Exam review

A nonresident agent is allowed to conduct insurance transactions in Georgia because his home state allows Georgia residents to transact insurance business in it. This is known as a/n a)Appointment. b)Reciprocity agreement. c)Nonresident arrangement. d)Overinsurance.

B

Who elects the Commissioner of Insurance to office? a)Member insurers b)Registered voters c)The State Department of Insurance d)NAIC

B

Which of the following is NOT typically excluded from life policies? a)Self-inflicted death b)Death that occurs while a person is committing a felony c)Death due to war or military service D)Death due to plane crash for a fare-paying passenger

D

An agent commingled $500 of insurance premiums collected with new applications with his personal funds. The agent could be found guilty of a a)Misdemeanor. b)Felony. c)Fiduciary crime. d)Breach of contract.

A

An agent is acting ethically in all of the following situations EXCEPT a)Always representing the insured. b)Working within the conditions of his/her contract. c)Representing the insurer, not the insured. d)Keeping customers' best interests in mind.

A

Another name for a substandard risk classification is a)Controlled. b)Declined. c)Elevated. d)Rated.

D

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)Interest-sensitive whole life b)Life annuity with period certain c)Increasing term d)Limited pay whole life

D

Which of the following best details the underwriting process for life insurance? a)Selection, classification, and rating of risks b)Solicitation, negotiation and sale of policies c)Issuance of policies d)Reporting and rejection of risks

A

Which of the following is NOT true regarding Equity Indexed Annuities? a)They earn lower interest rates than fixed annuities. b)The insurance company keeps a percentage of the returns. c)They have guaranteed minimum interest rates. d)They are less risky than variable annuities.

A

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)Annuity certain b)Fixed annuity c)Refund life d)Variable annuity

A

Which of the following terms will be permissible in describing a life insurance policy in company advertisements? a)Variable plan b)Risk-free plan c)Investment plan d)Retirement plan

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 agent license can be issued a)Any person approved by the Commissioner. b)Only to individuals. c)To a natural person or a corporation. d)To partnerships.

B

Methods used to pay the death benefits to a beneficiary upon the insured's death are called a)Designation options. b)Beneficiary provisions. c)Death benefit options. d)Settlement options.

D

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? a)Domestic b)Alien c)Nonadmitted d)Foreign

D

Which of the following is an example of a producer's fiduciary duty? a)The trust that a client places in the producer in regard to handling premiums. b)An obligation to state every known fact about the policy the producer is selling. c)A duty to base all transactions upon the principle of Utmost Good Faith. d)The obligation to tell the truth to the best of one's knowledge

A

Which of the following is the required number of participants in a contributory group plan? a)75% b)100% c)25% d)50%

A

Most LTC plans have which of the following features? a)Variable premiums b)Open enrollment c)Guaranteed renewability d)No elimination period

C

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an a)Nonqualified annuity. b)Modified endowment contract. c)Accelerated benefit policy. d)Endowment.

B

Which of the following best describes an insurance company that has been formed under the laws of this state? a)Alien b)Foreign c)Domestic d)Sovereign

C

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? a)Switching b)False advertising c)Rebating d)Twisting

D

To legally transact insurance in this state, an insurer must obtain which of the following? a)Certificate of Authority b)Power of Attorney c)Business entity license d)Certificate of Insurance

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 is the purpose of the buyer's guide? a)To allow the consumer to compare the costs of different policies b)To provide the name and address of the agent/producer issuing the policy c)To list all policy riders d)To provide information about the issued policy

A

All of the following statements about equity index annuities are correct EXCEPT a)They invest on a more aggressive basis aiming for higher returns. b)The annuitant receives a fixed amount of return. c)They have a guaranteed minimum interest rate. d)The interest rate is tied to an index such as the Standard & Poor's 500.

B

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? a)Disclosure rule b)Fair Credit Reporting Act c)Consumer Privacy Act d)Conditional receipt

B

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a)The date of application b)The date of medical exam c)The date of policy delivery d)The date of issue

B

If policyowners repeatedly replace policies from the same agent, this is most likely evidence that a)The agent needs more training on the suitability of policies for clients. b)The agent knew that replacement was intended in connection with the sale and intentionally violated the replacement regulation. c)The agent is reputable and generally trusted by policyholders; the more replacements, the better. d)The agent made a commendable effort to offer the best possible policy for his or her clients

B

In this state, what is the maximum fine for transacting insurance without a license? a)$500 b)$1,000 c)$5,000 d)$10,000

B

Insurers must keep files of all advertisements used in Georgia for the minimum of how many years? a)2 b)4 c)5 d)7

B

The paid-up addition option uses the dividend a)To accumulate additional savings for retirement. b)To purchase a smaller amount of the same type of insurance as the original policy. c)To purchase a one-year term insurance in the amount of the cash value. d)To reduce the next year's premium

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

What is the benefit of choosing extended term as a nonforfeiture option? a)It can be converted to a fixed annuity. b)It has the highest amount of insurance protection. c)It matures at age 100. d)It allows for coverage to continue beyond maturity date.

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

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

What is the purpose of Life Insurance Solicitation regulation? a)To help producers understand different insurance policies b)To help consumers compare life insurance products in regard to their relative cost c)To provide information regarding replacement of policies d)To identify the required and prohibited actions for insurance advertising

B

What is the purpose of a suicide provision within a life insurance policy? a)To protect the policyowner b)To protect the insurer from persons who purchase life insurance with the intention of committing suicide C)To limit the insurer's liability after the 2 year waiting period d)To deter the policyowner from committing suicide

B

What is the purpose of settlement options? a)They provide the beneficiary with the income he/she cannot outlive. b)They determine how death proceeds will be paid. c)They are guarantees built into the policy. d)They guarantee a return of excess premiums

B

When is the earliest a policy may go into effect? a)After the underwriter reviews the policy b)When the application is signed and a check is given to the agent c)When the first premium is paid and the policy has been delivered d)When the insurer approves the application

B

Which nonforfeiture option provides coverage for the longest period of time? a)Accumulated at interest b)Reduced paid-up c)Extended term d)Paid-up option

B

Which of the following best describes the MIB? a)It is a rating organization for health insurance. b)It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. c)It is a government agency that collects medical information on the insured from the insurance companies. d)It is a member organization that protects insured against insolvent insurers.

B

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 determines the length of time that benefits will be received under the Fixed-Amount settlement option? a)Amount of interest b)Size of each installment c)Predetermined length of time stated in the contract d)Length of income period

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 the best reason to purchase life insurance rather than annuities? a)To liquidate a sum of money over a lifetime b)To create an estate c)To liquidate a sum of money over a period of years d)To create regular income payments

B

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? a)There is a 10% penalty for early distribution of the death benefit. b)They are tax free to terminally ill insured. c)They are always taxable to chronically ill insured. d)They are always taxed.

B

Which of the following statements about the reinstatement provision is true? a)It guarantees the reinstatement of a policy that has been surrendered for cash. b)It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. c)It permits reinstatement within 10 years after a policy has lapsed. d)It provides for reinstatement of a policy regardless of the insured's health.

B

Which two terms are associated directly with the way an annuity is funded? a)Renewable or convertible b)Single payment or periodic payments c)Increasing or decreasing d)Immediate or deferred

B

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)Joint and survivor. b)Straight life. c)Life income with period certain. d)Installment refund.

B

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)Survivorship insurance. b)Juvenile protection provision. c)Survivor protection. d)Life planning.

C

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT a)Late payments. b)Failure to pay off a loan. c)Disputes regarding consumer report information. d)Tax delinquencies.

C

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT a)Fully insured status. b)Waiting period of 5 months. c)Being age 65. d)Inability to perform any gainful work.

C

All of the following are true regarding a decreasing term policy EXCEPT a)The contract pays only in the event of death during the term and there is no cash value. b)The face amount steadily declines throughout the duration of the contract. c)The payable premium amount steadily declines throughout the duration of the contract. d)The death benefit is $0 at the end of the policy term.

C

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a)Twisting b)Defamation c)False advertising d)Unfair claims

C

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a)10 days b)3 days c)5 days d)7 days

C

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a)Cost of living provision. b)Nonforfeiture option. c)Guaranteed insurability rider. d)Paid-up additions option.

C

In a survivorship life policy, when does the insurer pay the death benefit? a)Half at the first death, and half at the second death b)If the insured survives to age 100 c)Upon the last death d)Upon the first death

C

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability? a)Occupation b)Address c)Sexual orientation d)Age

C

The death benefit under the Universal Life Option B a)Increases for the first few years of the policy, and then levels off. b)Remains level. c)Gradually increases each year by the amount that the cash value increases. d)Decreases by the amount that the cash value increases.

C

Which of the following entities has the power to issue certificates of authority? a)NAIC b)Federal Insurance Regulation Board c)Commissioner of Insurance d)Department of Insurance

C

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)The wife of the deceased insured b)The former wife of the deceased insured c)A minor son of the insured d)A business partner of the insured

C

Which of the following statements is correct regarding a whole life policy? a)Cash values are not guaranteed. b)The policy premium is based on the attained age. c)The death benefit may increase or decrease during the policy period. d)The policyowner is entitled to policy loans

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 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 Straight Life policy has what type of premium? a)An increasing annual premium for the life of the insured b)A decreasing annual premium for the life of the insured c)A variable annual premium for the life of the insured d)A level annual premium for the life of the insured

D

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the a)Secondary beneficiary. b)Contingent beneficiary. c)Irrevocable beneficiary. d)Revocable beneficiary.

D

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT a)Employer contributions are tax deductible as ordinary business expense. b)Funds accumulate on a tax-deferred basis. c)Employee and employer contributions are not counted as income to the employee for income tax purposes. d)At distribution, all amounts received by the employee are tax free.

D

All of the following are true about variable products EXCEPT a)The minimum death benefit is guaranteed. b)The cash value is not guaranteed. c)Policyowners bear the investment risk. d)The premiums are invested in the insurer's general account.

D

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)An offer of employment. b)Stocks, securities, or bonds. c)An offer to share in commissions generated by the sale. d)Dividends from a mutual insurer.

D

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a)Payments for 20 years b)Payments for life c)Nothing d)Payments for 15 years

D

An insurance producer just sold an insurance policy to his sister. What kind of business is this? a)Illegal b)Internal c)Personal d)Controlled

D

Authorized insurance companies are examined by the Commissioner at least once every a)Year. b)2 years. c)3 years. d)5 years.

D

Existing insurers must provide policyowners with a policy summary for the existing life insurance within how many days of receiving the written communication and replacement? a)20 b)31 c)5 d)10

D

If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement? a)"Commissioned advertisement" b)"Insurer is not responsible for the contents of the testimonial" c)"The author is the employee of the insurer" d)"Paid endorsement"

D

If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed an act of a)Misrepresentation. b)Defamation. c)Coercion. d)Churning.

D

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. The company is guilty of a)Concealment. b)Unfair claim practice. c)Rebating. d)Misrepresentation

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

When transacting business in this state an insurer formed under the laws of another country is known as a/an a)Domestic insurer. b)Foreign insurer. c)Admitted insurer. d)Alien insurer.

D

Which is TRUE about the cash surrender nonforfeiture option? a)After the cash surrender, the insured is covered for a grace period of one month. b)The policy remains active for some time after the policyholder opts for cash surrender. c)The policyholder receives the original cash value of the policy. d)Funds exceeding the premium paid are taxable as ordinary income.

D

Which of the following is NOT true regarding the annuitant? a)The annuitant's life expectancy is taken into consideration for the annuity. b)The annuitant receives the annuity benefits. c)The annuitant must be a natural person. d)The annuitant cannot be the same person as the annuity owner.

D

Which of the following is TRUE regarding variable annuities? a)The funds are invested in the company's general account. b)The company guarantees a minimum interest rate. c)A person selling variable annuities is required to have only a life agent's license. d)The annuitant assumes the risks on investment.

D

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? A)They are always taxable to chronically ill insured. b)They are always taxed. c)There is a 10% penalty for early distribution of the death benefit. d)They are tax free to terminally ill insured.

D

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy? a)They are always taxable to chronically ill insured. b)They are always taxed. c)There is a 10% penalty for early distribution of the death benefit. d)They are tax free to terminally ill insured.

D

Which of the following statements about the reinstatement provision is true? a)It permits reinstatement within 10 years after a policy has lapsed. b)It provides for reinstatement of a policy regardless of the insured's health. c)It guarantees the reinstatement of a policy that has been surrendered for cash. d)It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

D

Which of the following would be considered an unfair claims settlement practice? a)Requesting the insured to submit a signed proof of loss statement, after the insured has already verbally advised the insurer of the claim b)Requesting the insured swear under oath concerning the facts of the claim c)Delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation d)Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered

D