Certificate Exam

Which of the following falls under an agent's fiduciary responsibilities?

Submitting premiums to the insurer

An insured covered by a life insurance policy with an accidental death rider was injured in an accident and died 120 days later. The policy has $50,000 coverage with triple indemnity. What will the beneficiary receive?

$150,000

The Commissioner obtains a restraining order against a person who has violated an insurance law. The person continues the violation for 15 days. The person will have to pay a fine of

$5,000

A person who knowingly obtains information on a consumer from a consumer reporting agency under false pretenses may be imprisoned for up to how many years?

2 years

To comply with the timely payment of claims provision, insurers must pay a claim within how many days of receiving proof of loss?

30 days

A teacher may defer a portion of his earned income into a(n)

403(b) (TSA)

A consumer would like to get more information on their Investigative Consumer Report. How many days does the insurer have to comply?

5 days

To secure a lower premium, an applicant for insurance may choose to backdate the application up to

6 months

According to the Fair Credit Reporting Act, consumer reports are prohibited from reporting negative information about a customer after how many years?

7 years

Of $10,000 in premiums a producer wrote over the past year, $3,000 came from sales to a business which employs the producer's spouse. This is considered

A legal practice

Term insurance provides coverage for

A specified period of time

An insured has a policy in which the death benefit remains level while the premium increases, and is renewable without proof of insurability. What kind of policy is this?

Annually renewable term

Which of the following is known as a business continuation agreement?

Buy-sell agreement

The loan value of a whole life policy is limited to the policy's

Cash value

A warranty under which certain things will be done or not be done after the policy takes effect is a(n)

Conditional warranty

What is the main purpose of the Gramm-Leach-Bliley Act?

Consumer privacy protection

Which of the following nonforfeiture options of a life insurance policy allows a policyowner to use the cash value to purchase additional insurance of the same type?

Extended term

Which of the following acts protects consumers against the distribution of incorrect and obsolete personal or financial information?

Fair Credit Reporting Act

Which of the following would be considered a peril? Gambling Fire Smoking Driving too fast

Fire

Where must an insurer's home office be located for it to be considered an alien insurer?

In another country

Where does a domestic insurer have its home office?

In this state

Which of the following principles describes restoring the insured to his or her original financial status after a loss?

Indemnity

Which of the following is a characteristic of an equity indexed annuity?

Interest rates are often associated with a stock index

An insured cashes in a life insurance policy and purchases a Single Premium Immediate Annuity. The monthly income amount will be impacted by all of the following EXCEPT

Lifestyle

Which of the following premium payment modes would result in the highest overall premium for a year's worth of life insurance?

Monthly

The law of large numbers is best defined as a large number of people with similar exposures to loss resulting in actual losses being

More predictable

A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will

Never receive less than 4% interest

Information regarding the insured's medical history can be found in which part of the application for life insurance?

Part 2

For the purposes of life insurance underwriting, a 35 year old male who is in excellent physical condition with no known medical problems or hazardous hobbies would most likely be classified as a

Preferred risk

Which of the following policy elements remains constant in Level, Increasing and Decreasing policies?

Premium

An agent who offers a cash reward to a prospect for buying a policy is guilty of

Rebating

An applicant for insurance needed more insurance than the insurer was willing to issue. The insurance producer told him that he could maximize the death benefit without increasing the face amount by adding which of the following riders?

Return of premium

Unlike the dividend itself, the interest earned on dividends is

Taxable

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed?

The insurance company's general account

Who bears the investment risk in variable life insurance products?

The policyowner

Which of the following terms will be permissible is describing a life insurance policy in company advertisements?

Variable plan

Life insurance intermediaries must hold a securities license if they want to transact what type of insurance products?

Variable policies

Which of the following is an intermediary who acts on behalf of the insured in insurance transactions?

Insurance agent

To qualify for waiver of premium benefit, an insured must meet the policy's definition of

Total disability

An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?

Apparent

Which of the following provisions specifies the right of a person insured under a group life insurance policy to transfer the policy's ownership?

Assignment

Which of the following provisions or options protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan provision

An applicant for a life insurance policy submitted his application on January 5. The policy was issued on January 31. The agent was vacationing at the time the policy was issued, so the applicant did not receive the policy until February 10. The applicant decides that he does not want the policy. When would he need to return the policy to the insurer to receive a full refund of premium?

February 20th, or 10 days after the time the policy's delivered

The insurance component of a Universal Life policy is what type of insurance?

Flexible Premium Adjustable Life

An insured just got married and would like to purchase additional coverage on his existing life insurance policy. Which of the following policy riders will allow the insured to purchase additional coverage without evidence of insurability?

Guaranteed insurability

The face amount of a life insurance policy will be included in the insured's taxable estate if the insured transfers ownership of the policy

In the 3 years before his or her death

Paul is the policyowner of a life insurance policy which will increase significantly in face amount (death benefit) when the insured reaches an age specified in the policy. This policy is referred to as a

Jumping juvenile policy

All of the following are types of whole life insurance EXCEPT

Level term

Due to a large inheritance, a policyowner no longer needs a life insurance policy and agrees to sell it to a third party for more than its cash value. This type of transaction is called a

Life settlement

Statements made by an applicant for an insurance policy that are true to the best of the applicant's knowledge are referred to as

Representations

Which of the following means "liquidity" in a life insurance contract?

The cash value available to the policyowner

If the insurer failed to pay a claim within the required period of time, all overdue payments will be charged an annual interest of

7.5%

Over several years, a policyowner paid $10,000 in premiums for his insurance policy. When he suffered a loss, the insurance company paid out $50,000 in benefits. What characteristic of an insurance contract does this describe?

Aleatory

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's salary and years until retirement?

The human life value approach

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

Term insurance pays the death benefit to the beneficiary if the insured dies while the policy is in effect but pays nothing if the insured dies after the policy's cancellation or expiration. This is known as

Pure death protection

An annuity pays a monthly amount for the remainder of the annuitant's life. If death occurs before the principal is exhausted, the remaining amount will be paid to a designated beneficiary. Which payment option has this annuitant selected?

Refund life

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim

The practice of making sure that the purchase of an annuity product is correct for the purchaser's investment objectives, financial status, tax status, and needs is called

Suitability

Which of the following statements is TRUE regarding an annuitant?

The annuitant must be a natural person

When an annuity is surrendered early, an annuitant will receive

The annuity value minus the surrender charge

Which of the following riders usually expires when the covered insured reaches a specific age?

Limited Pay

If an insurer makes a statement misrepresenting or incompletely comparing the terms of any insurance policy to induce a policyholder to drop an existing policy, what unfair practice has occurred?

Twisting

If a life insurance policy is not solicited through an intermediary, and if the policy offers a 30 day free-look period, which of the following is true regarding the buyer's guide delivery to the policyowner?

It must be provided at the time of application

If the owner of a traditional IRA decides to withdraw funds prior to age 59 1/2, funds are subject to an additional tax of

10%

In an IRA rollover, the rollover must be completed within how many days of the time the funds are taken out of the first plan?

60 days

Which of the following would be considered a senior consumer in this state?

Any person age 65 or older

For federal tax purposes, which of the following is true regarding lump-sum life insurance benefits?

It is received tax free

Which of the following is NOT considered a rebate?

Offering a prospective insured a multi-policy discount

A life insurance producer may share commission with

Another life producer

How often must individual agents pay their licensing fees?

Every 2 years

Which of the following are the features of a variable life insurance policy?

Fixed premium, guaranteed minimum death benefit, separate accounts

Which of the following settlement options does NOT guarantee that the entire principal will be paid out to the beneficiary?

Life income

An insured submits the full premium along with a completed application. Once the policy is issued, when does the coverage begin?

On the date of the application

The Medical Information Bureau (MIB) helps insurers compare medical information they have collected on a potential insured with the information received from

Other member insurers

Which of the following is INCORRECT regarding whole life insurance?

Policy loans are tax deductible

Which of the following describes twisting?

Policy replacement that is to the detriment of the policyowner

Which rule would apply if an insured wants to cash in an old policy and use the funds to purchase a new policy?

Replacement rule

Who maintains the rights in an annuity?

The owner

Which of the following is NOT an IRS requirement for a qualified retirement plan?

The plan must favor shareholders

When does the free-look period begin for insurance policies?

When the policyowner receives the policy

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

An adjustable life policy allows the policyowner to do any of the following EXCEPT

Skip premium payments

The life insurance policy clause that prevents an insurance company from denying payments of a death claim after a specified period of time is known as the

Incontestability clause

In variable life and variable universal life insurance policies, who decides where premiums will be invested?

Policyowner

Which of the following is NOT true regarding the policy summary?

The policy summary may be part of the policy

In whole life insurance, which of the following terms describes features such as cash values and loan provisions

Living benefits

Which of the following types of policies are issued by stock companies?

Nonparticipating

The cash value under a modified endowment contract (MEC) accumulated on a/an

Tax-deferred basis

Which of the following allows the dividend to be used to pay up policy premiums sooner than originally planned?

Paid-up insurance option

When an insured dies, who has first claim to the death proceeds of the insured's life insurance policy?

Primary beneficiary

Who is considered a nonresident agent?

An agent who resides in another state, but is licensed to write insurance in this state

What type of life insurance policy is used by insurance companies to fund certain riders?

****Annually renewable term****FIX

The cash value under a modified endowment contract (MEC) accumulates on a/an

****LLFO basis****FIX

Which of the following is true regarding the annuity period?

It may last for the lifetime of the annuitant

In insurance, the term "loss" is defined as

The reduction decrease or disappearance of value of the person or property insured in a policy, by a peril insured against

If an insurer plans to seek information about an applicant from an investigator, the insurer must

*******Provide the applicant with a written Disclosure Authorization Notice*******FIX

Regular premium payments made to purchase an individual nonqualified annuity are

******Nondeductible********FIX

According to the general statutes and rules for insurance contracts issued in this state, who should receive notice of right to file a complaint?

All policyowners when a policy is issued

An insured would like to reactivate a life insurance policy that lapsed 2 years ago by paying all missed premiums and providing evidence of insurability. Which provision allows the insured to do this?

Reinstatement

Which of the following is a person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer?

Reinsurance manager

If the Department issues a cease and desist order, that means the insurer must do which of the following?

Stop committing a particular violation

A policyholder has a life insurance policy that will allow for a partial withdrawal or surrender of the policy's cash value. This policy is most likely a

Universal life policy

During which of the following annuity periods does an insured make monthly contributions to the annuity for retirement purposes?

Accumulation period

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?

Insurer

When replacing a life insurance policy, a producer has all of the following duties EXCEPT

Send a written communication to existing insurers advising them of the proposed replacement