Life insurance wrong questions
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? A) Additional insured rider B) Family term rider C) Spouse rider D) Children's rider
B) Family term rider
Which of the following best describes annually renewable term insurance? a)It is level term insurance. b)It requires proof of insurability at each renewal. c)Neither the premium nor the death benefit is affected by the insured's age. d)It provides an annually increasing death benefit.
a)It is level term insurance.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a)Proof of insurability is not required. b)Medical exam c)Her parents' federal income tax receipts d)Medical exam and parents' medical history
a)Proof of insurability is not required.
All of the following are true regarding rebates EXCEPT a)Rebates are allowed if it's in the best interest of the client. b)Rebates are only allowed if specifically stated in the policy. c)Rebating can be anything of economic value, given as an inducement to buy. d)Dividends are not considered to be rebates.
a)Rebates are allowed if it's in the best interest of the client.
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? a)Return the application to the applicant for completion b)Issue a policy anyway since the application has been submitted c)Ask the producer who solicited the policy to complete and resign the application d)Fill in the blanks to the best of the insurer's knowledge
a)Return the application to the applicant for completion
Under an extended term nonforfeiture option, the policy cash value is converted to a)The same face amount as in the whole life policy. b)The face amount equal to the cash value .c)A lower face amount than the whole life policy. d)A higher face amount than the whole life policy.
a)The same face amount as in the whole life policy.
When must the accelerated benefit provision be effective for illness? a)Within 30 days of the effective date of the policy b)No sooner than 30 days after the policy went in effect c)Within 90 days of the policy issue date d)As of the effective date of the policy itself
a)Within 30 days of the effective date of the policy
What type of insurance would be used for a Return of Premium rider? a)Annually Renewable Term b)Increasing Term c)Level Term d)Decreasing Term
b)Increasing Term
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? a)Hazardous occupation b)Military service or war c)Limited d)Aviation
b)Military service or war
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a)Disclosure rule b)Replacement rule c)Reinstatement rule d)Conversion rule
b)Replacement rule
Notice of a hearing for a cease and desist order must be given at least how many days in advance? a)90 b)7 c)10 d)30
c)10
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? a)1 b)3 c)5 d)10
c)5
A Straight Life policy has what type of premium? a)A decreasing annual premium for the life of the insured b)A variable annual premium for the life of the insured c)A level annual premium for the life of the insured d)An increasing annual premium for the life of the insured
c)A level annual premium for the life of the insured
A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called a)Rebating. b)Retention. c)Conservation. d)Solicitation.
c)Conservation
The term "fixed" in a fixed annuity refers to all of the following EXCEPT a)Equal annuity payments b)Amount and length of payments c)Death benefit d)Guaranteed rate of interest
c)Death benefit
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a)Must be advised that a copy of the report is available to anyone who requests it. b)May sue the reporting agency in order to get inaccurate data corrected. c)Must be informed of the source of the report. d)Are entitled to obtain a copy of the report from the party who ordered it.
c)Must be informed of the source of the report
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT a)The interest is credited at a rate specified by the policy. b)The policyholder has the right to withdraw the accumulations at any time. c)The interest is not taxable since it remains inside the insurance policy. d)The annual dividend is retained by the company.
c)The interest is not taxable since it remains inside the insurance policy.
If an agent's appointment is terminated, suspended or revoked, the agent must cease selling or soliciting on behalf of the insurer within a)15 calendar days. b)30 calendar days. c)5 calendar days. d)10 calendar days.
d)10 calendar days.
Agent P has a life license. How many hours of CE must be completed to complete Agent P's requirement? a)8 b)10c )12 d)16
d)16
What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months
d)6 months
Which of the following would be required to be licensed as an insurance producer? a)A person whose activities are limited to producing insurance advertisements b)A salaried full-time employee who furnishes information for group insurance c)An insurance company director who performs executive, administrative and managerial duties d)A salaried employee who advertises and solicits insurance
d)A salaried employee who advertises and solicits insurance
At what time may the Insurance Commissioner inspect records pertaining to insurance transactions? a)At least 3 years after the transaction b)At any business time in the 5 years immediately following the relevant transaction c)At least 5 years after the transaction d)At any business time in the 3 years immediately following the relevant transaction
d)At any business time in the 3 years immediately following the relevant transaction
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 a)Experience Rating. b)Group rate. c)Insurer's scheduled rate. d)Attained age.
d)Attained age.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? a)Waiver of premium b)Incontestability period c)Assignment d)Automatic premium loan
d)Automatic premium loan
An insurance contract must contain all of the following to be considered legally binding EXCEPT a)Offer and acceptance. b)Consideration. c)Competent parties. d)Beneficiary's consent.
d)Beneficiary's consent.
Which of the following statements concerning buy-sell agreements is true? a)Premiums paid are deductible as a business expense. b)Benefits received are considered income taxable. c)Buy-sell agreements pay in the event of a medical emergency. d)Buy-sell agreements are normally funded with a life insurance policy.
d)Buy-sell agreements are normally funded with a life insurance policy.
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of a)Loading. b)Defamation. c)Twisting. d)Coercion.
d)Coercion.
Which of the following is licensed solely to advise insureds about their policies? a)Agent b)Broker c)Actuary d)Consultant
d)Consultant
During replacement of life insurance, a replacing insurer must do which of the following? a)Guarantee a replacement for each existing policy b)Designate a new producer for a replaced policy c)Send a copy of the Notice Regarding Replacement to the Department of Insurance d)Obtain a list of all life insurance policies that will be replaced
d)Obtain a list of all life insurance policies that will be replaced
All of the following are characteristics of group life insurance EXCEPT a)Amount of coverage is determined according to nondiscriminatory rules. b)Individuals covered under the policy receive a certificate of insurance. c)Certificate holders may convert coverage to an individual policy without evidence of insurability. d)Premiums are determined by the age, sex and occupation of each individual certificate holder.
d)Premiums are determined by the age, sex and occupation of each individual certificate holder.
Which of the following is called a "second-to-die" policy? a)Family income b)Juvenile life c)Joint life d)Survivorship life
d)Survivorship life
Children's riders attached to whole life policies are usually issued as what type of insurance? a)Variable life b)Adjustable life c)Whole life d)Term
d)Term
A licensed agent must file a report with the Insurance Commission regarding all of the following EXCEPT a)The agent is fined by the IRS. b)The agent is found guilty of assault. c)The agent is convicted of driving in another state under the influence of alcohol. d)The agent files divorce proceedings.
d)The agent files divorce proceedings.
Which of the following is NOT true regarding the annuitant? a)The annuitant's life expectancy is taken into consideration for the annuity. b)The annuitant receives the annuity benefits. c)The annuitant must be a natural person. d)The annuitant cannot be the same person as the annuity owner.
d)The annuitant cannot be the same person as the annuity owner.
In a life settlement contract, whom does the life settlement broker represent? a)The insurer b)The beneficiary c)The life settlement intermediary d)The owner
d)The owner
What is the purpose of the regulations on life and annuity marketing practices? a)To establish minimum rates for life insurance policies and annuities b)To eliminate unfair trade and unfair competition practices c)To provide consumers with choices in life insurance products d)To establish minimum standards for advertisement, solicitations and replacement of policies
d)To establish minimum standards for advertisement, solicitations and replacement of policies
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A) $100 B) Revocation of license C) $2500 D) $1000
C) $2500
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a A) Cost of living provision B) Non forfeiture option C) Guaranteed insurability rider D) Paid up additions option
C) Guaranteed insurability rider
If an agent's appointment is terminated, suspended or revoked, the agent must cease selling or soliciting on behalf of the insurer within a)10 calendar days. b)15 calendar days. c)30 calendar days. d)5 calendar days.
a)10 calendar days.
How long is an insurer required to maintain records in Virginia? a)Permanently b)3 years c)5 years d)10 years
b)3 years
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? A) Withdrawals are not taxable B) Distributions before 59 1/2 incur a 10% penalty on policy gains C) Policy loans are taxable distributions D) Accumulations are tax deferred
A) Withdrawals are not taxable
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? A) Premature death B) Return of premium C) Cost of living D) Decreasing term
B) Return of premium
Which is TRUE about the cash surrender non forfeiture option? A) The policy remains active for some time after the policyholder opts for cash surrender B) The policyholder receives the original cash value of the policy C) Funds exceeding the premium paid are taxable as ordinary income D) After the cash surrender, the insured is covered for a grace period of 1 month.
C) Funds exceeding the premium paid are taxable as ordinary income
The interest earned on policy dividends is A) Tax deductible B) 40% taxable, similar to capital gain C) Taxable D) Non taxable
C) Taxable
All of the following are true regarding decreasing term policy except A) The contract pays only in the event of death during the term and there is no cash value B) The face amount steadily declines throughout the duration of the contract C) The payable amount steadily declines throughout the duration of the contract D) The death benefit is $0 at the end of the policy term
C) The payable amount steadily declines throughout the duration of the contract
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A) Indemnity B) Representation C) Warranty D) Concealment
C) Warranty
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the A) Reinstatement clause B) Insuring clause C) Misstatement of Age clause D) Incontestability clause
D) Incontestability clause
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a)As of the application date b)As of the policy delivery date c)As of the first of the month after the policy issue d)As of the policy issue date
a)As of the application date
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a)Cash surrender b)Reduced paid-up c)Paid-up options d)Extended term
a)Cash surrender
Once the agent's appointment with the insurer has been terminated, how soon must the insurer mail a notice of termination to the agent? a)10 days b)15 calendar days c)30 days d)5 business days
b)15 calendar days
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? a)The insured's estate b)The primary beneficiary's estate c)The insured's contingent beneficiary d)The insurance company
c)The insured's contingent beneficiary
Which of the following types of insurance policies would perform the function of cash accumulation? a)Credit life b)Increasing term c)Whole life d)Term life
c)Whole life
All of the following forms of policies are exempt from the standard policy regulations for insurers EXCEPT a)Group life and annuities used to fund funeral expenses. b)Structured settlements. c)Credit life insurance. d)Group life or group annuities where there is direct solicitation.
d)Group life or group annuities where there is direct solicitation.
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a)Dividend options b)Guaranteed renewable option c)Nonforfeiture options d)Guaranteed insurability option
d)Guaranteed insurability option
What is the benefit of choosing extended term as a nonforfeiture option? a)It matures at age 100. b)It allows for coverage to continue beyond maturity date. c)It can be converted to a fixed annuity. d)It has the highest amount of insurance protection.
d)It has the highest amount of insurance protection.
Which of the following riders would NOT cause the Death Benefit to increase? a)Guaranteed Insurability Rider b)Cost of Living Rider c)Accidental Death Rider d)Payor Benefit Rider
d)Payor Benefit Rider
An insured takes a policy loan from a whole life policy. During repayment, the interest rate changes significantly. Which scenario is most accurate? a)An insurer cannot terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse. b)An insured can change his variable interest rate to a fixed interest rate matching the rate quoted when he first took the policy loan, with a 2% penalty assessed at repayment. c)The insurer may file a hardship and terminate coverage without repaying the loan. d)An insurer can terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse.
a)An insurer cannot terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse.
An adverse underwriting decision may be based on which of the following? a)Information obtained from an insurance institution responsible for a previous adverse underwriting decision b)Personal information received from an insurance-support organization whose primary source of information is insurance institutions c)That an individual previously obtained insurance coverage from a particular insurance agent d)That an individual previously obtained insurance coverage through a residual market mechanism
a)Information obtained from an insurance institution responsible for a previous adverse underwriting decision
Who is responsible for establishing and maintaining a system by which recommendations to consumers can be monitored and supervised? a)Insurers b)The Commission c)The Better Business Bureau d)Individual agents
a)Insurers
If a retirement plan or annuity is "qualified," this means a)It is approved by the IRS. b)It has a penalty for early withdrawal. c)It accepts after-tax contributions. d)It is noncancellable.
a)It is approved by the IRS.
Margaret applies for an insurance license, but the Commission decides not to issue the license because her tarnished reputation. She notifies the Commission that she wants to dispute this judgment in a hearing. The Commission must give her at least how many days' notice of the date of the hearing? a)0 b)10 c)30 d)60
b)10
Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages? a)10 b)3 c)5 d)7
b)3
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as a)Defamation. b)Coercion. c)Rebating. d)Misleading advertising.
b)Coercion.
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of a)Nothing, unless the remarks were in writing b)Defamation. c)Misrepresentation. d)Discrimination.
b)Defamation.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of a)Rebating. b)Misrepresentation .c)Concealment. d)Unfair claim practice.
b)Misrepresentation
The Federal Fair Credit Reporting Act a)Prevents money laundering. b)Regulates consumer reports. c)Protects customer privacy. d)Regulates telemarketing.
b)Regulates consumer reports.
What is the maximum penalty that could be imposed on an agent for an unintentional violation of Virginia insurance law? a)$5,000 b)$500 c)$1,000 d)$2,000
c)$1,000
Which of the following best describes the unfair trade practice of defamation? a)Issuing false advertising material b)Refusing to deal with other insurers c)Making derogatory oral statements about another insurer's financial condition d)Assuming the name and identity of another person
c)Making derogatory oral statements about another insurer's financial condition
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a)Her parents' federal income tax receipts b)Medical exam and parents' medical history c)Proof of insurability is not required. d)Medical exam
c)Proof of insurability is not required.
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a)Payment of premium. b)Delivery receipt. c)Signed waiver of premium. d)Statement of good health.
c)Signed waiver of premium.
Which two terms are associated directly with the way an annuity is funded? a)Immediate or deferred b)Renewable or convertible c)Single payment or periodic payments d)Increasing or decreasing
c)Single payment or periodic payments
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a)A corporation can be an annuitant as long as the beneficiary is a natural person. b)The contract can be issued without an annuitant. c)The annuitant must be a natural person. d)A corporation can be an annuitant as long as it is also the owner.
c)The annuitant must be a natural person.
Who is legally required to keep records pertaining to insurance transactions? a)Insureds b)Agencies and insurers only c)The Commission d)All licensees
d)All licensees
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? A) The policy will be void B) The insurer may deny coverage later, because of the information missing on the application C) The policy will be interpreted as if the insurer waived its right to have an answer on the application D) The policy will be interpreted as if the insured did not have an answer to the question
B) The insurer may deny coverage later, because of the information missing on the application
Which is true about a spouse term rider? A) The rider is decreasing term insurance B) Coverage is allowed up to age 75 C) The rider is usually level term insurance D) Coverage is allowed for an unlimited time
C) The rider is usually level term insurance
How many hours of continuing education must be completed on the subject of ethics biennially? a)3 b)5 c)10 d)12
a)3
If the Commission determines the agent's appointment is invalid, within how many days will the Commission notify the insurer? a)5 business days b)10 business days c)21 calendar days d)30 calendar days
a)5 business days
How often must insurance consultants renew their license? a)Every year b)Every 2 years c)Every 5 years d)Never: licenses are perpetual unless revoked
a)Every year
Which policy component decreases in decreasing term insurance? a)Face amount b)Cash value c)Dividend d)Premium
a)Face amount
All of the following would qualify as an eligible insured for group life insurance coverage under a group plan EXCEPT a)Former member of an eligible association b)A credit union employee c)An employee of a non-profit institution who works on a full-time basis d)An employee of a public works facility
a)Former member of an eligible association
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a)Replacement rule b)Reinstatement rule c)Conversion rule d)Disclosure rule
a)Replacement rule
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of a)Misrepresentation. b)Rebating. c)Twisting. d)Defamation.
c)Twisting.
What happens when a policy is surrendered for its cash value? a)Coverage ends but the policy can be reinstated at any time. b)The policy can be reinstated by paying back all policy loans and premiums. c)The policy can be converted to term coverage. d)Coverage ends and the policy cannot be reinstated.
d)Coverage ends and the policy cannot be reinstated.
Which of the following is NOT a duty of the Commission of Insurance? a)Appointing the Commissioner of Insurance b)Enforcing the Insurance Code c)Suspending or revoking licenses of Insurance Code violators d)Examining each domestic insurer at least once a year
d)Examining each domestic insurer at least once a year
Within his or her fiduciary capacity, what must an agent do with funds held in the separate account? a)Report quarterly to insurer b)Issue annual statements to the insured and the insurer c)Index earnings with other separate accounts d)Keep accurate and detailed records
d)Keep accurate and detailed records
Which of the following will be included in a policy summary? a)Copies of illustrations and application b)Comparisons with similar policies c)Primary and secondary beneficiary designations d)Premium amounts and surrender values
d)Premium amounts and surrender values