Insurance FEG
The payment of an accelerated death benefit is
Tax free to a recipient is the benefit payment is qualified
Which type of insurance is designed to provide life insurance protection only for a limited of time?
Term Life Insurance
Accelerated Benefit Rider
Terminal illness or injury
Conservation
The act of saving or keeping the existing policy and preventing it from being replaced.
In addition to the actual policy, an entire contract includes what?
The application
Which has the right to revoke license?
The commissioners of commerce
What is the primary purpose of the reinstatement provision
To put a policy back in force as if it had never lapsed
An applicant completes the application and submits it to the insurer along with a premium check. When is the applicants offer considered accepted?
When the insurer issues a policy
An insurer which is formed under the laws of another country is an?
Alien Insurer
An insurer which is formed under the laws of another country is an
Alien insurer
A proposed insured whose likelihood of loss is significantly less than the average is classified as:
Substandard risk
Beneficiary
Receive the policy proceeds or death benefits under the contract if the insured dies while the policy is in force.
Declined risks
Refusal to issue coverage
How long is a temporary license?
180 Days
Standard risks
Same health occupation as reflected in mortality
In Indiana what is true regarding the duties of insurers in a replacement situation
A civil penalty if 50k
In Indiana what could be the result of violating a cease and desist order
A civil penalty if not more than 25k per violation
A rider on a whole life policy that adds temporary for a spouse and children is:
A family term rider
Who would not be exempt from licensing
A person who receives a commission for selling group insurance
What best describes 3rd party ownership
A policy owned by one person I during the life of another person
Which is the flexibility of a whole life policy?
Adjustable whole life
When a policy owner make a change in the policy's coverage of other benefits if an irrevocable beneficiary has been named
After the irrevocable beneficiary dies
Who has the right to change the beneficiary?
Policy Owner
An insurer that is authorized to do business In this state must be
An admitted insurer
If the proposed insured dies while the policy is in forced the company will pay the death benefit to the beneficiary.
An insuring clause
Accidental and Dismemberment will pay the principle sum of death occurs:
As a result of an accident regardless of when the accident occurs
An immediate annuity making payment after the:
Policy has been in force for one year
Mutual insurance companies are owned by:
Policy holders
The individual who has the ownership rights of policy is called the
Policyowner
In Indiana foreign insurer
Can be from the US territory
Only the owner
Can surrender an annuity
What gives an insurer the authority to operate within this state
Certificate of authority
If the Insured and the Primary beneficiary are killed in the same accident, the policy proceed will pay the death benefit to who?
Contingent Beneficiary
Policyowner
Controls the policy and maintains the right to make all decisions regarding coverages.
A convertible term policy enables the policy owner to:
Convert a policy to a permanent policy
Life insurance policy premiums establish a
Cost basis in the policy for tax purposes
Who has the right to change the premium mode
Policyowner
Fair Credit Reporting Act
Protects the consumers right to the privacy of credit and financial information, ensuring that all collected data is confidential, accurate, relevant, and properly used.
Preferred risks
Qualify for lower premiums
Universal life provides for an increasing death benefit only if the applicant choose
Death benefit option B
If an applicant for life insurance misstated his age in the application, what would be the consequence if when it is discovered
Death benefit will be that premium paid would have purchased at insurance at the correct age. 2 years only to deny
An insured
is the person or entity that is covered by the Insurance policy.
What is a characteristic of contributory plan?
Eligible employees pay a portion of the premium
Annuity products linked to a market related index are called:
Equity Indexed Annuity
An insurance agency that is seeking to become a licensed business entity must meet with
Everyone who sells or solicits insurance for the agency must be individually licensed
An insurance agency that is seeking to become a licensed business entity must meet with?
Everyone who sells or solicits insurance for the agency must be individually licensed.
The states__branch enforced the existing status that have been put in place
Executive
What is insurable interest?
Exist between the owner (applicant) and insured before the policy will be issued. Example: Spouse, immediate family, business partner
Insurance interest
Exist between the owner and insured before the policy will be issued.
The commission of commerce may not issue the license if:
Fail to meet a court order for child support
Information from a 3rd party collected by the application for insurance and during underwriting of the policy may be subjected to the jurisdiction of what?
Fair Credit Reporting Act
Information from a 3rd party collected by the insurance company I the application for insurance and during underwriting of the policy may be subjected to the jurisdiction of what?
Fair Credit Reporting Act
Federal Regulation called the __protects consumer policy.
Fair credit reporting act
A federal regulation called the ___protects consumer policy.
Federal Credit Reporting Act
Insurers that are incorporated in another state but doing business in this state, are considered:
Foreign
A nonprofit corporation without capital stick formed solely for the benefit of its members is a:
Fraternal benefit society
A nonprofit corporation without capital stock formed solely for the benefit of it members is a:
Fraternal benefit society
Which rider would allow additional insurance at a specified date or event without evidence of insurability?
Guaranteed insurability
An owner
Has all of the contractual rights in an annuity contract
NAIC
Has no legal authority over insurance regulation
Part 2 of the application consist of
Hospitalization, Surgeries, past and present health
What does part 2 of the application consist of?
Hospitalization, health information
Under the fair credit reporting act
If denied coverage, they can request a copy of the report
Third Party Ownership
If the policy is owned by a person other than the insured.
What is 3rd party ownership?
If the policy is owned by a person other than the insured. Example: Spouse or parent
What is liquidity?
Immediate funds available upon death to pay creditor, taxes, and final expenses as well as cash values available for policy loans, withdrawals
What is an example of a nonqualified plan?
Individual Annuity
Insured
Individual whole life is covered under the policy.
What is insured?
Individual whose life is covered under the policy Example: I am insured.
Legal contract between 2 parties, purchased by the insured and stating that the insurance company promises to make payment for a loss arising from an unexpected event.
Insurance contract
An __is a person or entity that is covered by an insurance policy.
Insured
Replacing insurer
Insurer responsible for issuing the new policy that will replace the existing policy.
Existing insurer
Insurer that issued the current policy to be replaced
What is an existing insurer?
Insurer that issued the current policy to be replaced
Substandard risks
Issued rated policies
Which type of life insurance is written under a single contract for the spouse in which it is payable upon the first death.
Joint
Insurance contract
Legal contract between 2 parties
What is Insurance Contract?
Legal contract between 2 parties. Purchased by the insured.
Who has no legal authority over insurance regulations?
The NAIC
What is conservation?
The act of saving or keeping the existing policy and preventing It from being replaced.
Death benefits are paid to the estate of the policy owner/insured in what?
The beneficiary is the estate
When an insurer requires that an insured be subjected to a medical examination, who pays for the medical exam
The insurer
Viator definition:
The owner/insured of a life insurance policy who is entering into a viatical settlement because of terminal illness
The life insurance policy cost basis consists of:
The premiums paid in
The maximum amount the accidental death and dismemberment rider will pay out before it expires is:
The principle sum
What is the primary purpose of the reinstatement provision?
To put a policy back in force as it has never lapsed
John is named in a policy as the individual who is entitled to receive the policy upon the death of Tom. Which statement best applies to this scenario?
Tom is the insured in the policy and john Is the named beneficiary
Suicide is not covered in the policy for the first two years.
True
Who performs the functions of risk selection in determining an individual's insurability for policy issue?
Underwriter
A variable universal life is a combination of what?
Universal and variable life
When it comes to life insurance, insurable interest on one's own life is:
Unlimited
Which policies has cash value dependent on the investment performance of common stock?
Variable Life
An Insured wants to purchase a policy with 3 key elements Flexible Premium, Death Benefit, and the choice of how the cash value accumulates. Which Policy would fit the needs?
Variable Universal Life
When the structure and flexibility of a universal life policy are combined with investment choice is a:
Variable Universal Life Policy
USA patriot act and anti-money laundering
Was passed to help detect and prevent this illegal activity
What I the USA Patriot Act and anti-money laundering?
Was passed to help detect and prevent this illegal activity
All of the following are times in which life insurance policy cash values can become taxable:
- When policy is sold - Policy surrender - Policy fails to meet the IRS definition of life insurance
What are the 4 elements of a legal contract?
1. Competent parties 2. Legal purpose 3. Offer and acceptance (agreement) 4. Consideration
4 Elements of a Legal Contract
1. Competent parties 2. Legal purpose 3. Offer and acceptance 4. Consideration
Transacting insurance can involve any of 4 different phases in the sale of products what are they?
1. Solicitation 2. Negotiation 3. Execution of contract 4. Handling matters subsequent to a contract
What is the list of universal life?
- Flexible premium - 2 death benefit options - Guarantee minimum rate or return on cash value - Mortality charge for cost of pure insurance deducted monthly - Partial withdrawal or surrender available
Universal Life
- Flexible premium - 2 death benefit options to choose from - Guaranteed minimum rate of return on cash value - Mortality barge for cost of pure insurance is deducted monthly - Partial withdrawal or surrender available
What does part one of the application consist of?
- General questions about the applicant - Marital status - Residence - Occupation
An application for insurance is completed and submitted to an insurance company. In order for coverage to be effective immediately the policy:
- Is issued at a higher risk than the standard risk applied for
What is the fair credit reporting act?
- It protects the consumers right to privacy of credit and financial information. - Ensuring that all collected data is confidential, accurate, relevant, and properly used - Must provide post-notification to the applicant - The applicant Is entitled to be informed of anyone who requested a copy of the report in the prior 6 months.
What are the types of term life insurance policy?
- Level - Decreasing - Increasing
The insurer generally assumes the investment risk in all of the following annuities
- Market value adjustment - Fixed - Indexed
What does the policy contain?
- Name of the insurance company - Name of the insured and policy owner - Face amount of the policy - Basic description of the type of policy purchased - Policy number and anniversary date - Insurance company promise to pay the death benefit
Permanent insurance
- Policy matures or endows when cash value = face amount - Issued with a level face amount - Policy loans available - Designed to provide coverage for a life time - Premiums may be payable for life, limited period or lump. - Premium builds a reserve known as cash value
A life insurance applicant answers on the application indicate that hey in good health. In fact, the applicant actually has a disease that they are not aware of. This statement on the application is considered.
A representation
Term life insurance is designed to provide coverage for___
A specified period of time
Viatical settlement broker definition:
A licensed life insurance producer representing a terminally ill viator when transacting viatical settlement
Viatical settlement agent defnition:
A licensed life insurance producer representing the viatical settlement provider and solicits, offers, and attempts to negotiate a viatical settlement contract with the viator
Who would not be exempt from licensing?
A person who receives a commission for selling group insurance
What is the list of permanent insurance?
- Policy matures or endows when cash value=face amount - Issued with a level face amount - Policy loans available - Designed to provide coverage for a lifetime - Premium builds a reserve known as cash value - Premiums may be payable for life, limited period, or lump
Who are the parties in a 3rd party life insurance ownership situation?
- Policy owner - Insured - Insurer
HIPPAs privacy rules are implanted to:
- Protect the privacy of all individually identifiable health information
What is conditional receipt?
- Provides that coverage will become effective as of wither the date of application or the date of completion of required medical exam. - If the initial premium is paid at the time of application the producer will issue a conditional receipt
Income tax free
- Qualified accelerates death benefit - Policy dividend that is less than the premium paid - Group life insurance death benefit proceeds - Lump sun death benefit paid to a beneficiary
What is the requirement for an Indiana resident producer to renew their license?
- Reside or work in Indiana - Complete 24 hours of continuing education - Pay all required renewal fees
What are the violations of the Indiana producer licensing law?
- Using customers premiums for personal use - Failing to meet Indiana's CE requirement - Being 3 years behind on child support payments
USA Patriot Act and Anti-money laundering
- Was passed to help detect this illegal activity, - Transaction report must be filled with financial crimes network through the department of treasury for every cash transaction that exceeds $10,000 and wire transfer in excess of $3,000
Sam has $100.00 traditional whole life insurance policy with a $30.00 cash surrender value. What is the insurers net amount at risk?
$70
A $100.00 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy cost $750 and the rider is $50 what is the total premium annually the policy owner must pay to keep the policy force?
$800
Members of the ___include state and territorial insurance commissioners or regulators.
(National Association of Insurance Commissioners) NAIC
What are the underwriting factors?
- Age - Gender - Hobbies - Occupation - Health history - Tobacco use
True about policy loans
- Cannot exceed the amount in cash value - Not taxable so long as the policy remains in force - interest in a policy loan is not deductible
Universal life is similar to whole life in what ways?
- Cash values accumulate based on premium deposits and interest - Any internal cash value growth is tax deferred - It provides a death benefit
The owner of an annuity may do
- Change the annuity date - Select or change the settlement option prior to death - Name and change the beneficiary
Term Insurance
- Coverage may be convertible - Death benefits may be level, decreasing or increasing - Temporary protection - Coverage may be renewable - Written for a specified time period or to a specified age - Pure insurance
What is the list of term life insurance?
- Death benefits may be level, decreasing or increasing - Temporary protection - Coverage may be renewable - Written for a specific time period or specific age
What are the principle of indemnity?
- Designed to restore an insured to the same physical or financial condition - Means to compensate for a loss, or to make one whole again.
What is the list of variable life?
- Fixed premium - No guarantee - Policy owner bears all investments risk - Cash value in separate account fluctuates based on market - Death benefit varies - Sold by individuals
Once a policy has been Reinstated the Insured must wait what amount of time before coverage for sickness is available?
10 days
How many cried house of continuing education must a produced complete every renewal period
24
How many total hours of continuing education covering the subject for which the license must complete?
24
Which would be considered legally competent to enter into a contract?
25-year-old, self-employee
Life and health producers in Indiana must meet
3 hours of ethics every 2 years
Life and health producers in Indiana must meet?
3 hours of ethics every 2 years.
How many hours of training must be completed before a producer in Indiana can sell an annuity
4
How many hours of training must be completed before a producer in Indiana can sell an annuity?
4
The lowest monthly social security retirement benefit would occur if started at age
62
The lowest monthly social security retirement benefit would occur is started at age
62
The double indemnity rider requires that the insured die within __days of the accident
90
Viatical settlement provider definition:
A 3rd party that purchases and enters into a viatical settlement contract with a viator
Consistently violating the Indiana unfair claims settlement practices statue is considered an unfair competition law violation and could result in
A civil penalty of $50,000
In Indiana, what could be the result of violating a cease and desists order?
A civil penalty of not more than $25,000 per violation
What is buyers guide?
A generic brochure developed by the NAIC to assist prospective buyers of life insurance.
When the death of an insured occurs within a specified period causing the policy to pay double or triple benefits this policy must have which
Accidental death rider
The underwriter greatest concern when underwriting a group plan is __
Adverse selection
Underwriting factors
Age, gender, hobbies, physical condition, health history, occupation, tobacco use
What is Cash Accumulation?
An amount of cash accessible to pay the policy owner form within permanent life insurance policy
What is policy replacement?
Any transaction in which a new life policy or annuity is to be purchased and the producer knows or should know that existing contracts.
Fair Credit Reporting Act is entitled to
Be informed of anyone who request a copy of the report in the prior 6 months
Which is not required to sign a completed application?
Beneficiary
What is conditional contract?
Both parties must perform certain duties to make the contract enforceable
Universal life provides for an increasing death benefit only if the applicant chooses:
Death benefit option B
An insurer has issued a new policy and mailed it to the producer. The producer should
Deliver the policy to the insured in person and obtain a delivery receipt.
In Indiana, foreign insurerIn Indiana, foreign insurer
Can be from the US territory
What gives an insurer the authority to operate within this state?
Certificate of authority
What is written by one party, the insurance company, without any input from the applicant
Contract of adhesion
What is policy owner?
Controls the policy and maintains the right to make all decisions regarding coverages
Life insurance policy premium establish a __in the policy for tax purposes
Cost basis
An insurer has issued a new policy and mailed it to the producer. The producer should:
Deliver the policy to the insured in person and obtain a delivery receipt.
What refers to the jurisdiction where an insurer was formed or incorporated?
Domicile
Characteristics of contributory plan
Eligible employees pay a portion of the premium
What are the difference between Life Insurance and Annuity?
Life Insurance: - Provides benefits upon death of the insured. - Creates an estate - Pay a death benefit - Protects against premature death - Owner, insured, beneficiary - POLICY Annuity - Provides steady income until death of the annuitant - Liquidates an estate - Pays a living benefit - Protects against living to long - Owner, annuitant, beneficiary - CONTRACT
In personal insurance needs, what is Estate Creation?
Life insurance proceeds paid in lump sum provide financial assets to create an immediate estate the insured can pass on to survivors.
A producer provided a conditional receipt to an applicant on May 5 at any time of an application based on a standard risk. The insurer required a routine medical exam which was completed on May 15. The policy was issued a based on a substandard risk on May 20 and the producer delivered the policy on May 22. The effective date of charge is?
May 22
Competent Parties
Must have legal capacity to Emeterio into a contract
What is competent parties?
Must have legal capacity to enter into a contract Restricted parties include: o Minors o Mentally in component o Under the influence of drugs or alcohol
In an employee sponsored group life insurance plan, the employee has control over
Naming a beneficiary
In an employer sponsored group life insurance plan the employee has control over within:
Naming a beneficiary
Does the NAIC have authority over insurance regulation?
No
Contribution to a non qualified plan are
Not tax deductible
What is unilateral contract?
One party is legally bound to the contractual
In Indiana the insurance commissioner does not have the power to:
Overturn legislation
Who can surrender an annuity?
Owner
Who has all the contractual rights in an annuity contract?
Owner
A key person is typically what?
Part of the management term Respected by customers, creators, suppliers, or vendors More highly paid
Who has the right to change the premium mode?
Policy holder
The individual who has the ownership rights of policy is called the:
Policy owner
Collecting the initial premium and issuing the receipt:
Policy will not go into effect until the first premium has been paid off.
What is binding receipt?
Provides immediate coverage is the premium is paid at the time of application.
What is trial application?
Provides immediate coverage is the premium is paid at the time of application.
In personal insurance needs, what is the Estate Conservation?
Provides money to pay any estate taxes or loans
In personal insurance needs, what is Survivor Protection?
Providing funds for surviving spouse and dependents
What is preferred risks?
Quality for lower premiums
What is a beneficiary?
Receive the policy proceeds, or deaths benefits under the contract if the insured dies while the policy is in force.
The non forfeiture option that provides coverage for the longest period of the time is
Reduced paid up
The nonforfeiture option that provides coverage for the longest period of time is:
Reduced paid-up
What is declined risks?
Refusal to issue coverage
Under the Fair Credit Reporting Act, if an individual is denied coverage, they can:
Request a copy of the report
What is an replacing insurer?
Responsible for issuing the new policy that will replace the existing policy.
What are the standard risks?
Same health, occupation as reflected in mortality
The insurance industry is primarily regulated at the
State level
The insurance industry is primarily regulated at what level?
State level
Dividends issued by stock insurers are paid to:
Stockholders
In which policy is the Insured covered to age 100 and the premium payment are the same?
Straight Whole Life Policy
Submitted without premium.
Submitted without premium.
Generally, the payment of an accelerated death benefit is__to a recipient if the benefit payment is qualified.
Tax free
How does an option A death benefit feature of a universal life policy work?
it pays out the policy face amount
