MS Life, Health and Sickness Insurance Test

Which of the following is INCORRECT regarding whole life insurance?

Policy loans are tax deductible

Which of the following describes twisting?

Policy replacement that is to the detriment of the policyowner

Which of the following individuals must have insurable interest in the insured?

Policyowner

Which of the following is TRUE regarding a joint life policy?

Premium is based on the average of the insureds

A consumer would like to get more information on their Investigative Consumer Report. How many days does the insurer have to comply?

5 days

According to the Fair Credit Reporting Act, consumer reports are prohibited from reporting negative information about a customer after how many years?

7 years

What type of group insurance plan requires that 75% of eligible employees be included in the plan?

A contributory plan

Which of the following describes a Stranger-Originated Life Insurance (STOLI) arrangement?

A person with no insurable interest in the insured purchases a life policy

Term insurance provides coverage for

A specified period of time

When dividends are available to the owner of a participating policy, which of the following dividend options can the policyowner exercise?

Apply the dividends to reduce the next year's premium

After a policy had been in effect for 18 months, a claim was submitted. The insurer determined that the insured had made a material misstatement on the application for coverage. The insurer would probably do which of the following?

Contest the claim

Making statements that are false, maliciously critical, and designed to injure an insurance person or business is known as

Defamation

Under a universal life insurance policy, policyowners have a choice between what two types of premiums?

Flexible premium and level premium

Which of the following are the features of a variable life insurance policy?

Flexible premium, no cash values, separate account

Under a key person policy, the key employee is the

Insured

Which of the following is responsible for paying premiums on an insurance policy?

Insured

Which settlement option allows the insurer to retain the face amount but pay some income based on gain on the proceeds to the beneficiary at regular intervals?

Interest only

Which settlement option allows the insurer to retain the face amount but pay some income based on gain on the proceeds to the beneficiary at regular. intervals?

Interest only

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant

In which of the following types of temporary insurance protection does the death benefit NOT change throughout the life of the policy?

Level term

Which of the following settlement options does NOT guarantee that the entire principal will be paid out to the beneficiary?

Life Income

An insured cashes in a life insurance policy and purchases a Single Premium Immediate Annuity. The monthly income amount will be impacted by all of the following EXCEPT

Lifestyle

The Medical Information Bureau (MIB) helps insurers compare medical information they have collected on a potential insured with the information received from

Other insurers

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

Other-insured rider

Which of the following allows the dividend to be used to pay up policy premiums sooner than originally planned?

Paid-up addition

When an insured dies, who has first claim to the death proceeds of the insured's life insurance policy?

Primary beneficiary

All of the following practices would be prohibited EXCEPT

Projecting a dividend on a participating policy

What is the purpose of requiring licenses for persons who transact insurance?

Protect the general public

An annuity pays a monthly amount for the remainder of the annuitant's life. If death occurs before the principal is exhausted, the remaining amount will be paid to a designated beneficiary. Which payment option has this annuitant selected?

Straight Life

The assignment provision in a life insurance policy allows the policyowner to change

The ownership of the policy

The agent's personal observations regarding the applicant are included in

The producer's report

When must a beneficiary have insurable interest in an insured?

Upon the insured's death

Information regarding the insured's medical history can be found in which part of the application for life insurance?

part 2

Unlike the dividend itself, the interest earned on dividends is

taxable

The point at which an insurer issues a policy is known as

Acceptance

An individual borrowed money at the bank to send his daughter to college. Instead of purchasing Credit Life insurance, he used an existing life insurance policy to secure the debt. This would be considered a/an

Collateral assignment

What clause stipulates that if an insured and the primary beneficiary die as a result of the same incident, the benefits will be paid as if the primary beneficiary had died first?

Common disaster clause

How often must the Commissioner examine books and records of each licensed insurer in this state?

Every 2 years

Which of the following acts protects consumers against the distribution of incorrect and obsolete personal or financial information?

Fair Credit Reporting Act

Where does a domestic insurer have its home office?

In this state

Which of the following statements is TRUE regarding an annuitant?

The annuitant must be a natural person

An insurer requires an individual applying for life insurance to take an HIV test. Who must consent to this?

The applicant

Which of the following means "liquidity" in a life insurance contract?

The cash value available to a policy owner

To offer a policy loan option, a policy must

Have cash value

Where must an insurer's home office be located for it to be considered an alien insurer?

In another state

If an insurer plans to seek information about an applicant from an investigator, the insurer must

Provide the applicant with a written disclosure Authorization Notice

Term insurance pays the death benefit to the beneficiary if the insured dies while the policy is in effect, but pays nothing if the insured dies after the policy's cancellation or expiration. This is known as

Pure death protection

A married couple near retirement want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?

Joint and survivor

Which of the following is NOT considered a rebate?

Offering a prospective insured a multi-policy discount

Which of the following disability riders in life insurance allows the policyowner to keep coverage in force without paying policy premiums after a qualifying event?

Waiver of premium

If an insurer makes a statement misrepresenting or incompletely comparing the terms of any insurance policy to induce a policyholder to drop an existing policy, what unfair practice has occurred?

Twisting

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Universal Life

All of the following are types of whole life insurance EXCEPT

Limited payment

The General Information sechion of the life insurance application includes all of the following information about the applicant EXCEPT

Medical history

Which of the following nonforfeiture options of a life insurance policy allows a policyowner to use the cash value to purchase additional insurance of the same type?

Reduced Paid-Up

Which of the following riders usually expires when the covered insured reaches a specific age?

children's term

Which of the following is TRUE regarding a level term life policy written with a renewable provision?

At the end of the term, the policy can be renewed without evidence of insurahility.

The insurance component of a Universal Life policy is what type of insurance?

Annual Renewable Term

Which of the following is a characteristic of an equity indexed annuity?

Interest rates are only associated with a stock index

This state provides a temporary license for all of the following causes EXCEPT

An agent's retirement

Unused premiums are returned to policyowners tax free in the form of

Dividends

Which of the following is NOT a duty of the Commissioner of Insurance?

Establish insurance rates

How does the premium in a survivorship life policy compare to the premium in a joint life policy?

It will be lower

Which of the following riders provides for a waiver of premium when the policyowner and the insured are NOT the same person?

Payout benefit

Which of the following is defined as an absolutely true statement upon which the validity of the insurance policy depends?

Representation

In insurance contracts, consideration on the part of the insured is

The payment of premiums and representations made in the application.

Which of the following is NOT true regarding the policy summary?

The policy summary may be part of the policy

When does the free-look period begin for insurance policies?

When the insurer issues the policy

How long is the grace period for an individual life insurance policy?

1 month (30 to 31 days).

When applicants submit prepaid applications, they will receive a/an

Conditional receipt

An insured has a policy in which the death benefit remains level while the premium increases, and is renewable without proof of insurability. What kind of policy is this?

Increasing term insurance

Which of the following provide(s) funding for the Mississippi Life and Health Guaranty Association?

Member insurers

In whole life insurance, which of the following terms describes features such as cash values and loan provisions?

Nonforfeiture options

When replacing a life insurance policy, a producer has all of the following duties EXCEPT

Obtain a list of existing life insurance policies

A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will

Always receive the current interest rate adjusted for inflation

In a decreasing term policy, the term "decreasing" refers to

The death benefit

Which of the following best describes insurance?

The transfer of loss

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate.

The Assignment Clause in a life insurance policy allows the policyowner to do which of the following?

Transfer policy rights to another person

In which of the following types of temporary insurance protection does the death benefit NOT change throughout the life of the policy?

Whole life

The maximum number of employees allowed for a SIMPLE plan is

100

Of $10,000 in premiums a producer wrote over the past year, $3,000 came from sales to a business which employs the producer's spouse. This is considered

A legal practice

Over several years, a policyowner paid $10,000 in premiums for his insurance policy. When he suffered a loss, the insurance company paid out $50,000 in benefits. What characteristic of an insurance contract does this describe?

Aleatory

Which one of the following does NOT affect the insured's life insurance premium?

Reserves

If an insurer receives an incomplete application from a prospective insured, the insurer will

Return the application to the applicant for completion

Which of the following falls under an agent's fiduciary responsibilities?

Submitting premiums to the insurer

An applicant for insurance needed more insurance than the insurer was willing to issue. The insurance producer told him that he could maximize the death benefit without increasing the face amount by adding which of the following riders?

Return of premium

Which of the following is known as a business continuation agreement?

Buy-sell agreement

Who bears the investment risk in variable life insurance products?

Policy owner

Regular premium payments made to purchase an individual nonqualified annuity are

Tax deferred

A life insurance policy was classified as a Modified Endowment Contract (MEC) in its third year. When will it lose this classification?

When the beneficiary changes

If a settlement option is not selected on a life insurance policy, how will the benefits be distributed?

As income to the beneficiary for life

A whole life policy's cash value will equal the face amount when the insured reaches what age?

100

In a noncontributory group policy

100% of eligible employees must be covered

Which of the following provisions or options protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan provision

A person who knowingly obtains information on a consumer from a consumer reporting agency under false pretenses may be imprisoned for up to how many years?

2 years

According to the insurance statutes definition, an insurer who transacts insurance in this state, but whose articles of incorporation are registered in Canada is considered what type of insurer?

Alien

Which of the following actions would be considered an offer?

An applicant submitting the application

If the owner of a traditional IRA decides to withdraw funds prior to age 59½, funds are subject to an additional tax of

10%

A policy is about to lapse due to outstanding loans. How much notice is the insurer required to give the insured?

30

An agent who offers a cash reward to a prospect for buying a policy is guilty of

Rebating