Exam Simulator Three

If an individual violates a cease and desist order issued by the State Corporation Commission, the individual will be subject to a fine of

$5000

After an annuity has been in force for _____ year(s), it becomes incontestable.

2 years

Administrative actions taken against an agent must be reported to the State Corporation Commission within _____ days of the final disposition

30

An insurance company or agent must respond within _____ days to insurance request to access personal information collected on him/her by the insurer

30

In Virginia, an insurer must file a written notice of appointment with the State Corporation Commission within

30 days of the first insurance application submitted by the licensee

One becomes eligible for Social Security disability benefits after having been disabled for

5 months

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

6 months

Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?

Accelerated (living) benefit

Which statement regarding a single premium life insurance policy is not correct?

Additional premiums may be required under certain conditions

Which is an accurate description of the premium in a graded premium life insurance policy?

Annual increases in premium for a stated number of years then levels off for the remainder of the contract

In what situation could an insurance policy's coverage be modified?

Applicant is a substandard risk

When does the insured stop making payments under a thirty-payment whole life policy?

At the time of death or 30 years after the policy's inception, whichever comes first

Which statement regarding the cash value of a whole life insurance policy is correct?

Available to the policyowner when policy has been surrendered

A domestic insurance company in Virginia must

Be formed under Virginia insurance laws

Which statement regarding the waiver of premium rider is accurate?

Cash payment is not directly provided to the policyowner

All of these are considered to be in violation of the Federal Fraud and False Statements Act EXCEPT

Claims reimbursement

An individual, age 45, would like to help pay for his daughter's college expenses in 10 years. Which annuity would be appropriate for this individual?

Deferred annuity

Which of these is not considered a type of limited payment whole life insurance?

Endowment at age 70

The application is part of the annuity contract according to the

Entire contract clause

How often must the Commission examine each domestic insurance company?

Every five years

A policy owner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?

Face amount minus the loan balance and past-due premium

An example of misrepresentation is

Falsifying the terms, benefits, advantages, or conditions of an insurance policy

Which of these may not be deducted from premium payments or the cash value of the variable life insurance policy?

Federal premium taxes

Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?

Fixed amount installment option

An annuity contract may be returned for a full refund during the

Free-look period

Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?

Free-look period

Which of the following is NOT subject to the promise to pay in an ensuring clause?

How the premium is calculated

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

A policyowner has just borrowed from a life insurance policy's cash value. Which of these statements is true?

In the event of death, the loan amount is deducted from the policy proceeds

In Virginia, an insurance agent's appointment

Is in effect until termination

Which of these would not be a valid reason to add the waiver of premium rider to a life insurance policy?

It allows a policy loan to cover premium payments if the policy owner becomes totally disabled

All of these are duties that a producer may be required to perform when delivering an insurance policy except

Leave a conditional receipt with client

An insurance policy maybe issued with a preferred insurance premium in all of these situations EXCEPT

Living in a rural area

When determining the suitability of an annuity for a consumer, the insurance provider is obligated to

Make reasonable efforts to fit the annuity with the consumer's needs

A Life Policy that has premiums that are lower than normal during the early years is called

Modified life

Life insurance premiums are computed on what three factors?

Mortality, interest, expenses

Which of these statements accurately portrays an adjustable life insurance policy?

Policy can alternate between forms of term and whole life insurance

Which statement regarding an adjustable life insurance policy is not true?

Policy loans are not permitted

The beneficiary of a life insurance policy is normally selected by whom?

Policyowner

A cease and desist order issued against an agent

Prohibits a specific practice listed in the order

A life insurance policyowner sells her policy to a third party in a viatical settlement. Under this transaction, the policyowner

Receives an amount less than the policy's death benefit

During an annuity's liquidation phase, the annuitant normally

Receives benefit payments at regular intervals

What does a 401(k) plan generally provide its participants?

Salary-deferral option

Switching Life insurance policies without tax consequence is permitted under

Section 1035 rules

A life insurance producer's underwriting duties may include

Seeking additional information requested by the insurance company

Assets that back the non-guaranteed values of variable life insurance policy products are held in which account?

Separate account set up by the insurer

Which of the following entities does not establish regulations for variable insurance products?

State Attorney General

The interest paid during an annuity's payout period is called

Taxable as ordinary income

Which statement concerning adjustable life insurance is accurate?

The face amount and premiums can be changed simultaneously by the policyowner

What is the effect of the market value adjustment in a market value adjustment annuity?

Transfers some of the investment risk to the policyowner

How is a collateral assignment used in a life insurance contract?

Transfers specific ownership rights to a creditor

Insurance crimes which affect interstate commerce are prosecuted by the

US Attorney General

When does interest income for a flexible premium deferred annuity get reported for federal income taxes?

Upon receiving distributions from the contract

An insurance policy that can also be classified as a securities product is called

Variable Life

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

Variable Universal Life

An insurance company's failure to enforce a contract provision is called a

Waiver

Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?

When the contract has been held for the period specified in the policy

A producer working for an insurance company may be personally liable for

acts performed which are prohibited in the agency contract

The absolute assignment of a life insurance policy results in

all incidents of ownership transferred to the assignee

Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of

apparent authority

When does the owner's contractual rights begin under an individual annuity contract?

at the time of purchase

Which of these life insurance policies does not contain a cash value provision?

decreasing term life

A qualified profit-sharing plan is designed to

distribute a portion of company earnings to its employees

The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called

implied authority

XYZ Corp has implemented a qualified retirement plan. This plan may NOT discriminate

in favor of highly compensated employees

A business may purchase an annuity for all of the following reasons except

informally funding a non-qualified deferred compensation plan

After an insurance application has been originated, the producer normally

is the major personal contact to the insured

During the sale of the life insurance policy, an agent may provide an incomplete illustration

never

In an individual retirement account (IRA), rollover contributions are

not limited by dollar amount

When a lapsed policy's premium has been paid current, it has the potential of being

reinstated

Under a deferred annuity, which contract feature initially charges a 5-10% fee that eventually reduces to $0 after a stated amount of time?

surrender charge