Exam
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is a cash value?
Automatic Premium Loan option
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Being permanently disabled
Which of the following is NOT an indicator of a competent party?
Business profession
Which of the following would be considered a peril?
Five
Which of the following is a correct statement about annuities?
Fixed annuities do not provide protection against inflation.
How will life insurance proceeds that are paid as a lump sum received by the beneficiary?
Free of federal income taxation
In order to sell long-term care (LTC) policies, a producer is required to fulfill all of the following EXCEPT
Have at least 4 years of experience in the insurance industry
During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is
Higher
Which of the following statements is TRUE regarding an Agent's Report during the policy application process?
It provides the agent's personal observations concerning the proposed insured
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death?
Joint Life
Agents may be found guilty of defamation if they make a false statement that is intended to (29)
Maliciously criticize another insurance company
The reduction of the premium option uses the dividend to reduce
Next year's premium
An Equity Indexed Annuity will grow based upon
Performance of a recognized index
The frequency and the amount of the premium payment are known as what?
Premium mode
What is the difference between a straight life policy and a 20-pay whole life policy? (59)
Premium payment period
How do premiums in variable universal life policies vary from those in variable whole life policies?
Premiums are flexible
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal
An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using?
Reduction
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT
Reports may be sent to anyone who requests one
If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?
The change must be reported to the Director
How are policy loans calculated?
The policy's cash value minus unpaid loans and accrued interest
All of the following are true of the Survivorship Life policy EXCEPT
The premium is based on the age of each insured
Which of the following is TRUE regarding premium in a 10-year level premium policy?
The premium will remain level for 10 years
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed? (95)
The primary beneficiary died before the insured
All of the following are true regarding the waiver of cost of insurance rider EXCEPT
The rider expires when the insured reaches age 60
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$2,500
What is the maximum fine for signing blank application forms by a producer?
$200
How many days is the free-look period in most life insurance policies? (20)
10 days
An IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed? (9)
10%
What is the penalty for withdrawing money from an annuity prior to age 59 1/2? (25)
10%
In a noncontributory group policy
100% of eligible employees must participate
How soon from a change of address must a nonresident producer notify the Department? (22)
30 days
There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age? (6)
59 1/2
The entire contract includes all of the following EXCEPT
A buyer's guide
The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called?
A collateral assignment
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
Which of the following best describes a rebate?
A producer returning part of her commission to her client, as an inducement to buy
An Agent is hand delivering an insurance policy to a policyowner. What must the agent obtain to complete the transaction?
A signed delivery receipt
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?
Accumulation period
Which of the following documents used in the underwriting process contains specific medical details about an applicant?
Attending Physician's Statement (APS)
Insurers CANNOT transact insurance in this state without a
Certificate of Authority
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
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
Continue to increase
Decreasing Term Insurance is often used to
Cover a mortgage
A policyholder believes that his company is committing insurance fraud. Which of the following is the right authority for investigating this matter?
Director
For an insurance contract, the principle of utmost good faith means
Each party relies upon the truthfulness of the other
An adjustable life policy can assume the form of
Either term insurance or permanent insurance
Which type of authority is found in the agent's contract?
Express
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
A producer's license may be cancelled for noncompliance with continuing education requirements. Which of the following would constitute noncompliance? (34)
Failing to complete at least 8 credit hours in each line of authority
Premiums collected on behalf of the insurance company by an agent will be held in what capacity?
Fiduciary
Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before the insured
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
Immediately
If the Director of Insurance determines that a producer has engaged in an unfair or deceptive act, the Director may do all of the following EXCEPT
Imprison the producer
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
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?
Insurance application
Which of the following statements describes one of the reasons individuals purchase life insurance?
It creates an immediate estate
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT
It does not have a guaranteed death benefit
Which of the following is TRUE of level term insurance?
It is temporary protection
If a retirement plan or annuity is qualified, this means
It satisfies IRS requirements for favorable tax treatment
When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true?
Joint Life has a lower premium than the total of the two individual policies
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy owner select?
Joint and survivor
An annuitant pays the annuity premium on the 14th of each month. Which best describes the arrangement ?
Level
The Human Life Value approach to determining Life insurance needs is based upon which of the following ideas? (84)
Loss of the breadwinner's income
cash value guarantees in a whole life policy are called
Nonforfeiture values
Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?
Occupation
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?
Paid-up additions
Which dividend option will increase the death benefit? (28)
Paid-up additions
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT
Pay next year's premium in advance
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
In order to sell, solicit, or negotiate insurance, an individual may be licensed as a
Producer
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles
Standard
Life Insurance can provide which of the following?
Survivor protection
Which type of insurance policies provides pure life insurance protection without a savings element?
Term
Which of the following statements concerning the Medical Information Bureau is correct?
The Medical Information Bureau assists underwriters in evaluating and classifying risks
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
In a life insurance application, all of the following signatures will be required EXCEPT
The home office underwriter
With Adjustable Life, the owner can change all of the following EXCEPT (35)
The insured
All of the following of group life insurance EXCEPT? (8)
The insureds each own their own contract
Which of the following best depicts the law of large numbers?
The larger the pool of risks under study, the more accurate the predictions will be.
Which of the following is true regarding a joint life annuity?
The payments stop at the first death
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 annuity has committed an illegal practice known as
Twisting
An aleatory contract is based on what kind of exchange?
Unequal exchange of value
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?
Unfair discrimination
Considering the principles of liquidity, how would the policy owner use today's cash values in a life insurance policy?
Use it for emergency expenses
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes
Waiver of premium rider
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability
In life insurance, producers are permitted to share or split commissions, providing that
Both are properly licensed for the line of insurance.
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out.
Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?
Buy-Sell Agreement
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have?
Revocable
A whole life policy that will generate immediate cash value is a
Single premium policy