Financial Advising

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE

Withdrawals are not taxable

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

lump sum

Which of the following insurers are owned by stockholders

Stock

Which of the following is the best reason to purchase life insurance rather than an annuity

To create an estate

Which of the following would be required to be licensed as an insurance producer

A salaried employee who advertises and solicits insurance

What is the definition of a unilateral contract

One-sided: only one party makes an enforceable promise

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy

Which of the following will NOT be considered unfair discrimination by insurers

Discriminating in benefits and coverages based on the insured's habits and lifestyle

A life insurance policy has a legal purpose if both of which of the following elements exist

Insurable interest and consent

What describes the specific information about a policy

Policy summary

Which of the following is true of a children's rider added to an insured's 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 type of life insurance policy generates immediate cash value

Single premium

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insureds age 100 is called

Single premium whole life

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

The LEAST expensive first-year premium is found in which of the following policies

annually renewable term

Which of the following would describe a legal document which would dictate who can buy a deceased partners share of a business and for what amount

buy-sell agreement

If a producer continues to violate the Insurance Code, a new civil penalty will be assessed every

day

What are the two components of a universal policy

insurance and cash amount

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

unilateral

Which of the following includes information regarding a persons credit, character, reputation, and habits

Consumer report

An individual purchased a $100,000 Joint Life Policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife recieve from the policy

$100,000

All documents used in the solicitation of insurance must be maintained by an insurer for at least

3 years

If a resident insurance producer moves from Tennessee to another state, he/she must file a change of address and provide certification from the new resident state within how many days of the change of legal residence?

30 days

Upon receipt of notice of appointment, the Commissioner must verify the insurance producer is eligible for appointment within how many days?

30 days

In insurance, an offer is usually made when

An applicant submits an application to the insurer

Which of the following is NOT typically excluded from life policies

Death due to plane crash for a fare-paying passenger

Which policy component decreases in decreasing term insurance?

Face amount

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first.

A policy summary must include all of the following EXCEPT

Guaranteed dividend rate

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members

Term rider

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

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a Notice Regarding Replacement

Which of the following is a key distinction between variable whole life and variable universal life products

Variable whole life has a guaranteed death benefit

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

sexual orientation

Which of the following is a risk classification used by underwriters for life insurance

standard

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized

An insurance producer license may be renewed if the producer has paid the application fees, submitted the renewal form to the commissioner, and

Completed continuing education requirements

An insured pays an annual premium to his insurer. I'm return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

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

It has the highest amount of insurance protection

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

Joint life annuity

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the first insured. Which policy is that

Joint life policy

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

For the purpose of making an investigation, the Commissioner does NOT have the power to do which of the following?

Make testimony and documents available to the public

All of the following are true regarding insurance policy loans EXCEPT

Policy loans can be made on policies that do not accumulate cash value.

Who can request changes in premium payments, face value, loans, and policy loans

Policyowner

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy

Premiums are not tax deductible as a business expense.

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy

Return of premium

Which of the following best details the underwriting process for life insurance

Selection, classification, and rating of risks

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles

Standard risk is representative of the majority of people.

Which of the following policies would be classified as a traditional level premium contract

Straight life

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

A Corporationid the owner and beneficiary of the key person life policy, if the corporation collects the policy benefit, then

The benefit is received tax free

Which of the following is INCORRECT concerning a noncontibutory group plan

The employees receive individual policies

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary.

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

All of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits.

Within how many days must insurance producers reports changes of address to the commissioner

30 days

Which of the following would be required to complete pre licensing education

A nonresident life insurance producer who is planning to transact property insurance

The term " illustration " in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy

All materials used in the solicitation of life insurance must provide the following EXCEPT

A single sum of all guaranteed and nonguaranteed benefits

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

In an insurance company makes a statement that it's policies are guaranteed by the existence of the insurance Guaranty Association, that would be considered

An unfair trade practice

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information except the applicants

Ancestry

A key person insurance policy can pay for which of the following?

Costs of training a replacement

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wan to to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy

Guaranteed insurability option

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

Increasing Term

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this

Reduction of premium

Which of the following best defines target premium in a universal life policy

The recommended amount to keep the policy in force throughout its lifetime

A temporary license may be issued without examination in all of the following instances EXCEPT

To an applicant who fails to pass an insurance producer's examination

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

a fixed amount

Which of the following may obtain a producers license, but may NOT sell, solicit, or negotiate a contract of insurance in Tennessee

business entity

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of

coercion

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

interest-sensitive whole life

in order to enforce the insurance Code the commissioner has the power to conduct which of the following

investigations