Primerica Practice Test
What Settlement Option is the only option that is temporary or changeable?
Interest Only
How long is the grace period for an individual life insurance policy?
1 month
if a group life policy ends insurance for any class of insured individuals, an individual policy must be ordered to every individual who has been insured for ...
5 years
What is an Equity Indexed Annuity?
A fixed annuity that invest on a relatively aggressive basis to aim for higher returns.
Is there valid insurable interest between a debtor in the life of a creditor?
No. There is no valid insurable interest
Cash value guarantees in a whole life policy are called...
Nonforfeiture values
Which of the following is NOT a component of an insurance policy premium?
Number of beneficies
In case of loss, the indemnity provision in insurance policies....
Restores an insured person to the same financial state as before the loss
Wagering on a sporting event is known as what type of risk?
Speculative
When a whole life policy lapses or is surrender prior to maturity the cash value can be used to...
Purchase a single premium policy for a reduced face amount
What Settlement Option is paid over a number of years and will be paid in full?
Fixed Period
Traditional IRA contributions are tax deductible based on...
...Owner's income
What is true about credit life insurance?
Creditor is the policyowner.
What type of annuity can be purchased with a single premium and provide benefit payments immediately?
Immediate
What are the components of a Cash Nonforfeiture Option?
Loan with 8% interest but still have the insurance, or if you surrender (cancel) and lose 6%.
Annuities Certain limit the amount paid by the annuity to a certain fixed...
Period or fixed amount
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as....
Utmost Good Faith
The provision which states that both the policy and a copy of the application form the contract between the Policyowner and the insurer is called the....
Entire contract
An annuity owner receives the same guaranteed payment every month. What type of annuity is it?
Fixed
What Settlement Option is paid in a fixed amount and will be paid in full?
Fixed Amount
The insurer must be able to reply on the statements in the application, and the insured must be able to reply on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as...
Utmost good faith
What is the purpose of the surrender charge in a deferred annuity?
To compensate the company for loss of investment value
What kind of policy allows withdrawals or partial surrenders?
Universal life
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to...
...to purchase a single premium policy for a reduced face amount
List 3 statements regarding tax-qualified annuities.
1. Annuity earnings are tax deferred 2. The must be approved by the IRS 3. Withdrawals are taxed
Any insurance person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to....
5 years
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed.
Which component increases in the increasing term insurance?
Death benefit
How often must producer licenses renew in Louisiana?
Every 2 years
What is not considered a personal use for life insurance?
buy-sell agreement
Paid-up Insurance allows you to...
...Pay up the policy early
Upon policy delivery, the producer may be required to obtain...
...signed waiver of premium
What kind of Dividend Options creates a saving account that earns taxable interest?
Accumulation at Interest
When must insurable interest exist in a life insurance policy?
At the time of application
If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices?
At the time of policy delivery
What documents are used in the underwriting process containing specific medical details about an applicant?
Attending Physician's Statement (APS)
A whole life policy is surrendered for a reduced paid up policy. The cash value in the new policy will...
Continue to increase
What type of an interest rate is guaranteed in universal life policies?
Contract interest rate
The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. What is the insurance company's course of action?
Deny any payment of death benefit
If a life insurance company uses HIV testing as part of its underwriting, when must an applicant be notified of the procedure?
Prior to performance of the test
What type of plan has a tax benefit for both employer and employee?
Qualified plan
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
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
Define a loss.
The reduction, decreasing or disappearance of value of the person or property
How are fixed annuities and equity indexed annuities similar?
They both have guarantees
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
True or False - Positive HIV test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant.
True
An aleatory contract is based on what kind of exchange?
Unequal exchange of values
which of the following policies would have an IRA required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
What is the time limit of an immediate annuity?
Within 12 months
What best depicts the law of large numbers?
question - 44 The larger the pool of risk under study, the more accurate the predictions will be
What is the difference between a straight life policy and a 20-pay whole life policy?
question 38 - Premium payment period
Policy loan request, except for loan requests for payment of due premiums, many be deferred for a period of up to...
question 42 - 30 days
All of the following are true of the survivorship life policy except
the premium is based on the age of the insured
What is the time limit of a Deferred annuity?
After 12 months
What is not used to provide group life insurance?
Age, sex and occupation of each individual certified holder
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was cased by an accident as defined in the policy?
An accidental death rider
In a deferred annuity, the difference between the accumulation value and the surrender value is the...
Surrender charge
List three statements regarding an annuitant.
1. the annuitant must be a natural person 2. the annuitant's life expectancy is taken into consideration for the annuitant 3. the annuitant receives the annuity benefits
The widower of an agent was issued a temporary license 30 days ago. How much longer can be legally serve under this license?
150 Days
A temporary license is good for...
180 days
Describe a Hazard.
A warning
You never back track from a ________________ to a _________________
Annuity to a 401k plan
Which of the following would NOT trigger the payment of Accelerated Death Benefits? 1. Requiring an organ transplant for the insured to survive 2. Being permanently institutionalized 3. Being permanently disabled 4. Terminal illness
Being permanently disabled
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material
the medical information bureau was created to protect
Insurance companies from adverse selection by high risk persons.
which ultimately determines the interest rates paid to the owner of a fixed annuity?
Insurer's guaranteed minimum rate of interest
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.
What best describes annuity renewable term insurance?
It is level term insurance
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 the premium
What Settlement Option provides income for life and you may receive more than the death benefit?
Life Income
Which of the following is NOT a component of an insurance policy premium? 1. Insurer expenses 2. Investment return 3. Number of Beneficiaries 4. Mortality cost
Number of beneficiaries
During replacement of life insurance, a replacing insurer must do what?
Obtain a list of all life insurance policies that will be replaced.
What statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
What Dividend Option increases the death benefit for 1 year?
One-Year Term Dividend Option
A prospective insured receives a condition receipt but dies before the policy is issued. The insured will...
Pay the policy proceeds only if it would have issued the policy
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
List 3 characteristics of insurable risk.
The loss must be measurable, large, and due to chance.
Describe what the annuity period is.
The period of time during which accumulated money is converted into income payments
What is not true regarding a Straight Life Policy
The premium steadily decreases over time, in response to its growing cash value
The annuitant assumes the risks on investments in a what type of annuity?
Variable
What insurance policy allows a Policyowner to take out a loan from the policy's cash value?
Variable annuity
Which of the following products requires a securities license?
Variable annuity
What life insurance policy allows a Policyowner to take out a loan from the policies cash value?
Variable universal life
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?
Variable universal life
What is not fixed in a Indexed Whole Life Policy?
cash value growth
The interest earned on policy dividends is...
taxable
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1st; however, the insured failed to pay the premium. He died on February 28th. How much would the beneficiary receive from the policy?
$9,800
What options are under the Settlement Options?
1. Cash Payment 2. Life Income 3. Interest Only 4. Fixed Period 5. Fixed Amount
How many hour of continuing education credits are required in order for a producer to renew his/her license?
24 hours
When a resident producer changes his residence address, the insurance department must be notified within...
30 days
What producers will be required to complete continuing education hours to renew his license?
A producer licensed 4 years ago who holds only one line of authority
This state provided for a temporary license for all of the following EXCEPT
A producer's retirement.
Under the 401(k) bonus or thrift plan, the employer will contribute
An undetermined percentage for each dollar contributed by the employee.
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, tat would be considered...
An unfair trade practice
The death benefit protection component of universal life insurance is always...
Annually Renewable Term
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as a requested. When does the policy coverage become effective?
As of the application date.
What is not true about the federal tax advantages of a qualified plan?
At distribution, all amounts received by the employee are tax free.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash Option
What kind of dividend option sends policy owners checks?
Cash payment
What settlement option provides cash payment to the annuitant at annuitization?
Cash refund annuity settlement option
What limits the amount that a policyowner may borrow from a whole life insurance policy?
Cash value
What does "liquidity" refer to in a life insurance policy?
Cash value can be borrowed at any time
What report has information regarding a person's credit, character, reputation and habits.
Consumer report
Which of the following includes information regarding a person's credit, character, reputation and habits?
Consumer report
Which of the following statements is true regarding SIMPLE plans?
Contributions and earnings are tax deferred until funds are withdrawn
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index such as the Consumer Price Index, is called...
Cost of Living Rider
What happens when a policy is surrender for its cash value?
Coverage ends and the policy cannot be reinstated.
An adjustable life policy can assume the form of...
Either term insurance or permanent insurance
When the insured elected the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
John would like to allocate a portion of his monthly paycheck into the annuity, and would like to start the payouts at retirement, what kind of annuity should he purchase?
Flexible premium deferred annuity
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?
Guaranteed insurability option
If a life policy allows the policyowner to make periodic additions to the face amount at a standard rates, without providing insurability the policy includes a...
Guaranteed insurability rider
A fixed annuity provides the following features:
Guaranteed minimum rate of interest - payments that do not vary - guarantees the specified dollar amount for each payment and the length of the period of payments
A father purchases a life insurance policy on his teenage daughter and adds the payor benefit rider. in which of the following scenarios will the rider waive the payment premium?
If the father is disabled for more than 6 months
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?
Income tax on distributions.
What type of insurance would be used for a Return of Premium Rider?
Increasing Term
The mode of premium payment...
Is defined as the frequency and the amount of the premium payment.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death?
Joint Life
A Louisiana insurance company ran an advertisement in June 2008. When could the company discard the file on this A.D.?
June 2012
Which of the following best defines the unfair trade practice of rebating? 1. Making false statements that are maliciously critical and intended to insure another person in the business of insurance 2. Offering an inducement of something of value not specified in the policy 3. Making statements that misrepresent an insurance policy in order to indue an insured to replace the policy 4. Charing premium amounts in excess of the amount stated in the policy
Offering an inducement of something of value not specified in the policy
The dividend option in which the Policyowner uses dividends to purchase a term policy for one year is referred to as the...
One-year term option
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?
Paid-up Additions
What type of interest rate is guaranteed in universal life policies?
Question 6
Equity Indexed Annuities
Seek higher returns
List 3 components of Reduced Paid-Up Nonforfeiture Option.
Substandard risk - Builds cash value - Whole Life
If a producer is suspected of acting in violation of the insurance code, what authority would preside over a legal hearing regarding the matter?
The Commissioner
Who has the authority to issue cease and desist orders?
The Commissioner
What entity cannot regulate variable life policies?
The Guaranty Association
What would provide an underwriter with information concerning an applicant's health history?
The Medical information Bureau
J transferred his life insurance policy to his son two years before his death. What happens?
The entire face value of the policy will be included in J's taxable estate
What statement is true about a spouse term rider?
The rider is usually level term insurance.
In order to reinstate a life insurance policy the insured must do all of the following except...
pay next years premiums in advance
Which of the following is required to provide a notice of information practices to applications and policyholders?
question 11 - the underwriter
What is a Reduction of Premium?
A down payment on next year's premium.
Define Exposure.
A unit of measure used to determine rates of charge for insurance coverage.
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?
Accumulation Period
what is the time period called during which the surviving spouse of the insured does not receive Social Security income benefits?
Blackout Period
Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?
Buy-Sell Agreement
What Settlement Option excludes paying interest?
Cash Payment
The owner of an IRA dies without having named a beneficiary, by what point must the interest be distributed?
December 31st of the calendar year that contains the fifth anniversary of the owner's death
When must an IRA be completely distributed when a beneficiary is not named?
December 31st of the year that contains the fifth anniversary of the owner's death
What type of insurance policy is most commonly used in credit life insurance?
Decreasing term
An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered
Delivered
Which policy component decreases in decreasing term insurance?
Face amount
True or False - Insurers are barred from requesting HIV testing
False
What is payment called for an annuity?
Premium
What would be included in a policy summary?
Premium amounts and surrender values
Which of the following will be included in a policy summary?
Premium amounts and surrender values
Who can request changes in premium payments, face values, loans and policy plans?
The Policyowner
With the cash refund option, when the annuitant dies, what would the beneficiary receive?
The refund of the original amount minus payments already made.
Which of the following types of policies allows the Policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
Cash value guarantees in a whole life policy are called...
nonforfeiture values
What is included in a policy summary?
the premium amount and surrender values
Under an extended term nonforfeiture option, the policy cash value is converted to...
the same face amount as in the whole life policy
what is true regarding statistics used in an advertisement?
the source must be identified.
True or false - in group life, the cost of coverage is based on the ration of men and women in the group.
true
The paid-up addition option uses the dividend...
...To purchase a smaller amount of the same type of insurance as the original policy
List 3 characteristics of insurable risk.
1. The loss must be due to chance 2. the loss must be measurable 3. the loss exposure must be large
A licensed life producer has completed 12 of his continuing education hours for this period. How many more will be have to finish?
12
What Settlement Option gives a lump sum and is not taxable?
Cash Payment
What are the two components of a Universal policy?
Insurance and cash account
A whole life policy that will generate immediate cash value is a...
Single premium policy
A variable annuity serves...
...as a hedge against inflation
Which of the following is true regarding a waiver of a surrender charge on an annuity contract
The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to...
The contingent beneficiary
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
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
What allows an insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
Sam set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does Sam have?
Simplified Employee Pension (SEP)
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
false advertising
What is featured in a single premium immediate annuity?
income payments start within one year
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce....
Without receiving written consent from an insurance regulatory authority.
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
fixed amount
Mortality - Interest + Expense =
gross premium
A return of premium term life policy is written as what type of term coverage?
increasing
If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?
inform the insurance company
According to the Common Disaster cause, 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?
question - The primary beneficiary died before the insured
A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of the premium paid exceeds the amount that would have provided paid-up insurance in how many years?
question 12 - 3 years
Which of the following would NOT be eligible for coverage under key person? 1. The pharmacist in a drug store 2. the manager of a small store 3. the owner of a shop 4. the executive officer of a company
question 22 - the owner of a shop
How long is the period of time in which a licensee must renew his or her license?
question 25 - 30 days prior to expiration
If the Commissioner issues a cease and desist order, that means the insurer must...
question 26 - Suspend all insurance transactions in this state
During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is...
question 29 - lower
A whole life policy is surrender for a reduced-paid up policy. The cash value in the new policy will...
question 30 - Continue to increase
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
question 35 - Within 30 days
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT: 1. Pay next year's premium in advance 2. Pay back premiums 3. Pay any interest due on back premiums 4. Repay any outstanding loans and interest
question 41 - Pay any interest die on back premiums
Which of the following is NOT an example of the company's location of incorporation? 1. Alien 2. Authorized 3. Domestic 4. Foreign
question 46 - Authorized
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed amount
What dividend option will increase the death benefit?
Paid-up addition
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT... 1. Pay any interest due on back premiums 2. Repay any outstanding loans and interest 3. Pay next year's premiums in advance 4. Pay back premiums
Pay next year's premiums in advance
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at the time that the insured has misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy
All of the following statements about indexed whole life insurance are correct EXCEPT: 1. The cash value depends on the performance of the equity index 2. The policy face amount reminds level throughout the life of the policy. 3. The premium is fixed 4. There is a guaranteed minimum interest rate
Question 2
Which of the following is true regarding pure life annuity settlement option? 1. It guarantees that all the proceeds will be paid out 2. The beneficiary will receive a refund of the principal 3. It guarantees income for a specified period of time 4. It provides the highest monthly benefits
Question 47 - it provides the highest monthly income
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. There answer is considered to be...
Representation
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 rights of ownership. The policyowner should have her husband named as the...
Revocable beneficiary
What determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
Which of the following would be likely to establish a SEP? 1. Military personnel 2. The elderly 3. Low-Income individuals and families 4. Small employers
Small employers
The national DO NOT CALL Registry was created to regulate
Telemarketers
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
What entities regulate variable life policies?
The SEC, The Insurance Department, and the Federal government.
A 60 year old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. What happens?
The amount of the distribution is reduced by the amount of the 20% withholding tax
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distributions is reduced by the amount of 20% withholding tax
In a fixed annuity, what is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate of currant rate
The period of time during which accumulated money is converted into income payments is called...
The annuity period
What is the cost of coverage based on for group life insurance?
The average age and ration of men to women
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary
Who does the spendthrift clause in a life insurance policy protect?
The beneficiary
Peril is most easily defined as...
The cause of loss insured against
In comparison to consumer reports, describe a unique characteristic of investigative consumer reports?
The customer's associates, friends and neighbors provide the report's data.
an individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam
After a hearing, if the Commissioner finds a licensee is using Unfair Methods of Competition, the Commissioner may issue a Cease and Desist order against that person and levy a fine of how much?
Up to $1,000 for each violation
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?
$10,000 no tax consequence.
Listy 3 things regarding Straight Life Policy.
1. Lowest annual premium 2. Premium steadily decreasing over time, in response to its growing cash value. 3. Develops cash value by the end of the third policy year
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-pouncer plan who has earned income
How are state Insurance Guaranty Associations funded?
By their members - authorized insurers
Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC?
She must be appoint specifically by CGIC
Which settlement option provides a single beneficiary with income for the rest of his/her life?
Single Life
Which statement option provides a single beneficiary with income for the rest of his/her life?
Single Life
A producer is charged with committing several crimes in Louisiana. Who is required to report the charges to the Commissioner?
The producer
An insured as chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
Which of the following is a statement that is guaranteed to be true. and if untrue, may breach a insurance contract?
Warranty
Upon policy delivery, the producer will not receive...
sign of waiver of premium
Upon policy delivery, the producer should not require....
signed waiver of premium
The paid up addition option used the dividend...
...to purchase a smaller amount of the same type of insurance as the original policy.
Insurance policies are not drawn up through negotiations, and an insured as little to say about its provisions. what contract characteristic does this describe?
Adhesion.
Employer contributions made to a qualified plan
Are subject to vesting requirements
A California insurer wants to transact business in Louisiana. What document must it first receive?
Certificate of Authority
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to...
Charge a higher premium
Insurance companies that hold a Certificate of Authority to transact insurance in Louisiana must be examined how often?
Every five years or as often as the commissioner feels is necessary.
Under which installment option does the annuitant select the amount of each payment and the insurer determines how long the will pay benefits?
Fixed amount
The annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is known as which type of annuity?
Flexible premium Deferred Annuity
An individual purchasing a 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 additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
What is true about the premium on the children's rider in a life insurance policy
It remains the same no matter how many children are added to the policy.
What is the exception that an underwriter could use to select and classify risk for a potential client?
National origin
Which nonforfeiture option provides coverage for the longest period of time?
Reduced Paid-up
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
The insured will need a written consent of the insurer.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but are taxable upon distribution
A producer's license has been revoked for a violation of the insurance code. When can the producer apply for a new license?
Within 1 year of the revocation
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?
The employer is the owner and beneficiary.
In credit life insurance, who is responsible for paying the policy premiums?
The borrower only
Describe a Peril.
The causes of loss
The type of term insurance that provides increasing death benefits as the insured ages is called...
increasing term
A fixed annuity is...
Conservative - low risk - guarantees - general account - bonds
What is considered a physical hazard?
Diabetes
j applied for a life insurance policy one January. the policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid?
February 28th, or 10 days after the time the policy is delivered
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
life income with period certain
If $100 000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?
$3,000
An insurance owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will...
Pay the policy proceeds only if it would have issued the policy
What option are under the Dividend Options?
1. Cash Payment 2. Reduction Premium 3. Accumulation of Interest 4. Paid-Up Additions 5. Paid-up Insurance 6. One-year term
List 3 statements regarding a non qualified retirement plan?
1. Contributions are not currently tax deductible 2. It can discriminate in benefits and selecting participants 3. Earnings grow tax deferred
List 3 unfair claims settlement practices.
1. Failing to adopt and implement reasonable standards for settling claims. 2. Failing to acknowledge pertinent communication pertaining to a claim 3. Refusing to pay claims without conducting a reasonable investigation
List 3 characteristics of Group Life insurance.
1. Individuals receive a certificate of authority. 2. Amount of coverage is determined according to nondiscriminatory rules. 3. Certificate holders ma convert coverage to an individual policy without evidence of insurability.
What options are under the Nonforfeiture Options?
1. Reduced Paid up 2. Extended Term 3. Cash
If a producer allows his license to lapse, within what time period may the producer reinstate the same license?
2 years
If a resident producer or solicitor has a change of residential or business address, how soon must the licensee notify the Commissioner of these changes?
30 days
Insurers must keep files of all advertisements used in Louisiana for how many years?
4
The Commissioner is elevated to a term that lasts for how many years?
4 years
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teacher is a(n)...
403(b) Plan (TSA)
What kind of person would benefit most from a straight life immediate annuity?
A 60 year old man who needs as much retirement income as possible
If a company has a simplified employee pension plan what type of plan is it?
A qualified plan for a small business
If a producer's license was revoked for a violation of the Insurance Code, when can the producer apply for a new license?
After 1 year
With a Single Premium Deferred Annuity (SPDA), when are the benefits paid?
After more than 1 year
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered...
An unfair trade practice
Because an agent is using stationary with the logo of an insurance company, applicant's for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
In order to get a nonresident license in Louisiana, producers must...
Apply and pay a fee to a nonresident state that reciprocates
What is a feature of a variable annuity?
Benefit payment amounts are not guaranteed
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age what type of policy is this?
Jumping juvenile policy
What term best describes the act of withholding material information that would be crucial to an underwriting decision
Concealment
The proposed insured makes the premium on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
Conditional
All of the following are true non qualified deferred compensation plan EXCEPT... 1. It is a contractual agreement whereby the employee agrees to defer receipt of a portion of his compensation until retirement, disability or death 2. It does not require the IRS approval. 3. Contributions are tax deductible 4. it can be discretionary
Contributions are tax deductible
What is another word for Single Payments?
Lump sum
What is another word for Flexible Payments?
Periodic
If the Policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has ownership rights?
Policyowner
Based on a Human Life Value Approach, what is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death
If you surrendered your annuity, what are you entitled too?
Premiums + plus interest - the surrender charges =
The purpose of the Fair Credit Reporting Act is to...
Protect consumers against the circulation of inaccurate of obsolete personal or financial information
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT... 1. Birth of child 2. Marriage 3. Purchase of a new home 4. Approximately every 3 years between the ages of 25 and 40
Purchase a new home
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT: 1. Purchase of a new home 2. Approximately every 3 years between the ages of 25 and 40 3. Birth of a child 4. Marriage
Purchase of a new home
Key person insurance can provide protection for all of the following economic losses to a business except...
pay the death benefit to the estate of the insured...
How do premiums in variable universal life policies vary from those in variable whole life policies?
question 19 - premiums are flexible
All of the following are true regarding a cash refund annuity settlement option EXCEPT: 1. It is considered a refund life annuity 2. it provides a lump-sum payment to the beneficiary 3. It provides a cash payment to the annuitant at the annuitization 4. It guarantees a refund of the principal
question 40 - it is considered a refund life annuity
Premiums collected on behalf of the insurance company by an agent will be held in what capacity?
Fiduciary
What are the 3 investment options that help the annuity grow?
Fixed Annuity - Equity Indexed Annuity - Variable Annuity
if a beneficiary wants a guarantee that benefits paid from the principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed Period
List 2 components of Paid-Up Additions Dividend Options.
Automatic Option - Paid up coverage increases the death benefit
List 2 components of Extended Term Nonforfeiture Option.
Automatic option - Keeps the same coverage by switching to term
Which of the following is true regarding taxation of dividends in participating policies?
Dividends are not taxable
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
How often must producer license renew in Louisiana?
Every 2 years
All of the following information needs to be included on an application for life insurance EXCEPT... 1. The agent's statement, if applicable 2. Medical information about the applicant 3. Health insurance policies in force 4. Life insurance with other insurers
Health insurance policies in force
What type of annuity can be purchased with a single premium and provides benefit payments immediately?
Immediate
if a loan request if for payment of due premiums of the policy, how soon must the insurer issue a loan?
Immediately
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?
Inception report
What type of insurance would be used for a Return of Premium rider?
Increasing Term
Whole would be allowed catch-up contributions?
Individuals age 50 or older
What type of annuity guarantees to pay an income to the annuitant each year as long as he lives, and upon death, the annuitant will refund the remaining payments to a beneficiary?
Installment refund annuity
What are the two components of a universal policy?
Insurance and cash account
All of the following are considerations under the needs approach planning for life insurance EXCEPT... 1. Debt cancellation 2. Education Fund 3. Insured's income 4. Emergency Reserve funds
Insured's income
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
when i 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.
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT: 1. It builds cash value 2. If the insured lives to age 100, the policy matures, and the face amount is paid to the insured 3. It does not have a guaranteed death benefit 4. It is funded by a level premium
It does not have a guaranteed death benefit
If a contact provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a...
Joint Life Annuity
When comparing Joint Life Policy to two individuals life policies of the same amount on the same insureds, which condition is true?
Joint Life has a lower premium than the total of two individual policies
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policy select?
Joint and Survivor
What Settlement Options involve installments with interest?
Life Income - Interest Only - Fixed Period - Fixed Amount
Guaranteeing future dividends is considered to be an unfair or deceptive act known as...
Misrepresentation
A Equity Indexed Annuity is....
Moderate - some risk (4%-8%) - some guarantees - bonds - S&P500
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an...
Modified endowment contract
What is another word for Level Payments?
Monthly
Under the Fair Credit Report Act, individuals rejected for insurance due to information contained in consumer report...
Must be informed of the source of the report
An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?
The difference between the premium paid and the cash value
All of the following are advantages of a qualified retirement plan EXCEPT
The income at retirement is tax free
With Adjustable Life, the owner can change all of the following EXCEPT... 1. Premium 2. The length of time the coverage will last 3. The insured 4. The death benefit
The insured
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. Who receives the death benefit?
The insured's contingent beneficiary
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
All of the following statements about indexed whole life insurance are correct EXCEPT... 1. Premium is fixed 2. There is a guaranteed minimum interest rate 3. The cash value depends on the performance of the equity index 4. The policy face amount reminds level throughout the life of the policy
The policy face amount reminds level throughout the life of the policy
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount with interest equals or exceeds the cash value.
Which of the following is TRUE regarding premium in a 10-year level premium policy? 1. The premium will be level for the first few years of the policy, but will increase by the 10th year 2. The premium will remain level for 10 years 3. The premium will remain the same at renewal 4. The premium will decrease at the end of the term
The premium will remain level for 10 years
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?
Which of the following is required to provide a notice of information practices to applicants and policy holders? 1. The department of insurance 2. The NAIC 3. The underwriter 4. The producer
The producer
Which of the following is required to provide notice of information practices to applicants and policyholders?
The producer
What is the disadvantage of a fixed annuity?
The purchasing power buy over time will be eroded due to inflation
If a policy includes a free-look period of at least 10 days, the Buy's Guide may be delivered to the applicant no later than...
With the policy
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant
With the policy
If during the underwriter process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices?
At the time of policy delivery.
