LIFE EXAM PART 5 STCUSA

Which of the following is characterized by the least expensive premium ? -An annuity -Modified life -Single premium life insurance -Decreasing term life

Decreasing term life

The Commissioner or Superintendent of Insurance approves premium rates on policies to be issued in this State to make sure that they are not unfairly discriminatory. This means that an insurer may submit rates to the Insurance Department on what kind of bases?

File and use

All of the following are considered to be insurance transactions, EXCEPT: -Contract issuance -Collection of premiums -Delivery of an insurance policy -Filing of a claim

Filing of a claim

Which of the following settlement options is determined by the length of time proceeds are paid to a beneficiary? -Life income -Interest only -Fixed amount -Fixed period

Fixed period

An insurance organization which offers insurance benefits to its members best describes which of the following? -Alien insurer -Domestic insurer -Foreign insurer -Fraternal

Fraternal

Any producer who changes his or her personal or business residence must generally notify the State Insurance Department within what period of time?

30 days

Group conversion to an individual plan must take place within what period of time following employment termination.

31 days

An insurance adviser may also be referred to as:

A consultant

What best describes the term risk exposure?

A measure of how likely it is that some event will occur

Which of the following protects an individual against superannuation? -Life annuity -Interest sensitive whole life -Straight life policy -Fixed annuity

Life annuity

If an individual desires life insurance protection and cash value buildup and is willing to pay premiums until retirement, what type of policy would he or she purchase?

Limited payment life

What type of policy would you suggest your client purchase if she desires death protection and a cash value buildup but is of limited means presently?

Modified life insurance

The concept of "corridor" is most often associated with which policy?

Universal life

A producer offering a kick-back of commissions to a prospective insurance purchaser has engaged in what sales or marketing practices?

rebating

If an insured purchases a decreasing term life insurance policy, what portion of the contract decreases?

The death benefit

Theresa is age 38 and purchases a twenty-pay whole life insurance policy. The death benefit is $50,000. It is attractive to Theresa since she will no longer be required to make premium payments at the end of the twenty-year period. When will her policy mature?

Age 100

Which of the following acts on behalf of a principal? -An insurer -The entire teaching staff -An agent -An assistant principal

An agent

An increasing term rider is characterized by which of the following? -An increasing investment value -An increasing settlement portion -An increasing face amount -An increasing premium

An increasing face amount

Which of the following best describes the doctrine of reasonable expectations? -An insured is entitled to the coverage that he or she may expect -An insured wishes to incorporate to transfer risk. -An insured relies on a statement made by a producer. -An insured suffers harm due to a producer misrepresentation.

An insured is entitled to the coverage that he or she may expect

Producers may generally share commissions with which of the following? -An officer of an insurer -An insured -The holder of a temporary license -Another producer licensed in the same line of insurance

Another producer licensed in the same line of insurance

In order for an insurance contract to be legal and enforceable it must include four basic elements. All of the following are elements of a legal contract, EXCEPT: -Consideration -Legal purpose -Beneficiary designation -Agreement

Beneficiary designation

Two partners enter into a buy-sell agreement. The business is worth $100,000. Both partners have an equal interest in the firm. What would be used to best support this agreement?

Buy $50,000 of life insurance on each partner

A universal life insurance policy provides a combination of term insurance protection and:

Cash savings plan

A type of assignment where some but not all rights are transferred to another party best describes:

Collateral assignment

State law prohibits an insurer or producer from engaging in unfair sales practices. Which of the following would be considered to be an illegal or unfair practice? -Transferring risk -Commingling -A non-insurance transfer -Replacement

Commingling

A life insurance policy's incontestable clause allows an insurer:

Contest a claim occurring during the contestable period

All of the following are types of premium receipts, EXCEPT: -Approval conditional receipt -Counter signature receipt -Binding receipt -Insurability conditional receipt

Counter signature receipt

The Commissioner of Insurance may place on probation, suspend, revoke or refuse to renew a producer license after a hearing if the producer has engaged in which of the following: -Engaged in coercive practices -Was convicted of a traffic violation -Shared commissions with a fellow producer -Failed to explain the terms, benefits and conditions of a policy

Engaged in coercive practices

Which of the following statements is true with regard to the misstatement of age provision which appears in a life insurance policy? -If the insured's age is overstated, the death benefit will be reduced -If the insured's age is understated, the insurer will pay an additional death benefit upon death -If the insured's age is misstated, the contract will be void -If the insured's age is overstated, the insurer will pay an additional death benefit at death

If the insured's age is overstated, the insurer will pay an additional death benefit at death

Bill is 48 years of age and opens an Individual Retirement Account (IRA). At what point does Bill have ownership of the funds in the account?

Immediately

A life insurance dividend is considered to be a return of an overpayment of premium. Therefore, life insurance dividends are tax-exempt. Each of the following is a dividend option, EXCEPT: -Accumulated at interest -One year term insurance -Paid-up additions -Interest only

Interest only

What provides interest payments to the primary beneficiary following the death of the insured?

Interest only option

Which of the following is not a responsibility of a field underwriter? -Issue a policy -Complete applications -Collect premium -Provide a premium receipt to an applicant

Issue a policy

A whole life insurance policyholder possesses several dividend options as the owner of the contract. What is true regarding the one-year term dividend option?

It provides a level amount of protection for a temporary period

Which element of an insurance contract requires that the proposed insured be competent and possess the capacity to enter into a contract?

Legal capacity

All of the following requirements must be satisfied before a person may be issued a resident insurance license, EXCEPT: -Must possess a college degree -Must be competent and trustworthy -Must be a State resident -Must pass a State examination

Must possess a college degree

According to a permanent insurance policy's non-forfeiture options, a policy may not lapse when cash value is present. All of the following are types of these non-forfeiture options, EXCEPT: -Cash surrender -Extended level term insurance -Reduced paid-up insurance -One-year term insurance

One-year term insurance

A stock insurer and a mutual insurer differ according to:

Ownership

A life insurance policy was issued to Bob four years ago. The insurer then learns of material misrepresentations when Bob dies. How will the insurer respond when the claim is filed by the beneficiary?

Pay the claim

A producer offering an item of value to a prospect in return for purchasing an insurance policy has engaged in:

Rebating

All of the following are types of dividend options, EXCEPT: -Reduced paid-up insurance -One-year term insurance -Paid-up additions -Accumulate at interest

Reduced paid-up insurance

Tristar Computers is a partnership comprised of John, Bob, and Tim. They hold an equal financial interest in the partnership. After deciding to enter into a buy-sell agreement, their agent suggests they utilize a cross-purchase plan and fund it with life insurance. If this plan is utilized, how many life insurance policies will be purchased?

Six

How does the cash value of a universal life insurance policy accumulate?

Tax-deferred

When an individual receives a qualified distribution from a Roth IRA, the benefit received is:

Tax-free

Which of the following is not owed a fiduciary duty by an insurance producer? -An insurer -Insurance agency personnel -An insurance client -The Insurance Commissioner

The Insurance Commissioner

If a statement of continued good health must be submitted to an insurer, it must be completed by who?

The applicant

In order for the waiver of premium benefit rider to be activated, what must occur?

The insured must be under the care of a doctor

A premium receipt is provided to an applicant by the producer when an initial premium is collected at the time of application. What does a "Conditional Receipt" provide?

This receipt provides coverage on a date earlier than the issue date of the policy

To avoid any penalties or adverse tax consequences, rollovers of qualified plans must be effected within how many months of withdrawal?

Two months

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? -Variable life -Modified endowment contract -Universal life -Fixed annuity

Variable life