Exam fax life

Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producer's license

Forgery

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

The insured may choose to convert to term or permanent individual coverage— When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance.

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income— Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level.

Under which of the following circumstances would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for her medical treatment.

A producer holds a life and accident and health or sickness insurance license and a property insurance license. How many hours of continuing education must the producer complete every license renewal period? A

24

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

Death benefit - A fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.

Which of the following policy components contains the company's promise to pay?

Insuring clause

Which of the following settlement options in life insurance is known as straight life?

Life income— The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary's death.

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A— Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

Policy summary— A policy summary usually includes all the listed information, and must be delivered along with a new policy.

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.— While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken into consideration, the annuitant must be a natural person.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application.

If an insured continually uses the automatic premium loan option to pay the policy premium,

The policy will terminate when the cash value is reduced to nothing.— This option, usually elected at the time of application, provides that in case of a possible policy lapse, the premium will be automatically paid form the contract's guaranteed cash value. However, once the cash value is exhausted, the policy will terminate.

The Commissioner will deny a license renewal to a producer who plans to exclusively sell

To family members

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2500- An individual who willfully violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500.

Which of the following individuals could qualify for a temporary insurance license?

A designee of a producer who is called to active military servic

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date— If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application.

Combining collected premiums and producer's own funds in one account is called

Commingling

An insurance producer just sold an insurance policy to his sister. What kind of business is this?

Controlled

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option

Fixed amount— When the fixed amount settlement option is chosen, the policyowner sets the amount of each installment. The insurer will determine how long the installments are to be paid.

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free— Funds in a qualified plan accumulate on a tax-deferred basis; however, at distribution any amount received by the employee will be treated as ordinary income for tax purposes.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in whole life policy— Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.

The maximum amount of annual interest that may be charged on a policy with a fixed interest rate is

8%

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of

Defamation

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Executive bonus— When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called an executive bonus.

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.— The "owner" is the person who purchases the contract and has all of the rights such as naming the beneficiary and surrendering the annuity. The owner, however, does not have to be the one who receives the benefits; it could be the annuitant (if different from the owner) or the beneficiary.

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Limited pay life— In limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policy owner

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration— The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.— Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases— Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.

Which of the following riders would NOT cause the Death Benefit to increase

Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.

Which of the following would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction — When an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, a 12-year-old student is considered to be underage in most states and a person under mind-impairing medication most likely would not be mentally competent.

Which of the following will be included in a policy summary?

Premium amounts and surrender values— A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

A person insured under a group life insurance policy can make an assignment of all or any part of the incidents of ownership under the policy to any of the following EXCEPT

The policyholder— Any person insured under a group life insurance policy can make to any person, other than the policyholder, an assignment of all or any part of the incidents of ownership conferred on the insured by the policy or by law, including the right to exercise the conversion privilege and the right to name a beneficiary.