Licensing Exam
When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information?
Application
An insured owns a Term Policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for a discounted premium rate. Which option best describe this scenario?
Re-entry
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
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
Events in which a person has both the chance of winning or losing are classified as
Speculative risk
The interest earned on policy dividends is
Taxable
Which of the following types of insurance policies would provide the greatest amount of protection for temporary period during which an insured will have limited Financial Resources.
Term
Which of the following may not be included in an insurance company's advertisement?
That its policies are covered by a state Guaranty Association
All of the following entities regulate variable Life policies except?
The Guaranty Association
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
The annuitant must be a natural person.
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.?
The date of the medical exam.
The policyowner of an adjustable life policy wants to increase the death benefit, which of the following statements is true regarding this change?
The death benefit can be increased by providing evidence of insurability.
How long will the beneficiary receive payments under the single life settlement option?
Until the beneficiary's death.
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In forming of an insurance contact, this is referred to as?
Utmost good faith
Which of the following types of policies allows for a flexible premium and a variable investment component?
Variable universal life insurance
What is the minimum age for a person to obtain a life insurance on him- or herself? (13)
18
An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders?
2.5%
If a property and casualty producer has less than 2 years left on his or her existing license, what percentage of the surplus lines broker license fee will the producer be charged for the addition of that license?
50%
An individual was insured under a group contract. He was just fired from his job and, subsequently, his coverage was terminated. How long does his insurer have to notify him of his right to convert that group policy into an individual policy?
60 days beyond the policy's next expiration date
A telemarketer wants to make an unsolicited sales call to a potential customer what is the earliest time the telemarketer can call the prospects residence?
8 am
According to the Entire Contract Provision, a policy must contain?
A copy of the original application for insurance
An insurer neglected to provide a buyer's guide to a customer at the time of application, which of the following will happen as a result?
A free-look period of 15 days will be granted
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured.
An individual was involved in a head-on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe?
Avoidance
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
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 cash values will purchase.
Which of the following is true about the 10-day free look period in a life insurance policy
It begins when the policy is delivered
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principal amount will be paid out.
Which of the following premium modes would result in the highest annual cost for an insurance policy?
Monthly
Using a class designation for beneficiaries means
Naming beneficiaries as a group
Attempting to determine how much insurance a family would require based upon their financial objective is known as?
Needs approach.
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced.
Under a Pure Life annuity, an income is payable by the company
Only for the life of the annuitant.
the causes of loss insured against an insurance policy are known as?
Perils
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a?
Premium receipt
What is the term for the entity that an agent represents regarding contractual agreements with third parties?
Principal
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
Upon the death of the insured the primary beneficiary discovers that the insurer choose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit.
An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is true?
The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.
in a case where the primary beneficiary produces insured in the event of the insurance death the death benefit to
The contingent beneficiary
if an insured withdrawals a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
The death benefit will be smaller
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. which of the following would receive the death benefit?
The insured's contingent beneficiary
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
The policyowner can specify the way proceeds are split in the policy.
What must happen when an individual policy or annuity has been personally delivered to the policy owner
The policyowner must sign a delivery receipt
All of the following are true about variable products except?
The premiums are invested in the insurer's general account.
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums.
An absolute assignment is a
Transfer of all ownership rights on a policy
What type of account will most likely be established for a minor?
Trust
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. what contract element does this describe?
Unilateral.
Which of the following applicants would the insurance charge a higher rate of premium and not violate regulations regarding unfair discrimination?
an applicant who is a smoker
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
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?
attending physician statement
In group life policies, individual certificates are given to
each insured person
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an?
modified endowment contract
an individual buys a flexible premium deferred life annuity with 20 year period certain what would his
payments for 15 years
a domestic insurer issuing a variable contracts must establish one or more
separate accounts
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 amounts steadily declines throughout the duration of the contract
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?
$100,000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in a auto accident, and after 10 weeks of hospitalization, died from the injuries. How much will the beneficiary receive from the policy?
$200,000
If an insurance company sends e-mail solicitations to potential customers, and if a customer chooses to opt out of the list, then how much time will the company have to remove the person from solicitation lists
10 days
An insured just died. The insurance beneficiary promptly sent the insurer proof of death. According to Arizona law, this insurer may now establish a period of time during which the settlement will be made. What is the greatest amount of time the insurer can mandate for this particular period?
2 months
Annuities or pure endowments contracts have a grace period of at least
30 days
If the owner of a whole life policy, who is also the insured, passes away at age 80 with no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
A full death benefit.
According to the replacement rule replacement of life insurance is defined as a process in which
A new policy is brought and an old policy is converted to a Reduced Paid-up policy
What type of life insurance is most commonly used for group plans?
Annual renewable term
Which of the following is NOT true of Section 1035 Policy Exchanges
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.
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 partner. What type of insurance policy may be used to fund this agreement?
Any from of life insurance
Which of the following Provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specific level
Bail-out
All of the following information about a customer must be used in determining annuity suitability EXCEPT
Beneficiary's age.
Which of the following is owned by a corporation to serve that organization's needs at lower rates than would otherwise be available with commercial insurance?
Captive insurer
what term best describes the act of withholding material information that should be crucial to an underwriting decision
Concealment
Where would the underwriter find relevant information not presented by the applicant on the insurance application but communicated by the producer?
Conditional receipt
What characteristic makes whole life permanent protection?
Coverage until death or age 100.
Which of the following will not be appropriate use of a deferred annuity
Creating an estate
Which of the following would be the beneficiary in credit life insurance?
Creditor
Who requires that a prospective producer take and pass a written exam on the kinds of insurance business specified in the application?
Director
A producer Agent must do all of the following when delivering a new policy to the insured EXCEPT?
Disclose commissions earned from the sale of the policy
The following are all causes for the insurance director to suspend or impose conditions upon the continuance of a producer's license except?
Evidence that the producer is a poor personal credit risk.
Items stipulated in the contract that the insurer will not provide coverage for are found in the
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.
If a beneficiary wants a guarantee that benefits paid for a principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
What required provision protects against unintentional lapse of the policy?
Grace period
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 wants 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
An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceases the insured.
A producer is in the Army Reserves and is called into active military service. She makes a request that her license be placed on inactive status while she is away. The written statement she provides must have all of the following information except? (7)
Information about next kin or spouse
What are the two components of a universal policy?
Insurance and cash account
Which of the following statements regarding HIV testing for life insurance purposes is not true
Insurers are barred from requesting HIV testing.
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
Interest only
Which of the following statement is true about a policy assignment?
It transfers rights of ownership from the owner to another person.
Which of the following statements best describes the effect the Accelerated benefit provision would have on the benefits paid to the beneficiary?
It will decrease the benefits paid to the beneficiary
Which of the following statements is true concerning Accidental Death Rider?
It will pay double or triple the face amount.
Which of the following best describes the MIB
It's a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT
Other Insurance Coverages.
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.
Payments for 15 years