simulated 4

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a) The benefit is received tax free. b) The benefit is subject to the exclusionary rule. c) IRS has no jurisdiction. d) The benefit is received as taxable income.

a

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a) An unfair trade practice. b) A misrepresentation. c) A required disclosure. d) A legal representation of the Association.

a

If an insured continually uses the automatic premium loan option to pay the policy premium, a) The policy will terminate when the cash value is reduced to nothing. b) The face amount of the policy will be reduced by the automatic premium loan amount. c) The cash value will continue to increase. d) The insurer will increase the premium amount.

a

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? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.

c

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a) One-year term purchase. b) Accumulation at interest. c) Reduction of premiums. d) Paid-up additions.

d

Which of the following statements concerning buy-sell agreements is true? a) Buy-sell agreements pay in the event of a medical emergency. b) Buy-sell agreements are normally funded with a life insurance policy. c) Premiums paid are deductible as a business expense. d) Benefits received are considered income taxable.

b

Which of the following would be required to be licensed as an insurance producer? a) An insurance company director who performs executive, administrative and managerial duties b) A salaried employee who advertises and solicits insurance c) A person whose activities are limited to producing insurance advertisements d) A salaried full-time employee who furnishes information for group insurance

b

Which two terms are associated directly with the way an annuity is funded? a) Renewable or convertible b) Single payment or periodic payments c) Increasing or decreasing d) Immediate or deferred

b

All of the following are true regarding the guaranteed insurability rider EXCEPT a) The insured may purchase additional insurance up to the amount specified in the base policy. b) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. c) This rider is available to all insureds with no additional premium. d) The insured may purchase additional coverage at the attained age.

c

If an agent wishes to sell variable life policies, what license must the agent obtain? a) Surplus Lines b) Personal Lines c) Securities d) Adjuster

c

A producer intentionally violated insurance statutes. Ultimately, the Commissioner determined there were a total of 25 separate violations. What is the total, monetary penalty this producer can expect to receive? a) $250,000 b) $625,000 c) $100,000 d) $25,000

a

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 a) Survivor protection b) Life planning c) Survivorship insurance d) Juvenile protection provision

a

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? a) False advertising b) Defamation c) Coercion d) Misrepresentation

a

The proposed insured makes the premium payment 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? a) Conditional b) Adhesion c) Personal d) Unilateral

a

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a) Slandering b) Defamation c) Undercutting d) Twisting

a

Which type of life insurance policy generates immediate cash value? a) Single Premium b) Level Term c) Decreasing Term d) Continuous Premium

a

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? a) HR 10 plan b) Profit sharing plan c) 401(k) plan d) Tax-sheltered account plan

b

How often are insurance producers in this state required to fulfill continuing education requirement? a) Annually b) Every 2 years c) Every 3 years d) Only if a license has lapsed

b

To appoint a producer as its agent, the appointing insurer must file a notice of appointment with the Commissioner within how many days from the date the agency contract is executed? a) 10 days b) 15 days c) 20 days d) 5 days

b

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) Representation b) Warranty c) Concealment d) Indemnity

b

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a) Pay nothing; there was a misrepresentation on the application b) Pay the full death benefit and refund excess premium c) Pay a reduced death benefit d) Pay the full death benefit

c

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the a) Insuring clause. b) Misstatement of Age clause. c) Incontestability clause. d) Reinstatement clause.

c

The term "fixed" in a fixed annuity refers to all of the following EXCEPT a) Equal annuity payments b) Amount and length of payments c) Death benefit d) Guaranteed rate of interest

c

Which nonforfeiture option has the highest amount of insurance protection? a) Decreasing Term b) Reduced Paid-up c) Extended Term d) Conversion

c

Which of the following is NOT true of life settlements? a) They could be sold for an amount greater than the current cash value. b) They involve insurance policies with large face amounts. c) The seller must be terminally ill. d) They could be used for a key person coverage.

c

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 a) Total contract. b) Aleatory contract. c) Complete contract. d) Entire contract.

d

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? a) Reinstatement rule b) Conversion rule c) Disclosure rule d) Replacement rule

d