Life Insurance Quiz
K has a loan of $5,000 outstanding against her $25,000 traditional whole life policy. If K dies, how much will her beneficiaries receive?
$20,000
All employer-paid premiums for amounts of group life insurance over $__________ are reported as taxable income to the employee.
$50,000
A life insurance producer who has been licensed for at least ______ is deemed to meet the licensing requirements to operate as a viatical settlement broker.
1
How many fictitious names may a licensee use at a business location?
1
Purchasers of life insurance or annuities are given an unconditional right to return their policies for a full refund within ______ days after its delivery.
10
To be fully insured for Social Security, generally a person must have worked and paid into the Social Security system for a minimum of ______ years.
10
What is the minimum number of people needed to form a fraternal benefit society?
10
An insurer who terminates an appointment, employment, or other relationship of a producer must within ______ days after notifying the Insurance Commissioner, mail a copy of the termination notice to the producer.
15
B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy?
2 years of premiums, plus interest due on overdue premiums amounts
A producer must maintain and make available records of transactions for inspection by the Insurance Commissioner for at least ______ years after the respective transactions.
3
For how long must insurance advertising files be kept?
3
Where a life insurance replacement is involved, the producer must retain a copy of written or printed communications used for presentation to the applicant for at least ______ years.
3
A licensee must inform the Commissioner of each change of business or residence address within ______ days after the change.
30
A life insurance producer must notify the Insurance Commissioner that he/she is acting as a viatical settlement broker and submit the licensing application along with any applicable fee within ______ days from the first day of operating as a viatical settlement broker.
30
An insurer may not delay paying any claim for damage to a motor vehicle more than _____ days after receiving a statement of charges from any garage or licensed body shop previously authorized by the insured to perform the repairs.
30
Insurers are required to report a producer's failure to remit premiums to the Commissioner when the payment is how many days past due?
30
What is the continuing education requirement for Nevada producers?
30 hours every 3 years
Group life insurance policies must provide for a grace period of how many days?
31
A licensee must retain records of all viatical settlement transaction for ______ years.
5
Administrators must keep records of all transactions available for inspection by the Insurance Commissioner for _____ years.
5
The Commissioner can examine every insurer at least once every ____ years.
5
Generally, an insurer may defer the granting of a policy loan for up to ______ months.
6 months
Resident producers of other states may obtain a Nevada resident license without having to take an examination if they apply within ____ days of their move.
90
Which of the following is an example of a collateral assignment?
A business using a life insurance policy to secure a bank loan
Knowingly accepts business from a producer who is licensed
A life insurance policy sold through direct response with a $10,000 face amount
What type of policy has an endowment date, a face amount, and cash value?
A permanent life insurance policy
Which of the following statements is true?
A producer may assign commissions to a non-licensed person if that person is not required to be licensed
Which of the following persons would need an insurance consultant's license in order to earn a fee for providing insurance advice?
A securities broker
An _________ assignment is considered permanent.
Absolute
What are the two types of life insurance assignments?
Absolute and collateral
Which of the following situations will require proof of insurability?
Adjusting the face amount up on a Universal Life insurance policy with Option A death benefit selected
A/an_______is a personal statement submitted by the producer to the insurer regarding the applicant's financial condition and any personal knowledge of the applicant.
Agent's Report
Under the life insurance disclosure requirements which one of the following is false?
An agent must inform the prospective purchaser that he/she is acting as an insurance agent and give them his/her full name and office address of the agency for which he/she is working for
Open enrollment periods are offered on a(n) ______ basis that allows individuals to enroll without evidence of insurability or to make changes.
Annual
Group Life Insurance is usually written as:
Annual Renewable Term
A producer may not act as an agent unless he/she is __________ as an agent by the insurer.
Appointed
Dividends issued by mutual insurance companies:
Are non-taxable refunds (returns) of unused or surplus premiums
How are employer paid premiums on a group life insurance plan treated for tax purposes?
As an ordinary and necessary business expense
How often may the accounts and records of any insurance agent, solicitor, broker, general agent, adjuster, or any person that controls an insurer be examined by the Insurance Commissioner?
As often as deemed advisable
If a father were to add a Child Rider to a policy to cover his children, when would coverage become effective for a newborn?
At 14 or 15 days of age
Which underwriting source is primarily used when an application reveals conditions for which more medical information is required?
Attending Physician's Statement
An insured with a participating life insurance policy receives an annual dividend check in the mail. He must have selected which Dividend Option:
Cash
The nonforfeiture option that, if exercised, terminates all coverage is:
Cash Surrender
Which of the following personal uses of life insurance is specifically designed to provide benefits to the policyowner while the insured is still alive?
Cash accumulation
Which of the following is TRUE concerning reinstatement of a life insurance policy?
Companies have the right to require medical examinations
If a home office underwriter obtains MIB codes inconsistent with information provided on the application, what is the underwriter required to do?
Conduct further investigation to obtain more information prior to making a decision
In a legal sense, premium functions as the insured's _______.
Consideration
In a replacement transaction, all of the following are insurer duties and responsibilities, except:
Contact the client to assure that they understand the transaction
With a Variable Life Policy, which of the following is guaranteed?
Death benefit
Which product should you recommend for a client who wishes to keep pace with inflation while protecting capital?
Equity-indexed annuity
Which individual policy standard provision stipulates the conditions under which the insurer will not pay a claim while the policy was in force at the time of death of the insured?
Exclusions
In a replacement transaction, the insurer that is having its policy replaced is known as the _______ insurer.
Existing
The nonforfeiture option that provides protection equal to the policy's face amount for a specified number of years and days is:
Extended Term
All funds received by a producer must be held in a(n) ___________ capacity.
Fiduciary
When withdrawing cash from a cash value life insurance policy, the amount of the withdrawal up to the policy's cost basis is tax-free. This tax accounting rule is referred to as:
First-In, First-Out (FIFO)
If the beneficiary is concerned about a payout for a particular period of time, the _______ settlement option should be selected.
Fixed Period
______ are primarily social organizations that engage in charitable and benevolent activities consisting of members of a given faith, lodge, or order, and are usually organized as non-profits.
Fraternal Benefit Societies
All of the following must be included in a whole life policy, except:
Guaranteed dividend table
Ultimately it is up to the _______ to determine if the proposed insured is an acceptable risk.
Home office underwriter
All of the following are true regarding Current Assumption Whole Life, except:
If current rates decrease, the policyowner pays reduced premiums, or the cash values will grow faster
The only way a death benefit can be 100% income tax-free is to be paid out __________.
In a lump sum
Which type of term protection has an increasing face value as the insured gets older?
Increasing Term
Which of the following is NOT one of the essential elements of any legal contract?
Indemnity
The Modified Endowment Contract (MEC) rules were put into place because:
Individuals were overfunding life insurance policies and using them as tax-free investment vehicles instead of a way to protect survivors against the financial cost of one's death
The MIB obtains its information from which of the following?
Insurers
What is an insurer permitted to do if and when it discovers during the underwriting process that a proposed insured has AIDS?
Insurers may refuse to issue a policy to individuals based on positive HIV test results
The cash value in an Indexed Life insurance policy:
Is based on the performance of a designated quity index over a specified period of time
Which one of the following regarding the Nevada Life and Health Insurance Guaranty Association is false?
It is not liable to pay more than $100,000 in the aggregate for any one life for any combination of life insurance benefits
The Insurance Commissioner may not suspend, revoke, limit, or refuse to issue or renew any license if the licensee or applicant:
Knowingly accepts business from a producer who is licensed
Albert owns a life insurance policy insuring his son David. He wants a Settlement Option that, if David were to die, would provide guaranteed payments to Albert and his wife until both of them die. Albert's producer should recommend:
Life Income Joint and Survivor
Cranston wants a Settlement Option for his beneficiary that will guarantee the beneficiary an income as long as the beneficiary lives. Cranston should choose:
Life Income Only
Which of the following products provides an immediate lump sum in the event of premature death?
Life insurance
For which of the following types of benefits may the Nevada Life and Health Insurance Guaranty Association pay up to $500,000?
Major medical insurance benefits
The Insurance Commissioner can do all of the following, except:
Make insurance laws if it is in the public interest to do so
All of the following are unfair practices, except:
Making any statement or use any name for a policy that represents a policy's terms, benefits, or dividends (including dividends previously paid)
Rebating is a ___________ and violators may not receive commission for any sale for which a rebate was given.
Misdemeanor
If X has a life insurance policy that is no longer wanted or needed and is considering selling their policy, how much might X receive if the premiums are $10,000 annually, the cash value is $200,000, and the face amount is $1,000,000?
More than $200,000 but less than $1,000,000
A generic brochure was developed by the ________ to assist prospective buyers of life insurance, which includes descriptions of all the basic types of life insurance and comparisons of their relative costs.
NAIC
Members of the ___________ include state and territorial insurance commissioners or regulators.
National Association of Insurance Commissioners (NAIC)
Which one of the following regarding required provisions for group life insurance is false?
No payment of benefits if no beneficiary is named
Which of the following riders can be used to cover the life of an additional insured who is an unrelated business partner?
Nonfamily rider
The insuring clause is found:
On the first page of the policy
A Whole Life policyowner elects to use his dividends to pay off the policy sooner than originally planned. Which option allows this to occur?
Paid-Up Option
Which of the following is NOT an illegal rebate?
Paying a bonus to nonparticipating policyowners out of accumulated surplus
In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age?
Payor Benefit (Waiver of Payor Premium)
All of the following are TRUE of Policy Loan Rate provisions, except:
Policies with fixed interest loan rates have a maximum interest rate of 10%
The individual who has the ownership rights of a policy is called the:
Policyowner
Mutual insurance companies are owned by:
Policyowners
If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as?
Preferred
Normally, when the insurer determines that the insured is an acceptable risk, the insurer will send the policy to the ____________.
Producer
Which of the following is not considered transacting insurance?
Providing premium bills or administrative forms to existing policy owners
All of the following are traditional whole life policy nonforfeiture values, except:
Renewable and convertible features
Which one of the following is a proper claim settlement practice?
Representing to claimants pertinent facts or provisions in the insurance policy that relate to any coverage at issue
Which of the following annuities does not have a traditional accumulation phase?
Single premium immediate
If dividends are left on deposit with an insurer to earn interest:
The dividend is tax-free, but the interest is taxable
An employee who is covered under an employer group life insurance plan may assume all of the following are TRUE of the opportunity of conversion, except:
The employee chooses which type of insurance to convert to
If an insured has a Life Paid-Up at 75 Policy (a limited-pay life paid-up at age 75), what would the beneficiary receive if the insured died at age 68?
The face amount
What is the net amount at risk in a Whole Life Insurance policy?
The face amount less the cash values
In all cases upon the insured's death, the beneficiary receives which of the following?
The face amount of the policy
The Mode of Premium provision addresses
The frequency of premium payment
Variable Whole Life and Variable Universal Life are similar, except for:
The guaranteed death benefit
If the insured outlives all of the beneficiaries named in the policy and then dies, by default who receives the death benefit?
The insured's estate
Maria's policy was issued with an incorrect age. She was actually older than what was listed in the policy. Which of the following will the insurer most likely do if she had died 5 years after policy issue, but prior to this discovery?
The insurer would pay out a reduced benefit in proportion to the underpayment of premium
Clayton is asking his life insurance producer about any potential taxation issues related to his $100,000 personal Whole Life policy. All of the following are TRUE, except:
The interest that he pays on policy loans is tax-deductible
All of the following regarding advertisements are true, except:
The name of the producer must be clearly identified in all advertisements
A policyowner has chosen the Fixed Amount Settlement Option. Which of the following best describes this option?
The owner specifies the amount of each periodic payment and the insurer pays that amount until the funds plus interest are depleted
Universal Life is similar to Whole Life in all of the following ways, except:
The timing and amount of premium is flexible
All of the following are true regarding annuities, except:
They are similar to life insurance
What is the primary incentive for a third party to acquire a life insurance policy from a terminally ill insured?
To profit at the time of claim
Charging individuals of the same class and equal life expectancy different rates for life insurance or annuities is an example of:
Unfair Discrimination
Which one of the following policies are not exempt from the state replacement regulations?
Universal life
If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens?
Unless specified otherwise, the cash values buy extended term
Which of the following statements is TRUE regarding Fixed Annuities?
Upon annuitization, the annuity payments are level
A consumer should know the following aspects of a group insurance policy, except:
Upon separating from the group, the group life coverage is not convertible
Which of the following policies must be sold by prospectus?
Variable Whole Life
All of the following regarding credit life and health insurance are true, except:
When a lender requires a borrower to have consumer credit insurance as additional security for a loan, the borrower is entitled to obtain it through any authorized or unauthorized insurer
When is a cross purchase buy-sell agreement plan used?
When parties purchase life insurance on each other
An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased.
Whole Life