Life Insurance Study Set #2

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies.

The rules regarding life policy replacement apply to which of the following situations?

The original policy is allowed to lapse.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

signed waiver of premium

Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?

term rider

If an insurer required a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examinantion?

the insurer

The regulation of the insurance industry primarily rests with

the state

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?

$10,000, no tax consequnce

If a resident insurance producer moves from Tennessee to another state, he/she must file a change of address and provide certification from the new resident state within how many days of the change of legal residence?

30 days

All of the following would be considered rebating EXCEPT

An agent misrepresents policy benefits to convince a policyowner to replace policies.

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

Lump sum

For the purpose of making an investigation, the Commissioner does NOT have the power to do which of the following?

Make testimony and documents available to the public

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividend to the next year's premium, thus reducing it to $900. What option does this describe?

Reduction of Premium

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

The Ownership provision entitles the policyowner to do all of the following EXCEPT

Set premium rates.

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement options.

An insurance application cannot ask about which of the following information about an applicant?

Sexual orientation

Which is true about a spouse term rider?

The rider is usually level term insurance.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

When would a 20-pay whole life policy endow

When the insured reaches age 100

Which of the following types of insurance polices would perform the function of cash accumulation?

Whole life

which of the following is not an example of a business use of Life Insurance?

Workers compensation

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

a full death benefit

Which of the following terms describes making false statements about financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

defamation

any inducement offered to the insured in the sale of insurance products that is not specified in the policy is an unlawful practice known as

rebating

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

survivor protection

An insurer must present a buyer's guide and policy summary prior to accepting the applicant's initial premium, unless the policy contains an unconditional refund provision within at least how many days?

10

What is the minimum required age for an insurance producer in this state?

18 years old

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free.

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions.

What required provision protects against unintentional lapse of the policy?

Grace Period

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants

A married couple owns a permanent policy which covers both of their lives and plays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?

Pay the death benefit

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

Premiums are not tax deductible as a business expense.

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,

The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.

All of the following are true key person insurance EXCEPT

The plan is funded by permanent insurance only.

Which of the following best defines the "owner" as it pertains to life settlement contracts?

The policyowner of the life insurance policy

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract

Which of the following is the best reason to purchase life insurance rather than annuities?

To create an estate

When is the earliest a policy may go into effect?

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

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

aleatory

if an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following EXCEPT the applicant's

ancestry

All of the following statements concerning dividends are true EXCEPT

dividend amounts are guaranteed in the policy

How often are insurance producers in this state required to fulfill continuing education requirement?

every 2 years

Which of the following is an example of an agent's fiduciary responsibilites?

forwarding premiums to the insurer

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?

guaranteed insurability option

Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?

medical Information

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

other-insured rider

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?

paid-up option

A policy summary must include all of the following EXCEPT

the guaranteed dividend rate

How many accounts must the Tennessee Life and Health Insurance Guaranty Association maintain?

3 accounts: Life insurance, annuities, and health insurance

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

The main difference between immediate and deferred annuities is

when the income payments begin

Which of the following is True regarding variable annuities?

The annuitant assumes the risks on investment

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

conditional

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

$100,000

Which of the following would be required to complete prelicensing education?

A nonresident life insurance producer who is planning to transact property insurance

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of

Defamation

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

30 days

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

Payor Benefit Rider

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policyowner

Candidates for either a Property license or a Casualty license must complete how many hours of prelicensing education

20

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

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

Convertible Term Policy.

Which of the following statements is TRUE about a policy assignment

it transfers right of ownership from the owner to another person

Which of the following are NOT fundable by annuities?

Death benefits

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option

What is the purpose of a free-look period in insurance policies?

It allows the insured to reject the policy with a full refund.

Which of the following best describes the MIB?

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

Military service or war

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

Single payment or periodic payments

Which of the following statements about a suicide clause in a life insurance policy is true?

Suicide is excluded for a specific period of years and covered thereafter

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract.

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

charge a higher premium

An insured purchased a life insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

interest-sensitive whole life