Life and Health Licence Test 1
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? O Claim will be denied O Claim will be paid in full O Claim will be partially paid O Claim will be decided by an arbitrator
O Claim will be denied
In Georgia, which of the following is considered an Unfair Trade Practice? O Replacement O Coercion O Aleatory O Subrogation
O Coercion
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan? O Revocable assignment O Beneficiary change O irrevocable assignment O Collateral assignment
O Collateral assignment
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan? 0 30% 0 40% 0 50% 0 60%
50 %
If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have? Noneligible Noncontributory Eligible Contributory
Contributory
How are Roth IRA distributions normally taxed? O 10% penalty tax is applied O Taxed as ordinary income O Capital gains tax is applied O Distributions are received tax-free
Distributions are received tax-free
All of these are characteristics of an Adjustable Life policy, EXCEPT: O adjustable premiums O adjustable premium payment period O combination of term and whole life insurance O face amount can be adjusted using policy dividends
Face amount can be adjusted using policy dividends
What is an organization that solicits insurance only to its members? O Nonadmitted company O Mixed company O Captive society O Fraternal benefit society
Fraternal benefit society
All of these statements about the Waiver of Premium provision are correct, EXCEPT O A waiting period must pass before becoming eligible for benefits O Waiver of Premium is available on both permanent and term insurance policies O Insured must be eligible for Social Security disability for claim to be accepted O Insured must be totally disabled to qualify
Insured must be eligible for Social Security disability for claim to be accepted
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT: Fixed Period Interest Only Fixed Amount Life Income
Interest Only
W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n): O Flexible Premium Deferred annuity O Variable annuity O Immediate annuity O Straight Life annuity
O Immediate annuity
What is the purpose of the U.S.A. Patriot Act? O detect and deter fraud O detect and deter alien insurance companies O detect and deter terrorism Odetect and deter misrepresentations
detect and deter terrorism
Traditional individual retirement annuity (IRA) distributions must start by: O age 59 1/2 O age 65 O April 1st of the year following the year the participant attains age 59 1/2 O April 1st of the year following the year the participant attains age 70 1/2
O April 1st of the year following the year the participant attains age 70 1/2
What action can a policyowner take if an application for a bank loan requires collateral? O Utilize accelerated benefits provision O Borrow against policy cash value and use as a down payment O Assign policy ownership to the bank O Name bank as beneficiary
O Assign policy ownership to the bank
Who is NOT required to sign a life insurance application? O Adult insured O Policyowner O Agent O Beneficiary
O Beneficiary
Which statement about a whole life policy is true? O Beneficiary may be changed only with the consent of the premium payor O Death benefit can usually be adjusted O Cash value mav be borrowed against O Premiums are flexible
O Cash value mav be borrowed against
S is covered by a whole life policy. Which insurance product can cover his children? O Assignment provision O Payor benefit O Accelerated benefit rider O Child term rider
O Child term rider
Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to file for Social Security disability benefits? - 3 - 4 - 5 - 6
- 5
Which statement regarding the misstatement of age provision is considered to be true? O Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered O Requires that a New policy must be applied for a misstatement of age is found on the current policy O Misstatement of age provision is valid only during the contestible. O Insurer may void the policy if a misstatement of age is discovered.
- Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
In order for coverage on a nonmedical insurance application to take effect of the same day to producer and must collect a signed application and... O A medical information report O The initial premium O Forward it immediately to the insurer O Attending physician statement
- The initial premium
In Georgia, an insurance company must notify the Commissioner within____days to terminate an agent's appointment. 30 45 60 90
30
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? 10% 20% 30% None
None
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of: O $10,000 O $7,500 O $5.000 O $2,500
O $10,000
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a: O $125,000 individual whole life policy O $25,000 modified whole life policy O $25.000 individual term life policy O $25,000 individual whole life policy
O $25,000 individual whole life policy
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? O $100,000 O $50.000 O Refund of premiums paid plus interest O No claim will be paid because cause of death was from natural causes
O $50.000
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? O 30 Pay Life O Term to Age 70 O Universal Life O Adiustable Life
O 30 Pay Life
Which of these is an element of a Variable Life policy? O A fixed, level premium O Insurer assumes the investment risk O No investment risk to the policyowner O Rate of returns are guaranteed
O A fixed, level premium
Which of the following statements about noncontributory employee group life insurance is FALSE? O A minimum number of employees is required to participate O All eligible employees must be covered O No evidence of insurability required O Must have conversion rights
O A minimum number of employees is required to participate
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true? O is the policyowner, the insured, and the beneficiary O ABC is the policyowner, C is the insured, and ABC is the beneficiary O is the policyowner and the insured, and ABC is the beneficiary O ABC is the policyowner, C is the insured, and her husband is the beneficiary
O ABC is the policyowner, C is the insured, and ABC is the beneficiary
Which of the following is NOT included in an annuity contract? O Nonforfeiture benefit O Free-Look period O Beneficiary O AD&D rider
O AD&D rider
All are true statements regarding the underwriting process, EXCEPT: O Signed consent from the applicant must be provided in order to test for AIDS and HIV virus O AIDS and HIV virus exams can be conducted in a discriminatory fashion O The cost of any examination is paid for by the insurer O The original application is the primary source of information used in the underwriting process
O AIDS and HIV virus exams can be conducted in a discriminatory fashion
A policyowner may generate taxable income from which of the following Dividend Options? O Nonforfeiture O Cash O Accumulation at Interest O Reduced Premium
O Accumulation at Interest
Which of the following is considered to be misrepresentation? O Replacing an existing policy with a new one O An agent guaranteeing a policy's dividends O Sharing commissions with other licensed agents O Representing a foreign insurer
O An agent guaranteeing a policy's dividends
Which premium schedule results in the lowest cost to the policyowner? O Semi-annual O Monthly O Quarterly O Annual
O Annual
Which type of contract liquidates an estate through recurrent payments? O Universal life insurance O Whole life insurance O Annuity O 401(k)
O Annuity
When can a policyowner change a revocable beneficiary? O Anytime O After the consent of the current beneficiary O Never O Only it primary beneficiary dies
O Anytime
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? O Collect initial premium O Collect initial premium along with a signed health statement O Explain to the applicant the policy is no longer in effect due to change in health condition O Collect initial premium and leave a binding receipt
O Collect initial premium along with a signed health statement
A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company Xand begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed? O The employee's family O Company Y O Company X O The employee's estate
O Company X
T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? O Binding receipt O Conditional receipt O Warranty receipt O Backdated receipt
O Conditional receipt
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? O Entire contract O Owner's rights O Nonforfeiture options O Conversion
O Conversion
The combination of Whole Life and to as a Family Income Policy Term insurance is referred O Decreasing O Universal O Variable O Level
O Decreasing
How are surrender charges deducted in a life policy with a rear-end loaded provision? O Deducted from the death benefit O Deducted when the policy is discontinued O Deducted from policy's cash value O Deducted when assigned to another policyowner
O Deducted when the policy is discontinued
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? O Immediate O Retroactive O Deferred O Universal
O Deferred
A 45 year-old woman won $100,000 in a scratch-off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase? O Immediate Variable annuity O Immediate annuity O Deferred Fixed annuity O Variable annuity
O Deferred Fixed annuity
Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? O Each partner owns a $1,000,000 policy on their own life O Each partner owns a $1,000,000 policy on their partner's life O Each partner owns a $500,000 policy on their own life O Each partner owns a $500,000 policy on their partner's life
O Each partner owns a $500,000 policy on their partner's
What provision in a life insurance policy states that the application is considered part of the contract? O Application provision O Policy Exclusions provision O Entire Contract provision O Incontestability provision
O Entire Contract provision
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? O Misrepresentation O Exclusion O Collateral assignment O Concealment
O Exclusion
Term insurance has which of the following characteristics? O Expires at the end of the policy period O Builds cash value O Has nonforfeiture options O Endows at the end of the policy period
O Expires at the end of the policy period
What does a Face Amount Plus Cash Value Policy pay upon the insured's death? O Face amount plus the policy's cash value O Face amount plus the policy's dividends O The greater amount of the policy's death benefit or the cash value O Face amount plus total premium paid throughout the life of the policy
O Face amount plus the policy's cash value
Which Federal law allows an insurer to obtain an inspection report on a potential insured? O Medical Information Bureau Act O Freedom of Information Act O Fair Credit Reporting Act O Medical Information Act
O Fair Credit Reporting Act
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? O Family Lump Sum Policy O Family Maintenance Policy O Family Survivor Policy O Family Income Policy
O Family Maintenance Policy
In Georgia, an example of an alien insurer would be one that is incorporated in O Georgia O Florida O Puerto Rico O France
O France
In the state of Georgia, every policyowner must be offered which of the following? O Double money-back guarantee O Free-look period O Waiting period O Inflation rider
O Free-look period
What is considered a valid reason for small businesses to insure the lives of its major shareholders? O To provide an income for the surviving dependents O Reduce the company's tax liability O To pay for final expenses O Fund a buy-sell agreement
O Fund a buy-sell agreement
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? 0 20% of the funds are subiect to taxes 0 80% of the funds are invested in a separate account O If Tom's employment is terminated, 20% of the funds would be forfeited O If Tom's employment is terminated, 80% of the funds would be forfeited
O If Tom's employment is terminated, 20% of the funds would be forfeited
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? O If the primary beneficiary is a minor at the time of the insured's death O If the primary beneficiary dies before the insured O If the insured died of accidental causes O If the insured died of natural causes
O If the primary beneficiary dies before the insured
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following? O Critical illness O Terminal illness O Inability of the insured to perform more than 2 Activities of Daily Living (ADL's) O Inability of the insured to maintain insurance premiums due to unemployment
O Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in: O Only income tax on the amount withdrawn O Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan O Continued tax-free accumulations in the bank savings account O Only a 10% penalty on the withdrawal of funds
O Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over? O Only income taxes on $30,000 O Only income taxes on $24,000 O Income taxes plus a 10% penalty tax on $30,000 O Income taxes plus a 10% penalty tax on $24,000
O Income taxes plus a 10% penalty tax on $30,000
How does an indexed annuity differ from a fixed annuity? O Fixed annuity owners receive credited interest tied to the fluctuations of the linked index O Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index O Fixed annuity owners have a separate investment account O Indexed annuity owners receive annual dividends
O Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index
Which of these actions should a producer take when submitting an insurance application to an insurer? O Issue a binding receipt to applicant if no initial premium is submitted O Disclose to the applicant the amount of commissions to be earned on this transaction O Inform insurer of relevant information not included on the application O Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer
O Inform insurer of relevant information not included on the application
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? O Agent's report O MIB report O Inspection report O Attending physician's report
O Inspection report
If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? O Primary beneficiary's estate O Primary beneficiary's next of kin O Insured's estate O Insured's contingent beneficiary
O Insured's contingent beneficiary
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value? O Cash surrender O Life settlement contract O Buy-sell arrangement O 1031 Exchange
O Life settlement contract
Which of these is NOT relevant when determining the amount of personal life insurance needed? O Existing life insurance coverage O Local unemployment rate O Household income O Household debt
O Local unemployment rate
The entity whose sole purpose is sharing medical data among its member companies is called the O National Association of Insurance Commissioners (NAIC) O Medical Information Bureau (MIB) O State government O State Underwriting Association
O Medical Information Bureau (MIB)
A policyowner is allowed to pay premiums more than once a year under which provision? O Insuring O Consideration O Payor O Mode of Premium
O Mode of Premium
Which type of policy is considered to be overfunded, as stated by IRS quidelines? O Modified Whole Life O Modified Endowment Contract O Variable Universal Life O Interest-Sensitive Whole Life
O Modified Endowment Contract
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? O Variable Life O Adjustable Life O Graded Premium Whole Life O Modified Whole Life
O Modified Whole Life
Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy? O Notice to existing and replacing insurers of intention to replace O A list of all policies the agent has replaced in the last 3 years O A statement made by the agent that NAIC guidelines have been met during the replacement process O A copy of the agent's insurance license
O Notice to existing and replacing insurers of intention to replace
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? O Nonforfeiture O Entire Contract O Insuring Clause O Owner's Rights
O Owner's Rights
Which statement is TRUE in regards to a policy loan? O Past-due interest payments not paid after 3 months will void the policy O Past-due interest on a policy loan is added to the total debt O Insurance companies can send delinquent interest accounts to a collection agency O Insurance companies can charge an interest rate based on the policyowner's credit report
O Past-due interest on a policy loan is added to the total debt
Which of these statements concerning an Individual Straight Life annuity is accurate? O Life expectancy of the annuitant is not a factor O The payments are received tax-free O Only available to employees of nonprofit charitable, educational, and religious organizations O Payments are made to an annuitant for life
O Payments are made to an annuitant for life
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled? O Family Maintenance clause O Payor clause O Assignment provision O Automatic Premium Loan provision
O Payor clause
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? O Payor provision O Accelerated Benefits provision O Assignment provision O Waiver of Premium provision
O Payor provision
Which of the following best describes a contingent beneficiary? O Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured O Person designated by the primary beneficiary's executor to receive policy proceeds O Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies O Person designated by the insurance company to receive policy proceeds in the event that the primary beneficiary dies
O Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
Which of the following information is NOT required to be included in a Whole Life policy? O Policy's loan interest rate O Policy's quaranteed dividend table O Policy's premium O Policy's cash value table
O Policy's quaranteed dividend table
Who has the right to change a revocable beneficiary? O Beneficiary O Agent O Insurance agency O Policyowner
O Policyowner
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? O Portion of the premiums paid for by the employer may be a tax deduction O Portion of the premiums paid for by the employee may be a tax deduction O Portion of the death proceeds are taxable to the beneficiary O Portion of the death proceeds are taxable to the estate
O Portion of the premiums paid for by the employer may be a tax deduction
A policyowner is able to choose the frequency of premium payments through what policy feature? O Consideration O Payor benefit O Premium Mode O Assignment provision
O Premium Mode
Which of these characteristics is consistent with a Straight Life policy? O owner can adjust both premium and death benefit O Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract O Owner has the option of converting to term insurance O Premiums are payable for as long as there is insurance coverage in force
O Premiums are payable for as long as there is insurance coverage in force
Which of the following actions is NOT possible with a Universal Life policy? O Policy's cash value may be used to pay premiums O Premium payments may be made at unscheduled times O Premiums may be applied as a credit against income tax O Face amount may be adjusted
O Premiums may be applied as a credit against income tax
A Medical Information Report (MIB) report may disclose which of the following: O Prior preferred rating O Prior use of marjuana O Prior lapsing of policy O Prior bankruptcy judgement
O Prior use of marjuana
A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? O Proceeds will go to the primary beneficiary's estate O Probate will decide who receives proceeds O Proceeds will go to the contingent beneficiary O Proceeds will go to the insured's estate
O Proceeds will go to the contingent beneficiary
All of these are considered sources of underwriting information about an applicant, EXCEPT: O Inspection Report O Credit Report O Rating Services O Medical Information Bureau
O Rating Services
Which of these Nonforfeiture Options continue a build-up of cash value? O Waiver of Premium O Extended Term O Reduced Paid-Up O Cash Surrender
O Reduced Paid-Up
Which of the following is an example of a nonforfeiture option? O Conversion option O Reduced Paid-Up option O Inflation option O Guaranteed insurability option
O Reduced Paid-Up option
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? O Request will be accepted only it in writing by the insured O Change will be made only if premiums are paid current O Change will be made immediately O Request of the change will be refused
O Request of the change will be refused
A(n) beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary. O Revocable O irrevocable O Tertiary O Replaceable
O Revocable
Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? O Geographical location O Source of income O Risk classification O Marital status
O Risk classification
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? O Risk classification O Warranty review O Insurable interest O Inspection report
O Risk classification
Which of the following are Equity Indexed annuities typically invested in? O Corporate Bonds O Money Market accounts O Municipal Bonds O S&P 500
O S&P 500
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? 0 403(b) Plan O Deferred Premium O Single Premium O Period Certain
O Single Premium
Which of the following types of permanent life insurance policies offers the highest initial cash value? O Single premium O Limited pay O Straight whole O Interest-sensitive
O Single premium
Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary? O Split-dollar plan O Employer purchase plan O Key employee plan O Deferred compensation plan
O Split-dollar plan
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT: O Cash value has a minimum rate of accumulation O If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index O The premiums can be lowered or raised, based on investment performance O Tied to an equity index such as the S&P 500
O The premiums can be lowered or raised, based on investment performance
Why is an applicant's signature required on a life insurance application? O To attest that the statements on the application are warranties O To attest that the statements on the application are accurate to the best of the applicant's knowledge O To give Power of Attorney to the producer if needed O To attest that all statements on the application are guaranteed to be true
O To attest that the statements on the application are accurate to the best of the applicant's knowledge
Life insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation? O Federal Reserve Act O USA Patriot Act O Fair Credit Reporting Act O Dodd-Frank Act
O USA Patriot Act
A Variable Annuity has which of the following characteristics? O Underlying equity investments O Only available with Single Premium O Offers a fixed interest rate O Does not require an insurance license
O Underlying equity investments
In order to sell a(n) __________ Life policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA). O Variable O Adjustable O Straight O Term
O Variable
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? O Modified Whole Life O Variable Life O Universal Life O Adjustable Life
O Variable Life
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a quaranteed minimum death benefit? O Universal life O Variable life O Fixed annuity O Modified endowment contract
O Variable life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan? O Variable life O Universal life O Variable universal life O Adjustable life
O Variable universal life
Which parts of a life insurance policy are guaranteed to be true? O Rating O Representation O Statement O Warranty
O Warranty
When does a life insurance contract become effective if the initial premium is not collected during the application process? O After all medical and personal information has been evaluated O When insurer receives initial premium from the producer O When producer delivers policy and collects initial premium O After application has been approved by the underwriters
O When producer delivers policy and collects initial premium
A $20,000 life insurance policy application is completed, however the producer does not collect the initial premium. At what point does the coverage go into effect? O When the applicant receives the policy and pays the initial premium O When the MIB report is received O Upon a completed medical examination O Upon policy approval
O When the applicant receives the policy and pays the initial premium
At what point does a Whole Life Insurance policy endow? O At age 65 O When premium paid equals the death benefit O When the cash value equals the death benefit O In 30 years or age 65, whichever comes first
O When the cash value equals the death benefit
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? O Term Life O Whole Life O Credit Life O Universal Life
O Whole Life
What type of insurance offers permanent life coverage with premiums that are payable for life? O Credit Life O Renewable Term Life O Whole Life O Endowment
O Whole Life
Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase? O Endowment with Extended Term O Endowment with a Payor Benefit O Whole Life policy with an Other Insured Rider O Family Income policy
O Whole Life policy with an Other Insured Rider
A Return of Premium life insurance policy is: O a Nonforfeiture option O Whole life and Increasing term O interest-sensitive O Variable life
O Whole life and Increasing term
Someone who is appointed by an insurer to engage in insurance transactions is called a(n) O salesperson O agent O adjuster O an attorney-in-fact employee
O agent
Insurance companies that are organized in countries outside the United States are referred to as O domestic O alien O international O foreign
O alien
Group life insurance policies are generally written as: O a term rider O annually renewable term O increasing term O group whole lite
O annually renewable term
Under a Graded Premium policy, the premiums O are higher during the policy's early years O are lower during the policy's early years O are constant throughout the length of the policy O can be adjusted by the insured
O are lower during the policy's early years
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? O 10 year increments O at future dates specified in the contract with proof of insurability required O at future dates specified in the contract with no evidence of insurability required O at any time while policy is active
O at future dates specified in the contract with no evidence of insurability required
The incontestable clause allows an insurer to: O disallow a change of ownership throughout the Contestable period O disallow a change of beneficiary during the Contestable period O contest a claim at anytime if the cause of death was accidental O contest a claim during the Contestable Period
O contest a claim during the Contestable Period
What type of group insurance plan involves employees sharing the cost? O contributory plan O non-contributory plan O qualified plan O non-qualified plan
O contributory plan
A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the O inherent risk O commission rate O inflation factor O cost of insurance
O cost of insurance
T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company O does NOT have to make any further payments O MUST make full payments to the beneficiary O MUST make half-payments to the beneficiary O has the option to continue making payments based on what has already been paid out
O does NOT have to make any further payments
An example of an unfair claims practice would be O requesting a third-party arbitrator to resolve a disagreement O failing to effectuate prompt, fair, and equitable settlements of a claim O paying a claim promptly after receiving proof of loss O requiring the insured to give a statement under oath
O failing to effectuate prompt, fair, and equitable settlements of a claim
T is an agent and when hired, is reminded that he has a responsibility to handle clients' funds in an honest and ethical manner. This responsibility is referred to as O fiduciary responsibility O reasonable trust O ethical behavior O legal competence
O fiduciary responsibility
What kind of premium does a Whole Life policy have? O decreasing O adjustable O level O deferred
O level
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: O mandatory income tax withholding on the transfer amount O paying transfer fees O paying trustee fees O ever paying income taxes on the distributions
O mandatory income tax withholding on the transfer amount
Whole Life insurance policies are contractually guaranteed to provide each of the following, EXCEPT: O cash value that will ultimately replace the death benefit O nonforfeiture benefit options O premiums that remain fixed for the life of the policy O partial withdrawal features beyond a surrender charge period
O partial withdrawal features beyond a surrender charge period
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the: O cash value O estate of the insured O policy proceeds O nonforfeiture value
O policy proceeds
An agent would be guilty of rebating by O returning a portion of a premium as incentive to purchase insurance O cancelling a client's insurance policy without cause O selling direct marketing products O offering temporary insurance coverage
O returning a portion of a premium as incentive to purchase insurance
The premiums paid by an employer for his employee's group life insurance are usually considered to be: O tax-deductible to the employer O partially deductible to the employee Otax-deductible to the employee O taxable income to the employee
O tax-deductible to the employer
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and O a Medical Information Report O the initial premium O forward it immediately to the insurer O Attending Physician Statement
O the initial premium
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and O the initial premium O agreeing to a physical examination O delivery of policy O disclosure of any medical conditions
O the initial premium
A level premium indicates: O the premium is fixed for a period stated in the contract, then becomes variable O the premium can only be changed with the consent of the insurer O the premium stays level until the policy's renewal date O the premium is fixed for the entire duration of the contract
O the premium is fixed for the entire duration of the contract
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n): O underwriter O sole proprietor with insurable interest O third-party with no insurable interest O relative with insurable interest
O third-party with no insurable interest
An insurance agent is quilty of ___if the agent misrepresents a policy to induce a policyowner to surrender an existing policy. O coercion O twisting O sliding O misrepresentation
O twisting
Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period O may be altered by the policyowner O is controlled by the NAIC O is the same in all contracts O varies according to the contract
O varies according to the contract
P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to: O R's estate O Q's estate O P and Q's estate O P only
P only
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? O P cannot borrow against the policy's cash value while disabled O P will have to pay income taxes on the amount of premiums waived O P will still receive declared dividends O P cannot assign ownership of the policy while premiums are being waived
P will still receive declared dividends