CH 11 VA State Life and Health Insurance Exam
Which of the following is NOT a responsibility of the replacing insurer in life insurance policy replacement? A) Read the notice regarding replacement to the applicant B) Verify receipt of the replacement forms C) Provide a free-look period to the applicant D) Notify an existing insurer about the replacement
A) Read the notice regarding replacement to the applicant The agent is usually responsible for reading to the applicant at the time of application a notice regarding replacements of insurance and annuity contracts. All the other duties must be completed by the insurer.
Within what time frame must an individual apply and then pay the first premium for a life insurance policy converted from group to individual coverage? A) 10 days B) 31 days C) 180 days D) 1 year
B) 31 days If an individual is terminated from a group life insurance contract, he or she has 31 days in which to apply for an pay the first premium for continued individual coverage
Within what time frame must an individual apply and then pay the first premium for a life insurance policy converted from group to individual coverage? A) 10 days B) 31 days C) 180 days D) 1 years
B) 31 days If an individual is terminated from a group life insurance contract, he or she has 31 days in which to apply for an pay the first premium for continued individual coverage.
All of the following would qualify as an eligible insured for group life insurance coverage under a group plan EXCEPT A) An employee of a non-profit institution who works on a full-time basis B) An employee of a public works facility C) Former member of an eligible association D) A credit union employee
C) Former member of an eligible association Generally, termination of membership from an association results in ineligibility for coverage under the group plan.
Most methods used to determine the suitability of a particular annuity recommendation to a client are based on information regarding all of the following EXCEPT A) The client's investment objectives. B) The client's financial status. C) The client's insurability. D) The client's tax status.
C) The client's insurability. The most pertinent information off of which an agent makes annuity recommendations to clients concerns such things as client's financial status, tax status, investment objectives, and overall financial status. Insurability is not a factor in the purchase or exchange of annuities.
Marketing practice regulations apply to all of the following EXCEPT A) Television commercials B) Internet advertisements C) Radio commercials D) Company memos
D) Company memos Marketing practice regulations apply to any communication disseminated in the state of Virginia that is intended to market a company's product.
Which of the following documents must be provided to the policyowner or applicant during policy replacement? A) Disclosure Authorization Form B) Buyer's Guide and Policy Summary C) Policy illustrations D) Notice Regarding Replacement
D) Notice Regarding Replacement During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.
How long must an insurer keep the records of marketing communication pertaining to life insurance for each year? A) 5 years B) Until the report on the insurer's examination 2 years from now C) 7 years D) Until the Commission inspects that communication
A) 5 years Insurers must maintain a file of any life insurance marketing communications used with the public, subject to the inspection by the Commission. These materials must be kept for either 5 years or until the filing of the next regular report on the insurer's examination, whichever is longer.
A life insurance agent visits his service member friend on a military base. The friend introduces the agent to his next door neighbor, another service member, and the agent immediately begins a sales presentation. The presentation is A) A prohibited practice B) An unethical practice. C) Permitted with the service member's introduction. D) Allowed if no sales is made.
A) A prohibited practice Regardless of location, it is considered a misleading and deceptive practice to solicit life insurance door-to-door to military service members. All sales presentations must be made after a prearranged appointment.
What does military sales regulation protect? A) Active duty service members B) Retired military personnel and their families C) Anybody who exempt from coverage due to the war exclusion D) Producers who solicit insurance on military installations
A) Active duty service members The military sales regulation applies only to the solicitation or sale of life insurance and annuities to an active duty service member.
How often can an insurer calculate the adjustable interest rate in a life insurance policy? A) At least annually, but not more than quarterly B) At least on a quarterly basis C) Monthly D) Every 3 years
A) At least annually, but not more than quarterly Insurers will provide life policies, except extended term policies, a provision that after 3 policy years allows policyholders to borrow any cash values in excess of the mandates reserves at a specified interest rate which is either fixed or variable. The variable interest rate must be calculated at least every 12 months, but not more than every 3 months.
When a consumer refuses to provide the information necessary for the agent to make a suitable recommendation for a life insurance product for that consumer, which of the following is true? A) Neither the agent nor the insurer has any further obligation to the consumer regarding suitability B) The insurer is still responsible for the suitability of the recommendation C) The agent may be sued by the consumer for the recommendation D) The insurer may refuse to provide service to that consumer
A) Neither the agent nor the insurer has any further obligation to the consumer regarding suitability In those cases where the consumer refuses to provide the needed information or decides to enter into a transaction not based on a recommendation by the agent or insurer, neither the agent nor insurer has any obligation to the consumer regarding suitability.
An insured takes a policy loan from a whole life policy. During repayment, the interest rate changes significantly. Which scenario is most accurate? A) An insurer can terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse. B) An insurer cannot terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse. C) An insured can change his variable interest rate to a fixed interest rate matching the rate quotes when he first took the policy loan, with a 2% penalty assessed at repayment. D) The insurer may file a hardship and terminate coverage without repaying the loan
B) An insurer cannot terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse. The insurer will notify the policyholder of the initial interest rate at the time of the first policy loan and of any change in interest at least annually. An insurer cannot terminate coverage under an existing policy during a policy year in which the interest rate increased and subsequently caused the policy to lapse.
All of the following forms of policies are exempt from the standard policy regulations for insurers EXCEPT A) Credit life insurance B) Group life or group annuities where there is direct solicitation C) Group life and annuities used to fund funeral expenses D) Structured settlements
B) Group life or group annuities where there is direct solicitation Direct solicitation policies are not exempted from regulation and must meet certain minimum standards of marketing practices to be used.
Who is responsible for implementing a system that monitor and supervises agent recommendations regarding annuity suitability? A) The Insurance Commissioner B) The insurer C) The Virginia Insurance Guaranty Association D) Individual agents
B) The insurer Insurers are responsible for implementing a supervisory system for agent recommendations. The system must have written procedures for agents to follow and methods of periodic review for individual agents. Although insurers are responsible for such a system, they may contract the supervisory role to a third party.
When must the accelerate benefit provision be effective for illness? A) As of the effective date of the policy itself B) Within 30 days of the effective date of the policy C) No sooner than 30 days after the policy went in effect D) Within 90 days of the policy issue date
B) Within 30 days of the effective date of the policy The accelerate benefit provision must be effective for accidents on the effective date of the policy or rider, and for illness no more than 30 days following the effective date of the policy or rider.
Sammie is an agent with an insurer who markets numerous annuity products. Sammie is hoping to sell a certain product because the commissions are very lucrative. the client called Sammie an all that Sammie knows is the client has "a lot of money to invest". Which of the following BEST describes what Sammie should consider in this situation prior to taking any application from the client? A) The client's knowledge of how annuity commissions are paid. B) Is this product going to guarantee the client the result she needs? C) Is this investment suitable for the client based on her situation D) Will the client refuse to provide the correct and needed suitability information?
C) Is this investment suitable for the client based on her situation While it is important for a client to provide the truthfully provide the need information to an agent, an agent is responsible for making a determination of suitability based on the information provided by the client.
What is the purpose of the regulations on life and annuity marketing practices? A) To eliminate unfair trade and unfair competition practices B) To provide consumers with choices in life insurance products C) To establish minimum standards for advertisement, solicitations and replacement of policies D) To establish minimum rates for life insurance policies and annutities
C) To establish minimum standards for advertisement, solicitations and replacement of policies The purpose of regulating life and annuity marketing practices is to establish for insurers and agents minimum standards of conduct and guidelines to assure that advertisements, solicitations, replacements, conversion efforts, and sales of life insurance and annuities are not untrue, deceptive, or misleading.
During replacement of life insurance, a replacing insurer must do which of the following? A) Obtain a list of life insurance policies that will be replaced B) Guarantee a replacement for each existing policy C) Designate a new producer for a replaced policy D) Send a copy of the Notice Regarding Replacement to the Department of Insurance
A) Obtain a list of life insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.
During a conversion from a group policy to an individual policy 15 days after an employee's termination, the employee who was terminated dies. Which of the following scenarios is most accurate? A) The group policy will pay the death benefit that the employee would have received regardless of whether the application for coverage or premium payment was made. B) The group policy will pay the death benefit that the employee would have received as long as the first premium payment for the individual policy was made. C) The individual policy will pay the death benefit that the employee would have received from the group policy as long as the first premium payment was made. D) The individual policy will pay the death benefit that the employee would have received from the group policy as long as application was made
A) The group policy will pay the death benefit that the employee would have received regardless of whether the application for coverage or premium payment was made. If an employee who has terminated employment dies during the period in which individual coverage conversion is available, the group policy will pay the death benefit that the employee would have regardless of whether the application for coverage or premium payment was made.
One method that insurers have incorporated into many life insurance policy contracts to assist policyholders with terminal conditions in paying for living expenses under certain conditions is called A) Last right protection B) Accelerated benefits provisions C) Mortuary provisions coverage D) Pre-paid funeral expense coverage.
B) Accelerated benefits provisions Accelerate benefits are incorporate into a life insurance policy and allow policyholders to receive portions of the death benefit in advance of the insured's death.
The conversion privilege allows a person insured under a group policy to change coverage from A) A group policy to a term policy without evidence of insurability B) An individual policy to a group policy without evidence of insurability. C) A group policy to an individual policy without evidence of insurability D) An annuity to a life insurance policy.
C) A group policy to an individual policy without evidence of insurability. An individual can convert coverage from a group policy to an individual policy without evidence of insurability; however, the individual policy may be any form of life coverage, except term coverage, that is customary for the insurer based on the insured's risk.
The term "marketing communication" is commonly used to describe all of the following sales materials EXCEPT A) Media pieces designed to generate public interest in the company B) Materials used to recruit and train sales personnel for the insurer. C) Printed brochures that are used with existing clients to explain policy provisions. D) Printed advertisement in the Wall Street Journal about a new policy being offered.
C) Printed brochures that are used with existing clients to explain policy provisions. Materials sent to existing clients that do not have a new sales focus are not considered "marketing communication"
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) Conversion rule B) Disclosure rule C) Replacement rule D) Reinstatement rule
C) Replacement rule Anytime a new policy is issued that replaces or modifies existing insurance, a replacement for must be submitted to the ceding company.
Simply stated, the purpose of regulating life insurance and annuity contract replacement is A) To enable agents to maintain a continual marketing process with existing clients B) To allow insurers an opportunity to market products with enhanced benefits to a larger market. C) To ensure that minimum standards of marketing conduct are being met by the insurers and their agents. D) To establish and provide minimum standards of sales production quote for major insurers
C) To ensure that minimum standards of marketing conduct are being met by the insurers and their agents. The goal of replacement regulation is to ensure that the public's financial interests are being protected in the replacement process and that any replacement has a valid purpose.
An insurance company has 30 agents that represent the company in its Northwest region. The agents each have their own satellite office in which they perform the agent duties. Numerous offices have developed marketing campaigns to increase sales. What is the company's duty regarding marketing communications in this example? A) Maintain a client file for each of its insured parties B) Have the agent terminate all marketing campaigns immediately C) Ask the Commission for a temporary approval for the use of any disapproved ads D) Make a file copy of any marketing materials used with the public.
D) Make a file copy of any marketing materials used with the public. An insurer must maintain a file of any marketing communications that are used with the public and make it available to regulators for inspection at their request.
All of the following are required of an association in order to qualify as a group life insurance coverage EXCEPT A) Membership of 100 or more. B) Longevity of at least 10 years. C) A constitution and by-laws. D) A good faith purpose.
B) Longevity of at least 10 years. Members of legitimate associations that have a membership of 100 or more, meet longevity requirement of 5 years, have a constitution and by-laws, and a good-faith purpose can qualify as a group for group life insurance coverage.
The content of a sales presentation written by a company's insurance agent is considered the responsibility of A) The agent B) The insurer C) The agent's office manager D) The Commission
B) The insurer All marketing communications, regardless of their source, are the responsibility of the insurer.
Your client was insured under her employer's group life insurance plan at her place of employment. She contacted you as she was terminated from her job. She wants to convert her group policy to an individual policy. All of the following statements about her situation are correct EXCEPT A) Application for an individual policy and the first premium payment must be made within 31 days of termination of employment. B) Should she convert to individual coverage, the premium will be based upon her current age and risk class. C) She will be able to convert to term insurance D) She would not need to prove insurability for a conversion policy
C) She will be able to convert to term insurance. The individual policy may be any form of life coverage, except term coverage, that is customary for the insurer based on the insured's risk.
Which of the following is not an activity of daily living (ADL)? A) Dressing B) Bathing C) Sleeping D) Eatin
C) Sleeping The ability of persons to do activities of daily living (ADLs) is often used to determine the extent of a person's disability. ADLs include basic activities such as getting dressed, bathing, continence, mobility, and fixing meals.
In the event a client refuses to provide information related to his or her tax status, investment objectives, or overall financial situation, and then enters into an annuity contract, who remains responsible for the suitability of an agent's recommendations? A) The agent B) The insurer C) The client D) The insurer's officers
C) The client Neither the agent nor the insurer has any obligation to the consumer regarding suitability of a recommendation if the client fails to provide basic information relating to their financial status and investment objectives or decides to enter into an annuity contract not based on a recommendation.
