XcelSolutions Pennsylvania Insurance Test

A beneficiary change can occur

normally at any time during the policy term

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)

partial surrender

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?

participating life insurance policy

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n) waiver of premium rider payor rider automatic premium loan rider juvenile waiver rider

payor rider

Mortality is calculated by using a large risk pool of

people and time

Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments?

period certain

The Penn life and heath guaranty association protects life insurance death benefit claims up to

$300,000

What is implied authority defined as?

Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties

Which of these factors would an insurer consider when determining whether to accept a group life plan?

Average Age

What happens to the coverage under a children's term rider when that child reaches a certain specified age?

Coverage is eliminated

Proceeds of the viatical settlement contract could be subject to the claims of

Creditors

Which of the following is considered to be an event or condition that increases the probability of an insured's loss?

Hazard

Fixed annuities provide each of the following EXCEPT

Hedge against inflation

Maria the producer would like to advertise an annuity product on a highway billboard. Which of the following must be included in the advertisement?

Her name

When an applicant for a producer's license has a principal place of residence or business location in Penn, for licensing purposes the State of Penn is known as

Home State

Provide funds to help pay taxes

How are survivorship life insurance policies helpful in estate planning?

Law of Large Numbers

How do insurers predict the increase of individual risks?

Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents?

Human Life value approach

Which of these is a method of determining the level of funds required for ongoing support in the event of the breadwinner's death?tax

Human life value

Contain an offer and acceptance

In order for a contract to be valid, it must

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life income

Which of these is not considered to be a common life insurance nonforfeiture option?

Life income annuity

Which of the following annuity payout makes no additional payments regardless of when the annuitant dies?

Life only

A limited payment whole life policy provides

Lifetime protection

A life insurance policy that has premiums fully paid up within a stated time period is called

Limited payment insurance

Insurance premium is determined by each of the following factors EXCEPT

Liquidity

Viatical settlement brokers are permitted to do all of the following EXCEPT

Make the first transaction up to 30 days before approved for a license

What is involved when a life insurance policy has been backdated?

Making the policy effective on an earlier date than the present

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Pay age-corrected benefits

Kurt is an active duty serviceman who was recently killed in an accidental while home on leave. Which military service exclusion clause would pay upon his death?

Results

An individual who removes the risk of losing money in the stock market by never purchasing stocks is said to be engaging in

Risk avoidance

Which of these retirement plans do not qualify for a federal income tax deduction?

Roth IRA

which market index is normally associated with san indexed annuities rate of return?

S & P 500

In Pennsylvania, what's the requirement for a minor to receive proceeds from a death benefit?

a guardian must be appointed

Which of the following is an example of the insured's consideration

a paid premium

Fixed period settlement options are considered to be a form of

annuity

Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called

annuity certain

deeds and actions of a producer indicate what kind of authority?

apparent

a licensee may only sell, solicit, and negotiate insurance contracts on behalf of the

appointing insurer

A type of group that has a constitution and bylaws and has been organized for purposed other than obtaining insurance is called an

association or labor group

According to life insurance contract law, insurable interest exists

at the time of application

The commissioner has the right and duty to

audit insurer financial reports and conduct market studies

Which of these factors is NOT taken into account when determining an applicant's life insurance needs?

automobile

In a insurance contract, the element that shows each party is giving something of value is called

consideration

An employee under a group insurance policy has the right to name a beneficiary and the right to

convert to an individual policy in the event of employment termination

is not an element of a valid contract

countersignature

Which prohibited act involves a producer spending a client's insurance premiums for his/her own personal use?

embezzlement

One role of the Commissioner is to

enforce state insurance laws

Level premium permanent insurance accumulates a reserve that will eventually

equal the face amount of the policy

Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called?

estate conservation

Under a non-qualified annuity, interest is taxed after the

exclusion ratio has been calculated

The power given to an individual producer that is not specifically addresses in his/her contract is considered what type of authority

implied

The pennsylvania Dept of insurance may take each of the following actions except

incarceration

Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any money withdrawn.

income

Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's

income period

Which of these is considered a major tax advantage of life insurance?

income tax is typically not owed on proceeds paid directly to a beneficiary

What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?

increases

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid.

individual

The conversion privilege under a group life plan allows an employee to convert to an

individual plan upon employee termination

The conversion privilege under a group life plan allows an employee to convert to a

individual plan upon employment termination

A producer who offers 10% of his commission to a potential client as an inducement to purchase an insurance policy is committing the act of

inducement

Who is responsible for assembling the policy forms for the insureds?

insurance carriers

Non-admitted Insurer

is not afforded protection by the guaranty fund

A producer does NOT have fiduciary responsibility to

the Pennsylvania Guaranty Association

Converting a group plan to permanent life insurance requires

the conversion being applied for within 31 days of termination

The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as

twisting

Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined

underwriting

When an insurance company consistently fails to provide reasonable explanation for the denial of a claim, this is called an

unfair claim settlement

On occasion, insurable interest may exist in the absence of economic interest. Which of the following examples does this pertain to?

husband and wife

The free-look provision gives the policyowner

the right to return the policy for a full refund within a specified number of days

Under a contract of adhesion

the terms must be accepted or rejected in full

Legal purpose is a term used in contract law meaning

there must be legal reasons for entering into the contract

A producer that willfully violates any provision of Pennsylvania Insurance law may be imposed to a maximum penalty set by the Commissioner at

$5,000 per violation

Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals $250,000. Rob recently died age 60. The death benefit would be

$500,000

An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?

1 month

Every Pennsylvania insurer, upon receiving notification of a claim, must acknowledge receipt of the notice within

10 day

The free look period provided in a life insurance policy is usually

10 days

Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called a(n

1035 exchange

How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability?

12 months

A Pennsylvania temporary producer license ,ay be issued for a period not to exceed

180 days

A life insurance policy becomes incontestable after it has been in force for

2 years

Producers must complete a total of ___ Continuing Education credits for each two-year licensing period

24

An Accelerated Death Benefit in Pennsylvania must be at least what percentage of the total death benefit?

25

Pennsylanvania requires that a licensee complete __ hours of continuing education on the subject of ethics every reporting period

3

Within how many days must a producer report to the Commissioner any charges made against him/her?

30

Pennsylvania law requires that an insurer must notify the Commissioner of a producer appointment termination

30 days

Greg has recently been terminated from his job that covered him for group life insurance. How long does he have to convert his coverage to an individual policy?

31 days

A Roth IRA owner must be at least what age in order to make tax-free withdraws?

59 1/2 and owned account for a min of 5 years

How many months can a life insurance policy normally be backdated from the date of application

6

A rollover from a Traditional IRA to another IRA MUST be done within __ days to avoid tax consequences

60

Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid tax consequences?

60

Within how many days must a rollover be completed in order to avoid being taxed as a current income

60

At a predetermined date or age, regardless of the insured's health

A Renewable Term Life Insurance policy can be renewed

Group Policy

A business will typically use which type of life insurance to cover their employees?

Which of the following BEST describes a conditional insurance contract?

A contract that requires certain conditions or acts by the insured individual

Which policy feature makes a universal life policy different from a whole life policy?

A flexible premium schedule

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application?

A good health statement

Reinsurer

A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the

A Modified Endowment Contract (MEC) is best described as

A life insurance contract which accumulated cash values higher than the IRS will allow

Which of the following employers is required to follow ERISA regulations?

A local electrical supply company with 12 employees

How soon can the benefit payments begin with a deferred annuity?

A min of 12 months after date of purchase

All of these are vaild options for an Adjustable Life Policy EXCEPT

A nonforfeiture option can be used to increase the death benefit

Stock Insurer

A nonparticipating company is sometimes called a

A self-funded plan

A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called

If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?

A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age.

A temporary license may be issued without state examination to all of the following EXCEPT

A prospective producer who is currently enrolled in a pre-licensing insurance class

a policy that is paid up after only one payment

A single premium cash value policy can be described as

Which of these is considered to be a living benefit option in a life insurance policy

Accelerated death benefit

Which of the following is considered to be an alternative to a life settlement

Accelerated death benefit rider

All of these are common exclusions to a life insurance policy except

Accidental Death

All of these are valid policy dividend options for a life insurance policy owner EXCEPT

Accumulate without interest

Of the following dividend options, which of these is taxable

Accumulation at interest

Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in? Payout period Accumulation period Deferred period Growth period

Accumulation period

A policyowner may change two policy features on what type of life insurance? Modified Whole Life Decreasing Term Life Adjustable Life Whole Life

Adjustable Life

What does the Group Life underwriting risk selection process help protect insurance companies from?

Adverse selection

How does life insurance create an immediate estate?

After first premium is paid, the face amount may be available to the beneficiary.

Which of these is affected by the frequency of an insurance policy's premium payments?

Cost

When does an immediate annuity begin making payments?

After the first premium has been paid

An error was made on Mary's life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does not apply?

Age

The term which describes the fact that both parties of a contract may not receive the same value is referred to as

Aleatory

An insurer formed according to the legal requirements of another country is considered

Alien insurer

Claim Forms

All of the following are elements of an insurance policy EXCEPT

Losing money at a casino

All of the following are examples of pure risk EXCEPT

When a whole life policy is surrendered, income taxes may be owed

All of these statements concerning whole life insurance are false EXCEPT

What is the nonforfeiture value of an annuity before annuitization?

All premiums paid, plus interest, minus any withdrawls and surrender charges

Doctors pooling their money to cover malpractice exposure

An example of risk sharing would be

Liquidity

An insurer's ability to make unpredictable payouts to policyowners is called

State Insurance Departments

An insurer's claim settlement practices are regulated by the

Which of these is NOT considered to be a purpose of an annuity?

Annuities are intended to create an estate

Which of the following is considered to be the period when the accumulated value in an annuity is paid out?

Annuitization phase

An attending physician's statement would be appropriate for which life insurance purpose?

At the request of the insurer to assist in the underwriting decision

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT

Beneficiary

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has

Better than average mortality or morbidity experience

The period in which there are no Social Security benefits for the surviving spouse is called the

Black out period

According to Pennsylvania law, which of the following is NOT considered to be personally identifiable financial information?

Blind trust data that does not include names and addresses

An insurer has a right to screen applicants for HIV in which of the following way?

Blood test for HIV

In which of the following relationships would there NOT be an insurable interest?

Business owner to business customer

Which of these is not considered a form of life insurance advertisement

Buyer's Guide

Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?

Can be converted to permanent coverage without evidence of insurability

Which of the following is NOT part of an insurance contract?

Certificate of Authority

The coverage, conditions, and limitations in the master policy of a group contract can be found in which document?

Certificate of coverage and benefits

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

In Pennsylvania, who is responsible for Continuing Education (CE) course content approval

Commissioner

Pat is insured with a life insurance policy and karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect their rights of the contingent beneficiary to receive the policy benefits?

Common disaster clause

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium".

Consideration clause

In what part of an insurance policy are policy benefits found?

Declarations

Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period?

Decreasing term insurance

All of the following are examples of a Business Continuation Plan EXCEPT

Deferred Compensation

Rob has a benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits this description

Deferred compensation option

What is the primary purpose of a rating service company such as A.M Best?

Determine financial strength of an insurance company

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt

Dies instantly from a car accident

A life insurance policy owner was injured in an automobile accident which results in a total and permanent disability. which rider would pay a monthly amount because of this disability?

Disability income rider

Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity?

During periods of inflation, annuitants will experience a decrease in purchasing power of their payments

Which of these statements concerning Traditional IRAs is CORRECT

Earnings are taxable when withdrawn

Which of the following is NOT a federal requirement of a qualified plan?

Employee must be able to make unlimited contributions

What is the name of the provision which states that a copy of the application must be attached to the policy when issued?

Entire contract

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index What kind of policy is this?

Equity index whole life

Which of the following is an annuity that is linked to a market-related index?

Equity-indexed annuity

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called

Errors and omissions

Craig purchased a life insurance policy to enable his heirs to pay estate taxes. What is this called?

Estate conservation

Which of these would limit a company's liability to provide insurance coverage?

Exclusion

The taxable portion of each annuity payment is calculated using which method?

Exclusion ratio

All of these are settlement options for life insurance policies EXCEPT

Extended Term

Which of these riders will pay a death benefit if the insured's spouse dies?

Family term insurance rider

Which of the following constitutes ground for suspending a Penn producer's license?

Felony conviction

Which of the following is required to maintain a producer's license in Pennsylvania?

Field underwriter, who solicits insurance and earns a commission

A producer is meeting with a client to determine whether an annuity would be suitable for purchase. Which of the following topics needs to be discussed with the client?

Financial objectives

Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?

Fixed amount

Which of these annuities require premium payments that vary from year to year?

Flexible premium deferred annuity

When a qualified plan starts making payments to its recipients, which portion of the distributions is taxable

Gains

How are annuities given favorable tax treatment?

Gains are taxed at distribution

An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?

Grace period

Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n)

Guaranteed insurability rider

An annuitant is guaranteed to NOT outlive their benefits with a(n)

Guaranteed lifetime withdraw benefit

Level premium term life insurance policies

Have premiums that are averaged over the policy period

Which of the following provisions protects a Pennsylvania policy owner from an innocent mistake made on the application over 2 years ago?

Incontestability provision

How does one qualify as a fully-insured individual under Social Security disability coverage?

Individual has been credited with the appropriate number of quarters of coverage

All of the following are characteristics of a Group Life Insurance plan EXCEPT

Individual underwriting

When a producer offer something of value in return for the purchase of an insurance policy, which prohibited sales practice has been committed?

Inducement

Which of the following is present when an applicant stands to lose value if the insured dies

Insurable interest

In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest?

Insurable interest can be established sufficiently by sentimental attachment alone

Business owner and business client

Insurable interest does NOT occur in which of the following relationships?

When a licensee's address has changed, who must be notified of this change?

Insurance Department

Which of the following signatures is not required on an individual insurance application.

Insurer

Sharon is the policy owner of a $50,000 life insurance policy. Her son, Mike is the beneficiary. If Sharon MUST obtain Mike's signature in order to change the beneficiary, which kind of beneficiary designation is this?

Irrevocable

What happens to interest earned if the annuitant dies before the payout start date?

It is taxable

Which of the following would disqualify a company's retirement plan from receiving favorable tax treatment?

It is temporary

All of the following statements correctly describe the purpose of Social Security EXCEPT

It provides a source of income for a meaningful standard of living during retirement

A life insurance policy written on one contract for two people in which it is payable upon the first death is called

Joint

Which type of life insurance is normally associated with a Payor Benefit rider?

Juvenile insurance

What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death?

Last Survivor life insurance

Which contract element is insurable interest a component of?

Legal purpose

Which type of annuity stops all payments upon the death of the annuitant?

Life annuity

Which type of annuity guarantees a stated number of income payments, whether or not the annuitant is still alive to receive them?

Life annuity certain

Which of these is likely to occur when life or health insurance is being applied for?

Medical history from the insured may be reviewed and reported.

During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT

Misstatement of age in the application

The premium payment mode that results in the highest overall cost would be

Monthly

What would be an expense factor in an insurance program?

Mortality costs

All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPt

National Association of Insurance Underwriters

Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?

Net death benefit will be reduced if the loan is not repaid

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?

No federal income tax is owed on life insurance proceeds

How are contributions made to a ROTH IRA handled for tax purposes?

No tax deductible

Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive

Nothing

What is the required action taken by a pennslyvania licensee before operating under an assumed business name?

Notify the commissioner

Which of the following is a violation of Pennsylvania insurance law?

Offering insurance contracts through unlicensed entities

How do interest earnings accumulate in a deferred annuity?

On a tax-deferred basis

What is an insurance policy's grace period?

Period of time after the premium is due but the policy remains in force

A producer who sells an individual life insurance policy in Pennsylvania MUST deliver to the policy owner a

Policy Summary and Buyers Guide

Which situation accurately describes a reduced paid-up nonforfeiture option?

Policy has a decreased face amount

Which of these is considered to be a document that describes the critical segments of a life insurance policy?

Policy summary

During the accumulation period, who can surrender an annuity?

Policyowner

Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?

Policyowner has the right to select the investment which will provide the greatest return

Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test?

Pre-death distributions are typically taxable

Under a Modified Endowment Contract, what are the likely tax consequences?

Pre-death distributions will become taxable

Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement

Premiums paid plus interest earned is returned to the beneficiary

Which of the following is a person who negotiates an insurance contract on behalf of an insurer

Producer

What is required before an insurance producer can act as a representative of an insurer

Producer needs to be appointed by that insurer

Advertising material for a life insurance policy does NOT need to contain

Producer's commission rate

Which of the following is a reinstatement condition?

Proof of insurability

In penn, an insurance producer license can be denied for failure to pay each of the following EXCEPT

Property tax

All of the following are considered appropriate uses of life insurance for business purposes EXCEPT

Protecting the business by covering entry level employees with life insurance.

What is the primary reason for buying an annuity

Provide future economic security

Which of the following is NOT an Unfair Claim Settlement Practice?

Providing claim payments to insureds according to the policy's coverage guidelines

Dana is an employee who deposits a percentage of her income into her individual annuity, Her company also contributes a percentage into a separate company pension plan. What kind of annuity is this considered?

Qualified Retirement annuity

The Commissioner is responsible for all of the following except

Recommending insurers

What is the primary feature of a viatical settlement

Reduced death benefit prepayment

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT

Reduction of Premium

A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due?

Reduction of premium dividend option

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made?

Refund annuity

Any of the following may be an unfair claims practice EXCEPT

Refusing to pay persons bringing false or fraudulent claims

A transaction in which a new life insurance policy is purchases and an existing life insurance policy is surrendered is called

Replacement

According to Penn law, group life insurance conversion privileges must NOT

Require evidence of insurability

A life insurance producer licensed in the Commonwealth of Pennsylvania is authorized to

Solicit, receive and forward applications to the insurer

What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?

Specified amount of money

Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?

Spendthrift clause

Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?

Sprendthrift trust clause

In an insurance contract, the applicant's "consideration" is the

Statement made in the application and the premium

All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT

Stock purchase

Which of these will have the highest monthly payout upon annuitization?

Straight Life

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of heath history, occupation, or hobbies?

Substandard Risk

Which type of multiple protection policy pays on the death of the last person?

Survivorship life policy

Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity?

Temporary annuity certain

Which of the following policies does NOT build cash value?

Term

Insurance Sales Calls

The Do Not Call Registry offers exemptions for calls placed from all the following EXCEPT

Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because

The MEC tends to be an investment vehicle

Which of these statements regarding the annuitant is correct?

The annuitant's life expectancy determines the annuity payments

Which of the following statements is CORRECT regarding an individual applying for life or health insurance?

The applicant's medical history may be analyzed and reported

Law of Agency

The authority granted to a licensed producer is provided via the

What does the word "level" in Level Term describe?

The face amount

Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? The policy automatically converts to whole life after the 10-year period The face amount will remain constant and the premium will increase over the 10-year period The premium will remain constant and the face amount will increase over the 10-year period The face amount and premium will remain constant over the 10-year period

The face amount and premium will remain constant over the 10-year period

When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach

The family's financial objectives if the income earner were to die or become disabled.

What is a corridor in relation to a Universal Life insurance policy

The gap between the total death benefit and the policy's cash value

What will the beneficiary receive if an annuitant dies during the accumulation period?

The greater of the accumulated cash value or the total premium paid

Which of the following would be a valid reason why a policy premium would be higher than the standard premium

The insured does not meet established underwriting requirements

Who assumes the investment risk with a fixed annuity contract?

The insurer

Under a life insurance policy, what does the insuring clause state?

The insurers obligation to pay a death benefit upon an approved death

Which of the following statements about the contestability of a life insurance policy is true?

The policy can be contested by the insurer only during the first two years of the contract

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?

The policy may be paid up early by using policy dividends

if an insured dies during the grace period with no premiums paid

The policy would be payable, minus the premium amount

A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that

The policyowner may need to resume premium payments depending on actual results

If the annuitant dies before the annuity start date,

The premiums paid plus interest earned will be given to the beneficiary

Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires,

The protection ends

Who were Keogh plans designed to provide pension benefits for?

The self-employed

What is the purpose of the medical information bureau (MIB)

To help underwriters evaluate risk

Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds.

Tom

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called

Universal Life

A life insurance policy that is subject to a contract interest rate is referred to as

Universal Life

Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?

Universal Life

Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?

Universal Life Policy

A partial surrender is allowed in which of the following life policies?

Universal life

A life insurance policy which contains cash values that vary according to its investment performance of stocks is called

Variable Whole Life

Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?

Variable universal policy

Life insurance may make an immediate benefit payment before the insured dies in which transaction

Viatical settlement

Agreements made by terminally ill persons to sell their life insurance policies at a discount in order to pay medical expenses are called

Viatical settlements

Viatical settlement brokers send packets of information to potential viatees. These information packets normally include existing policy terms and which of the following?

Viator's medical prognosis

All of the following riders can increase the death benefit amount EXCEPT

Waiver of Premium

Representation

What are an applicants statements concerning occupation hobbies, and personal health history regarded as?

When does a life insurance policy typically become effective?

When initial premium is collected and policy is issued

Express Authority

When the principal gives the agent authority in writing, it's referred to as

Which of these would be the best example of a limited pay life insurance policy?

Whole life policy with premiums paid up after 20 years

Because dividends are considered to be a return of premium

Why are dividends from a mutual insurer not subject to taxation

Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds

Will no longer provide insurance protection

Loans obtained by a policyowner against the cash value of a life insurance policy are treated as taxable income would not be treated as taxable income are limited by the face amount of the policy would be subject to a Federal estate tax

Would not be treated as taxable income

Holding premium funds for timely submission to the insurer is an example of

acting in a fiduciary capacity

For Pennsylvania Insurance Code violations, the Commissioner may assess a

administrative penalty

An underwriter's primary responsibility to an insurer is to protect against

adverse selection

People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called

adverse selection

a non-contributory health insurance plan helps the insurer avoid

adverse selection

An individual most likely will have an insurable interest in insuring a persons life if

an economic interest exists for the continuance of the insured's life

If the insurance Department determines that the issuance of a temporary producer license serves in the public's best interest, the license may be issued to

an executor of a deceased producer's estate

In order to solicit insurance in Pennsylvania, all of the following is required EXCEPT

be at least 21 years of age

A domestic insurance company in Pennslyvania MUSt

be formed under Pennslyvania Insurance laws

An order issued by the commissioner that prohibits a specific practice listed in the order is called an

cease and desist order

Which of the following is required for an insurer to conduct business in this state

certificate of authority

A provision that allows a policy owner to temporarily give up ownership rights to secure a loan is called a

collateral assignment

A provision that allows a policyowner to temporarily give up ownership right to secure a loan is called a

collateral assignment

ownership of a life insurance policy may be temporarily transfered with a

collateral assignment

Life insurance policies will normally pay for losses arising from

commercial aviation

A waiver of premium rider allows an insured to waive premium payments if the insured is

completely and permanently disabled

Field underwriting preformed by the producer involves

completing the application and collecting initial premium

The least expensive option to pay off a 30-year mortgage balance would be

decreasing term life

An example of a tax-qualified retirement plan would be a

defined contribution plan

All of these are standard exclusions found in a life insurance policy EXCEPT

disability

When the principal gives the agent authority in writing, its referred to as

express authority

A spouse and child can be added to the primary insured's coverage as what kind of rider?

family term

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following except

fare-paying passenger

Violations of us code title 18 section 1033, may result in

fine or imprisonment

When collecting insurance premiums from a client, a producer MUST

forward premiums to the insurer on a timely basis

A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs

from insurer to insurer and no cash is received by the policy owner

An insured's status under Social Security can be described as

fully insured

A life insurance rider that allows an individual to purchase insurance a they grow older, regardless of insurability, is called an

guaranteed insurability rider

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?

guaranteed lifetime withdraw benefit

A producer's license may only be suspended or revoked if the producer

has been afforded a right to a hearing

Index whole life insurance contains a securities component that acts as an

hedge against inflation

When a decreasing term policy is purchased, it contains a decreasing death benefit and

level

An insurance company may only pay commissions to a

licensed producer appointed by the insurer

Producer commissions may not be paid to

licensed producers not appointed by an insurer

The premium for a Modified whole life policy is

lower than the typical whole life policy during the first few years and then higher than typical for the remainder

An insurer would be committing Unfair Discrimination if coverage was denied based upon

marital status

A guaranteed issue insurance policy has no

medical underwriting

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

minus indebtedness and without interest

Over the course of a year, which premium payment mode is most expensive?

monthly

A buyer's guide and policy summary

must be delivered with or prior to policy delivery

A type of insurer that is owned by its policyowners is called

mutual

A whole life policy option where extended term insurance is selected is called an

nonforfeiture option

A producer who sells insurance in PA but resides in another state is called a

nonresident producer

Replacement regulation is designed to protect the interests of

policyowners

A producer's fiduciary duty requires that

premiums are forwarded to the insurer on a timely basis

According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and it's

promises made

The fair credit and reporting act's main purpose is to

protect consumers with guidelines regarding credit reporting and distribution

Decreasing term life insurance is often used to

provide coverage for a home mortgage

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST remit all past-due premiums within the grace period provide evidence of insurability to the insurer resubmit a new life insurance application provide a valid reason for the lapse

provide evidence of insurability to the insurer

The two major actions required for a policyholder to comply with the Reinstatement Clause are provide evidence of insurability, agree to a new incontestable period provide evidence of insurability, pay past due premiums pay past due premiums, agree to a new incontestable period pay past due premiums, agree to a reduction in coverage

provide evidence of insurability, pay past due premiums.

An annuity is primarily used to provide

retirement income

Charging a client less premium than what is stated in their insurance policy is called

rebate

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity ( a fixed sum of money paid to someone each year, typically for the rest of their life.) value and the income payments already made?

refund annuity

What is the automatic continuance of insurance coverage referred to as?

renewal

All statements in an insurance application, in the absence of fraud, are considered

representations

A life insurance policyowner does NOT have the right to

revoke an absolute assignment

An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)

rider

Term insurance is appropriate for someone who

seeks individuals seeking temporary protection and lower premiums.

Which of the following are the premium payments for a Universal life policy not used for

separate account investments

The Pennsylvania insurance dept is responsible for each of the following except

shareholders

If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if

the insured outlived the beneficiary

A whole life insurance policy accumulates cash value that becomes

the policy loan value which the insured may borrow against

Under a traditional IRA, interest earned is taxed

upon distribution

A securities license is required for a life insurance producer to sell

variable life insurance

Which type of policy combines the flexibility of a universal life policy with investment choices?

variable universal life policy

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

viatical settlement agreement

What guarantees that the statements supplied by an insurance applicant are true

warranty

A renewable Term Life insurance policy allows the policyowner the right to renew the policy

without producing proof of insurability.

Unilateral

In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered

The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement?

Insurable interest can be based on the love and affection of individuals related by blood or law.

Law of large numbers and risk pooling

Insurance companies determine risk exposure by which of the following

Transference

Insurance represents the process of risk

Which of these is NOt considered to be a nonforfeiture option in a whole life insurance policy

Interest only

What is the purpose for having an accelerated death benefit on a life insurance policy

It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary?

interest only

A policyowner is prohibited from making any changes to the policy without the beneficiaries written consent under which beneficiary designation?

irrevocable beneficiary

Child term rider

Jonas is a whole life insurance policyowner and would like to add coverage for his two children Which of the following products would allow him to accomplish this?

$10,000

Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?

$5,000

Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken?

A provision in a whole life policy that allows a policy owner to terminate the policy in return for a reduced paid-up policy of the same type is called a

Nonforfeiture provision

Which of these is NOT considered to be a risk factor in life insurance underwriting?

Number of children

How is the cost of a policy affected when a policyowner pays premiums more frequently

increases

What would happen if a life insurance applicant is given a conditional receipt from a insurance agent and then dies the next day?

Claim will be paid if application is approved

Tim is covered under a group plan and would like to change his group coverage to an individual policy with the same insurer because of employment termination, which of these describes the change that will take place?

Conversion

All of these are typically sources of underwriting information for life or health insurance EXCEPT

Disclosure authorization response

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?

Endowment policy

Provide death benefits

What is considered to be the primary reason for buying life insurance?

Peril

What is known as the immediate specific event causing loss and giving rise to risk?

Term, whole, and universal life insurance

What type of life insurance are normally used for key employee indemnification?