Exam FX Insurance

Insurable interest must exist

At the time of application

Extended Term Option

Automatic nonforfeiture option: same face amount, shorter term of coverage

Variable Life Insurance

Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance.

Which is true about the cash surrender nonforfeiture option

Funds exceeding the premium paid are taxable as ordinary income.

Bob purchased a policy to provide coverage on himself, his wife Linda, and their two children, John and Kristen. All of them would need to prove insurability EXCEPT

Any children born to them after the inception of the contract.

All of the following are true regarding Key Employee Disability Income insurance EXCEPT

Benefits are taxable to the employer

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?

Immediately after receiving written proof of loss

What type of insurance would be used for a Return of Premium rider?

Increasing Term

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about

Whether an insurable interest exists between the individuals

Under life-income (straight life) settlement option

the recipient cannot outlive the benefit payments

Once it has been reasonably proven that a person has knowingly violated the insurance code regarding unfair methods of competition, the dept may impose a civil penalty of

$5000 for each violation

What is the maximum period that an insurer would pay benefits in accordance with an additional monthly benefit rider?

1 year

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

All of the following are dividend options

Accumulated at interest, reduction of premiums, paid up additions

In insurance, an offer is usually made when

An applicant submits an application to the insurer

Types of Exclusions that policy won't cover

Aviation, hazardous occupations, war and military service, suicide

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate Authority

Fixed Life Insurance

Contracts that offer guaranteed minimum or fixed benefits that are stated in the contract.

Which of the following is not and essential element of an insurance contract

Counteroffer

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Which of the following is NOT funable by annuities?

Death benefit Annuities are used to fund a persons retirement

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin 1 yr since the annuity was purchased. What type of annuity is it?

Deferred

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary responsibility

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

Fixed amount

When an employee terminates coverage under a group insurance policy, coverage continues in force

For 31 days.

What do individuals use to transfer their risk of loss to a larger group

Insurance

Alien Insurer

Insurer in another country

In order for an insured to receive accelerated death benefits

Insurer may require certain qualifying factored be met under the conditions for payment forms

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

Which of the following is true regarding a term health policy?

It is nonrenewable

Which of the following is true of a childrens rider added to an insureds permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

Which of the following is excluded in a dental insurance plan?

Lost dentures

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive

Nothing; the payments will cease.

Shortly after a replacement transaction on a Medicare supplement policy, the insured decided to cancel the policy, but is unsure whether the free-look provision applies. The insured could find that information in the

Notice Regarding Replacement Must inform applicant by the 30 day free look provision

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

An applicant wants to buy a policy that has a cash value element. Which type should they buy?

Permanent

Who must have insurable interest in the insured?

Policyowner

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

Rebating

Which settlement option provides a single beneficiary with income for the rest of his/her life?

Single Life

Which of the following would help prevent a universal life policy from lapsing?

Target premium

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

Peril is most easily defined as

The cause of loss insured against

In a group policy, who is issued a certificate of insurance?

The individual insured

The insured had his wife named as beneficiary of his life insurance policy. To ensure that his wife had income for life after death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insureds age at death Age at death won't be considered but longer life expectancy of recipient, the lower the payments will be

A licensee serving in the military is unable to fulfill her continuing education requirement. What would the lie see have to do to renew the license?

The licensee may submit to the department to have requirements and fees waived. The department will then determine if request is permissible.

The insuring clause of a disability policy usually states all of the following EXCEPT

The method of premium payment

In terms to parties to a contract, which of the following does not describe a competent party

The person must have at least completed secondary education.

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

The same face amount as in the whole life policy

Which of the following is true about nonforfeiture values?

They are required by state law to be included in the policy.

What is the purpose of settlement options?

They determine how death proceeds will be paid

permanent life insurance

Various forms of whole life insurance policies that build cash value and remain in effect to 100, as long as premium is paid

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or whole serving in the military?

War or military seevice

nonparticipating policy

a policy that does not pay dividends to policyowner

Guaranteed Insurability Option

allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called

avoidance

Nonforfeiture Options

cash surrender, reduced paid-up insurance, extended term insurance

What term best describes the act of withholding material information that would be crucial to an underwriting decision

concealment

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

An insured is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?

cost containment

Policy Loans

found only in policies with cash values(whole life).Owner is entitled to borrow an amount equal to the available cash value. The insurer must give 30 days written notice that the policy is going to lapse. Insurer can defer loan for up to 6 months unless purpose of loan is to pay premium.

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

one-year term option

Additional Monthly Benefit Rider

pays an additional benefit during first six to 12 months pays even if the insured receives government benefits

A situation in which a person can only lose or have no change represents

pure risk Is the only type insurance companies are willing to accept.

A group blanket health policy is best suited for which of the following?

summer camp

Term Life Insurance

temporary life insurance provided for a specific period of time Also known as pure life insurance

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract

warranty

Universal Life Insurance

A combination of whole life insurance and term life insurance. Policy owner has the flexibility to increase the amount of premium paid and later decrease it again. Can even skip.

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?

A debtor has an insurable interest in the life of a lender.

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds death?

A minor son of the insured Minor does not have the legal capacity to release the insurer from further obligation, benefits passed through guardian

What is a foreign insurer

An insurer with a home office in another state

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the consumer price index, is

Cost of living rider

Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs?

Metal level classification

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

The death benefit will be smaller

If an insured slips a premium payment on a universal life policy

The missing premium may be deducted from the policy's cash value. The policy will NOT lapse.

The paid up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

foreign

Key person disability income

premiums are not deductible to the business, but the benefits are received income tax free by the business

Fair Credit Reporting Act

Act that protects privacy of background information and ensures that information supplied is accurate.

In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?

All providers will have the same coverage options and conditions for each plan

Guaranteed Insurability Rider

Allows policyowner to purchase specific amounts of additional insurance at specific dates or events without proving continued insurability

Rebating

Any inducement offered in the sale of insurance products that is not specified in the policy.

Participating Life Insurance Policy

Any policy that distributes it's dividends to policy owners by cash payments, reduced premiums, units of paid up insurance, a savings program, or by purpose of term insurance

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will purchase.

Which of the following are the authorities that an agent can hold?

Expressed and Implied.

Which of the following statements concerning Medicare Part B is correct

It pays for physician services, diagnostic tests, and physical therapy.

indemnity

Means insureds cannot recover more than their loss

All of the following are requirements for producer license renewal EXCEPT

Renewal examination Just need record of fingerprints, up to date continuing Ed and renewal fees

Insurance is the transfer of

Risk

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement options

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true?

The insured was in compliance with the policy requirements regarding claims.

Unless otherwise required, policyholders must be notified of an increase in premium rates that trigger La the contingent benefit on lapse. How long to proved those notice?

30 days

Which of the following statements best describes the effect the accelerated benefit provision would have on the benefits paid to the beneficiary?

it will decrease the benefits paid to the beneficiary

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is

monthly