Part 2 (Law) - Life Only

Which of the following is an example of replacement? A: A client keeping a policy and deciding not to buy a new one B: A client building up a whole life policy and converting it to a reduced paid up policy. C: A client having 25% of their cash value borrowed and selecting a new term policy in place of the current policy D: An insured renewing their term coverage

C: A client having 25% of their cash value borrowed and selecting a new term policy in place of the current policy

Which of the following policies are exempt from replacement regulation? A: A term policy that is convertible that expires in 6 years. B: A whole life policy that has 25% of its cash value loaned C: A variable life policy D: A policy that is surrendered

C: A variable life policy Of all the listed answers, Variable life is the only situation that is exempt from replacement regulations. All of the other listed answers are policies that are defined by replacement regulation.

Which of the following policy death benefit amounts would not warrant an illustration for a product that may normally require one? A: $40,000 B: $30,000 C: $20,000 D: $10,000

D: $10,000 In policies with $10,000 or less death benefit, an illustration is not required.

The regulation that specifies an agent's duty to ensure that a prospective buyer receive the best plan/coverage for the client's need is: A: Solicitation B: Replacement C: Advertisement D: Guaranty Association

A: Solicitation Life Solicitation rules stipulate an agent's duty to recommend the best product/plan for the proposed insured's need.

Under Illustration Regulation, an illustration must be provided at: A: application B: delivery C: premium payment D: None of the Above

A: application Illustrations must be supplied at application by the producer.

Company A is replacing a policy that was written ten years ago by Company B. Company A is: A: the replacing insurer B: the existing insurer C: A direct-response sale D: the applicant

A: the replacing insurer Because Company A is replacing Company B's coverage, Company A is the replacing insurer.

Which of the following are exemptions under life solicitation rule? A: Credit Life B: Annuities C: Variable Life D: All of the Above

D: All of the Above Credit Life, Annuities, and Variable life policies are all exemptions under Life Solicitation Rule.

All of the following are not allowed under advertising regulations EXCEPT: A: Ads that state the policies are limited B: A genuine testimonial by a celebrity endorser C: An ad implying that a government entity approves the policy D: State that dividends are guaranteed on a television commercial

B: A genuine testimonial by a celebrity endorser Testimonials and endorsements by any third party endorsers must be factual and genuine. The remaining answers are examples of what is not permitted by advertising laws.

Under Life Solicitation Rule, the definition that applies to a consumer that is most concerned about cash value buildup is referred to as: A: Life Insurance Net Payment Cost Index B: Life Insurance Surrender Cost Index C: Policy Summary D: Cash Dividends

B: Life Insurance Surrender Cost Index Under Life Insurance Surrender Cost Index which explains cash surrender value over 10 or 20 years, is important when cash value is of primary importance to the policyholder.

Which of the following policies are regulated under FINRA compliance? A: Whole Life B: Annuities C: Variable Life D: Term Life

C: Variable Life Variable life policies are regulated under the Financial Industry Regulation Authority (FINRA) and an agent must be licensed in life and securities to market Variable products.

The time in which a participating policy must begin to surplus out is by A: the end of the grace period B: the end of the first policy year C: the end of the third policy year D: the end of the fifth policy year

C: the end of the third policy year Participating policies must begin to pay surplus out by the end of the third policy year.

All of the following are excluded under advertising regulations EXCEPT: A: Marketing materials created by the insurer for agent use only B: A general announcement about new group enrollment C: A producer answering a policyholder's question that does not urge a client to modify coverage D: A producer explaining that a senior's policy is endorsed by the federal government

D: A producer explaining that a senior's policy is endorsed by the federal government A producer cannot imply that benefits are endorsed by government agencies. All of the remaining answers are excluded from advertising regulations.

G has suffered a life altering heart attack and is allowed to use some of her death benefit to pay for medical bills. Which law allows this scenario? A: Replacement B: Advertising C: Long Term Care Rider D: Accelerated Benefit

D: Accelerated Benefit Under Accelerated Benefit law, an insured may receive 75% of their death benefit for a qualified condition such as a heart attack in which the insured will never recover

Which of the following is required to be listed in an illustration? A: Age and sex of proposed insured B: Initial death benefit C: Dividend option of non-guaranteed elements D: All of the Above

D: All of the Above Illustrations require the name, age, and sex of the insured, initial death benefit and any non-guaranteed dividend options projected.

All of the following are CORRECT about replacement regulations EXCEPT: A: the purpose of replacement is to protect the insured B: information must be factual and not misleading C: the insured must receive information to make a decision in their best interest D: None of the Above

D: None of the Above All of the answers are the purpose of replacement and therefore there are no false answers listed.

All of the following is required to be on an illustration EXCEPT: A: name of insurer B: name and address of the producer C: generic name of the policy D: Notice Regarding Replacement form

D: Notice Regarding Replacement form The name of the insurer, agent and generic name of the policy are all required to be in an illustration.