Insurance License
A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount?
$25
An employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program?
$25,000
___ of personal life insurance premiums is usually deductible for federal income tax purposes.
0%
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
An insured may assign up to ___ of policy ownership under an individual life insurance policy.
100%
In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?
2 years
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes. Once the rollover takes place to a new custodian, the remainder of the distribution is made.
The USA Patriot Act was enacted in
2001
A new general property and casualty licensee must complete at LEAST ___ hours of continuing education within 24 months of initial licensure.
24
In Texas, an individual life insurance policy is REQUIRED to have a grace period of
31 days
Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?
5
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
50,000 minus any outstanding policy loans. At the time of the insureds death the policy is beyond the contestable period
Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement?
6 -each partner owns, is the beneficiary of and pays the premiums for life insurance on the other partners equal to his or her share of the purchase price
How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law?
6 months
how long does an individual have to rollover funds from an IRA or qualified plan?
60 days
What is the monetary penalty for willfully violating a cease-and-desist order?
A fine of up to $500
Which of the following statements about noncontributory employee group life insurance is FALSE?
A minimum number of employees is required to participate
Which of the following is NOT included in an annuity contract -Beneficiary -Free-Look period -Nonforfeiture benefit
AD&D rider
An example of false advertising would be
An insurer exaggerating its dividends in a magazine advertisement
In Texas which of these statements regarding the suicide clause is TRUE
An insurer may not use suicide as defense after the 2nd year
Any changes made on an insurance application requires the initials of whom?
Applicant
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Which of the following is a requirement for obtaining a Texas insurance agents license?
Be honest, trustworthy, and reliable
A policy loan is made possible by which of these life insurance policy features>?
Cash Value provison
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
Claim will be denied
Which of the following is NOT included in a life insurance illustration?
Companys mortality rate
Insurance policies are offered on a take it or leave it basis, which make them:
Contracts of Adhesion
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
Daughter
The Combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy
Decreasing
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?
Deferred
How often must an insurance agent license normally be renewed?
Every 2 years
Which of the following is an important underwriting principle of group life insurance?
Everyone must be covered in the group
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with?
Extended Term
Which of these provisions is NOT required in life insurance policies? -Free Look -Grace Period -Entire Contract
Extended Term
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?
Family Maintenance Policy
What is an organization that solicits insurance only to its members?
Fraternal benefit society
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will void a policy
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Income that cannot be outlived by the owner
Which of the following groups may NOT be insured by a group of life insurance policies?
Individuals who are related by blood, marriage or legal adoption
Which of these is NOT an example of a Nonforfeiture option? -Extended Term -Reduced Paid-Up -Cash Surrender
Life Income
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
Long term care
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?
Misrepresentation
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
When will a hearing be held after a notice of hearing, alleging participation in an unfair or deceptive act, is served to a licensee or insurer by the Commissioner?
No sooner than 6 days
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
Owners rights
What action will a life insurance company most likely take if an insured dies and it is discovered that the insureds age was misstated on the application?
Pay an amount the premiums would have purchased at the insured's actual age
Which life insurance rider typically appears on a Juvenile life insurance policy?
Payor Benefit rider
Who has the right to change a revocable beneficiary?
Policyowner
What is the consideration given by an insurer in the consideration clause of a life policy?
Promise to pay a death benefit to a named beneficiary
J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?
Revocable
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable
Which of the following is NOT a required provision in group life policies?
Right to Loan
Which of these is NOT an example of doing insurance business?
Selling shares of stocks
Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas?
The agent
Which statement regarding a Key Employee Life policy is NOT true? -application must be signed by key employee -company purchases, owns, pays premiums and is the beneficiary -prevents financial loss that may ensue if key employee dies
The beneficiary is named by the key employee
the common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
The clause provides the payment of proceeds to the insured's estate
All of these statements about the Commissioner of Insurance are true EXCEPT -regulates business of insurance in this state -ensures that Texas insurance laws are executed -protects and ensures the fair treatment of consumers
The commission must be elected
Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?
The initial premium was NOT submitted with the application
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premiums can be lowered or raised, based on investment performance
Why would the Insurance Commissioner examine the records of an insurance company?
To determine the solvency of the company
Life Insurance companies are required to establish and maintain an anti-mpney laundering compliance program according to which federal regulation?
USA Patriot Act
A variable annuity has which of the following characteristics?
Underlying equity investments
In order to sell a (n)____ Life policy, a producer is required to register with financial Industry Regulatory Authority (FINRA).
Variable
Which of the following actions does the commissioner of insurance NOT have the power to conduct?
activate insurance companies' financial reserves
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Whole Life coverage at specified times
A qualified profit-sharing plan is designed to:
allow employees to participate in the profits of the company
If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be
an amount that the premiums paid would have purchased at the current age
An insurer is NOT required to provide information on fraudulent claims if requested by -The Texas Department of Insurance -Attorney General -Commissioner
an insured
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
A certificate of ____ permits an insurance company to transact business in Texas
authority
A life insurance application must be signed by all of these, EXCEPT
beneficiary
Variable Whole Life Insurance can be described as
both an insurance and securities product
All individuals covered under a group contract will receive a(n)
certificate
B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of
coercion
the phrase "transacting business" includes
collecting premiums
Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.
conditional
A universal life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the
cost of insurance
An insurance company organized under New York laws and licensed to do business in Texas is considered a(n)
foreign company
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
free-look period has expired
Credit Life Insurance is
insurance issued to a debtor to cover outstanding loan balances
Quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased. the higher the frequency of payments, the higher the premiums.
A license may be denied, suspended, or revoked if the licensee
is found guilty of misrepresentation in obtaining the license
A domestic insurance company in Texas is considered a company that?
is incorporated and formed in Texas
During a sales presentation for a participating life insurance policy, an agent MUST
make a prospect understand that dividends are NOT guaranteed
Which of these is NOT considered to be an element of an insurance contract? -the offer -acceptance -consideration
negotiating
All of these statements concerning settlement options are true, EXCEPT: -increased proceeds can be provided through accumulation of interest -rapid depletion of proceeds can be avoided -proceeds can be administered by the insurance company
only the beneficiary may decide
An insurance agent has a fiduciary responsibility to all of the following EXCEPT
other agents
The ___ has the right to change a life insurance policy's beneficiary
policyowner
Which statement is correct regarding the premium payment schedule for whole life policies?
premiums are payable throughout the insured's lifetime/coverage lets until death if the insured
An example of rebating would be
returning a portion of a premium as inducement to purchase insurance
To terminate an agents appointment, an insurance company must
send termination notice to the Texas Department of Insurance
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
set up a meeting with the applicant to answer the remaining questions
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
the initial premium
The reason for backdating a policy is
to obtain a premium rate based on an earlier age
An example of an unfair claims settlement practice is
turning down a claim without providing the basis of denial