SYNCIS License Test (21-40)

What license or licenses are required to sell VARIABLE annuities?

Both, a life insurance license and a security license (Agents are required to have both a life insurance license and a securities license to sell variable annuities.)

If an insureds changes his payment plan from monthly to annually, what happens to the total premium?

Decreases (Decreases because the insurer would have the entire premium to invest for a full year, they would reduce the premium amount.)

If a change needs to be made to the application, it should be accomplished by any of the following methods EXCEPT:

Erase or white-out the incorrect answer and record the correct answer. (An agent should not use white-out or obliterate any answers given to a question on an application. It could prevent an insurer from contesting the application, should it be necessary.)

An underwriter my obtain information on an applicant's hobbies, financial status, and habits by ordering a(n):

Inspection report (An inspection repo may be ordered about an applicant from an independent firm or credit agency. It is a general report of the applicant's finances, character, work, hobbies, and habits.)

At age 72, an insured purchases a life insurance policy through a third party who finances the premium through a short term nonrecourse loan. The death benefit will be transferred to the third party. Most likely, the insured has obtain a (n):

Investor-originated life insurance policy. (Investor originated life insurance (IOLI) is a life policy written on seniors, usually 70 years and above by investors who have no insurable interest in the insured. The transaction is initiated by a third party investor and the policyholder receives cash, or other form of compensation, as a reward for taking out the life policy.)

Which of the following is true of the Fair Credit Reporting Act?

The purpose of the Act is to protect the consumer's right to privacy by making certain that underwriting data is confidential, accurate, relevant, and properly used. (The fair credit reporting act governs what information is collected and who may receive the information.)

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability. (The policy owner (insured) would need to prove insurability for the amount of the increase.)

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

The payable premium amount steadily declines throughout the duration of the contract. (Premiums remain level with a decreasing term policy. Only the face amount decreases.)

Which of the following is true regarding a level term insurance policy?

It provides temporary protection. (Level term insurance is the most common type of temporary protection purchased.)

Is it illegal for an insurance company to advertise that it is the leader of the financial industry and therefore pays the most claims each year?

Yes, advertisements must not mislead the public in terms of financial standing. (Advertisements must not mislead the public or attempt to induce a person to purchase insurance because of false advertisements.)

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must by paid:

For 20 years or until death, whichever occurs first. (Under a 20-pay life policy all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years, however, if the insured dies before all of the planned premiums are paid, the beneficiary will received the face amount as a death benefit.)

An insurance policy that only requires a payment of premium at its inception and no further premiums contributions, and in addition to providing insurance protection for the for the life of the insured, endows at the insured's age 100, is called

Single Premium Whole Life (Single premium whole life requires the entire premium to be paid in one lump sum at the policy's inception.)

Amy's insurance premium has decreased slightly, despite the fact that her level of health has remained the same. Which of the following most likely caused the premium decreased?

Her insurer used interest earned on premium amounts. (Because insurers receive premiums before they must pay out benefits, they can invest the premium money and use the interest to lower amounts charged to insureds.)

An individual has just borrowed $10,000 from his bank on a 5-year note. What type of policy would best suited to this situation?

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

Which of the following statements is correct regarding Adjustable Life?

Evidence of insurability may be required when insurance is increased (The policy owner must prove insurability for the amount of the increase in face amount.)

A prospective insured receives a conditional receipt and dies before the policy is issued. The company will:

Pay the policy proceeds only if it would have issued the policy (When a conditional receipt is given, the applicant and the company form what might be called a conditional contract contingent upon conditions that exist at the time the application is signed, or when the medical exam is completed, if required. Unless the insurer can show a reason why the policy would not have been issued, or would have been in any way different than applied for, the coverage begins when the application was signed or the date of the medical exam, whichever is later.)

Which of the following is another term for accumulation period of an annuity?

Pay-in period (The two major periods in an annuity are the accumulation period and the annuity period which is when the annuity ceases to accumulate value and begins to generate regular benefit payments. The accumulation period is also known as the pay-in period. It is the period of time over which the annuitant makes payments (premiums into an annuity.)

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person. (Owners of annuities can be individuals or entities like corporations and trusts but the annuitant must be a natural person, whose the life expectancy is taken into consideration for the annuity.)

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio (The cash value of variable life policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer.)

What is the main purpose of the regulation on life insurance policy illustrations?

To help customers make educated decisions in buying life insurance. (The purpose of the regulation on individual and group life insurance policy illustrations I to provide standards that will protect and educate customers.)