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

Aleatory Contract

A contract where the values exchanged may not be equal but depend on an uncertain event.

Automobile physical damage insurance ( property insurance

A limited insurance representative may solicit and negotiate contracts for all of the following insurance products except

continue to increase

A whole life policy is surrendered for a reduced paid up policy. The cash value in the new policy will

The primary beneficiary died before the insured.

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?

A policy is reissued with a reduction in cash value

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

FINRA

An agent selling variable annuities must be registered with..

Legal

An agreement that is enforceable by law is known as what kind of contract?

Cash option

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Hold a hearing to determine if a violation has been. committed

Before suspending or revoking an insurance agency's license, the commissioner must first

Handling insurer funds in a trust capacity

Concerning insurance, the definition of fiduciary responsibility is

The insurer's domicile or Location of incorporation will determine whether a company is domestic foreign or alien

How is it determined whether an insurer is allowed to write business in a state?

Fixed Period

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

With the policy

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant...

An unfair trade practice

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

The face value of the policy is payable to the beneficiary upon the death of the insured.

Life insurance creates an immediate estate. Which of the following best explains this statement?

Policy owner's minor children or business associates

Policies written on a third-party ownership basis are usually written to cover which of the following?

Group Life Insurance

Rules of replacement apply to all of the following except?

Which of the following statements regarding HIV testing is NOT true?

Test results must be sent to the Department of Insurance.

A private civil proceeding against an agency or producer

Testimony, documents, or other evidence obtained by the commisoner may not be used in which of the situations?

Protect private customer information filed with a financial institution.

The Gramm0Leach-Billey Act was passed to

A buyer's guide ( contract includes the policy, a copy of applicantion, and any riders or amendments)

The entire contract includes all of the following EXCEPT

Purchase of a new home ( allows the owner to purchase additional amounts every 3 years or so between 25 and 40)

The guranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all the following except

Insurance companies from adverse selection by high risk persons.

The medical information bureau (MIB) was created to protect

Insuring Clause

The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the

A presentation of nonguaranteed elements of a polcy

The term illustration in a life insurance policy refers to.

Convertible term policy

The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a...

15 days

To appoint a producer as it's agent, the appointing insurer must file a notice of appointment with the commissioner within how many days from the date the agency contract is executed?

Owner's income

Traditional IRA contributions are tax deductible based on which of the following?

Joint Life

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?

Issuing the policy

Which of the following activities is not performed by an insurance producer?

Payor Benefit Rider

Which of the following riders would NOT cause the Death Benefit to increase?

Term insurance ( provides the greatest amount of coverage for the lowest premium)

Which of the following types of insurance products would be appropriate for an indivudal with a low income and high insurance needs?

The owner of a shop

Which of the following would NOT be eligible for coverage under key person?

Cross out the incorrect information with one line, enter the correct information, date, and initial the correction.

While completing a life insurance application, the applicant realizes that she should have answered an earlier question differently. What should the agent do to make the necessary change?

A policyowner who is not the insured

Who is a third-party owner?

The insured

With adjustable life, the owner can change all of the following except

Unilateral Contract

only one of the parties to the contract is legally bound to do anything

Contract of Adhesion

the insured must accept the entire contract with all of its terms and conditions

conditional

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characterstic does this describe?

The insured may renew the policy for another 10 years, but at a higher premium rate.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10- year term?

3 days

An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request?

Period or fixed amount ( annuities certainly limit the amount paid by the annuity to a certain fixed period or until a certain fixed amount is liquidated.

Annuities Certain limit the amount paid by the annuity to a certain fixed

30 days

If an insurer is going to terminate the appointment of an insurance producer, within how many days following termination must the insurer notify the Commissioner of the termination?

5 years

In addition to the current year, how many prior years must an insurer maintain claim records?

An applicant submits an application to the insurer

In insurance, an offer is usually made when

Premiums paid by an employer on a $30,000 group term life insurance plan for employees

In which of the following instances would the premium be tax deductible

At the insured's age 100

In whole life insurance, when is the policy cash value scheduled to equal the face amount.

30 days

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

Insurance and cash account (Insurance component is always annual renewable term insurance. Cash account accumulates tax deferred.)

What are the two components of a universal policy?

25,000 ( per violation and 250,000 for aggregate violations)

What is the maximum fine the commisioner may impose on an insurer for a single willful violation of the insurance code?

6 months

What is the waiting period on a Waiver of Premium rider in life insurance policies?

The rider is usually level term insurance

What is true about a spouse term rider?

Issue the policy anyway and pay the face value to the beneficiary.

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as Standard. Y was killed and automobile accident on August 22, before the policy was issued. In this case, the insurance company will.

Extended Term

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

When the application is signed and a check is given to the agent.

When is the earliest a policy may go into effect?

Offering an inducement of something of value not specified in the policy

Which of the following best defines the unfair trade practice of rebating?

It is level term insurance

Which of the following best describes annually renewable term insurance?

Both the principal and interest are liquidated together over the selected period of time

Which of the following best describes fixed-period settlement option?

It provides the highest monthly benefits

Which of the following best describes pure life annuity

The amount of premium payment

Which of the following information will be stated in the consideration clause of a life insurance policy?

Debtor in the life of the creditor

Which of the following is NOT an example of a valid insurable interest?

other insureds

Which of the following is NOT mandatory policy provision in life insurance policies issued in this state?

Variable whole life has a guaranteed death benefit.

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

Premiums are not tax-deductible as a business expense

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

The payments stop at the first death.

Which of the following is true regarding a joint life annuity?

It provides the highest monthly benefit

Which of the following is true regarding pure life annuity settlement option???

Buy-sell agreements are normally funded with a life insurance policy. ( simply a contract that establishes what will be done with a business in the event that the owner dies. Normally funded with life insurance policy.

Which of the following statements concerning buy-sell agreements is true?

Variable Whole Life ( A fixed level premium. It's a combination of decreasing term and investment fund)

Which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value?

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

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

Monthly premium waiver and monthly income

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?

The death benefit is taxable to the business ( key person life insurance premium is not deductible by the business, and the death benefit is not taxable to the business.

All of the following are true about key-person insurance except

The Guaranty Association

All of the following entities regulate variable life policies EXCEPT

The policy face amount remains level throughout the life of the policy ( the face amount increases annually to keep pace with inflation.)

All of the following statements about indexed whole life insurance are correct except

The payments will stop when the annuitant dies

All of the following statements are true regarding installments for a fixed amount EXCEPT

24 ( 24 hours of study every 2 years)

All resident producers must complete at least how many hours of continuing education every 2 years?

One party accepts the exact terms of the other party's offer

Which statement best describes agreement as it relates to insurance contracts?

Its premium steadily decreases over time, in response to its growing cash value.

Which statement is NOT true regarding a Straight life policy?

single payment or periodic payments

Which two terms are associated directly with the way an annuity is funded?

Decreasing Term

An individual had just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Guaranteed Insurability Option

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 wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?