Life Exam CH 8
Domestic insurance companies must be audited or examined by the Commissioner or Superintendent of Insurance on a regular basis in order to determine which of the following?
Insurer solvency
A life insurer's promise to pay the death benefit is found in which of the following provisions?
Insuring provision
Which of the following is true regarding dividends paid by a permanent life insurance policy?
Interest earned on dividends is taxable
If a life insurance policy becomes a modified endowment contact, it may revert back to an ordinary life policy within:
It is not allowed to revert back to an ordinary life contract
Which of the following statements is true regarding a market value adjusted annuity?
It is not linked to an index
Jack wishes to buy life insurance on his eighteen year old son. Who must sign the application?
Jack and his son
Which of the following agency names may be used by a licensee who wishes to open his or her own office?
John J. Smith Insurance
Some life insurance policies may cover more than one individual. A life insurance contract which insures two or more individuals with the proceeds paid upon the death of the first to die is known as a:
Joint life policy
Arthur signed an application for a $200,000 life insurance policy on June 12th and took a required medical exam on June 14th. He gave the producer the initial premium and received a conditional receipt at the time of application. The home office approved the policy and sent it to the producer on June 29th and the producer delivered the policy to Arthur on July 2nd. Arthur's insurance protection actually began on:
June 14th
Each of the following is an unfair or illegal sales practice, EXCEPT:
Disclosure
The primary purpose of the Medical Information Bureau (MIB) is to:
Discover misrepresentation and fraud
A direct writing insurer markets insurance policies through:
Employees who are licensed as captive producers
When a producer collects premiums from an insured and commingles them with his or her personal funds, which of the following has occurred?
Larceny
Which of the following annuities promises to pay the annuitant monthly income for life with no minimum guaranteed amount of payments?
Life annuity
Which of the following types of insurance companies is incorporated without capital stock or shares?
Mutual insurer
Which of the following types of insurers issues participating life insurance policies?
Mutual insurer
A salary continuation plan is also referred to as a:
Non-qualified deferred compensation plan
Which of the following risk classifications is characterized by a lower annual premium?
Preferred risk
The insured's consideration in a life insurance contract is the:
Premiums paid and statements made
All of the following are dividend options available in a participating life insurance policy, EXCEPT:
Reduced paid-up insurance
When an insured dies, his or her beneficiary may select any of several settlement options in which to receive the policy proceeds. Each of the following is an available life insurance settlement option, EXCEPT:
Reduced paid-up insurance
Which of the following is not a dividend option?
Reduced paid-up insurance
An agent fills out an application but neglects to list the beneficiary designation. What will the insurer do when it receives the incomplete application?
Return the application to the agent
Group plan sponsors may include all of the following, EXCEPT:
Self-employed individuals
Which of the following policies is best suited to provide funds to pay for taxes due and other administrative expenses with regard to a deceased's estate?
Survivor life insurance
Each of the following is a form of risk classification utilized by life or health insurance underwriters, EXCEPT:
Tabular risk
Jerry has a whole life policy with a death benefit of $100,000. The cash value that increases each year is:
Tax-deferred
The waiver of premium rider, when added to a life insurance policy, would provide coverage in which of the following circumstances?
The insured suffers a total disability lasting eight months
All of the following statements are TRUE concerning a cease and desist order that's violated by an insurance producer or agent, EXCEPT:
The producer may have his insurance license revoked without a hearing.
Ray has a life insurance policy with a waiver of premium benefit. If he becomes disabled for a lengthy period of time, the insurer will begin to waive the premium in which of the following months?
The seventh month following the onset of the disability
Bill purchases an annuity contract that guarantees a 4% return. The index to which the funds are tied only receives 3% this year. What return does Bill receive?
4%
Which of the following is provided to an applicant when a premium is collected along with an application for life insurance?
A conditional receipt
Which of the following licensed individuals may provide insurance advice to a customer for a stipulated fee?
A consultant or adviser
Which of the following best describes an organization that offers life insurance products to its members only?
A fraternal
An Individual Retirement Account (IRA) provides a mechanism for a person to set aside funds for retirement. Each of the following is true regarding an IRA, EXCEPT:
A penalty is assessed for withdrawals after age 59 1/2
Twisting is a form is misrepresentation. Which of the following is considered a form of twisting?
A producer makes an illegal inducement to influence the surrender of a policy
If an applicant for life insurance is considered a substandard risk by an insurer but still insurable, the insurer will probably take which of the following actions?
Accept the risk and charge an extra premium
Which of the following does not provide a living benefit?
Accidental death rider
A single-premium immediate annuity has no:
Accumulation period
Term life insurance may be converted at any time without proof of insurability. All of the following statements pertaining to the conversion privilege of group term life insurance are correct, EXCEPT:
An insured employee must convert to the same type of term life coverage as was provided under the group plan
An insurer must provide to each insured a confidentiality statement with regard to privacy issues within which of the following time frames ?
Annually
If no premium is paid with an application for life insurance, what responsibilities does a producer possess when the policy is delivered?
Collect the premium and a statement of continued good health and issue a premium receipt
Which of the following is not a penalty assessed a producer who engages in an unfair sales or marketing practice ?
Community service
An individual has applied for life insurance and given the producer the initial premium. The producer provides the applicant with a receipt which specifies that the individual is covered immediately for 60 days from the date of the application. Which type of receipt was issued?
Unconditional
Which of the following insurance plans allows the policyowner to increase coverage every year?
Universal life
Non-forfeiture options provide a policyowner with all, EXCEPT:
Using the cash value to fund the automatic premium loan
If an insurance company issues a health insurance policy based upon an incomplete application, it has unknowingly engaged in a:
Waiver
Once an application for coverage is completed it is forwarded to the insurer by the producer. If the application is sent to the company without any premium, this can be described as:
An invitation
A testimonial used in an advertisement for an accident and health insurance plan must:
Be genuine and represent the author's current opinion
Which of the following are not generally governed by replacement regulations?
Group life insurance
A rider is an additional attachment to a life insurance policy and can provide a benefit or restrict coverage. Which of the following is true regarding the following life insurance policy benefit riders?
Guaranteed insurability provides the insured with the option to purchase additional amounts of insurance without a medical exam
A life insurance dividend may be paid on a participating policy. Which of the following dividend options can be used when the policyowner is interested in minimizing his outlay of funds?
Reduce the premium
John owns a whole life policy that pays a yearly dividend. If John decides to utilize the dividend to decrease his out-of-pocket funding, he has selected which of the following?
Reduce the premium
Mutual insurers issue participating policies which in turn may pay dividends. Which of the following is a dividend option provided to the policyowner of a "par" policy?
Reduce the premium
If an annuity contract owner dies during the pay-in phase and prior to the pay-out phase, the beneficiary will receive the greater of the accumulated value of the annuity or the amount of contributions. Any amount received in excess of premiums paid is:
Taxable as ordinary income
Which of the following entities possess the ability and authority to revoke the insurance license of a producer?
The Department of Insurance
Which of the following protects a consumer's right to privacy by ensuring that underwriting data is kept confidential and accurate?
The Fair Credit Reporting Act
An annuity grows tax-deferred during:
The accumulation period
Which of the following statements best describes the entire contract provision?
The entire contract provision states that the whole life contract consists of the policy, a copy of the original application and all other amendments, endorsements or riders
Insurers utilize several sources of information in order to make underwriting decisions. Each of the following are important underwriting factors, EXCEPT:
The initial premium paid
