missed questions on simulated exam

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

6 months Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.

an insurer wants to begin underwriting procedures for an applicant. what source will it consult for the majority of its underwriting information?

application the application contains most of the information used for underwriting purposes. this is why its completeness and accuracy are so crucial

. In a survivorship life policy, when does the insurer pay the death benefit

upon the last death Survivorship life pays on the last death rather than upon the first death.

#35. If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?

0% If an insured accepts an accelerated death benefit, the death benefit received by the beneficiary will be reduced by the amount paid by the accelerated death benefit, as well as the amount of earnings lost by the insurance company in interest income. Because it is legal for an insurer to pay 100% of the death benefit before an insured dies, it is possible that the beneficiary of a policy would not receive any benefits after the insured's death

under an extended term nonforfeiture opion, the policy cash value is converted to

the same face amount as in the whole life policy under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy

Which of the following is NOT a type of whole life insurance?

increasing term There are several types of whole life policies. The first three, Straight Life, Limited Payment, and Single Premium, are the basic forms of whole life. Increasing term is a type of term insurance.

if only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it

unilateral in a unilateral contract, only one of the parties to a contract is legally bound to do anything

A licensed life insurance producer in Missouri completed 20 hours of continuing education credits in order to renew her license. How many hours of continuing education credit will this producer need to complete in order to renew her license the next term?

12 All insurance producers must successfully complete 16 credit hours of continuing education every 2 years, prior to license renewal. Excess hours accumulated during the 2 year period may be carried forward only to the next 2 year period.

who can make a fully deductible contribution to the IRA

an individual not covered by an employer-sponsored plan who has earned income individuals who are not covered by an employer sponsored plan may deduct the amount of their IRA contributions regardless of their income level

all of the following are examples of third-party ownership of life insurance policy except

an insured borrows money form the bnk and makes a collateral assignment of a part of the death benefit to secure the loan a collateral assignment is the transfer of some or all of the death benefits of the policy to a creditor as a security of a loan, but does not give the creditor the rights of ownership. in the event of the insured's death the creditor would only be able to recover that portion of the policy's proceeds equal to the creditor's remaining interest in the loan

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

automatic premium loan This provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium

representations are written or oral statements made by the applicant that are

considered true to the best of the applicant's knowledge representations are statements made by an applicant that they believe to be true

which of the following in NOT an example of insurable interest

debtor in creditor he three recognized areas in which insurable interest exists are as follows: a policyowner insuring his or her own life, the life of a family member (relative or spouse), or the life of a business partner, key employee, or someone who has a financial obligation to them. A debtor does not have an insurable interest in the creditor.

An individual has 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?

decreasing term A decreasing term policy's face amount decreases as the amount of debt is reduced.

a producer submitted a new application to his insurer; however 30 days later there was still no coverage available for the applicant. what must the producer do?

inform the applicant in writing Producers must ensure that each applicant for new policy receives coverage as soon as reasonably possible. If the insurer does not provide coverage within 30 days of the application, the producer must inform the prospective insured of this fact in writing.

sranger-originated life insurance policies are in direct opposition to the principle of

insurable interest because the purchaser of a stranger-orientated life insurance policy doesnt know the insured, or have any interest in the insured's longevity STOLI policies violate the principle of insurable interest

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 When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy.

which of the following statements are TRUE concerning irrevocable beneficiaries?

they can never be changed once irrevocable beneficiaries are indicated for the policy, their written consent is required to change the beneficiary

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 Term riders may be used to customize a permanent life insurance policy to meet the needs of the policyowner.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT

the insured may choose to convert to term or permanent individual coverage When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance

what is the purpose of the insurability provision in group life policies issued in this state?

to allow the insurer to require proof of insurability form individual insured

Paul is a producer in Kansas and wants to become a producer in Missouri. The Department will waive certain examination requirements, provided that Kansas would waive these same requirements if a Missouri producer sought licensure in Kansas. What term is used to describe this phenomenon?

reciprocity this occurs when the state in which the person resides accords the same privilege to residents of missouri

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n

equity indexed annuity The interest rates of Equity Indexed Annuities are tied to the Standard and Poor's Index.

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

reduction of premium The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.

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?

$8,000, 60 days Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.

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 information EXCEPT the applicant's

ancestry The Fair Credit Reporting Act regulates what information may be collected and how the information may be used. Consumer Reports include written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources. Ancestry is not a relevant factor assessed in these reports

an insured receives an annual life insurance dividend check. what term best describes this arrangement

cash option the cash option allows an insurer to send the policyholder an annual, nontaxable dividend check

if an insured worker has earned 40 quarters of coverage, the worker's status under social security disability is

fully insured a worker is fully insured under social security if the worker has accumulated the required number of credits based on his/her age

Which is TRUE about the cash surrender nonforfeiture option?

funds exceeding the premium paid are taxable as ordinary income The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. Once the policyholder opts for cash surrender, the policy is immediately inactive

A Return of Premium term life policy is written as what type of term coverage?

increasing Return of premium (ROP) life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

Which of the following will be included in a policy summary?

premium amounts and surrender values A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

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

single payment or periodic payments Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payment annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment varies