Exam Simulator

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?

$10,000 no tax consequence

For how long are insurers required to maintain records pertaining to life insurance solicitation?

3 year

If an agent's residence address is changed, within how many days must the agent nofify the Commissioner?

30 days

What is the number of credits required for fully insured status for Social Security disability benefits?

40

Agents,subagents, and counselors are required to maintian records of all insurance transactions for what time period?

5 years

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Which of the following would describe a legal document which would dictate who can buy a decased partner's share of a business and for what amount?

A Buy-Sell agreement

According to the entire contract provision, a policy must contain

A copy of the original application for insurance.

Buy-Sell Agreement

A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.

A straight life policy has what type of premium?

A level annual premium for the life of the insured

Which of the following would be required to submit fingerprints with the license application?

A new producer applying for a resident license.

The two types of assignements are

Absolute and collateral

All the following are examples of violations of replacement EXCEPT

Advising an applicant to answer questions correctly.

An insured pays a $100 premium every month for his insurnace coverage, yet the insurer promises to pay $10,0000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

An agent is acting ethically in all of the following situations EXCEPT

Always representing the insured.

Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?

An Annuity

Which of the following products will protect an individual from outliving their money?

Annuity

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain

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 partners. What type of insurance policy may be used to fund this agreement?

Any form of life insurnace. Any form of life insurance may be used to fund a buy-sell agreement.

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?

As of the application date

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value willl equal $100,000

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

All of the following are personal uses of life insurance EXCEPT

Buy-Sell agreement

A producer who fails to seperate premium monies from his own personal funds is guilty of

Commingling

Which of tyhe following is NOT an essential element of an insurance contract?

Counteroffer

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

A producer must do all of the following when delivering a new policy to the insured EXCEPT

Disclose commissions earned from the sale of the policy.

All of the following could be considered rebates if offered to an isured in the sale of insurance EXCEPT?

Dividents from a mutual insurer.

How is the Commissioner of Insurance selected to be the chief officer of the Department of Insurance?

Elected to office for a term of 4 years

All of the following statements are true regarding tax-qualified annuities EXCEPT

Employer contributions are not tax deductible.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cashs values will purchase.

Items stipulated

Exclusions clause

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

Executive is the owner, and the executive pays the premium.

Which policy component decreases in decreasing term insurance?

Face Amount

What type of premium do both Universal Life and Variable Universal Life policies have?

Flexible

In a direct transfer, how is money transferred from one retirement plan to a traditional IRA?

From trustee to trustee

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Illegal under any circumstances called defamation.

A return of premium term life policy is written as what type of tern coverage?

Increasing

An underwriter may obtain information on an applicant's hobbies,financial status, and habits by ordering a(n)

Inspection report

What do individuals use to transfer their risk of loss to a larger group?

Insurance

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

Interest only

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits.

Which of the following is TRUE regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred.

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants.

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity

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?

Joint and survivor

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?

Limited pay whole life

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a cosumer report

Must be informed of the source of the report

Traditional IRA contributions are tax deductible based on which of the following?

Owner's income

A prospective insured receives a conditional receipt but does before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy.

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

An insured will be allowed to reactivate her lapsed

Reinstatement provision

Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?

Renewable

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 ______________.

Revocable beneficiary

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

It would be considered unfair discrimination to ask an insurance application about which of the following and then use that information as a rating factor to determine insurability.?

Sexual orientation

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim.

Which of the following is a generic consimer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

The Buyers Guide

All of the following employees may be a 403(b) plan for their retirement EXCEPT

The CEO of a private corporation.

If the Commissioner is not able to serve due to disability,resignation, or death which of the following will happen?

The Chief Deputy Commissioner will serve as the Commissioner until the next election.

Which of the following is an example of liquidity in a life insurance contract?

The cashs value available to the policyowner.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates,friends and neighbors provide the report's data

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by porviding evidence of insurability.

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?

The insured's premiums will be waived until she is 21.

All of the following are true regarding a decreasing term policy EXCEPT?

The payable premium amount steadily declines throughout the duration of the contract.

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

If an insurance premium is paid by the policywoner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true?

The policy will not lapse since payment to the agent is the same as a payment to the insurer.

If an insured continually uses the automatic premium loan

The policy will terminate when the cash value is reduced to nothing.

All of the following would be eligible to establish a Keogh retirement plan EXCEPT

The president and employee of a family corporation. Keogh plans are for self-employed individuals and their employees.

Which is true about a spouse term rider?

The rider is usually level term insurance.

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

The same face amount as in the whole life policy

Which is generally true regarding insureds who have been classified as preferred risks?

Their premiums are lower.

Which of the following is the best reason to purchase life insurance rather than an annuity?

To create an estate

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cashs value in the policy to cover the premium amount?

Universal Life

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT?

Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

In a survivorship life policy when does the insurer pay the death benefit?

Upon the last death

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent.

A willful violation of an agent's fiduciary responsibility that involved funds exceeding $1,000 will be considered

a felony

In insurance, an offer is usually made when

an applicant submits an application to the insurer

Which of the following individuals must have insurable interest in the insured?

policyowner