state insurance pratice exam
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount?
$25
An employee is covered under a company group life plan with a $50,000 death benefit.What is the MAXIMUM amount a spouse may be insured for under this program?
$25,000
which of the following types of term life policies most likely contains a renewabillity feature?
10 year convertible term
All of the following statements about traditional individual retirements accounts are false Except.
10% penalty is applied to withdrawals before age 59 1/2
An insured may assign up to ___ of policy ownership under an individual life insurance policy.
100%
a 15-year mortgage is best protected by whaty kind of life policy?
15 year descreasing term
In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?
2 years
An individuals participant personally received eligible rollover funds from a profit sharing plan. the income tax withholding requirements for this transaction?
20% is withheld for income tax
A new general property and casualty licensee must complete at LEAST ____ hours of continuing education within 24 months of initial licensure
24
In Texas , an individial life insurance policy is required to have a GRACE PERIOD of ?
31 days
One becomes eligible for Social Security disability benefits after having been disabled for
5 months
_____ of continuing education MUST be completed in the classroom or classroom equivalent.
50%
An insurer may normally delay the payment of a cash value loan or surrender value for up to
6 months
how long can a cash surrender value payment be defferred by the insurance compant under the nonforfeiture law?
6 months
what is the monetary penalty for willfully violation a cease-and-desist order?
A fine up to $500
which of these is NOT a reason for a business to buy key person life insurance ?
A pension deficiency if they key employee dies
Before a life insurance policy is issued, which of these components of the contract is required?
A signed application by prospect
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?
ABC is a policy owner, C is the insured, and ABC is the beneficiary
which of the following is NOT included in annuity contract?
AD&D Rider
Which of the following actions does the commissioner of insurance NOT have the power to conduct?
Activate insurance companies finanical reserves.
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
An amount that the premiums paid would have purchased at the current age
An insurer is NOT required to provide information on fraudulent claims if requested by
An insured
An example of false advertising would be
An insurer exaggerating its dividends in a magazine advertisement
With whom may an agent legally share commissions?
Another agent with the same line of insurance
When an insurance application is taken by a producer, which of these statements is true?
Any changes made on the application require the applicants initials
A certificate of __________ permits an insurance company to transact business in texas.
Authority
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
Aviation exclusion
which of these is not considered to be a cost connected with an indiduals death?
Business expenses
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
Claim will be denied
As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
Coercion
B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of
Coercion
which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance poilcy?
Complete the application and review the information wityh the customer prior to obtaining the customers signature , then send the application off to the insurance compant.
T is given a receipt After completing a life insurance application and paying the initial premium. Under this situation, T's coverage is
Conditional, depending on the insurers underwriting guidelines
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
Daughter
Additional coverage can be added to a Whole Life policy by adding a(n)
Decreasing term rider
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?
Deffered
Which of these provisions is not required in life insurance plans
Extended term
An insurance compant organized under new york laws and licensed to do business in texas is considered an?
Foreign company
What is an organization that solicits insurance only to its members
Fraternal benefit society
A lif insurance policy would be considered a wagering contract WITHOUT
Insurable interest
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
A sole propritor may use this plan ONLY if the employee of the buisness is included.
Keogh Pension Plan
What kind of premium does a Whole Life policy have?
Level
during a sales presentation for a participating life insurance policy an agent must
Make a prospect undestand that dividends are not guaranteed
in a life insurance policy , which provision states who may select policy options , designate and name a beneficiary , and be the reciouebt if any finacial benefits from the polict?
Owners rights
All of the followign statements are true regarding a policys Grace period. EXCEPT
Past due premiums are waived
Which action will a life insurance company most likely take if an insurewd dies and it is discovered that the insureds age was misstated on the application
Pay an amount the premiums would have purchased at the insureds actual age
The underwriting process involves all of these. EXCEPT
Policy loan
Who of the follwing is an example of a nonforfetiture option?
Reduced Paid up option
S buys a $10,000 whole life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. what kind of rider did s include on the policy?
Return of premium rider
What dies a 401 (k) plan generally provide its paricipants?
Salary-deferall contrubutions
which of these factors DOES NOT influence an applicants need for life insurance?
Self-Maintenance
To terminate a agents appoinment, an insurance company must
Send termination notice to teh Texas Department of insurance
Who owns a stock unsurance company
Stockholders
Which of these life insurance riders allows the applicant to have excess coverage?
Term Rider
All of these statments about the commissioner of insurance are true except
The commissioner must be elected in a general election
What are the underlying concept regarding level Premiums?
The early years are charged more than what is needed
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premium can be lowered or raised based on investment performance
The free-look provision begins
Upon receipt of the policy by the policyowner
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable life
S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?
Variable whole life
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy. only if iys discovered during the Contesable period and proven to be material
When is the face amount of a Whole Life policy paid?
When the insured dies or the policy maturity date, whchever happens first
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole life
A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of
adhesion
A qualified profit sharing plan is designed to
allow employees to participate in the profits of the company
In Texas, which of these statements regarding the Suicide clause is TRUE?
an insurer may not use suicide as a defense against payment after the second year.
in a qualified retirement plan , the yearly contributions to an employees account
are restricited to maximum levels set by the IRS
The Automatic premium loan provision is designed to
avoid a policy lapse
The Phrase " Transacting business" includes?
collecting premiums
which of the following is NOT included in a life insurance illustration?
companys mortality table
What type of group insurance plan involves employees sharing the cost?
contributory plan
a variable insurance policy:
does not guarantee a return on investment accounts
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
exclusion
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
family maintenance policy
a 55 year old recently received a $30,000 distribution from a previous employers 401k plan , minus $6,000 withholding. which federal taxes apply if none of the funds were rolled over?
income taxes plus a 10% penally tax on 30,000
which of the following groups may NOT be insured by a group life insurance policy?
individuals who are related by blood
Credit Life Insurance is
insurance issued on a debtor to cover outstanding loan balances
How are policyowner dividends treated in regards to income tax?
interest on accumulations is taxed
A license may be denied, suspended, or revoked if the licensee?
is found guilty of misrepresenting in obtaining the license
life insurance that covers an insureds whole life with level premiums paid over a limited time is called?
limited pay life
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?
misrepresentation
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
modified whole life
An insurance agent has fiduclary responsibility to all of the following execpt?
other agents
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT
partial withdrawal faetures bneoynd a surrender charge period
Which life insurance rider typically appears on a Juvenile life insurance policy?
payor benefit rider
A retirement plan that sets aside part of the companys net income for distributations to qualified employees is called a
profit-sharing plan
An example of rebating would be
returning a portion of a premium as inducement to purchase insurance
which of the following is NOT a required provision in group life poilcies?
right to loan
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
set up a meeting with the applicant to answer the remaining questions
an individual who purchases a life annuity is given protection against
the risk of living longer than expected
An example of unfair claims settlement practice is
turning down a claim without providing the basis of denial
ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering
unfair methods of competition
S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be
universal life
how long does an insurance comapny appointment remain in force?
until terminated
A foreign insurance company conducting insurance business in texas
was formed under the laws of another state.
a life insurance policy that provides a policyowner with cash value along with a LEVEL FACE amount is called
whole life