NorthWestern Mutual Life Insurance Test

All documents used in the solicitation of insurance must be maintained by an insurer for at least

3 years

How soon from the submission of a notice of claim must an insurer acknowledge the receipt of the notice?

30 days

If a resident insurance producer moves from Tennessee to another state, he/she must file a change of address and provide certification from the new resident state within how many days of the change of legal residence?

30 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

The rules regarding life policy replacement apply to which of the following situations?

The original policy is allowed to lapse.

In a life settlement contract, whom does the life settlement broker represent?

The owner

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Viatical settlement

What is the name of the insured who enters into a viatical settlement?

Viator

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following types of insurance policies would perform the function of cash accumulation?

Whole life

An applicant who receives a preferred risk classification qualifies for

lower premiums than a person who receives a standard risk.

Candidates for either a Property license or a Casualty license must complete how many hours of prelicensing education?

20

All materials used in the solicitation of life insurance must provide the following EXCEPT

A single sum of all guaranteed and nonguaranteed benefits.

Which of the following products requires a securities license?

Variable annuity

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

The interest in not taxable since it remains inside the insurance policy.

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence

An insured purchased a 15-year level term life insurance policy with a 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 injuries. What amount would his beneficiary receive as a settlement?

$200,000

What is the minimum required age for an insurance producer in this state?

18 years old

An insurer must present a buyer's guide and policy summary prior to accepting the applicant's initial premium, unless the policy contains an unconditional refund provision within at least how many days?

10

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

100

A temporary license may be issued by the Commissioner for a period not to exceed how many days?

180

How soon must the insurer pay a death benefit claim after receiving the proof of death?

2 months

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

Who is a third-party owner?

A policyowner who is not the insured

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

Under which of the following circumstances would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for her medical treatment.

What is a foreign insurer?

An insurer with a home office in another state

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

Annually Renewable Term

The death protection component of Universal Life Insurance is always

Annually Renewable Term

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

Employer contributions made to a qualified plan

Are subject to vesting requirements

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?

As of the application date

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Authorized

Assuming that a policy does not contain an unconditional refund provision of at least 10 days, when must a buyer's guide and policy summary be provided?

Before accepting the initial premium.

All of the following information about a customer must be used in determining annuity suitability EXCEPT

Beneficiary's age.

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?

Buy-sell agreement

All of the following are personal uses of life insurance EXCEPT

Buy-sell agreement.

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time.

All of the following are duties and responsibilities of producers at the time of application EXCEPT

Change any incorrect statement on the application by personally initialing next to the corrected statement.

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 additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. What provision makes this possible?

Collateral assignment

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.

A key person insurance policy can pay for which of the following?

Costs of training a replacement

If a producer continues to violate the Insurance Code, a new civil penalty will be assessed every

Day.

If a producer discusses policy dividends in a sales presentation, what statement must the producer also make?

Dividends are not guaranteed.

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable.

All of the following would be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

What policy component decreases in decreasing term insurance?

Face amount

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount

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.

All of the following are business uses of life insurance EXCEPT

Funding against company's generate financial loss.

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

Concerning insurance, the definition of a fiduciary responsibility is

Handling insurer funds in a trust capacity.

The purpose of the Tennessee Guaranty Association is to

Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company.

When would a misrepresentation on an insurance application be considered fraud?

If it is intentional and material.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceases the insured

Annually renewable term policies provide a level death benefit for a premium that

Increases annually.

All of the following are Nonforfeiture options EXCEPT

Interest only

In order to enforce the Insurance Code, the Commissioner has the power to conduct which of the following?

Investigations

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is an MEC.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

Which of the following is an example of a limited-pay life policy?

Life Paid-up at Age 65

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life expectancy

All of the following are considered limited lines of insurance EXCEPT

Long-term care insurance.

For the purpose of making an investigation, the Commissioner does NOT have the power to do which of the following?

Make testimony and documents available to the public.

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation

Which of the following documents must be provided to the policyowner or applicant during the policy replacement?

Notice Regarding Replacement

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced.

What is the training requirement for producers who want to sell annuities in this state?

One-time 4-hour training course

A participating insurance policy may do which of the following?

Pay dividends to the policyowner.

Which of the following provisions would NOT be found in Term life insurance?

Policy loan

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

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?

Replacement rule

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What should the insurer do with the application?

Return to the applicant for completion

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

Revocable beneficiary.

If a producer is found to have committed unfair trade practices or fraud, the Commissioner has the authority to do all of the following EXCEPT

Sentence the producer to jail time.

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option.

Which type of life insurance policy generates immediate cash value?

Single Premium

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.

Which of the following would be considered a nonqualified retirement plan?

Split-dollar plan

Which of the following statements about a suicide clause in a life insurance policy is true?

Suicide is excluded for a specific period of years and covered thereafter.

Which of the following policies would NOT have a policy loans provision?

Term life

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,

The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data.

If an insured withdrawals 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 is INCORRECT concerning a noncontributory group plan?

The employees receive individuals policies.

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?

The employer is the owner and beneficiary.

A Policy Summary must include all of the following EXCEPT

The guaranteed dividend rate.

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

Which of the following best defines the "owner" as it pertains to life settlement contracts?

The policyowner of the life insurance policy

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a Notice Regarding Replacement.

Which is true about a spouse term rider?

The rider is usually level term insurance

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract.

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third-party ownership

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

A temporary insurance License may be issued without examination in all of the following instances EXCEPT

To an applicant who fails to pass an insurance producer's examination.

What is the purpose of key person insurance?

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

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

Which of the following is NOT an example of a business use of Life Insurance?

Workers Compensation