Life insurance

a person who willfully engages in an unfair claims practice or unfair method of competition must pay the commissioner how much?

$1,000-$5,000 for each violation

any licensee who fails to keep adequate books and records may have their license suspended for how long

1 to 6 months

the commissioner must give how many day notice of all hearings?

10 days written notice

modified endowment contracts (MEC) have what percentage IRS penalty for premature distribution

10%

IRs levies a ______ % penalty for cash surrenders on annuities, IRA, TSA and Keogh pans prior to age _____ unless the individual has died or become disabled.

10% 59 1/2

premature distributions may be made to a first-time homebuyer from an IRA without incurring a

10% penalty, subject to a lifetime dollar limit

a temporary license is good for how many days?

180 days

what is the prelicensing education requirement?

20 hours for each license

what is the continuing education requirement?

24 hours every 2 years. 3 hours must be ethics

replacement policies must contain a how many day free look period?

30 day free look

the commissioner serves how long in office?

4 years

copies of all records related to viatical statements must be kept for ___ years

5 years

paperwork related to completion of continuing education must be kept for how long?

5 years

records related to replacement life policies must be kept on file for how many years

5 years

an agent can share up to what percentage of their commission with another agent? Does the other agent have to be appointed by the paying insurer?

50% No

if a serving spouse inherits an IRA they myst start withdrawals no later than

April 1st of the year they reach age 72

person who knowingly obtains information about an individual from an or insurer under false pretenses is guilty of a

Class 1 misdemeanor

a person who commits a fraudulent act in connection with a viatical settlement is guilty of what type of felony

Class H felony

a person who attempts to obtain anything of value from another by false pretenses with the intent to cheat or defraud is guilty of a

Felony

All authorized life and health insurers must participate in what association?

Life and health insurance guaranty association

any question on an application used for ____ must be clearly marked as such

Marketing or research

selling insurance for an insurer a agent thought was property licensed but was not is a

Misdemeanor

a person who knowingly presents a fraudulent claim to an insurer is guilty of

a felony

an insurance agent who embezzles a clients monies is guilty of

a felony

a cashs urgenter where the amount received is more than the amount paid in premiums would cause

a taxable event

an insurer with a home office in another country

alien insurer

deferred annuities may be used to fund

an IRA

an Insurance contract is

an agreement between the insurer and the insured

an insurance company transacting business in North Carolina without a license is

an unauthorized insurer and is unlawful

IRAs may be funded with ________ but not with

annuities, whole life policies

premature distribution penalties are not waived due to

bankruptcy

in order to obtain an agents license one must...

be 18 years old, pass examination, complete pre-licensing training, be a good person, pay fees, submit an application to the commissioner

requiring that a borrower buy insurance as an condition to a loan is

coercion

when a clients funds are deposited with the general funds is

commingling

if an agents license is suspended or revoked it must be returned to?

commissioner

whenever an insurer knows that a person has violated the fraudulent claims provisions it is that persons duty to notify the

commissioner

every licensee myst report any change in residence or email address to ____________ within ____________ days. penalty for violating this requirement is a __________ administrative fee paid to _______________

commissioner, 10, $50, commissioner

if licensee is convicted in any court for any fine other than traffic violation, the licensee must notify who? how much time?

commissioner, within 10 days of the conviction date

Roth IRA are different from traditional iras in these ways

contributions are not tax deductible, but distributions are tax free do not have any required distribution rate

a licensed resident agent or broker doesn't need to __________ an application on behalf of a nonresident agent or broker

countersign

contributions to a traditional IRA will always be tax deductible if an individual and spouse arent

covers by a retirement plan at work

a limited representative could sell what?

credit life, travel accident or dental services coverages

an insurer with a home office in this state

domestic insurer

intimidating or discouraging a claimant from seeking legal advice would be a violation of

ethical standards

selling insurance for an insurer that is not properly licensed in North Carolina is a

felony

an insurer with a home office in another state

foreign insurer

premature distributions made from a deductible IRA from qualified educational expenses are exempt from

from the 10% penalty, not exempt from income tax

failure to pay child support, use of fraudulent practices and making an untrue statement on the license application are all

grounds for license suspension, revocation or refusal

if the commissioner finds that their is sufficient evidence to charge a person with a. criminal violation, what may they do?

have the person arrested

Terminally ill

having a sickness or illness that results in death in 24 months or less

an agent represents

insurer

MEC lose their favored tax treatment as life insurance since the IRS considers them to be

investments

if an insurance licensee is convicted of a criminal violation, what happens?

license is automatically suspended

viatical settlement providers and brokers must be

licensed

what would cause the 7 pay test to be applied again, and cause the policy to be classified as a modified endowment contract?

making a material change to a cash value life insurance policy

an agent who signs a blank policy is guilty of

misdemeanor and may be fined from $1,000 to $5,000

Unfair trade practices specific to North Carolina are

misrepresentation and false advertising of policies, defamation false financial statements, unfair discrimination, rebates and twisting

MEC stands for

modified endowment contracts

in the case of insurance applications, notice must be provided when?

no later than the policy delivery date when personal information is only collected from the applicant or public records or when personal information is collected from a source other than the applicant or public records

the direct transfer to Ira funds from one trustee to another is not

not taxable

dividends which are paid out by mutual insurers are not

not taxable to the policy owner

a person who willfully misstates information in any financial statement is guilty of

perjury

if an individual submits a written request for access to recorded personal information , the insurer must

permit the individual access to such information within 30 days

insurers may not discriminate against and applicant because of

race, color or national or ethnic orgin

offering a client something of value that is not specified in the policy is

rebate and illegal

an insurer cannot require that the insured use a ______ ________ for the repair of property damage

specific source

a person holding a resident insurance license moves out of state that person must

surrender their license to the commissioner within 30 days of terminating residence

a broker represents

the insured

a person who acts without the proper license may be deemed guilty of a misdemeanor and fined how much? how often?

$1,000-$5,000, each day violation occurs

the commissioner may order the payment of a monetary fine of __________ instead of _____________________________ a persons license

$100 and $1000 suspending or revoking

giving a special advantage as an inducement to buy insurance is

prohibited

distributions from a Roth IRA are not taxable if

the participant held the contract for at least 5 years and is at least age 59 1/2

in order to obtain a brokers license, the applicant must maintain a bond of how much?

$15000

a person who violated a cease and desist order may be fined up to how much?

$50,000

a producer that initiates an application must submit what to the insurer? to see what?

a statement signed by both the producer and the applicant, as to whether the applicant has existing policies or contracts

the commissioner is required to investigate all domestic insures how often

at least once every 5 years

the commissioner is required to report any violation of insurance law to who?

attorney general

a person holding a nonresident ,license that moves into the state is allowed to apply for a resident license without needing to

take relicensing training or pass the examination, as long as they apply within 90 days of establishing legal residence in the state.

Death benefits paid to beneficiaries are

tax free on all life insurance

surrending a life insurance policy for cash and using the proceeds to buy new life insurance policy from a different insure is a

tax-differed 1035 exchange

on cash surrender of a life insurance policy, amounts received in excess of premiums paid in are

taxable

dividends received by the owner of stock in a stock company are

taxable as ordinary income. dividends are never taxed as capital gains

MEC that is classified as life insurance but fails the 7-pay test would have

taxable loans and withdrawals

business may be conducted under an assumed name so long as

the commissioner is notified of the assumed name prior to use

when an insurer will be collecting personal information from a source other than the applicant or public records, the applicant must be advised as to the insurers information practices no later than when?

the date when personal information is collected

MEC are classified that way for how long?

the life of the contract

the commissioner of insurance is elected by

the people of North Carolina

the commissioner is required to review what reports of the insurers

their annual report filings

what will happen to a persons license who is not in compliance with continuing education requirement? how can it be reinstated?

their license will lapse proper completion of education within 120 days of the persons previous compliance year.

using blindness or deafness as an underwriting factor is

unfair discrimination

unfair trade practice include

unfair methods of competition, unfair or deceptive act or practices and unfair claims settlement practices

upon written request for access to recorded personal information, the insurer or agent must what?

within 30 business days inform the individual of the nature of the information and permit the individual to receive a copy of it

insurers and agents must provide ______ to all applicants or policyholders

written notice of information practices

universal life is a combination of

1 year renewable term and a cash value

whole life and limited pay life both reach maturity at the same age which is

100

limited pay whole life policies do not mature until the insured reaches age

100 years

in a noncontributory plan, how many employees must participate?

100% of all eligible employees

life insurance polices are incontestable after they have been in force for how long?

2 years

suicide is covered after how many years for the beneficiary to receive benefits?

2 years

ordinary life insurance has a grace period of how many days?

30 days

conversion from a group life policy to an individual policy is permitted for how many days

31 days regardless of health

in a contributory plan how many employees must participate?

75% of all eligible employees

failure to repay a loan will have a permanent effect on what?

Cash value accumulation

when a policy owner lists a group of people as beneficiaries it is know as what kind of designation?

Class designation

life insurance proceeds create an immediate ________ for the beneficiary

Estate

to sell variable products, an agent must be registered with

FINRA

what annuity has the least amount of risk?

Refund annuity

universal life benefits are

Transparent (stand alone)

the waiver of premium rider does not pay?

a cash benefit to the insured

policy modifications must be in writing and signed by who?

a company officer

fixed annuities guarantee what? backed by who?

a fixed rate of return and are backed by the state guaranty fund

a flexible premium fixed deferred annuity has

a flexible premium, minimum guaranteed rate of return and a death benefit equal to its cash value

a defined benefit qualified plan is structured based on what?

a pre-determined benefit amount

what is the name of the assignment that allows the policy owner to transfer their ownership to another person?

absolute assignment

this rider will pay proceeds prior to death for those with terminal illness

accelerated benefits rider

if the insured has misstated their age on the policy application, the insurer will do what?

adjust the premiums and benefits according to correct age of the insured

group insurance participation requirements help to avoid what

adverse selection

partial surrender are usually allowed in what policies?

annuities, universal life and variable life policies

a loan may be taken from a whole life policy as soon as when?

as soon as it develops a cash value

the face amount of a mortgage protection life insurance policy will decrease at the same rate as what

at the same rate as the mortgage balance declines

coverage requirement in a qualified plan is

broad range of employees

whole life benefits are

bundled

how are deferred annuities purchased

by making periodic payments over a period of time

if the insured names an individual as their irrevocable beneficiary how can they change it?

cannot change without the beneficiarys consent

in group life insurance, the employees receive _____________________ which summarizes coverage and lists the employees beneficiary

certificate of insurance

this rider is utilized by an employer who wants to transfer a key person life insurance policy from on key person to another

change of insured rider

what assignment lets owners. of life insurance policies temporarily assign their policy to a bank as collateral for a loan?

collateral assignment

this beneficiary will receive the policy proceeds if the primary beneficiary dies before the insured

contingent beneficiary

under this provision, it is assumed that the insured died last

contingent beneficiary

convertible term is

convertible based upon the current or attained age of the insured

Although Keogh plans are available to self-employed sole proprietors, partners, and their employees, its not available to

corporate officers

when adding a children's term rider to a life insurance policy, all of the insured children are

covered for a single, flat premium charge, no matter how many

what type of policy is used to provide credit life insurance

decreasing term

A plan where a employee forgoes current pay in exchange for future benefits is known as a

deferred compensation plan

employers may use annuities to fund what

deferred compensations plan, not corporate pension plans

when can a deferred annuity be surrendered

during its accumulation period

If the insured understates their age, it is ____________ that is reduced

face amount

a combination policy that automatically covers all family members including new born children at no extra premium charge is

family policy

if an annuitant selects a pay-out option that will pay for a specified period of time, the annuitant has seated what option?

fixed-period option

universal life have premiums that are

flexible

universal life offers

flexible premiums and a minimum guaranteed rate of return

adjustable whole life policy may be suitable for someone with what type of income

fluctuating

new life insurance policies are contestable for material misrepresentation for how long

for the first 2 years

extended term is the automatic

forfeiture option

fixed annuities go into what kind of account

general account

whole life policies must contain a table that shows their

guaranteed cash value at the end of each year for the first 20 years

guaranteed purchase benefit is also know as

guaranteed insurability rider

this riders allows the insured to increase coverage periodically without a physical exam

guaranteed insurability rider

variable products have no guarantees and are not backed by who

guaranty fund

an irrevocable beneficiary has what type of rights over the policy

has a vested interest in the policy

a single premium policy has what type of cash value

immediate cash value

an immediate annuity begins paying out when?

immediately after the initial premium is paid

upon policy reinstatement what 2 clauses start over

incontestability and suicide

on a annually renewable level term policy, the premium will

increase every year, the face amount remains the same

the return of premium rider and the return of cash value rider are both what types of term coverage

increasing term

the rate of return an insurer pays on fixed annuities might not keep up with what

inflation

all annuities are

insurance products

universal life insurance is also known as

interest sensitive whole life

if an outstanding policy loan, plus interest, exceeds the cash value of the policy what will happen to the policy?

it will lapse

the death benefit on an annuity during the accumulation period is equal to what

its cash value

straight or traditional whole life have what type of premium?

level premium that will provide coverage to age 100

this rider is added to a parents life policy in order to insure that child

level term rider

in a level term policy the premium and the amount of coverage are

level throughout the term

annuities are the opposite of

life insurance

endowments provide

life insurance protection

annuities are often used as what?

life insurance settlement options

annuities systematically

liquidate an este over a period of time

credit life is usually not used for what protection

mortgage protection

decreasing term is the type of insurance provided in

mortgage redemption insurance

Are policy loans taxable?

no

can a group be formed just to buy insurance?

no

can a life insurance policy that was surrendered for cash be reinstated?

no

if the owner of a 10 year period certain dies 13 years later will the beneficiary receive anything?

no

what kind of benefits will a beneficiary receive for a suicide occurring in the first 2 years

no benefit is payable, but all premiums are refunded

a revocable beneficiary has what type of rights over the policy?

no vested rights under a life policy

does a life income annuity have a beneficiary? how risky is this choice?

no, it is the riskiest choice

If a policy with a cash value lapses for nonpayment, the client has 60 days from the Premium Due date to select this?

nonforfeiture

in group life insurance benefits ________ taxable to the beneficiary should the employee die

not

premiums paid for individual life insurance and key person life insurance are

not tax deductible nor are the benefits taxed

survivorship life insurance is commonly used in estate planning to the death benefit of the policy can be used to

pay estate taxes when due

if an insured buys a policy and dies one month later, the insurer must

pay the claim

when the parent paying the premium on a Childs life insurance policy dies, the provision that allows the premium to be waived is what?

payor benefit rider

this annuity pays remaining benefits to beneficiary after policy owners death

period certain annuity pay-out option

No notice is required in connection with a policy renewal if

personal information is collected only from the policyowner, from public records or a notice was given within the previous 24 months

term insurance is renewable without

physical examination, up to a certain age.

offering an applicant shares of stock in the company as an inducement to buy is

prohibited

if an insured whose policy has lapsed wants it back the insured can apply for what?

reinstatement

most annuities are used for what

retirement, long term investments

this type of beneficiary can be changed at any time

revocable beneficiary

if the policy proceeds are paid out in a lump sum, this clause will not apply

spendthrift

life annuity start or stop making payments at death?

stops at death

joint life annuities start or stop making payments at death? 1st or 2nd person?

stops at the first death

life insurance e policy owners who gift their policies to a charity are entitled to

tax deduction in the year of the gift

this rider is added to a parents policy to cover the life of a child, which terminates at age 18 unless the child converts the rider to permanent coverage.

term life rider

the automatic premium loan rider can be added to a whole life policy but not to what policies?

term or credit life policies

if an insured dies during the accumulation period of an annuity what happens

the account value will be paid to the beneficiary who is responsible for taxes on interest earned

policy limits on credit life cannot exceed what

the amount of the loan

on group credit life, who is the policyholder and who is the beneficiary

the creditor is both the policyholder and the beneficiary

what decreases on a decreasing term policy

the face amount

adjusting the premium paid on an adjustable who life policy will affect what

the face amount and vice versa

when an insured dies during the grace period without paying the premium due, what will get paid to the beneficiary

the face amount minus the overdue premium

a joint life policy pays out when

the first insured dies

if a terminated employee dies within the grace period of their employer provided group life policy without converting, how much will the beneficiary get?

the full death benefit will be paid to the beneficiary

a life insurance policy provision that allows coverage to continue even if the premium is not paid on time is know as

the grace period

the misstatement of age provision runs for how long?

the life of the policy

who is responsible for paying the premium

the owner of the annuity

a joint surveyor policy pays out when

the second insured dies

survivorship life pays when

the surviving insured dies

children cannot buy an IRA uness

they have earned income

if the commissioner denies an initial application for an agent, what can the applicant do?

they may request a review within 30 days of receiving notification of denial

if a person purchases a whole life policy and adds a return of premium rider what kind of coverage will they have?.

they will have level coverage from whole life policy and increasing coverage from the rider

insurers take the money from annuitants who die to soon and pay it to who

those who live too long

what is the purpose of insurance information and privacy protection act>

to establish standards for the collection and use of information gathered by insurers and agents

_____ is not an unfair claims settlement practice

twisting

making a statement misrepresenting or incompletely comparing the terms of any policy to induce a policyholder to drop an existing policy is

twisting

in a traditional whole life policy how long are premiums due

until age 100

the free look period starts when?

upon policy delivery

a life insurance policy that invests its cash values in equities is known as

variable life

a life insurance policy that has a flexible premium and allows the policy owner to self-direct their cash values into equities is known as

variable universal life

a universal life policy that has an investment component is

variable universal life

a rider that will pay the premium on behalf of a disable insured until the insured either recovers or dies

waiver of premium rider

the owners right section of a policy state what?

who can change the beneficiary, who can take a loan, and who can take cash surrender

term insurance may be converted to

whole life, but not the reverse. conversion based on insureds attained age

taking a partial surrender on a universal life policy allows the policy owner to do what

withdraw some of the cash value without paying tax on the interest

if the interest settlement option is selected is it subject to taxes?

yes