Exam Simulator Three
If an individual violates a cease and desist order issued by the State Corporation Commission, the individual will be subject to a fine of
$5000
After an annuity has been in force for _____ year(s), it becomes incontestable.
2 years
Administrative actions taken against an agent must be reported to the State Corporation Commission within _____ days of the final disposition
30
An insurance company or agent must respond within _____ days to insurance request to access personal information collected on him/her by the insurer
30
In Virginia, an insurer must file a written notice of appointment with the State Corporation Commission within
30 days of the first insurance application submitted by the licensee
One becomes eligible for Social Security disability benefits after having been disabled for
5 months
How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
6 months
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
Accelerated (living) benefit
Which statement regarding a single premium life insurance policy is not correct?
Additional premiums may be required under certain conditions
Which is an accurate description of the premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years then levels off for the remainder of the contract
In what situation could an insurance policy's coverage be modified?
Applicant is a substandard risk
When does the insured stop making payments under a thirty-payment whole life policy?
At the time of death or 30 years after the policy's inception, whichever comes first
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policyowner when policy has been surrendered
A domestic insurance company in Virginia must
Be formed under Virginia insurance laws
Which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
All of these are considered to be in violation of the Federal Fraud and False Statements Act EXCEPT
Claims reimbursement
An individual, age 45, would like to help pay for his daughter's college expenses in 10 years. Which annuity would be appropriate for this individual?
Deferred annuity
Which of these is not considered a type of limited payment whole life insurance?
Endowment at age 70
The application is part of the annuity contract according to the
Entire contract clause
How often must the Commission examine each domestic insurance company?
Every five years
A policy owner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?
Face amount minus the loan balance and past-due premium
An example of misrepresentation is
Falsifying the terms, benefits, advantages, or conditions of an insurance policy
Which of these may not be deducted from premium payments or the cash value of the variable life insurance policy?
Federal premium taxes
Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?
Fixed amount installment option
An annuity contract may be returned for a full refund during the
Free-look period
Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?
Free-look period
Which of the following is NOT subject to the promise to pay in an ensuring clause?
How the premium is calculated
A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?
If the interest rate falls below a specified level, the surrender charge is waived
A policyowner has just borrowed from a life insurance policy's cash value. Which of these statements is true?
In the event of death, the loan amount is deducted from the policy proceeds
In Virginia, an insurance agent's appointment
Is in effect until termination
Which of these would not be a valid reason to add the waiver of premium rider to a life insurance policy?
It allows a policy loan to cover premium payments if the policy owner becomes totally disabled
All of these are duties that a producer may be required to perform when delivering an insurance policy except
Leave a conditional receipt with client
An insurance policy maybe issued with a preferred insurance premium in all of these situations EXCEPT
Living in a rural area
When determining the suitability of an annuity for a consumer, the insurance provider is obligated to
Make reasonable efforts to fit the annuity with the consumer's needs
A Life Policy that has premiums that are lower than normal during the early years is called
Modified life
Life insurance premiums are computed on what three factors?
Mortality, interest, expenses
Which of these statements accurately portrays an adjustable life insurance policy?
Policy can alternate between forms of term and whole life insurance
Which statement regarding an adjustable life insurance policy is not true?
Policy loans are not permitted
The beneficiary of a life insurance policy is normally selected by whom?
Policyowner
A cease and desist order issued against an agent
Prohibits a specific practice listed in the order
A life insurance policyowner sells her policy to a third party in a viatical settlement. Under this transaction, the policyowner
Receives an amount less than the policy's death benefit
During an annuity's liquidation phase, the annuitant normally
Receives benefit payments at regular intervals
What does a 401(k) plan generally provide its participants?
Salary-deferral option
Switching Life insurance policies without tax consequence is permitted under
Section 1035 rules
A life insurance producer's underwriting duties may include
Seeking additional information requested by the insurance company
Assets that back the non-guaranteed values of variable life insurance policy products are held in which account?
Separate account set up by the insurer
Which of the following entities does not establish regulations for variable insurance products?
State Attorney General
The interest paid during an annuity's payout period is called
Taxable as ordinary income
Which statement concerning adjustable life insurance is accurate?
The face amount and premiums can be changed simultaneously by the policyowner
What is the effect of the market value adjustment in a market value adjustment annuity?
Transfers some of the investment risk to the policyowner
How is a collateral assignment used in a life insurance contract?
Transfers specific ownership rights to a creditor
Insurance crimes which affect interstate commerce are prosecuted by the
US Attorney General
When does interest income for a flexible premium deferred annuity get reported for federal income taxes?
Upon receiving distributions from the contract
An insurance policy that can also be classified as a securities product is called
Variable Life
Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?
Variable Universal Life
An insurance company's failure to enforce a contract provision is called a
Waiver
Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?
When the contract has been held for the period specified in the policy
A producer working for an insurance company may be personally liable for
acts performed which are prohibited in the agency contract
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of
apparent authority
When does the owner's contractual rights begin under an individual annuity contract?
at the time of purchase
Which of these life insurance policies does not contain a cash value provision?
decreasing term life
A qualified profit-sharing plan is designed to
distribute a portion of company earnings to its employees
The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called
implied authority
XYZ Corp has implemented a qualified retirement plan. This plan may NOT discriminate
in favor of highly compensated employees
A business may purchase an annuity for all of the following reasons except
informally funding a non-qualified deferred compensation plan
After an insurance application has been originated, the producer normally
is the major personal contact to the insured
During the sale of the life insurance policy, an agent may provide an incomplete illustration
never
In an individual retirement account (IRA), rollover contributions are
not limited by dollar amount
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
Under a deferred annuity, which contract feature initially charges a 5-10% fee that eventually reduces to $0 after a stated amount of time?
surrender charge