insurance exam prep
level term
A policy that pays the death benefit if the insured dies during the 20-year premium-paying period and nothing if the death occurs after the 20-year period
Who pays some multiple of the face amount if death is the result of an accident as defined in the policy?
An accidental death rider
state taxes with a written request
An agent's appointment has been denied. What may be refunded?
The balance of the loan will be taken out of the death benefit.
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
certificate of insurance
If an employee is accepted into a group insurance plan, the status will receive a
The same face amount as in the whole life policy.
Under an extended term nonforfeiture option, the policy cash value is converted to
respond to the consumer's complaint
Under the Fair Credit Reporting Act, the reporting agency must
what can be left out of an application for life insurance?
health insurance policies in force
consideration
an insured makes truthful statements on the application for insurance and pays the required premium; it is known as which of the following?
unfair claims settlement
an insured submits a proof of loss form within 10 days of a loss; the insurer does not acknowledge the form for 3 months; what is the violation the insurer committed?
what are the types of nonforfeiture options?
cash surrender, extended term, and reduced paid-up
agents in the state are required to report all of the information except for
change in the marital status
what rider allows a couple to insure a child for a limited period of time at a specified amount?
children's term rider
replacing insurance policies for the purpose of making commissions
churning
5 hours
how many hours of continuing education in the agent's line of authority must be completed every licensing period?
terminate when the cash value is reduced to nothing.
if an insured uses the automatic premium loan option to pay the policy premium, the policy will
under what condition will proof of insurability NOT be required of an employee wanting to enroll in a group insurance plan?
if the employee enrolls within a certain time period
when can a producer be allowed to obtain insurance through an unauthorized insurer?
if there are no authorized insurers for a specific type of coverage in the state
100 persons
in order for a debtor group to qualify for group life insurance, the minimum number of participants joining the plan every year is
the group must be formed for a purpose other than obtaining group insurance
in order to qualify for group coverage
if an insurer accepts the application with unanswered questions and issues the policy,
it has waived its right to those answers
how does insurance distribute the financial consequences of individual losses?
it transfers the risk toi all persons insured.
what settlement option ensures that payments will continue until the death of the last beneficiary?
joint and survivor
what type of settlement pays throughout the lifetimes of two or more beneficiaries called?
joint and survivor
what is the name fo the policy designed to insure two or more lives and has a death benefit that is paid upon the first death only?
joint life
straight life charges what type of premium and what type of death benefit?
level annual premium and level, guaranteed death benefit
a whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
continue to increase
characteristics of annually renewable term (ART; a type of level term insurance)
death benefit remains level, policy is guarantee to be renewable each year without proof of insurability, and the premium increases each year.
what is generally included in life policies?
death of the insured who is a fare-paying passenger on a commercial airline
Making false statements about the financial condition of any insurer that is engaged in the business of insurance is called what?
defamation
an insurer exaggerates the financial condition of one of its competitors and makes it sound worse than it is. this is known as
defamation
when an insurer relinquishes control of the policy, the policy is considered
delivered
if an insured under a whole life policy with an accidental death rider kills himself after purchasing a policy what would the insurance company do?
deny the death benefit, but refund the premium
what does the accelerated death benefit not cover?
disability
what is not a standard exclusion in life insurance policies?
disability
when life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is called
estate conservation
when life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it's called
estate conservation
The automatic nonforfeiture option is what type of term?
extended term
offer and acceptance, consideration, competent parties, and legal purpose
four essential elements of all legal contracts
rebating
giving a client an inducement to a sale not stated in the policy is known as
what policy allows the policyowner to purchase specific amounts of additional insurance without proving continued insurability ?
guaranteed insurability rider
survivor protection
life insurance that can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death
what does an annuity protect the contract owner against?
living longer than expected.
what is the purpose of key-person insurance?
to cover the loss of earnings that the employee would have brought in until the business can hire and train a replacement.
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change, or surrender an insurance policy or annuity has committed what?
twisting
survivorship life (second to die policy) insures...
two or more lives for a premium that is based on a joint age
automatic premium loan
type of loan that prevents lapse of policy due to nonpayment of premium
both the principal and interest will be liquidated over a selected period of time.
under the fixed-period (period certain) settlement option,
what life policy allows for policyholders to withdraw a limited portion of the policy's cash value?
universal life
what type of insurance policy allows the policyowner to pay more or less than the planned premium?
universal life
payor benefit rider
which riders does not cause the death benefit to increase?
group term life insurance
which type of life insurance has a tax deductible premium?
the insurance company
who bears all the investment risk in a fixed annuity?
the insurer
whose policies are advertised is responsible for all its advertisements, regardless of who wrote, created, presented, or distributed them?
group insurance may be attained for associations if they have been in existence for at least how long?
2 years
what is the maximum value of an item an insurer can gift a prospective insured as an advertisement?
$25
Florida allows for a free-look period that lasts how long?
14 days
The Office of Financial Regulation and the Office of Insurance Regulation
2 offices of Financial Services Commission
associations may qualify for group insurance if they have been in existence for at least how long?
2 years
if a consumer report is requested, the insurer must notify the consumer how many days following the initial request?
3 days
the law requires agents to maintain records of transactions for how many years if the transaction pertains to its premium payments?
3 years
how long is the grace period in Florida?
30 days
an applicant for an agent's life only license must complete a minimum of how many hours of prelicensing education?
40 hours
The Florida Replacement Rule
A customer with an existing life insurance contract is considering exchanging it for a newer contract. What Florida insurance regulation should the customer's insurance agent consult?
misrepresentation
Issuing or circulating any sales material that is false or misleading would be considered
a rebate because the policy specifies that they might be paid.
Dividends paid to policyholders are not considered to be
an agent selling variable annuities must be registered with what organization?
FINRA
any type of life insurance
Key Person coverage may be funded by
when can an agent's appointment be transferred to another person?
NEVER
are policy dividends guaranteed and taxable?
No to both.
Do employers receive a tax deduction for any contributions made to a nonqualified plan?
No; they do not qualify for any favorable tax treatment under the IRS.
specifically stated in the policy
Rebates are only allowed if
what is NOT included in the buyer's guide?
SPECIFIC information about the particular policy
a specified number of days from receipt to look over the policy and if dissatisfied for any reason, return it for a full refund; the beginning of the free-look period begins when the policyowner receives the policy, not when the insurer issues the policy.
The free-look provision allows the policyowner
forbidden
The inclusion of the Life and Health Guaranty Association in an advertisement by an insurer is
Face amount
What does "level" refer to in level term insurance?
group insurance
What kind of policy does NOT typically require proof of insurability?
consideration
What on the part of the insured is the payment of premiums and the health representations made in the application, and what on the part of the insurer is the promise to pay in the event of loss?
the insurer is bound by the agent's acts
When an insurer appoints an agent
the insurer, and usually permanent insurance.
When group coverage is converted to an individual policy, who determines the type of coverage, and which type?
The date the summary was prepared
Which of the following dates must be contained in a policy summary?
Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?
face amount
Which policy component decreases in decreasing term insurance?
insuring clause
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
Universal life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
an individual not covered by an employer-sponsored plan who has earned income
Who can make a fully deductible contribution to a traditional IRA?
10%
an annuity contract is issued to a senior consumer over 65; what is the maximum surrender charge for a withdrawal of money?
the entire contract includes:
a copy of the application, any riders or amendments, and the policy
what type of group is not eligible for group life insurance?
a credit union
in order to become licensed as an insurance producer,
a customer service representative must solicit no more than one policy per year
level term insurance
a form of level term insurance that offers the most insurance at the lowest cost.
premiums from fixed annuities are invested where?
a general account
what is an example of policy replacement?
a policy that is reissued with a reduction in cash value
what happens to the cash value when a whole life policy lapses or is surrendered prior to maturity?
a single premium policy can be purchased for a reduced face amount
a policy summary must include what?
a statement that dividends are base on the company's current dividend scale and are not guaranteed.
what are the two types of assignments?
absolute and collateral
deferred annuity benefit payments begin how long after the contract was purchased?
after one year
30 days
agent must notify the department of insurance in writing how many days after being found guilty of a felony or crime punishable by imprisonment of 1 year
free-look provision
allows the policyowner a specified number of days from receipt to look over the policy and if dissatisfied for any reason, return it for a full refund of premium.
a universal life insurance policy is a
annually renewable term
what isn't subject to Florida regulations on life insurance solicitation?
annuities
what type of life insurance can be used to fund a buy-sell agreement?
any form of life insurance
the policyowner
any person insured under a group life insurance policy can make an assignment of all or nay part of the incidents of ownership EXCEPT for
in whole life insurance, when does the policy cash value equal the face amount?
at the insured's age of 100
if a level term product is renewed at the end of the term period, the policy premium will be
based on the attained age of the insured (insured's age at the time of renewal)
How are state insurance guaranty associations funded?
by their members- authorized insurers
stock
insurers owned by stockholders
what provision states the insurer's duty to pay the benefits upon the death of the insured, and to whom the benefits will be paid?
insuring clause
convertible term insurance does what?
it converts to a cash value policy with the same death benefit but at a higher premium
Availability of insurance benefits or coverage cannot be denied based on what two factors?
marital status and sex
the guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at:
marriage, birth of a child, and/or every 3 years or so between the ages of 25 and 40.
guaranteeing future dividends is considered to be a deceptive act known as
misrepresentation
the customer displays a lack of interest when an insurance agent explains various types of policies. the agent then guarantees higher dividends than he know would be possible. this is
misrepresentation
an insurance company owned by the policyholders is called the
mutual insurer
during replacement of life insurance, the replacing insurer must do what?
obtain a list of all life insurance policies that will be replaced.
a rider attached to a life insurance policy that provides coverage on the insured's family members is called what?
other-insured rider
60
paid-up nonforfeiture benefit will becoming effective as specified in the policy within how many days after the due date of the premium in default
what policy rider provides protection to an insured's minors in the case of death or disability?
payor benefit
whole life policies offer living benefits that include what?
policy loans
policies written on a third-party ownership basis are usually written to cover whom?
policyowner's minor children or business associates
what is the difference between a straight life policy and a 20-pay whole life policy?
premium payment period
what is true regarding the taxation of premiums in a key-person life insurance policy?
premiums are not tax deductible as a business expense.
premiums are not tax deductible except for which instance?
premiums paid by an employer on a group term insurance plan for employees
Insurance Guaranty Association
protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perm contractual obligations due to financial impairment
what is the only policy provision?
reinstatement
what provision or policy allows an insured to reactive a lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided?
reinstatement provision
when an insurer buys insurance from another company to minimize effects of catastrophic losses, they are
reinsuring
if a new life insurance policy is provided under a group life insurance policy covering employees or members of an association,
replacement regulations do not apply
churning
replacing insurance policies for the purpose of making commissions is known as
the Notice Regarding Replacement and all sales proposals used for at least 3 years or until the conclusion of the next regular audit by the insurance department, whichever is later
replacing insurers must maintain copies of
interest only settlement option
settlement option in which the beneficiary will only receive payments of the interest earned on the death benefit
who is a likely candidate to purchase a deferred annuity?
someone who wants to grow retirement funds tax deferred
representations are what?
statements that are believed to be true to the best of the applicant's knowledge; not necessarily or guaranteed to be true.
life insurance provides what?
survivor protection
any premiums paid by an employer for employee coverage of more than $50,000 is
taxable to the employee
level term insurance is what?
temporary protection
what policy does NOT offer a loan option?
term life; they do not have a cash value
what may be used to customize a permanent life insurance policy to meet the needs of the policyowner?
term rider
the accelerated benefits provisions allow the owner to be advanced a significant portion of the death benefit when the insured is
terminally ill
who is not eligible for coverage under key person?
the OWNER of a shop (owner is the principal, not key person).
if an agent is in the military, what is true?
the agent cannot sell a policy to another active military person who is of a lower rank.
what is NOT a violation of state insurance regulations?
the agent uses her license to write only business other than controlled.
it may last for the lifetime of the annuitant
the annuity period lasts how long?
who does not have an insurable interest in the insured?
the beneficiary
who does the spendthrift clause in a life insurance policy protect?
the beneficiary
what is not consideration in an insurance policy?
the cash value
who examines the books and records of insurance companies in Florida?
the chief financial officer
no proof of insurability up to the full term death benefit; most term policies contain the convertibility option; the premium of the policy is based on the attained age
the convertibility option under a term life insurance features
if a company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of what?
the date of the medical exam or the the date of the application, whichever is later
what date must be contained in a policy summary?
the date the summary was prepared.
what is a characteristic of nonforfeiture values?
they have to be included in the policy by state law.
annually renewable term
the death protection component of universal life insurance is always
each insurer appointing an agent in Florida must file all appointments with which entity?
the department
what entity is responsible for the administration and regulation of insurance?
the department of financial services
how will a life insurance beneficiary designation naming a spouse be changed by divorce?
the designation will be voided.
what does the policy, when coupled with the attached application, form?
the entire contract
life insurance creates an immediate estate. what explains this statement?
the face value of the policy is payable to the beneficiary upon the death of the insured
an insurer that operates for one or more social, educational, charitable, benevolent, or religious purposes for the benefit of its members is called
the fraternal insurer
if an insured forgets to pay the premium and ten days later, his policy is still in effect and has not lapsed, what can account for this?
the grace period
what is the primary source of information that is used to evaluate risk for life insurance?
the insurance application
with adjustable life, the owner CANNOT change
the insured
all advertisements are the responsibility of
the insurer
who is considered the principal?
the insurer issuing the policy
purchase a smaller amount of the same type of insurance as the original policy
the paid up addition uses the dividend to
the policyowner of a universal life policy may skip paying the premium and the policy will not lapse as long as what?
the policy contains sufficient cash value to cover the cost of insurance
according to the common disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
the primary beneficiary died before the insured.
under an extended term nonforfeiture option, the policy cash value is converted to
the same face amount as in the whole life policy
what is true about both fixed-period and fixed-amount settlement options?
they both guarantee that the principal and interest will be fully paid out.
level fixed
variable life insurance is based on what kind of premium?
what rider allows the insured to forgo payment if he or she is disabled for a period beyond 6 months?
waiver of premium rider
signed waiver of premium
what can be added to a life insurance policy and is not something to be obtained from the applicant?
term rider
what can be used to customize a permanent life insurance policy
a term life policy
what insurance product is subject to the regulation on life insurance solicitation?
false advertising
what is implying that the agent is the insurer called?
enacting new insurance laws
what is not a responsibility of the Office of Insurance Regulation?
the insured's age at death
what is not considered to determine the amount of payments of premium?
the amount of premium payment
what is stated in the consideration clause of a life insurance policy?
the blackout period
what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns 60 called
life insurance and securities license
what license or licenses are required to sell variable annuities
guaranteed insurability option
what option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability?
Universal Life-Option A
what policy has an IRS required corridor or gap between the cash value and the death benefit?
the medical information bureau
what provides an underwriter information about an applicant's health history?
whole life insurance
what type of insurance performs the function of cash accumulation?
mutual insurer
what type of insurer gives a dividend check that is not taxable and if all funds are paid out, no dividends are paid?
in forming an insurance contract, when does acceptance usually occur?
when an insurer's underwriter approves coverage