Life Part 2

If the premium has been paid and the policy has not been returned

under the terms of the 10-day free-look period, a claim will be paid

Mandatory & permissive

Per the code, the best definitions of "shall" and "may" are:

Whole life

Pete, who is 35 years old, has a life insurance policy with a death benefit of $150,000. At age of 100 the cash value of his policy will be $150,000. What type of policy does he have?

100%

Roger, who is 35 years old, has a life insurance policy with a death benefit of $150,000. At age of 100 the cash value of his policy will be $150,000. What type of policy does he have?

Convert to a whole life policy for the same face amount without proof of insurability.

Sam has a $200,000 convertible life insurance policy. If he chooses, he can:

Life income (straight life)

A beneficiary decides to take the option that will pay the largest amount per payment, knowing after death no monies will be paid out to any descendants. The settlement option is:

Morale

A client has a history of DUIs. To his insurer, they see him as ____________ hazard

Single Premium Immediate Annuity

A client receives a lump-sum inheritance. He'd like to use the 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?

Negotiates life settlement contracts between an owner and providers

A life settlement broker

vanishing premiums if the policy becomes paid up with non-guranteed elements paying future premiums

A policy illustration may not include:

An endowment policy

A policy pays the face amount if the insured dies before a specified date, or lives to that specified date. This best describes

At any time

A universal life policy may be surrendered for its cash value:

Life insurance creates an instant estate, while annuities liquidate a sum of money

Of the following, which best describes the difference between life insurance and annuities?

An alien insurer

According to the California DOI, an inusrer whose articles of incorporation are registered in Oslo, Norway. is considered:

A. Identification of their relationship to the insurance company B. License number must appear in the same size font as the phone number C. Must not include any titles, designation, or licenses that are not currently beheld D. All of the above Answer D

According to the California insurance code, what information is the agent required to include on their business card?

The new policy will expire in 10 years

After 12 years, the policy owner decides she no longer needs the large death benefit on the whole life policy. She calls you, her agent, and you tell her she can use the reduced paid-up non-forfeiture option. Which of the following is not true about the new policy?

The proceeds payable will be adjusted

After the insured passes away, it is discovered that the policy was rated based upon an incorrect age. The client lied about their age when filling out the application 8 years earlier. What effect will this have on the benefit?

Darren will be charged with felony and/or up to 10 years in jail

Agent Darren offers life insurance for no cost to people buying property in a local development. When the commissioner investigates his actions, which of the following is not a likely consequence?

Full retirement age is 65 for all persons born after 1937

All of the following are characteristics of the social insurance program known as social security, except:

No claim is paid with either receipt until a policy is issued

All of the following describe differences between binding receipts, except:

The illustration will note that both guaranteed and non-guaranteed elements will remain unchanged for the years illustrated

All of the following statements about life insurance policy insurance policy illustrations and senior market are correct, except:

Death during the grace period results in a full death benefit being paid

All of the following statements about policy provisions are true, except:

The face amount is payable after the first death

All of the following statements about survivorship life are true, except:

Exclusive agents work for themselves

All of the following statements about the agent are true, except:

Life income with 10 years certain provides at least 120 months of payment.

All of these following is not a personal use of life insurance?

Deny the application without a hearing

An applicant for an insurance license has had a previous application for a proffesional license denied for cause within the last five years. the insurance commissioner will:

Accelerated (Living) benefit

An insured has a terminal illness and need access to 1/3 of his death benefit to pay mounting medical expenses\. Which rider would meet the insured's current needs?

Financial losses

Of the following, which is not one of the three major loss exposures faced by insureds?

A misdemeanor punishable by a fine up to $1,000, a year in jail, or both

Any person to whom the commissioner has issued a seizure order and who refuses to deliver any books, records, or assets of an insurer faces:

ESOP's invest in a portfolio of stocks selected by the employer

Concerning qualified plans, which statement is false?

At least 24 hours

California rules for annuity sales require all agents to a specific disclosure document in advance to any senior citizen who is not already a client whenever a sales appointment will be conducted in the person's home. How far in advance must the prospect receive the written notice?

Paid-up Additions option

Candee owns a participating whole life policy and uses her policy dividends to buy more of the same type of coverage for herself. Candee has chosen the:

Protects an agent in the case of unintentional negligence

E&O Coverage

Possible fraudulent claims by the insured

Every admitted insurer in California must maintain a unit, or department, responsible for investigating which of the following?

$4,000

Gloria owns an annuity in which she has invested $5,000 a year for 10 years. She is currently receiving $8,000 annually from her annuity. By the time all of the principal and interest is paid out, Gloria will have been paid $100,000. How much of the annual benefit is taxable?

Qualified and non-qualified

How does the IRS classify the two different types of retirement acoounts?

It keeps the policy from being cancelled if, after two years, it is discovered that there was an error, concealment, or misrepresentation by the policyowner

How does the incontestability clause benefit the insured?

Group insurance has a non-deductible premium while individual insurance has a tax deductible premium to the payor

In comparing the purchase of individual life insurance to acquiring group life, which statement is not true?

Stock insurers are owned by the shareholders, and issue non-participating policies

In contrasting stock insurers with mutual insurers , which statement is not false?

Contribute a specific amount of capital reserves to the state

In order to be financially solvent, an insurer must accomplish all of the following, except:

The period of time after the youngest child reaches 16, but before the widow reaches 60, in which the surviving spouse receives no Social security benefits

In the insurance planning processes, the blackout period is:

Medical conditions found during under writing

Members of the MIB are required to report

Modified whole life, ordinary whole life, single premium whole life

Starting from the lowest to highest, rank the initial premium paid by the client for these insurance policies below:

Both are tax deductible to the investor

The Roth and Traditional IRAs have some similarities. which of the following is not true?

The job that is most hazardous

The applicant works 2 different jobs. The underwriter will rate him according to which job?

Fixed amount

The beneficiary chooses to receive the policy proceeds in the form of monthly income at the rate of $3,000 per month, until principal and interest are exhausted. What settlement option did the beneficiary select?

Odds of dying versus the odds of disability

The definitions of mortality and morbidity:

Any documents referenced by the policy

The entire contract can include many components. Which of the following cannot be a part of the entire contract?

Equity-indexed annuity

The future account value of the annuity Alex purchased is connected to the S&P 500 index. What type of annuity did he purchase?

Rescind the policy

The insured dies 6 months after the policy issue date. Upon death of the insured, it is determined that the applicant made a material misstatement on the application. What is the most likely course of action for the insurer?

Annuitant

The person who will receive the benefit of an annuity and whose life the payout is based upon when the contract is purchased is the:

Unequal exchange in value

The term aleatory is best defined by which of the following?

Reinstatement, entire contract, incontestability

Which of the following are common provisions found within many life insurance policies?

Credit life

Which of the following can be written as a group policy?

Will only increase with the inflation rate. There will be an additional premium charged, but no evidence of insurability is required.

Under the cost of living adjustment rider, the policy:

Interest only option

Under which life settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit?

18 or 19, if unmarried and a student in elementary or secondary school

Upon the death of a primary breadwinner who is fully insured under social security, a dependent child is eligible to receive an income benefit until the age of

The total premium paid is returned to the insured when the policy is cancelled

What is not likely to happen with a return of premium policy?

Non-deductibility of premiums, non-taxable death benefits

What is the usual federal income tax treatment of individual life insurance?

Extended term insurance

What nonforfeiture options allows a policyowner to use the existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time?

Mortgage redemption (decreasing term/mortgage protection)

What type of insurance would a person select as the most efficient method of paying the outstanding debt on their home in the event of death?

The insurance company must refund the entire premium paid

When a client is declined after submitting a prepaid application for life insurance:

The owner of the policy is disabled or has died

When a policy continues because of a payor benefit clause, it means

A client buys insurance to fund a buy-sell agreement

Which of the following is not a personal use of life insurance?

Guaranteed insurability/future purchase option

Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?

Copies of any written illustration or comparisons used in the process of making the replacement do not need to be included with the submitted application.

Which of the following statements about the process of replacement is incorrect?

An employee insures their employee in the fear of their job

Which of the following transaction would most likely be declined due to lack of insurable interest?

Any action that could do harm to your clients well-being such a reckless driving

Which of the following would not be considered a speculative risk?

Mobility & Bathing

Which pair are Activities of Daily Living (ADLs)?

Roth IRA

Which qualified plan is characterized by having a non-deductible contribution and tax-free distributions?

The reinstated policy is contestable if the first time it was in force it already passed the two year mark

Which statement about reinstatement in false?

They are not taxable and are not guaranteed

Which statement is an accurate description of life insurance policy dividends?

An insurer suffering from an impairment of their minimum required paid-in capital are insolvent

Which statement is false concerning insurance company regulations?

Brokers represent insurers in negotiating coverage with various insureds

Which statement is not true about insurance sales?

Without evidence of insurability at specified ages or dates

Your policy contains the guaranteed insurability rider. When can you purchase additional insurance on your policy?