Exam Review 2
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of a)Twisting. b)Defamation. c)Misrepresentation. d)Rebating.
A
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a)As of the application date b)As of the policy delivery date c)As of the first of the month after the policy issue d)As of the policy issue date
A
The term "conservation effort" deals with a)Discouraging policyholders from dropping existing policies. b)Writing the least amount of policy provisions as possible in a given policy. c)Charging the lowest possible premium for the highest possible benefit. d)Discouraging agents from terminating their appointments.
A
What is the minimum age for purchasing a life insurance policy in this state? a)15 b)16 c)18 d)21
A
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select? a)Straight life b)Joint and survivor c)Joint annuity d)Cash refund annuity
B
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of a)Rebating. b)Twisting. c)Defamation. d)Misrepresentation.
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
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of a)Third-party ownership. b)A STOLI policy. c)A prearranged funeral plan. d)A viatical settlement.
B
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? a)$0 b)$200 c)$9,800 d)$10,000
C
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a)Nonprofit service organization b)Stock c)Mutual d)Reciprocal
C
Insurers must screen all marketing plans to ensure that an advertisement does NOT use as the name of any kind of an annuity contract any phrase that a)Identifies the name of the insurer as the underwriter for the plan and its administration. b)Does not emphasize investment or tax features to such a degree that prospective buyers believe that the contract is for anything other than insurance purposes. c)Presents all material information and illustrations in an easily interpreted way. d)Does not include the word "annuity" unless accompanied by other clear language indicating it is an annuity.
D
Who makes up the Medical Information Bureau? a)Insurers b)Hospitals c)Former insured d)Physicians and paramedics
A
What is another name for interest-sensitive whole life insurance? a)Term life b)Adjustable life c)Current assumption life d)Variable life
C
Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses? a)Cash values b)Guaranteed values c)Nonforfeiture values d)Permanent values
C
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 subject to the exclusionary rule. b)IRS has no jurisdiction. c)The benefit is received as taxable income. d)The benefit is received tax free.
D
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are a)Paid at a fixed rate every year. b)Taxable as ordinary income. c)Guaranteed. d)Not taxable since the IRS treats them as a return of a portion of the premium paid.
D
The violation of a cease and desist order may result in a fine of a)$3,000. b)$5,000. c)$7,500. d)$10,000.
D
Which of the following is another term for an authorized insurer? a)Certified b)Licensed c)Legal d)Admitted
D
Which of the following is NOT a type of whole life insurance? a)Single premium b)Straight life c)Limited payment d)Level term
D
All of the following would be excluded from the regulation on life insurance solicitation EXCEPT a)A term life policy b)A credit life policy c)A group life policy d)An annuity
A
Agents, subagents, and counselors are required to maintain records of all insurance transactions for what time period? a)1 year b)3 years c)5 years d)7 years
C
An agent must be a resident of the state and be present in the state for at least how many months each year? a)3 b)4 c)6 d)1
C
Which of the following is NOT true regarding policy loans? a)Policy loans can be repaid at death. b)An insurer can charge interest on outstanding policy loans. c)A policy loan may be repaid after the policy is surrendered. d)Money borrowed from the cash value is taxable.
D
Using a class designation for beneficiaries means a)Naming an estate as the beneficiary. b)Naming each beneficiary by his or her name. c)Naming beneficiaries as a group. d)Not naming beneficiaries.
C
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than a)With the policy. b)Upon issuance of the policy. c)Within 30 days after the first premium payment was collected. d)Prior to filling out an application for insurance.
A
Which of the following best describes what the annuity period is? a)The period of time from the effective date of the contract to the date of its termination b)The period of time during which accumulated money is converted into income payments c)The period of time from the accumulation period to the annuitization period d)The period of time during which money is accumulated in an annuity
B
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
Who might receive dividends from a mutual insurer? a)Policyholders b)Subscribers c)Stockholders d)Agents
A
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? a)Alien b)Domestic c)Unauthorized d)Foreign
D
Transacting insurance without a license in this state is considered a(n) a)Felony. b)Insurance fraud. c)Coercion. d)Misdemeanor.
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
What type of premium do both Universal Life and Variable Universal Life policies have? a)Flexible b)Level fixed c)Decreasing d)Increasing
A
Which of the following is NOT true of life settlements? a)The seller must be terminally ill. b)They could be used for a key person coverage. c)They could be sold for an amount greater than the current cash value. d)They involve insurance policies with large face amounts.
A
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a)Automatic premium loan b)Extended term c)Reinstatement d)Reduced paid-up option
A
What are the two components of a universal policy? a)Mortality cost and interest b)Separate account and policy loans c)Insurance and cash account d)Insurance and investments
C
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a)One-year term purchase. b)Accumulation at interest. c)Reduction of premiums. d)Paid-up additions.
D
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 statements about equity index annuities are correct EXCEPT a)The annuitant receives a fixed amount of return. b)They have a guaranteed minimum interest rate. c)The interest rate is tied to an index such as the Standard & Poor's 500. d)They invest on a more aggressive basis aiming for higher returns.
A
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
What describes the specific information about a policy? a)Producer's report b)Policy summary c)Illustrations d)Buyer's guide
B
What is the maximum period of time a temporary license can be in force? a)1 year b)15 months c)6 months d)3 months
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)Jumping Juvenile b)Juvenile Premium Provision c)Waiver of Premium d)Payor Benefit
D
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a)Undercutting b)Twisting c)Slandering d)Defamation
D
Who makes up the Medical Information Bureau? a)Hospitals b)Former insured c)Physicians and paramedics d)Insurers
D
Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly? a)The beneficiary of the applicant b)The insurance company c)The applicant d)The producer
D
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? a)Paid-up option b)One-year term c)Reduction of premium d)Accumulation at interest
A
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a)Mutual b)Reciprocal c)Nonprofit service organization d)Stock
A
As defined by the Georgia Insurance Code, all of the following entities may have an insurable interest in the insured EXCEPT a)A corporation in which the insured holds a large percentage of shares. b)Insurer. c)Trustee. d)Charitable institution.
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
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
Which of the following is NOT true regarding an annuity certain? a)It is a short-term annuity. b)Benefits stop at the annuitant's death. c)It will pay until a fixed amount is liquidated. d)There are no life contingencies.
B
What required provision protects against unintentional lapse of the policy? a)Assignment b)Payment of premiums c)Reinstatement d)Grace period
D
