidate a sum of money over a period of years b)To create regular income payments c)To liquidate a sum of money over a lifetime d)To create an estate
d
An individual's tendency to be dishonest would be indicative of a a)Moral hazard. b)Morale hazard. c)Pure hazard. d)Physical hazard.
a
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
a
Which is true about a spouse term rider? a)The rider is usually level term insurance. b)Coverage is allowed for an unlimited time. c)The rider is decreasing term insurance. d)Coverage is allowed up to age 75.
a
Which of the following is an example of a producer's fiduciary responsibilities? a)Promptly forwarding premiums to the insurance company b)Helping clients to file claims c)Doing a review of his/her client's coverage d)Offering additional coverage to his client
a
All of the following are true regarding rebates EXCEPT a)Dividends are not considered to be rebates. b)Rebates are allowed if it's in the best interest of the client. c)Rebates are only allowed if specifically stated in the policy. d)Rebating can be anything of economic value, given as an inducement to buy.
b
All of the following benefits are available under Social Security EXCEPT a)Death benefits. b)Welfare benefits. c)Old-age and retirement benefits. d)Disability benefits.
b
All of the following would be different between qualified and nonqualified retirement plans EXCEPT a)IRS approval requirements b)Taxation on accumulation c)Taxation of withdrawals d)Taxation of contributions
b
Which of the following persons is required to complete prelicensing education in Wisconsin? a)Limited lines title insurance applicant b)Resident applicant with a 2-year associate's degree in business management c)Any person who has completed a 4-year college degree in business with an insurance emphasis d)Any person who has completed a 2-year Wisconsin vocational school degree in insurance
b
Which of the following would NOT be a violation of state insurance regulations? a)Agent B charges his clients a consulting fee, in addition to the premium for placing a policy. b)Agent C uses her license to write only business other than controlled. c)Agent D collects premiums due on policies and deposits the funds in his own personal account. d)Agent A uses her license to write only insurance for herself and her immediate family.
b
According to the rule of readability of insurance policies in this state, what is a required minimum score on the Flesch reading ease test for Medicare supplement policies? a)30 b)40 c)50 d)60
c
All of the following are examples of risk retention EXCEPT a)Copayments. b)Self-insurance. c)Premiums. d)Deductibles.
c
All of the following are personal uses of life insurance EXCEPT a)Estate creation. b)Cash accumulation. c)Buy-sell agreement. d)Survivor protection.
c
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a)No taxes are due since the plan participant is over age 59 1/2. b)There is a 10% early withdrawal penalty. c)The amount distributed is subject to ordinary income tax. d)The amount of the distribution is reduced by the amount of a 20% withholding tax.
d
Which of the following statements concerning buy-sell agreements is true? a)Premiums paid are deductible as a business expense. b)Benefits received are considered income taxable. c)Buy-sell agreements pay in the event of a medical emergency. d)Buy-sell agreements are normally funded with a life insurance policy.
d
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a)Cash surrender b)Reduced paid-up c)Paid-up options d)Extended term
a
What is the maximum life insurance coverage available to the state residents through the Wisconsin State Life Insurance Fund? a)$10,000 b)$50,000 c)$100,000 d)The amount of coverage is unlimited.
a
Any person who violates an insurance statute or rule of Wisconsin can be imprisoned for up to how many years? a)2 b)3 c)4 d)5
b
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a)Revocation of license b)$2,500 c)$1,000 d)$100 per violation
b
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? a)Waiver of Premium b)Payor Benefit c)Jumping Juvenile d)Juvenile Premium Provision
b
Which of the following is NOT a characteristic of an insurable risk? a)The loss exposure must be large. b)The loss must be catastrophic. c)The loss must be due to chance. d)The loss must be measurable.
b
Which of the following is TRUE about nonforfeiture values? a)Policyowners do not have the authority to decide how to exercise nonforfeiture values. b)They are required by state law to be included in the policy. c)They are optional provisions. d)A table showing nonforfeiture values for the next 10 years must be included in the policy.
b
Which of the following is TRUE regarding variable annuities? a)A person selling variable annuities is required to have only a life agent's license. b)The annuitant assumes the risks on investment. c)The funds are invested in the company's general account. d)The company guarantees a minimum interest rate.
b
Which of the following is a person who receives a fee or commission to attempt to negotiate settlements between a life insurance policyholder or certificate holder and one or more life settlement providers? a)Life intermediary b)Life settlement broker c)Surplus lines broker d)Reinsurance agent
b
An agent selling variable annuities must be registered with a)The Guaranty Association. b)SEC. c)FINRA. d)Department of Insurance.
c
Which nonforfeiture option provides coverage for the longest period of time? a)Paid-up option b)Accumulated at interest c)Reduced paid-up d)Extended term
c
Which of the following determines the cash value of a variable life policy? a)The policy's guarantees. b)The premium mode c)The performance of the policy portfolio d)The company's general account
c
Which of the following policies would be classified as a traditional level premium contract? a)Adjustable Life b)Universal Life c)Variable Universal Life d)Straight Life
d
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a)The benefit is received tax free. b)The benefit is subject to the exclusionary rule. c)IRS has no jurisdiction. d)The benefit is received as taxable income.
a
A license applicant's trustworthiness and competence will be determined by all of the following EXCEPT a)Personal testimonies from previous co-workers and managers. b)Misrepresentations in the application process. c)Criminal record. d)Regulatory actions.
a
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? a)Monthly premium waiver and monthly income b)Percentage of medical costs paid by the insurer c)Payments for life d)Yearly premium waiver and income
a
All of the following are beneficiary designations EXCEPT a)Specified. b)Tertiary. c)Contingent. d)Primary.
a
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay? a)50% tax on the amount not distributed as required b)No penalties, since the owner is older than 59 ½ c)10% for early withdrawal d)15% for early withdrawal
a
An applicant wants to buy a policy that has a cash value element. Which type should she buy? a)Permanent b)Stock c)Investment d)Term
a
An insurance producer just sold an insurance policy to his sister. What kind of business is this? a)Controlled b)Illegal c)Internal d)Personal
a
An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have? a)Industrial life b)Credit life c)Ordinary life d)Franchise life
a
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce a)Without receiving written consent from an insurance regulatory authority. b)Under any circumstances. c)Unless they have served an appropriate prison sentence. d)Without receiving written consent from a Federal Judge.
a
For variable products, underlying assets must be kept in a)A separate account. b)A revenue account. c)A money market account. d)A general account.
a
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a)5 days b)7 days c)10 days d)3 days
a
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? a)The annuitant will receive the higher of either the guaranteed minimum rate or current rate. b)The annuitant will always receive the current interest rate. c)The annuitant will receive the lower of either the guaranteed minimum rate or current rate. d)The annuitant will only receive the guaranteed minimum specified in the contract.
a
The Commissioner obtains a restraining order against a person who has violated an insurance law. The person continues the violation for 10 days. The person will have to pay a fine of a)$0. b)$5,000. c)$10,000. d)$50,000.
a
The LEAST expensive first-year premium is found in which of the following policies? a)Annually Renewable Term b)Increasing Term c)Decreasing Term d)Level Term
a
The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place? a)10 days after the notice was delivered to the policyholder b)10 days after the notice is sent out to the policyholder c)Immediately d)10 days after the decision was made
a
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? a)The policyowner can specify the way proceeds are split in the policy. b)The way proceeds are split between beneficiaries is decided by which type of policy is chosen. c)Life insurance policies may have only one beneficiary. d)The proceeds will be split evenly between the two beneficiaries.
a
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a)Must be informed of the source of the report. b)Are entitled to obtain a copy of the report from the party who ordered it. c)Must be advised that a copy of the report is available to anyone who requests it. d)May sue the reporting agency in order to get inaccurate data corrected.
a
What type of premium do both Universal Life and Variable Universal Life policies have? a)Flexible b)Level fixed c)Decreasing d)Increasing
a
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? a)Spendthrift provision b)Settlement option c)Accelerated benefit provision d)Loan provision
a
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
Which is TRUE about the cash surrender nonforfeiture option? a)Funds exceeding the premium paid are taxable as ordinary income. b)After the cash surrender, the insured is covered for a grace period of one month. c)The policy remains active for some time after the policyholder opts for cash surrender. d)The policyholder receives the original cash value of the policy.
a
Which of the following documents must be provided to the policyowner or applicant during policy replacement? a)Notice Regarding Replacement b)Disclosure Authorization Form c)Buyer's Guide and Policy Summary d)Policy illustrations
a
Which of the following is NOT a characteristic of variable annuities? a)They offer guaranteed stock performance. b)The contract owner bears the investment risk. c)Benefits are dependent on the performance of securities. d)The cash value is adjusted for inflation.
a
Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach? a)Estimated longevity b)Outstanding debt c)Mortgages d)Expenses
a
Which of the following is not a limited line of insurance? a)Life insurance b)Credit insurance c)Title insurance d)Legal expense insurance
a
Which of the following statements about a suicide clause in a life insurance policy is true? a)Suicide is excluded for a specific period of years and covered thereafter. b)Suicide is covered for a specific period of years and excluded thereafter. c)Suicide is covered as long as the policy is in force. d)Suicide is excluded as long as the policy is in force.
a
A Buyer's Guide must be presented a)When a potential applicant inquires about a policy. b)When the application is taken. c)Anytime before the policy is delivered. d)At the time of policy delivery.
b
A Universal Life Insurance policy is best described as a/an a)Flexible Premium Variable Life policy. b)Annually Renewable Term policy with a cash value account. c)Variable Life with a cash value account. d)Whole Life policy with two premiums: target and minimum.
b
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
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? a)Physical b)Morale c)Moral d)Legal
b
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Payor rider. b)Other-insured rider. c)Change of insured rider. d)Juvenile rider.
b
All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity? a)A 50-year-old woman b)A 60-year-old man c)A 60-year-old woman d)A 50-year-old man
b
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable? a)Annuitant b)Spouse c)Charitable organization d)Dependents
b
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Nonforfeiture options b)Guaranteed insurability option c)Dividend options d)Guaranteed renewable option
b
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? a)It will increase each year during the next 5 years as the face amount increases each year. b)It will increase because the insured will be 5 years older than when the policy was originally purchased. c)It will remain the same for the new 5-year term. d)It will decrease for the new 5-year term since the insured is now a lesser risk to the company.
b
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as a)Binding contracts. b)Contracts of adhesion. c)Unilateral contracts. d)Aleatory contracts.
b
During replacement of life insurance, a replacing insurer must do which of the following? a)Send a copy of the Notice Regarding Replacement to the Department of Insurance b)Obtain a list of all life insurance policies that will be replaced c)Guarantee a replacement for each existing policy d)Designate a new producer for a replaced policy
b
The insurer must maintain copies of all signed illustrations for a minimum of how many years after the policy is no longer in force? a)1 b)3 c)5 d)10
b
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a)The death benefit can be increased only by exchanging the existing policy for a new one. b)The death benefit can be increased by providing evidence of insurability. c)The death benefit cannot be increased. d)The death benefit can be increased only when the policy has developed a cash value.
b
Under a pure life annuity, an income is payable by the company a)For as long as either the annuitant or a named beneficiary is alive. b)Only for the life of the annuitant. c)Until the principal and interest are exhausted. d)For a guaranteed period of time, whether or not the annuitant survives to the end of that period.
b
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive a)The remainder of the principal. b)Nothing; the payments will cease. c)Guaranteed minimum benefit. d)The amount paid into the annuity.
b
Under an extended term nonforfeiture option, the policy cash value is converted to a)A higher face amount than the whole life policy. b)The same face amount as in the whole life policy. c)The face amount equal to the cash value. d)A lower face amount than the whole life policy.
b
Variable Whole Life insurance is based on what type of premium? a)Graded b)Level fixed c)Increasing d)Flexible
b
What type of insurance would be used for a Return of Premium rider? a)Annually Renewable Term b)Increasing Term c)Level Term d)Decreasing Term
b
Which is NOT true about beneficiary designations? a)Trusts can be valid beneficiaries. b)The beneficiary must have insurable interest in the insured. c)The beneficiary may be a natural person. d)The policy does not have to have a beneficiary named in order to be valid.
b
Which of the following Life Insurance policies would be considered interest sensitive? a)Increasing term b)Universal life c)Adjustable life d)Whole life
b
Which of the following changes does NOT need to be reported to the Commissioner within 30 days? a)From nonresident to resident status b)Each commission paid to a licensee who has held a license for less than 1 year c)The principal officers of a corporation licensed as intermediaries d)Management powers in the business entity
b
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated? a)Variable annuity b)Annuity certain c)Fixed annuity d)Refund life
b
Which of the following types of agent authority is also called "perceived authority"? a)Fiduciary b)Apparent c)Express d)Implied
b
Who does the Interstate Insurance Product Regulation Compact serve? a)NAIC b)Insurers c)Insureds d)Commissioner
b
equity indexed annuities a)Invest conservatively. b)Seek higher returns. c)Are more risky than variable annuities. d)Are security instruments.
b
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a)Most term policies contain a convertibility option. b)Upon conversion, the premium for the permanent policy will be based upon attained age. c)Upon conversion, the death benefit of the permanent policy will be reduced by 50%. d)Evidence of insurability is not required.
c
All of the following are marketing arrangements used by insurers EXCEPT a)Direct Response Marketing System. b)Independent Agency System. c)Reinsurance System. d)General Agency System.
c
All of the following are true about variable products EXCEPT a)The cash value is not guaranteed. b)Policyowners bear the investment risk. c)The premiums are invested in the insurer's general account. d)The minimum death benefit is guaranteed.
c
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? a)$8,000, tax on growth only b)$10,000, tax on growth only c)$10,000, no tax consequence d)$8,000, no tax consequence
c
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? a)Universal life b)Whole life c)Decreasing term d)Variable life
c
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a)$20,000 b)$25,000 c)$50,000 d)The face amount will be determined by the insurer.
c
An intermediary has just placed insurance on himself. He can receive compensation for this transaction only if he has placed insurance on other individuals with the same insurer within the last a)3 months. b)6 months. c)12 months. d)18 months.
c
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to a)3 years. b)5 years. c)10 years. d)12 years.
c
During a life insurance policy replacement, the insurer is required to provide the policyowner a free-look period of at least a)10 days. b)20 days. c)30 days. d)90 days.
c
If a person does not comply with an order issued within 2 weeks after the Commissioner has given notice, for each day that the violation continues, the Commissioner may issue a fine of up to a)$2,000. b)$3,000. c)$5,000. d)$1,500.
c
If a policy is marketed with an illustration, who must sign the illustration? a)Only the applicant b)The agent and the Commissioner c)The applicant and the agent d)Only the agent
c
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may a)Prolong the open enrollment period. b)Increase medical requirements on existing members. c)Require evidence of insurability. d)Require a higher premium.
c
In this state, insurers must pay a claim within how many days of receiving proof of loss? a)10 days b)15 days c)30 days d)90 days
c
The Commissioner issues an order without holding a hearing. The person aggrieved by this order demands a hearing shortly after receiving the order. The hearing must be held within a maximum of how many days? a)10 b)30 c)60 d)90
c
The death protection component of Universal Life Insurance is always a)Adjustable Life b)Decreasing Term c)Annually Renewable Term d)Whole Life
c
To sell variable life insurance policies, an agent must receive all of the following EXCEPT a)A securities license. b)A life insurance license. c)SEC registration. d)FINRA registration.
c
What is the benefit of choosing extended term as a nonforfeiture option? a)It allows for coverage to continue beyond maturity date. b)It can be converted to a fixed annuity. c)It has the highest amount of insurance protection. d)It matures at age 100.
c
Which of the following best describes a pure life annuity settlement option? a)Benefits are paid for a fixed period of time, specified when the policy begins to pay. b)Pure life provides payments for as long as both the annuitant and the spouse are living. c)Pure life provides payments for as long as the annuitant is alive. d)Pure life guarantees that all the proceeds will be paid out.
c
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? a)The Consideration Clause b)Assignment Rights c)Owner's Rights d)The Entire Contract Provision
c
Which of the following individuals must have insurable interest in the insured? a)Underwriter b)Producer c)Policyowner d)Beneficiary
c
Which of the following is NOT a goal of risk retention? a)To increase control of claim reserving and claims settlements b)To fund losses that cannot be insured c)To minimize the insured's level of liability in the event of loss d)To reduce expenses and improve cash flow
c
Which of the following terms is used to name the nontaxed return of unused premiums? a)Interest b)Surrender c)Dividend d)Premium return
c
Which of the following would be considered an illegal inducement to purchase insurance? a)Listing the insurance companies the agency represents in a letter b)Inviting prospective clients to the grand opening of the producer's new office c)Confirming future dividends in a life insurance proposal d)Mailing an agency brochure to a prospective client
c
Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? a)Debt cancellation b)Day care c)Vacation travel expenses d)Travel expenses for family to come to the funeral
c
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a)No payments b)Annuity dividends c)Full premium refund without any charges d)Guaranteed surrender value
d
All of the following statements are true regarding tax-qualified annuities EXCEPT a)Annuity earnings are tax deferred. b)They must be approved by the IRS. c)Withdrawals are taxed. d)Employer contributions are not tax deductible.
d
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)Any type of insurance policy may be used. b)The employer pays a bonus to a selected employee to fund the policy. c)It is considered a nonqualified employee benefit. d)The policy is owned by the company.
d
An agent is selling a client a Variable Life Insurance policy and as an inducement shows the client a projection based upon shares or dividends paid on a similar policy. This is a)Twisting. b)Defamation. c)Unacceptable business practice. d)Misrepresentation.
d
An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? a)He will have to pay a penalty regardless of his age. b)He will not have to pay a penalty, regardless of his age. c)He cannot withdraw money from his MEC before age 59½. d)He will have to pay a penalty if he is younger than 59½.
d
Applicants must complete a Crime Information Bureau form within how many days before taking their state exam? a)30 days b)60 days c)90 days d)180 days
d
During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal? a)Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½. b)Both interest and principal are taxed; no other penalties are imposed. c)Neither interest nor principal is taxed, but penalties may be imposed. d)Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½.
d
How long must a life insurance policy be in force before the owner can enter into a viatical settlement contract? a)90 days b)6 months c)1 year d)2 years
d
If the Commissioner issues an order without having conducted a hearing, the person aggrieved by the order may demand a hearing within how many days after the order was mailed? a)10 b)15 c)20 d)30
d
If the annuitant dies during the accumulation period, who will receive the annuity benefits? a)The annuity owner b)The insurance company c)The annuitant's estate d)The beneficiary
d
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a)They provide additional information from an outside source about a particular risk. b)They provide information about a customer's character and reputation. c)The customer has no knowledge of this action. d)The customer's associates, friends, and neighbors provide the report's data.
d
Installing deadbolt locks on the doors of a home is an example of which method of handling risk? a)Avoidance b)Transfer c)Self-insurance d)Reduction
d
Under what circumstance may an insurer cancel or refuse to renew an insurance policy based upon the past criminal record of the insured? a)Only upon conviction of an offense for which the insured had been previously convicted in the past 5 years b)By giving the insured 45 days prior written notice of the refusal or cancellation along with the specific reason c)Only with the written consent of the Commissioner d)Only upon conviction of an offense directly related to the risk insured
d
What is the advantage of reinstating a policy instead of applying for a new one? a)Proof of insurability is not required. b)The face amount can be increased. c)The cash values have gained interest while the policy was lapsed. d)The original age is used for premium determination.
d
What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months
d
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a)It is increased when extra premiums are paid. b)It decreases over the term of the policy. c)It remains the same as the original policy, regardless of any differences in value. d)It is reduced to the amount of what the cash value would buy as a single premium.
d
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a)Legal purpose b)Contract of adhesion c)Acceptance d)Consideration
d
Which component increases in the increasing term insurance? a)Cash value b)Interest on the proceeds c)Premium d)Death benefit
d
Which of the following can surrender a deferred annuity contract? a)Only the insurance company for nonpayment of premiums b)The beneficiary after the owner's death c)A deferred annuity cannot be surrendered. d)Only the annuity owner
d
Which of the following describes the tax advantage of a qualified retirement plan? a)Distributions prior to age 59½ are tax deductible. b)Employer contributions are deductible as a business expense when the employee receives benefits. c)Employer contributions are not taxed when paid out to the employee. d)The earnings in the plan accumulate tax deferred.
d
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? a)Withdrawn amounts are taxed on a first in, last out basis. b)Taxes are deferred on withdrawn amounts, but a flat penalty is charged. c)Taxes are deferred on withdrawn amounts. d)Withdrawn amounts are taxed on a last in, first out basis.
d
Which of the following is NOT true regarding Equity Indexed Annuities? a)The insurance company keeps a percentage of the returns. b)They have guaranteed minimum interest rates. c)They are less risky than variable annuities. d)They earn lower interest rates than fixed annuities.
d
Which statement regarding insurable risks is NOT correct? a)Insurance cannot be mandatory b)The insurable risk needs to be statistically predictable. c)An insurable risk must involve a loss that is definite as to cause, time, place and amount. d)Insureds cannot be randomly selected.
d
Which two terms are associated directly with the way an annuity is funded? a)Increasing or decreasing b)Immediate or deferred c)Renewable or convertible d)Single payment or periodic payments
d
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? a)The employer is the owner and the key employee is the beneficiary. b)The key employee is the owner and beneficiary. c)The key employee is the owner and the employer is the beneficiary. d)The employer is the owner and beneficiary.
d
All of the following are required in a life insurance illustration EXCEPT a)Name and home address of agent. b)Name and age of proposed insured. c)Underwriting classification upon which the illustration is based. d)Name of insurer.
a
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? a)Fraud b)Defamation c)Unfair discrimination d)Errors and omissions
a
An insurance producer who by contract is bound to write insurance for only one company is classified as a/an a)Captive agent. b)Solicitor. c)Broker. d)Independent producer.
a
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a)Consideration b)Good faith c)Representation d)Adhesion
a
An insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified? a)15 b)20 c)30 d)10
a
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a)Fixed period b)Life with period certain c)Fixed amount d)Interest only
a
An insurer decides to renew a policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified? a) 30 b) 60 c) 90 d) 100
b
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as a)The next month's premium is sufficient to cover both the current premium amount and the skipped amount. b)The policy contains sufficient cash value to cover the cost of insurance. c)The previous premium payments were high enough to create an excess of premium. d)The policyowner cannot skip premiums without the policy lapsing.
b
Which of the following best describes fixed-period settlement option? a)The death benefit must be paid out in a lump sum within a certain time period. b)Income is guaranteed for the life of the beneficiary. c)Both the principal and interest will be liquidated over a selected period of time. d)Only the principal amount will be paid out within a specified period of time.
c
Which of the following is true regarding state regulations for record maintenance? a)Any records except for checks may be maintained electronically. b)Insurer's records must be maintained both electronically and in paper form. c)Insurer's records may be maintained electronically. d)Insurer's records must be maintained as hard copies of original records.
c
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)Universal Life - Option A d)Universal Life - Option B
c
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a)The insured may choose to convert to term or permanent individual coverage. b)The insured would not need to prove insurability for a conversion policy. c)The insured may convert coverage to an individual policy within 31 days. d)The premium for individual coverage will be based upon the insured's attained age.
a
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid a)For 20 years or until death, whichever occurs first. b)Until the policyowner reaches age 65. c)For at least 20 years. d)Until the policyowner's age 100, when the policy matures.
a
Which of the following statements is an accurate comparison between private and government insurers? a)Private insurers may be authorized to transact insurance by state insurance departments. b)Insurance provided by the government is called federal insurance. c)Private insurers offer fewer lines of insurance than government insurers. d)Private insurers provide insurance in areas where the government will not.
a
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 b)Interest-sensitive whole life c)Life annuity with period certain d)Increasing term
a
hich of the following is NOT fundable by annuities? a)Death benefits b)Cash accumulation for any reason c)A person's retirement d)Estate liquidation
a
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a)Juvenile protection provision. b)Survivor protection. c)Life planning. d)Survivorship insurance.
b
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT a)Employee and employer contributions are not counted as income to the employee for income tax purposes. b)At distribution, all amounts received by the employee are tax free. c)Employer contributions are tax deductible as ordinary business expense. d)Funds accumulate on a tax-deferred basis.
b
How are contributions to a tax-sheltered annuity treated with regards to taxation? a)They are taxed as income for the employee, but are tax free upon withdrawal. b)They are not included as income for the employee, but are taxable upon distribution. c)They are never taxed. d)They are taxed as income for the employee.
b
If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to a)$3,000 b)$1,000 c)$1,500 d)$2,000
b
If an annuitant dies before annuitization occurs, what will the beneficiary receive? a)Cash value of the plan b)Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount c)Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount d)Amount paid into the plan
b
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's a)Prior insurance. b)Ancestry. c)Credit history. d)Habits.
b
In a direct rollover, how is the money transferred from one plan to the new one? a)From the original plan to the original custodian b)From trustee to trustee c)From trustee to the participant d)From the participant to the new plan
b
In forming an insurance contract, when does acceptance usually occur? a)When an insured submits an application b)When an insurer's underwriter approves coverage c)When an insurer delivers the policy d)When an insurer receives an application
b
In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits? a)Accumulation period b)Blackout period c)Nonpayment interval d)Benefit reduction
b
Records of replacement suitability inquiries must be kept in the agent's file for at least a)1 year. b)3 years. c)5 years. d)7 years.
b
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.
b
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a)Paid-up additions. b)One-year term option. c)Paid-up option. d)Accelerated endowment.
b
The minimum number of credits required for partially insured status for Social Security disability benefits is a)4 credits. b)6 credits. c)10 credits. d)40 credits.
b
The rule relating to insurance policy readability applies to which of the following? a)Only policies issued to senior citizens b)All insurance policies issued in this state c)Medicare supplement policies only d)Only policies that are submitted for approval to the Department of the Insurance
b
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy? a)Accidental death b)Return of premium c)Cost of living d)Decreasing term
b
Which of the following is NOT true regarding the accumulation period of an annuity? a)It is also known as the pay-in period. b)It would not occur in a deferred annuity. c)It is the period during which the annuity payments earn interest. d)It is the period over which the owner makes payments into an annuity.
b
Which of the following is an eligibility requirement for all Social Security Disability Income benefits? a)Be at least age 50 b)Have attained fully insured status c)Be disabled for at least 1 year d)Have permanent kidney failure
b
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? a)Premiums are taxable to the employee. b)Premiums are not tax deductible as a business expense. c)Premiums are tax deductible by the key employee. d)Premiums are tax deductible as a business expense.
b
Which of the following may NOT be included in an insurance company's advertisement? a)An identification of a limited policy as a limited policy b)That its policies are covered by a state Insurance Security Fund c)The policies' limitations or exclusions d)The name of a specific agent
b
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? a)Lump-sum approach b)Human life value approach (HLVA) c)Needs approach d)Blackout approach
b
Which of the following persons is not required to complete CE? a)Any licensee over 65 with more than 25 years of continuous licensure b)A limited lines intermediary with 40 years of continuous licensure c)A life insurance intermediary with 18 years of continuous licensure d)A property insurance intermediary with 40 years of continuous licensure
b
A Return of Premium term life policy is written as what type of term coverage? a)Renewable b)Level c)Increasing d)Decreasing
c
A domestic insurer issuing variable contracts must establish one or more a)Annuity accounts. b)General accounts. c)Separate accounts. d)Liability accounts.
c
A person that markets insurance but does not include an insurer is called a a)Solicitor. b)Conglomerate. c)Firm. d)Broker.
c
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? a)Legal b)Physical c)Morale d)Moral
c
A tax-sheltered annuity is a special tax-favored retirement plan available to a)Certain age groups only. b)Certain groups depending on factors such as race, gender, and age. c)Certain groups of employees only. d)Anyone.
c
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)Stocks, securities, or bonds. b)An offer to share in commissions generated by the sale. c)Dividends from a mutual insurer d)An offer of employment.
c
All of the following entities regulate variable life policies EXCEPT a)The SEC. b)The Insurance Department. c)The Guaranty Association. d)Federal government.
c
Every producer must maintain a place of business in this state a)And maintain an approval rating of 60%. b)That is approved by the Department. c)Accessible to the public. d)With the exception of resident licensees.
c
How long will the beneficiary receive payments under the single life settlement option? a)For a specified period of time b)Until the insured's age 100 c)Until the beneficiary's death d)Until the insured's death
c
How many hours of prelicensing education approved by the Commissioner must each applicant complete? a)12 b)18 c)20 d)24
c
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT a)The premium. b)The amount of insurance. c)The type of investment. d)The length of coverage.
c
In order for an intermediary to sell or offer to sell a variable contract he/she must have which of the following types of licenses? a)Life and Variable contract license b)Variable contracts and Series 7 c)Life and Series 6 or Series 7 d)Life and Series 24
c
Producers are required to comply with strict regulations when advising senior consumers about annuities. Which of the following would be considered a senior consumer? a)Any person qualified for Social Security b)Any person qualified for Medicare c)Any person age 65 or older d)Any person age 60 or older
c
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT a)Projected interest rates. b)Face amount of the policy. c)The insured's age at death. d)The beneficiary's life expectancy.
c
The paid-up addition option uses the dividend a)To reduce the next year's premium. b)To accumulate additional savings for retirement. c)To purchase a smaller amount of the same type of insurance as the original policy. d)To purchase a one-year term insurance in the amount of the cash value.
c
The rule relating to insurance policy readability applies to which of the following? a)Only policies that are submitted for approval to the Department of the Insurance b)Only policies issued to senior citizens c)All insurance policies issued in this state d)Medicare supplement policies only
c
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to a)The state. b)The beneficiary's estate. c)The insured's estate. d)Probate.
c
Traditional IRA contributions are tax deductible based on which of the following? a)Owner's age b)IRA limit c)Owner's income d)How long the plan has been in force
c
Which of the following is a feature of a variable annuity? a)Interest rate is guaranteed. b)Securities license is not required. c)Benefit payment amounts are not guaranteed. d)Payments into the annuity are kept in the company's general account.
c
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated? a)Refund life b)Variable annuity c)Annuity certain d)Fixed annuity
c
Which of the following is the closest term to an authorized insurer? a)Licensed b)Legal c)Admitted d)Certified
c
Which of the following is true regarding a market value adjusted annuity? a)There are no penalties for a premature surrender of the annuity. b)It provides a level benefit payment. c)The owner is guaranteed a fixed interest rate for a specific period of time. d)The insurer bears all the market risk of changing interest rates.
c
Which of the following is true regarding a single life settlement option? a)Proceeds are paid out in a lump sum. b)It provides income for a specified period of time. c)It provides income the beneficiary cannot outlive. d)Payments continue until the entire principal is exhausted.
c
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a)The Guaranty Association b)Consumer Privacy Act c)The Fair Credit Reporting Act d)Unfair Trade Practices Law
c
Which of the following statements about group life is correct? a)The group sponsor receives a Certificate of Insurance. b)The policy can be converted to an individual term insurance policy. c)The cost of coverage is based on the ratio of men and women in the group. d)The premiums are higher than in an individual policy because there is no medical exam.
c
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a)Policy loans are taxable distributions. b)Accumulations are tax deferred. c)Withdrawals are not taxable d)Distributions before age 59 1/2 incur a 10% penalty on policy gains.
c
Which two terms are associated directly with the way an annuity is funded? a)Immediate or deferred b)Renewable or convertible c)Single payment or periodic payments d)Increasing or decreasing
c
Which type of life insurance policy generates immediate cash value? a)Decreasing Term b)Continuous Premium c)Single Premium d)Level Term
c
Who can make a fully deductible contribution to a traditional IRA? a)Someone making contributions to an educational IRA b)A person whose contributions are funded by a return on investment c)An individual not covered by an employer-sponsored plan who has earned income d)Anybody; all IRA contributions are fully deductible regardless of income level
c
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a)Term to specified age b)Ordinary life policy c)Limited pay whole life d)Level term
d
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? a)Waiver of premium b)Incontestability period c)Assignment d)Automatic premium loan
d
A producer who fails to segregate premium monies from his own personal funds is guilty of a)Larceny. b)Embezzlement. c)Theft. d)Commingling.
d
All of the following are true regarding insurance policy loans EXCEPT a)The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. b)The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. c)Policyowners can borrow up to the full amount of their whole life policy's cash value. d)Policy loans can be made on policies that do not accumulate cash value.
d
An intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years? a)12 b)20 c)22 d)24
d
An intermediary's license remains in effect for how long? a)1 year b)2 years c)3 years d)Indefinitely
d
Annuities differ from life insurance in all of the following ways EXCEPT a)There is no stated amount of death benefit. b)They can be used in a qualified retirement plan. c)The annuitant must be living to collect. d)They are purchased with premiums.
d
How must a replacing producer respond to an applicant wishing to replace existing life insurance? a)The producer must collect the existing policies and turn them over to the replacing insurer. b)The producer must request the permission of the existing insurer. c)The producer has no specific duties. d)The producer must provide the applicant with a Notice Regarding Replacement.
d
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a a)Joint and survivor annuity. b)Deferred annuity. c)Pure annuity. d)Joint life annuity.
d
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? a)Limited pay whole life policy b)Modified life insurance policy c)Single premium policy d)Jumping juvenile policy
d
If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to a)$1,500 b)$2,000 c)$3,000 d)$1,000
d
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? a)Life income b)Fixed period c)Fixed amount d)Lump sum
d
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a)Unilateral b)Conditional c)Personal d)Adhesion
d
Life settlements sold in Wisconsin must allow for the rescission of the contract within a)10 days. b)15 days. c)20 days. d)30 days.
d
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a)Term insurance only b)Permanent insurance only c)Universal life insurance only d)Any form of life insurance
d
SIMPLE Plans require all of the following EXCEPT a)No other qualified plan can be used. b)No more than 100 employees. c)Employees must receive a minimum of $5,000 in annual compensation. d)At least 1,000 employees.
d
The Commissioner is required to examine every domestic insurer and every licensed rate service organization every a)1 year. b)2 years. c)3 years. d)5 years.
d
What type of annuity can be purchased with a single premium and provides benefit payments immediately? a)Single premium b)Deferred c)Fixed d)Immediate
d
When a fixed annuity owner pays pays a monthly annuity premium to the insurance company, where is this money placed? a)Forwarded to an investor b)Each contract's separate account c)The annuity owner's account d)The insurance company's general account
d
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a)Purchase a term rider to attach to the policy. b)Pay back all premiums owed plus interest. c)Receive payments for a fixed amount. d)Purchase a single premium policy for a reduced face amount.
d
Which of the following is NOT an allowable 1035 exchange? a)A whole life insurance policy is exchanged for a Universal life insurance policy. b)An annuity is exchanged for another annuity. c)A life insurance policy is exchanged for an annuity. d)A whole life insurance policy is exchanged for a term insurance policy.
d
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? a)Coverage is based on the predicted needs of that family. b)The death of an insured must be premature. c)It must be assumed that the death of the insured will occur immediately. d)Need is predicted using the number of years until the insured's retirement.
d
Which of the following is a key distinction between variable whole life and variable universal life products? a)Variable universal life is regulated solely through FINRA. b)Variable whole life allows policy loans from the cash value. c)Variable universal life has a fixed premium. d)Variable whole life has a guaranteed death benefit.
d
Which of the following is an example of liquidity in a life insurance contract? a)The death benefit paid to the beneficiary b)The flexible premium c)The money in a savings account d)The cash value available to the policyowner
d
Which of the following is true about the premium on the children's rider in a life insurance policy? a)It decreases when the oldest child reaches the age of 21. b)It increases when a newborn baby is added to the policy. c)It decreases when an adopted child is added to the policy. d)It remains the same no matter how many children are added to the policy.
d
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? a)Increasing term life b)Credit term life c)Decreasing term life d)Variable universal life
d
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death? a)A business partner of the insured b)The wife of the deceased insured c)The former wife of the deceased insured d)A minor son of the insured
d
Which of the following riders would NOT cause the Death Benefit to increase? a)Guaranteed Insurability Rider b)Cost of Living Rider c)Accidental Death Rider d)Payor Benefit Rider
d
Which of the following statements regarding deferred compensation funds is INCORRECT? a)They can be established by employers. b)They can be made with cash deposits to an annuity. c)They generally provide additional retirement benefits. d)They are usually qualified plans.
d
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
Which of the following will be included in a policy summary? a)Copies of illustrations and application b)Comparisons with similar policies c)Primary and secondary beneficiary designations d)Premium amounts and surrender values
d
Which of the following would help prevent a universal life policy from lapsing? a)Face amount b)Adjustable premium c)Corridor of insurance d)Target premium
d
Which policy component decreases in decreasing term insurance? a)Cash value b)Dividend c)Premium d)Face amount
d
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a)Variable life b)Decreasing term c)Straight whole life d)Universal life
d
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend a)Life income with period certain. b)Installment refund. c)Joint and survivor. d)Straight life.
d
How often are domestic insurers examined by the Commissioner? a)Biennially b)Annually c)Every 3 years d)Every 5 years
d
What is the maximum number of insurance risks an agent can place with a single insurer in one calendar year if the agent is not listed with that insurer? a)7 b)10 c)3 d)5
d
In insurance transactions, fiduciary responsibility means a)Handling insurer funds in a trust capacity. b)Maintaining a good credit record. c)Being liable with respect to payment of claims. d)Commingling premiums with agent's personal funds.
a
The risk of loss may be classified as a)Pure risk and speculative risk. b)Certain risk and uncertain risk. c)Named risk and un-named risk. d)High risk and low risk.
a
