Georgia Life Agents Accumulative Exam

In this state, what is the maximum fine for transacting insurance without a license?

$1,000

Employer contributions made to a qualified plan

1. Are after-tax contributions. 2. Are subject to vesting requirements. 3. May discriminate in favor of highly paid employees. 4. Are taxed annually as salary. Answer: Are subject to vesting requirements.

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

1. Only the principal amount will be paid out within a specified period of time. 2. Income is guaranteed for the life of the beneficiary. 3. Both the principal and interest will be liquidated over a selected period of time. 4. The death benefit must be paid out in a lump sum within a certain time period. Answer: Both the principal and interest will be liquidated over a selected period of time. Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.

Which of the following would NOT be considered an unfair and deceptive practice?

1. Rebating 2. Controlled business 3. Defamation 4. Misrepresentation Answer: Controlled business

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

3 years

When a policy is replaced, replacing insurers must maintain a replacement register regarding that policy for

Answer: 3 years (When a policy is to be replaced, replacing insurers must maintain copies of the replacement notice, all required written communications, the applicant's signed statement regarding replacement and a replacement register in their home office for at least 3 years, or until the conclusion of the next regular examination by the Insurance Department, whichever is later.)

A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?

Answer: 60 (A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within 60 days after the due date of the premium in default.)

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? 1. Refund life 2. Annuity certain 3. Variable annuity 4. Fixed annuity

Answer: Annuity certain

SIMPLE Plans require all of the following EXCEPT 1. No other qualified plan can be used. 2. No more than 100 employees. 3. Employees must receive a minimum of $5,000 in annual compensation. 4. At least 1,000 employees.

Answer: At least 1,000 employees. (A SIMPLE plan is available to small businesses that employ not more than 100 employees receiving at least $5,000 in compensation from the employer during the previous year.)

Which nonforfeiture option has the highest amount of insurance protection?

Answer: Extended Term (The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.)

In life insurance policies, cash value increases 1. Are income taxable immediately. 2. Grow tax deferred. 3. Are only taxed when the owner reaches age 65. 4. Are taxed annually.

Answer: Grow tax deferred. Generally life insurance cash values are only income taxed if the policy is surrendered (totally or partially) and the cash value exceeds the premiums paid.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? 1. It is a life contingency option. 2. Payments can be made in installments and as a single cash refund. 3. The beneficiary receives the remainder of the principal amount upon the annuitant's death. 4. It does not guarantee that the entire principal amount will be paid out.

Answer: It does not guarantee that the entire principal amount will be paid out. (With the Life with Guaranteed Minimum annuity settlement option, if the annuitant dies before the principal amount (the amount paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to the beneficiary. Pure life provides the highest monthly benefits for an individual annuitant.)

Which of the following best describes annually renewable term insurance? 1. Neither the premium nor the death benefit is affected by the insured's age. 2. It is level term insurance. 3. It provides an annually increasing death benefit. 4. It requires proof of insurability at each renewal.

Answer: It is level term insurance.

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Answer: Option A Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

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 1. Accumulation at interest. 2. Paid-up additions. 3. One-year term purchase. 4. Reduction of premiums.

Answer: Paid-up additions. (When this option is selected, the annual dividend acts as a single premium each year to buy additional amounts of insurance, based on the insured's currently attained age.)

Which of the following riders would NOT cause the Death Benefit to increase? 1. Cost of Living Rider 2. Guaranteed Insurability Rider 3. Payor Benefit Rider 4. Accidental Death Rider

Answer: Payor Benefit Rider (Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.)

All of the following are true about variable products EXCEPT 1. The minimum death benefit is guaranteed. 2. The premiums are invested in the insurer's general account. 3. Policyowners bear the investment risk. 4. The cash value is not guaranteed.

Answer: The premiums are invested in the insurer's general account. (Insurers selling variable products invest their customer's monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return, customers must bear the investment risk.)

Which of the following terms will be permissible in describing a life insurance policy in company advertisements? 1. Variable plan 2. Investment plan 3. Risk-free plan 4. Retirement plan

Answer: Variable plan (Any terms that imply that life insurance is an investment plan, or the terms that may lead a consumer to believe that it offers benefits not actually available are prohibited in advertisements.)

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? 1. Dividend Accumulation option 2. Paid-up additions 3. Accumulation at Interest 4. Paid-up option

Answers: Paid-up option (With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.)

Which of the following statements is INCORRECT? 1. It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly. 2. Misrepresenting the true nature or facts of a policy or its benefit in order to induce a policyholder to surrender one policy and replace it with another is illegal. 3. Discrimination in rates, premiums, policy benefits, etc. for persons within the same class or with the same life expectancy is illegal. 4. Replacing insurance policies for the purpose of making commissions is legal.

Answers: Replacing insurance policies for the purpose of making commissions is legal. (Churning is defined as replacing insurance policies for the sole purpose of making commissions, and it is illegal.)

What type of insurance would be used for a Return of Premium rider?

Increasing Term (The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.)

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

Which of the following entities is responsible for determining whether an advertisement might mislead or deceive a person of average education and intelligence?

The Commissioner (The Commissioner is responsible for determining whether an advertisement might mislead or deceive a person of average education and intelligence.)

An absolute assignment is a

Transfer of all ownership rights in a policy.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium.