Life Insurance

Under a 20 pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

for 20 years or until death, whichever occurs first

What provision in an insurance policy extends coverage beyond the premium due date

grace period

Which of the following named beneficiaries would NOT be able to recieve the death benefit directly from the insurer in the event of the insured's death

a minor son of the insured

Which of the following would provide an underwriter with information concerning an applicant's health history?

The medical information bureau

How often must the Comissioner examine rating organizations

every 5 years

A universal life insurance policy has two types of interest rates that are called

guaranteed and current

Concerning Juvenile Life insurance, which of the following statements is INCORRECT ?

juvenile life is classified as any life insurance purchased by a minor

Pertaining to insurance, what is the definition of a fiduciary responsibility

promptly forwarding premiums to the insurance company

The termination of martial property rights may be reversed for all of the following EXCEPT

the spouse named as beneficiary has obtained or consented to a final decree or judgement of an annulment, divorce or separation

insurers are required to give the insured converting to an individual policy notice of their conversion to an individual policy notice of their conversion privilege

15 days prior to group policy expiration

Which of the following is the term used when a person in a fiduciary position has used assests in manner for which they were not intended such as the wrongful taking or use of money belonging to another

misappropriation of funds

All of the following are licensing rewuirement for a business entity, EXCEPT

having all employees complete continuing education courses once every 2 years

All of the following employees may use a 403(b) plan for their retirement EXCEPT

the CEO of a private corporation

Which of the following is TRUE regarding variable annuities

the annuitant assumes the risks on investment

Events or conditions that increase the chances of an insured loss occuring are referred to as

hazards

Which of the following is NOT a goal of risk retention

to minimize the insured's level of liability in the event of loss

According to the Entire Contract provision, a policy must contain

A copy of the original application for insurance

Which of the following is the closest term to an authorized insurer?

Admitted

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of addtional assets to secure the loan. Which provision makes this possible?

Collateral assignment

An agent selling variable annuities must be registered with

FINRA

What required provision protects against unintentional lapse of the policy?

Grace period

Your clients employer does not offer a company wide annuity contract . What type of annuity contract could your client obtain?

individual

Which of the following is TRUE regarding the annuity period

it may last for the lifetime of the annuitant

Underlying assets for variable annuity contracts must be maintained in what type of account ?

separate account

An employee has group life insurance through her employer. after 5 years, she desides to leave the company and work independently. how can she obtain and individual policy

she can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

single premium whole life

All of the following are beneficiary designations EXCEPT

specified

Which of the following would help prevent a universal life policy from lapsing

target premium

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worder, it woud be an example of which legal concept?

Reasonable exceptions

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The fair credit reporting act

What do individuals use to transfer their risks of loss to a larger group

insurance

Which of the following is true regarding a single life settlement option

it provides income the beneficiary cannot outlive

All of the following are factors that an underwriter coukd use to select and classify risk except ?

national origin

Following a career change, an inusrer is no longer required to perform many physical activities, so he has implemented a program where he walks and jogd for 45 minutes each morninng. the insured has also eliminated most fatty foods from his diet. which method of dealing with risk does this scenario describe

reduction

An insured pay $1,200 annually for her life insurance permium. the insured applied this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. what option does this describe

reduction of premium

All of the following are true regarding a decreasing term EXCEPT

the payable premium amount steadily declines throughout the duration of the contract

all of the following are features and requirements of the Living Needs Rider EXCEPT

diagnosis must indicate that death is expected within 3 years

All other factors being equal, the least expensive first- year premium payment is found in

Annually renewable term

Which of the following is true about the mandatory 10 day free look in a life insurance?

It commences when the policy is delivered

Which of the following is NOT an example if insurable interest?

Debtor in creditor

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is greater amount

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client ?

limited pay whole life

what of the following licensees is classified as a representative of the insurance company and not allowed to represent an insured or claimant

producer

Which of the following is NOT true regarding the annuitant

the annuitant cannot be the same person as the annity owner

Which of the following is NOT a goal of risk retention ?

to minimize the insured's level of liability in the event of loss

the insured under $100,000 life insurance policy with a triple indemnity rider for accidental ddeath was killed in a car aaccident. It was determined that the accident was his fault. The triple indeminty 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 recieve

$100,000

Employer contributions made to a qualified plan

Are subject to vesting requirements

If a settlement option is not chosen by the beneficiary or policy owner, which option will be used?

Lump sum

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the federal government

Hazard is best defined as

Something that increase the risk of loss

All of the following are beneficiary designations EXCEPT

Specified

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim

What is the purpose of keys person insurance?

To lessen the risk of financial loss because of the death of a key employee

The paid up addition option uses the dividend

To purchase a smaller amount of the same tyoe insurance as the original policy

When a producer died, his surviving spouse needed to maintain the insurance agency until it could be sold. without testing, she could qualify for a temporary license for a maxium period if

180 days

For the purpose of examination by the department, insurers must keep a record of all financial files for at least...

5 years

if a licensed person is moving to Pennsylvania, he or she may become licensed as a resident if they submit a completed application within how may sayd of establishing residence in the Pennsylvania with proof of licensing from their prior home state

90

Which of the following best describes fixed period settlement option?

Both the priciple and interest will be liquidated over as selected period of time

What describes the specific information about a policy

policy summary

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy

they are tax free to terminally ill

Which of the following is NOT true regarding Equity Indexed Annuities

they earn lower interest rattes than fixed annuities

All of the following are requirements for the life insurance illustrations EXCEPT

they must be part of the contract

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

If a policy included a free-look period of at least 10 days, the buyer's guide may be delievered to the applicant

with the policy

If a policy includes a free-look period of at least 10 days, the Buyer's Guuide may be delivered to the applicant

with the policy

Equity indexed annuities

seek higher returns

An adjustable life policy owner can change which of the following policy features?

The coverage period

Which of the following is true about the mandatory 10- day free look period in a Life Insurance policy

it commences when the policy is delivered

if a settlement option is not chosen by the beneficiary or policy owner, which option will be used

lump sum

Which of the following is NOT true regarding the annuitant ?

the annuitant cannot be the same person as the annuity owner.

In a fixed annuity, which of the folllowing is true regarding the guaranteed interest rate on the investment ?

the annuitant will recieve the higher of either the guaranteed minimum rate or current rate

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur

the change must be reported to the Commissioner

Which of the following would provide an underwriter with the information concerning an applicant's health history

the medical information bureau

How long will the beneficiary recieve payments under the single life settlement option

until the beneficiary's death

All f the following are TRUE regarding the convertibility option under a term life policy EXCEPT

upon conversion, the death benefit of the permanent policy will be reduced by 50%

Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds

vacation travel expenses

At the time of initial licensing, what fee must a viatical settlement provider pay ?

$300

an employess quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she recieve from that plan administrator and how long does she have to complete the tax-free rollover

$8,000 60 days

If a viatical settlement provider transfers ownership of an insurance policy how, long does the insurer have to inform the insured of the change

20 days

A producer licensed in Pennsylvania must notify the Insurance Department of any change of address in his or her residence or business address within how many days

30

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

Option A

When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is the money placed?

The insurance company's general account

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

equity indexed annuity

An insured has had life insurance policy that he purchased 3 years ago when he was 40 years old. he is killed in an automobile accident and it is discovered that he is actually 45 years old, nd not 43, as stated on thr application. what will the company do

pay a reduced death benefit

Which of the following is NOT true about a joint and survivior annuity benefit option

payments stop among the first death of the annuitants

Once a mail-order solicitation has been fied, how long may it be used

2 years

When is the earliest a policy may go into effect?

When the application is sined and a check is given to the agent

A tornado that destroys property would be an example of which of the following

a peril

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. WHich of the following is true regarding taxation of the accelerated benefits

a portion of the benefit up to a limit is a tax free, the rest is taxable income

A provision in a life insurance policy that provides for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury is called

accelerated benefit provision

Which of the follwoing is the closest term to an authorized insurer

admitted

At times, it is possible for a life insurance agent to affect a savings of premium rates by backdating an application for life insurance. what is the maximum amount of time that an application may be backdated

6 months

The term "illustration" in a life insurance policy refers to

a representation of nonguaranteed elements of a policy

Which of the following types of agent authority is also called "perceived authority"

apparent

Which of the following protects the insured from an unintentional policy laspe due to nonpayment of premium

automatic premium loan

Which of the following features of the Indexed Whole Life policy is NOT fixed

cash value growth

What does "liquidity" refer in a life insurance policy

cash values can be borrowed at any time

When a policy owner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

classn designation

What happens when a policy is surrendered for its cash value

coverage ends and the policy cannnot be reinstated

If an insurer appoints a producer, which authority must be notified

department of insurance

When an employee terminates coverage under a group insurance policy, coverage continues in force

for 31 days

The mode of premium payment

is defined as the frequency and the amont of the premium payment

What is the main purpose of the Seven-pay test

it determines if the insurance policy is MEC

Which statement is NOT true regarding a Straight life policy

its premium steadily decreases over time, in response to its growing cash value

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that

joint life policy

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a join life poliy

lower

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military

military or service

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

not taxable since the IRS treats them as a return of a portion of the premium paid

All of the following are true regarding the guaranteed insurability rider EXCEPT

this rider is available to all insured s with no additional premuims

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated

those who have been insured under the plan for at least 5 years

Which of the following is the best reason to purchase life insurance rather than annuities

to create an estate

what is the person of key person insurance

to lessen the risk of financial loss because of the death of a key employee

Which of the following Life Insurance policies would be considered interest sensitive

universal life

An insured recieves a monthly summary for his life insurance policy. he notices that the cash value of the policy is significantly lower this month that it was last month. what type of policy does the insured have

variable

Which of the following products requires a securities license

variable annuity

The policy owner of an Ajustable Life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

the death benefit can be increased by providing evidence of insurability

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit

consumer report

The authority granted to an agent through the agent's contract is referred to as

express authority

An insured purchased a 15 year level term life insurance policy with the face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injurues. What amount would his beneficiary recieve as a settlement

$200,000

A rider attached to a life insurance policy that provides coverage on the insured's family members iss called the

Other-insured rider

What is the major difference between a stock comany and a mutual company?

Ownership

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation

human life value approach

How often may a viatical settlement provider contact an insured regarding the insured's health status if the insured's life expectancy is more than one year

once every 3 months

What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiarires

per stripes

An applicant wants to buy a policy that has a cash value element.. Which type should he buy

permanent

A producer has successfully has successfully completed 52 hours of CE. How many hours can the producer apply to her currrent reportin period and how many hours can she carry forward to the next reporting period ?

24 hours will be applied to the current reporting period and 24 can be applied to the period immediatley following. the excess 4 hours may not be carried over .

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained

3 days

a producer sold an insurance policy. Subsequently, his license was suspended. In this case, how much of the comission will the producer recieve

all

Which of the follwoing is a generic consumer publication that explains life insurance in generl terms in order to assist the applicant in the decision making process

buyer's guide

What limits the amount that a policy owner may borrow from a whole life insurance policy

cash value

A producer who fails to segregate premium monies from his own personal funds is guilty of

commingling

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the isurer violated

consideration

According to the entire contract provision, what document must be made part of the insurance policy

copy of the original application

When must an IRA be completely distributed when a beneficiary is not named

december 31 of the year that contains the fifth anniversary of the owner's death

Which of the following authorities monitors the financial strenght of insurers

department of insurance

Which policy component decreases in decreasing term insurance

face amount

Which of the following is an example of an unfair claim settlement practice

failure to promptly settle a claim when liability has been clearly established

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of

false advertising

What is the advantage of having a qualified annuity

favorable tax treatment

An applicant wants to buy a life insurance policy in which he can count on recieving the same benefits as stated in the contract. Which type should he buy

fixed

Under which installments option does the annuitant select the amount each payment, and the insurer determines how long they will pay benefits

fixed amount

The insurer may suspect that a moral hazard exists if the policyholder

is not honest about his health on an application for insurance

Which of the following does a producer NOT have the authority to do

issue policies

An insurer invests the money it recieves from premuims paid by its insureds. WHich of the following is TRUE regarding the interest earned on these investments

it is used to lower premiums

An insured who had a life insurance policy for $1 million died. In filling the claim, his wife and children discovered that there was no beneficiary name on the policy . What will happen to the death benefit in this case

it will go to the insured estate

An insured buys a 5 year level premium term policy with a face amount of $10,000. the policy also contains renewability and convertibility options. when the insured renews the policy in 5 years, what will happen to the premium

it will increasin because the insured will be 5 years older when the policy was orginially purchased

A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die the other would still like to continue recieving benefits. Which statement option should they choose?

joint and survivor

Based on Human Life Value Approach, which of the following is NOT used to calculate an individuals life value ?

predicted needs of the family after the insured's death

All of the following are characteristics of group life insurance EXCEPT

premiums are determined by the age, sex and occupation of each individual certificate holder

When an insured under a life insurance policy died, the designated beneficiary recieved the face amiunt of the policy as well as a refund of all the premium paid. Which rider is attached to the policy

return of premium

an ajustable life policy owner can change which o fthe following policy features

the coverage period

Who is the owner and who is the beneficiary on a Key Person Life insurance

the employer is the owner and beneficiary

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

the interest is not taxbale since it remains inside the insurance policy

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

the policy owned by the company

An insured has chosen joint and 2/3 survivor as the settlement option. what does this mean to the beneficiaries

the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would recieve after the insured's death ?

0%

An applicant wants to buy a life insurance policy in which he can count on recieveing the same benefits as stated in the contract. Which type should he buy ?

Fixed

Which of the following is an example of an agents fiduciary responsibilities

Forwarding premiums to the insurer

Which of the following does a producer NOT have authority to do?

Issue policies

Which of the following iss true regarding a waiver of a surrender charge on an annuity contract?

The charge may be waiveed if the annuitant is confined to a long-term care facility for at least 30 days

Which of the followingis NOT true regarding a Varible Unversal life poilcy?

The death benefit is fixed

Which is generally true regarding who have been classified as preferred risks?

Their premiums are lower

What kind of policy allows withdrawls or partial surrenders?

Universal life

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

An agent and applicant for a life insurance policy fill out and sign the application. However, the applicant does ot wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the intial premium, and the applicant completes an acceptable Statement of Good health

An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occured in a single day. What is the maximum penalty he faces ?

a 3rd degree misdemenor and a $1,000 fine

In life insurance policies, cash value increases are

growth tax deferred

Which of the following is true of a children's rider added to an insured's permament life insurance policy ?

if is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

annually renewable term policies provide a level death benefit for a preium that

increases annually

the policy owner wants to make sure that upon his death, the life policy will pay portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. which settlement option should the policy owner choose

interest only option

Circulating deceptive sales material to public is what type of Unfair trade practice

false advertising

If a insurance company makes a statement that it's policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered...

an unfair trade practice

Which of the following best describes a bail-out provision

it allows the owner to surrender the annuity without charge

Which of the following best describes fixed period settlement option ?

both the principal and interest will be liquidated over a selected period of time

the authority granted to an agent through the agents contract is referred to as

express authority

Which of the following is NOT typically excluded from life policies ?

death due to plane crash for a fare-paying passenger

an underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

inspection report

Which of the following is the best reason to purchase life insurance rather than annuities?

To create an estate

an individual has just borrowed $10,000 from his bank account on a 5 year installment laon requiring monthly payments. what type of life insurance policy would best be suited to this situatuion

decreasing term

Which nonforfeiture option provides coverage for the longest period of time

reduced paid-up

An insurer invests the money it recieves from premuims paid by its insured. Which of the following is TURE regarding the interest earned on these investments

it is used to lower premiums

When an annuity is written, whose life expectancy is taken into account?

annuitant

whenn an applicant purchased a life insurance policy, the agent dated the application 4 months prior. when asked by the applicant, the agent said he was allowed to backdated to policies up to 6 months if it would

lower the insured's premium

Which of the following is not considered a misrepresentation as it pertains to unfair trade practices ?

making comparisons between different policies

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes

misrepresentation

if someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy

permanent

An insured has entered into a viatical settlement but decides that he would like to back out of the contract. Which of the followingis true ?

the insured has 15 calendar days from the effective date of the contract to recind it

an insured purchased a 10 year level term life policy that is guaranteed renewable and convertible. what happens at the end of the 10 year term

the insured may renew the policy for another 10 years, but at higher premium rate

What type of insurance would be used for Return of premium rider?

Increasing term

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy ?

it is reduced to the amount of what cash value would buy as a single premium

Which of the following riders would NOT cause the Death Benefit to increase?

payor benefit rider

which of the following is NOT true regarding a Variable Universal Life policy

the death beneift is fixed

All of the following statements are true regarding installments for a fixed amount EXCEPT...

the payments will stop when the annuitant dies

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only recieve benefits for the amount loss

indemnity

A Unviversal Life insurance policy has two types of interest rates that are called

Guaranteed and Current

Employer contributions made to a qualified plan

are subject to vesting requirements

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits

fixed amount

An insurance company is domiciled in Montana and trabsacts insurance in Wyoming. which term best descibes the insurer's classification in Wyoming

foreign

Which insurance principle states that is a policy allows for greater compensation that the financial loss incurred, the insured may only recieve benefits for the amount lost

indemnity

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

joint and survivor

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die

joint life

Which of the following methods to designate a beneficary literally means "by the head"

per capita

Another name for substandard risk classification is

rated

Insurance producers that do not have company appointments are considered a/an...

representative of the consumer

what is the primary purpose of a 401 (k) plan

retirement

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

taxation on accumulation

The annuity owner dies while the annuity is till in the accumulation stage. Which of the following is TRUE

the beneficiary will recieve the greater of the money paid into the annuity or the cash value

A licensee serving in the military is unable to fulfill her continuing education requirement. What would the licensee have to do to renew the license

the licensee may submit a request to the department to have a requirement and have fees waived. the department will then determine if the request is permissible

All of the following are general requirements of a qualified plan except..

the plan must provide an offset for social security benefits

An insured stops making payments on a loan from his cash value policy. Whzt will most likely happen

the policy will terminate when the loan amount with interest equals or exceeds the cash value

Which is generally true regarding insureds who have been classified as preferred risks

their premiums are lower

All of the following statements concerning the use of life insurance as an Executive Bonus are correct except

the policy is owned by the company

an insured has chosen joint and 2/3 survivor as the settlement option. what does this mean to the beneficiaries

the surviving beneficiary will continue recieving 2/3 of the benefit paid when both beneficiaries were alive

All of the following are characteristics of a group life insurance plan EXCEPT

there is a requirement to prove insurability on the part of the participants