Financial Advising
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE
Withdrawals are not taxable
If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?
lump sum
Which of the following insurers are owned by stockholders
Stock
Which of the following is the best reason to purchase life insurance rather than an annuity
To create an estate
Which of the following would be required to be licensed as an insurance producer
A salaried employee who advertises and solicits insurance
What is the definition of a unilateral contract
One-sided: only one party makes an enforceable promise
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy
Which of the following will NOT be considered unfair discrimination by insurers
Discriminating in benefits and coverages based on the insured's habits and lifestyle
A life insurance policy has a legal purpose if both of which of the following elements exist
Insurable interest and consent
What describes the specific information about a policy
Policy summary
Which of the following is true of a children's rider added to an insured's permanent life insurance policy
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age
Which type of life insurance policy generates immediate cash value
Single premium
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insureds age 100 is called
Single premium whole life
All of the following are true of an annuity owner EXCEPT
The owner must be the party to receive benefits.
The LEAST expensive first-year premium is found in which of the following policies
annually renewable term
Which of the following would describe a legal document which would dictate who can buy a deceased partners share of a business and for what amount
buy-sell agreement
If a producer continues to violate the Insurance Code, a new civil penalty will be assessed every
day
What are the two components of a universal policy
insurance and cash amount
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
unilateral
Which of the following includes information regarding a persons credit, character, reputation, and habits
Consumer report
An individual purchased a $100,000 Joint Life Policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife recieve from the policy
$100,000
All documents used in the solicitation of insurance must be maintained by an insurer for at least
3 years
If a resident insurance producer moves from Tennessee to another state, he/she must file a change of address and provide certification from the new resident state within how many days of the change of legal residence?
30 days
Upon receipt of notice of appointment, the Commissioner must verify the insurance producer is eligible for appointment within how many days?
30 days
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Which of the following is NOT typically excluded from life policies
Death due to plane crash for a fare-paying passenger
Which policy component decreases in decreasing term insurance?
Face amount
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
A policy summary must include all of the following EXCEPT
Guaranteed dividend rate
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members
Term rider
If an insured continually uses the automatic premium loan option to pay the policy premium,
The policy will terminate when the cash value is reduced to nothing
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with a Notice Regarding Replacement
Which of the following is a key distinction between variable whole life and variable universal life products
Variable whole life has a guaranteed death benefit
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?
sexual orientation
Which of the following is a risk classification used by underwriters for life insurance
standard
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
An insurance producer license may be renewed if the producer has paid the application fees, submitted the renewal form to the commissioner, and
Completed continuing education requirements
An insured pays an annual premium to his insurer. I'm return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
What is the benefit of choosing extended term as a nonforfeiture option
It has the highest amount of insurance protection
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
Joint life annuity
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the first insured. Which policy is that
Joint life policy
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
For the purpose of making an investigation, the Commissioner does NOT have the power to do which of the following?
Make testimony and documents available to the public
All of the following are true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value.
Who can request changes in premium payments, face value, loans, and policy loans
Policyowner
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy
Premiums are not tax deductible as a business expense.
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
Purchase a single premium policy for a reduced face amount
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy
Return of premium
Which of the following best details the underwriting process for life insurance
Selection, classification, and rating of risks
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.
Which of the following policies would be classified as a traditional level premium contract
Straight life
Nonforfeiture values guarantee which of the following for the policyowner?
That the cash value will not be lost
A Corporationid the owner and beneficiary of the key person life policy, if the corporation collects the policy benefit, then
The benefit is received tax free
Which of the following is INCORRECT concerning a noncontibutory group plan
The employees receive individual policies
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary.
All of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only.
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
Within how many days must insurance producers reports changes of address to the commissioner
30 days
Which of the following would be required to complete pre licensing education
A nonresident life insurance producer who is planning to transact property insurance
The term " illustration " in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy
All materials used in the solicitation of life insurance must provide the following EXCEPT
A single sum of all guaranteed and nonguaranteed benefits
Under which of the following circumstances would an insurer pay accelerated benefits
An insured is diagnosed with cancer and needs help paying for her medical treatment
In an insurance company makes a statement that it's policies are guaranteed by the existence of the insurance Guaranty Association, that would be considered
An unfair trade practice
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information except the applicants
Ancestry
A key person insurance policy can pay for which of the following?
Costs of training a replacement
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wan to to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy
Guaranteed insurability option
What type of insurance would be used for a Return of Premium rider?
Increasing Term
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint Life
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this
Reduction of premium
Which of the following best defines target premium in a universal life policy
The recommended amount to keep the policy in force throughout its lifetime
A temporary license may be issued without examination in all of the following instances EXCEPT
To an applicant who fails to pass an insurance producer's examination
When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
a fixed amount
Which of the following may obtain a producers license, but may NOT sell, solicit, or negotiate a contract of insurance in Tennessee
business entity
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of
coercion
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
interest-sensitive whole life
in order to enforce the insurance Code the commissioner has the power to conduct which of the following
investigations