Review Terms

What is the minimum civil fine for violating a cease and desist order of the commissioner

$20,000

How much is an agent's appointment fee

$5

How long is the required grace period in life insurance policies in this state

1 month

If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days of the date that the contract is executed

15 days

Within how many days does a licensee have to inform the commissioner of a change of address

30 days

The term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy.

A policyowner of a universal life insurance policy must receive a policy status report from the insurer at least

Annually

Employer contributions made to a qualified plan

Are subject to vesting requirements

What are the five methods of handling risk

Avoidance, retention, sharing, reduction, transfer

How are state Insurance Guaranty Associations funded?

By their members - authorized insurers

All of the following are penalties for submitting fraudulent claims to the insurer except

Community service

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?

Evidence of insurability

J applied for a life insurance policy on January 10. The policy was issued on 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 the policy 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

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.

The commissioner may waive prelicensing requirements or examinations for someone who has been a licensed insurance producer

In preceding 12 months

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?

Inspection report

Which of the following is true about the annuitization period of annuity

It is a period which the payments into the annuity grow tax deferred

Which of the following best describes annually 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 premiums.

Which of the following is true regarding annuity period

It may last for the lifetime of the annuitants

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase because the insured will be 5 years older than when the policy was originally purchased.

Which of the following, upon conviction, carried a fine for up to $2000 for each violation

Misrepresenting the terms of a policy

What kind of policies do stock insurers issue

Nonparticipating

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

What kind of policies do mutual insurers issue

Participating policies

Who owns a mutual insurance company?

Policyholders

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death.

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount

Which nonforfeiture option provides coverage for the longest period of time?

Reduced Paid-Up

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

Upon policy delivery, the producer may be required to obtain any of the following except

Signed waiver of premium

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2

All of the following would be different between qualified and non qualified retirement plans except

Taxation on accumulation

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment

The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

In fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment

The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

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

An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?

The cost of coverage is a deductible expense by the employer

Which of the following statements about group life is correct

The cost of coverage is based on the ratio of men and women in the group.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is true regarding this change

The death benefit can be increased by providing evidence of insurability

Which of the following individuals could qualify for a temporary insurance license

The designee of a producer that is called to active service with the Navy

All of the following are true of an annuity owner except

The owner must be the party to receive benefits.

What is insurance based on

The principle of indemnity, the spreading of risk and the law of large numbers

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

A temporary producer license could be issued without examination to all of the following except

The spouse of a retiring insurance producer.

In an adjustable life policy all of the following can be changed by the policyowner except

The type of investment

All of the following are requirements for life insurance illustrations except

They must be part of the contract.

Which of the following is not a goal of risk retention

To minimize the insured's level of liability in the event of loss

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal Life

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit

Universal Life - Option A

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

apparent

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

defamation

Elements of Insurable Risk

due to chance, definite and measurable, statistically predictable, not catastrophic, randomly selected and large loss exposure

What kind of policy issues certificates of insurance to insureds?

group insurance

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

implied

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home

long term care(accelerated benefits)

Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?

reduction

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

reduction

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?

spouse