Life Insurance Review
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?
100% participation of members is required in noncontributory plans
A producer failed to complete the required continuing education credit hours for this compliance period, and allowed his license to lapse. Within what time period after the deadline may the license be reinstated?
12 months
What is the minimum number of study hours required of a candidate for casualty producer's license?
20
How many days' notice must an insurer provide to an insured regarding the lapse of a policy due to outstanding loans?
30 days
*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
A policy is reissued with a reduction in cash value
An individual has been diagnosed with Alezheimer'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 tax free; the rest is taxable income
The term "illustration" in a life insurance policy refers to
A presentation of non guaranteed elements of a policy
The term illustration in a life insurance policy refers to
A presentation of non guaranteed elements of a policy
Temporary producer license can be issued to all of the following EXCEPT
A spouse of disabled licensed producer before and after the sale of the business
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
Aleatory
What is the maximum loan amount a policy owner may withdraw from a variable universal life insurance policy?
An amount not exceeding the cash value
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
The death protection component of Universal Life Insurance is always
Annually Renewable Term
In order to get a nonresident license in this state, a producer must
Apply and pay a fee to a nonresident state
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
At distribution, all amounts are received by the employee are tax free
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
Attained age
Which of the following would NOT trigger the payment of accelerated death benefits?
Being permanently disabled
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Which of the following is a requirement for pre-licensing education for producers in this state?
Certain number of hours must be completed in a classroom setting
The purpose of the regulation regarding replacement of life insurance policies is to protect whom
Consumers
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term Policy
Decreasing Term insurance is often used to
Cover a mortgage
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination
Which of the following terms is used to name the non taxed return of unused premiums?
Dividend
How often must the preparation and posting of records of insurance transactions occur?
Every 30 days
How often does a viatical settlement provider's license expire?
Every year
How often does a viatical settlement providers license expire?
Every year
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended Term
What type of premium do both Universal Life and Variable Universal Life policies have?
Flexible
All of the following information needs to be included on an application for life insurance EXCEPT
Health insurance policies in force
Any company or person who violates a written order under the regulatory examinations section of the insurance code may be subject to all of the following penalties EXCEPT
Imprisonment
Which of the following is NOT true regarding a deferred annuity?
Income payments begin within 1 year from the date of purchase
What type of insurance would be used for a Return of Premium rider?
Increasing Term
Who makes up the Medical Information Bureau?
Insurers
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will
Issue the policy anyway and pay the face value to the beneficiary
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate
Which of the following applies to the 10 day free look privilege?
It permits the insured to return the policy for a full refund of premiums paid
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value
An insurer create an advertisement in January of 2015 and keeps a record of its contents on file. Its next regular examination will occur in December of 2018. How long must the insurer keep its advertisements on file?
January 2019 (4 Years)
Variable Whole life insurance is based on what type of premium?
Level fixed
Which of the following is an example of a limited pay life policy
Life paid up at age 65
A producer explains a couple of life insurance policies to a prospective insured but does not help to evaluate the costs of similar plans. Which rule is being violated?
Life solicitation rule
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
The reduction of premium option uses the dividend to reduce
Next year's premium
If the Director service a notice of a hearing upon an insurer, when must the hearing be held?
No sooner than 20 days and no later than 30 days after the notice is served
A trust officer of a bank wants to counsel people on their life insurance policies, for a small fee. What licensure must the officer receive in order to do this legally?
None
Which of the following best defines the unfair trade practice of rebating
Offering an inducement of something of value not specified in the policy
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the
One-year term option
Insurance contracts are unilateral in nature. What does that mean?
Only one party makes a promise
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
A rider is attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
Paid-up additions
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up option
Which of the following must a producer do in order to retain a license?
Pay renewal fees and complete required CE hours
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
What type of license does an individual need to obtain in order to solicit and sell insurance?
Producer's license
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal
Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?
Renewable
A man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
To sell variable life insurance policies an agent must receive all of the following EXCEPT
SEC registration
An individual receives a lump-sum inheritance. He'd like to use money to create a lifetime income since he'll be retiring soon. He purchases an annuity and wishes to receive payments beginning in 2 months. What did he buy?
Single Premium Immediate Annuity
In the event a licensed producer dies, a temporary license may be issued to the deceased producer's representative. This temporary license will allow the licensee to do all of the following EXCEPT
Solicit Insurance
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the shareholders and issue nonparticipating policies
In order for a firm to maintain its registration as a legal insurance company, what must it do?
Submit a biennial fee to the director
Which of the following would help prevent a universal life policy from lapsing?
Target premium
Which of the following will be stated in the consideration clause of a life insurance policy?
The amount of premium payment
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
If a nonresident is applying for a license in Illinois and his home state does not require continuing education for Illinois residents
The continuing education requirement will be waived in Illinois
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
The death benefit will be smaller
Which of the following best describes the tax advantage of a qualified retirement plan?
The earnings in a qualified plan accumulate tax deferred
Which of the following is INCORRECT concerning a noncontributory group plan
The employees receive individual policies
Life insurance creates an immediate estate. Which of the following best explains this statement?
The face value of the policy is payable to the beneficiary upon the death of the insured
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?
The insured may choose to convert to term or permanent individual coverage
A father owns a life insurance policy on his 15 year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy
In a life settlement contract, whom does the life settlement broker represent?
The owner
All of the following statements about indexed whole life insurance are correct EXCEPT
The policy face amount remains level throughout the life of the policy
Which of the following is TRUE regarding the premium in term policies?
The premium is level for the term of the policy
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
The primary beneficiary died before the insured
Who of the following must be identified on an insurance policy application?
The producer who solicited the policy
In the event a producer is found to have committed rebating, all of the following penalties would apply EXCEPT
The producer's license must immediately be terminated
If an applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriters approve the application
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
When would a 20-pay whole life policy endow?
When the insured reaches age 100
which of the following would not be allowed to offer insurance advice for a fee or commission in this state
a director of an insurance company
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
it is only taxable if the cash value exceeds the amount paid for premiums
What is the limit to the number of 90 day temporary licenses that a person may hold
no more than one per lifetime
according to state regulations for advertising of insurance products, insurers must maintain a file containing all of the following information except
the names of all agents who used the advertisements
All of the following are true about the completion of prelicensing training except
the requirement can be fulfilled by completing training through lecture course, home study or online
If a producer's license is violated for criminal activity, what is the maximum amount that can be charged for each offense?
$10,000
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$2,500
What is the minimum penalty that may be imposed on an insurer found guilty of defamation?
$200
What is the resident producer license fee payable once every two years
$215
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
$50,000