Life Insurance Final Exam

8. How long must a life insurance policy be in effect before the policy owner may use the nonforfeiture provision?

A: 3 years

10. A life insurance replacement gives the policyowner the right to return the policy for a 100% refund within ____ days of policy delivery

A: 30 days

14. The financial records of each domestic company must be inspected every ____ years by the commissioner

A: 5

4. Which of the following is a producer prohibited from doing?

A: Allowing an applicant to sign a blank or incomplete application

11. A ____ company is licensed by the commissioner to conduct insurance business in maryland.

A: Authorized

2. A 55 year old recently received a $30,000 distribution from a previous employers 401k plan, minus $6,000 for income tax withholding. Which federal taxes apply if non of the funds were rolled over.

A: Income taxes plus a 10% penalty tax on $30,000

1. The initial premium for a life insurance policy is typically paid in what way?

A: It is typically obtained by the producer and forwarded to the insurer

12. What is another term used for a "pure" life annuity?

A: Life income

7. An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called

A: Reasonable expectations

13. Which of the following is NOT a valid reason for a producers license to be provoked?

A: Sharing commissions with a licensed agent

9. A producer has indicated to a potential client that the proposed life insurance policy is covered by the Maryland Life and Health Insurance Guaranty corporation. This action taken by the producer is.

A; Prohibited by law

6. Contributions made by an employee to a qualified retirement plan are required to be

A: Subject to a vesting schedule

3. What happens when a policy owner borrows against the cash value of his life insurance policy?

A: The policy proceeds would be reduced by the outstanding loan balance

5. A terminally ill policy owner decides to sell his life insurance policy at a discount to help support his family. This sale is called a

A: Viatical settlement

15. Which statement regarding an adjustable life insurance policy is NOT true?

A; Policy loans are not permitted