TN Life Insurance Producer Exam
Which of the following best describes a contingent beneficiary?
Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured.
A producer may apply for one or more of the following licenses:
Personal lines property, Life insurance, and Accident and health or sickness insurance
Which of these characteristics is contingent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force.
What benefit does the Payor clause on a Juvenile Life policy provide?
Premiums are waived if the payor becomes disabled.
Straight Whole Life
Provides permanent level protection with level premiums from the time the policy is issued until the insured's death (or age 100).
Which of these is NOT a fair marketing practice when an existing insurance policy is being replaced?
Reduce the cost by lowering the commission
Which of the following is an example of a nonforfeiture option?
Reduced Paid-Up
Which of these Nonforfeiture Options continue a build-up of cash value?
Reduced Paid-Up
All statements regarding referrals are true EXCEPT:
Referral fees must be filed and approved with the Commissioner of Insurance.
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable
Post-tax dollar contributions are found in
Roth IRA Investments
What does a 401(k) plan generally provide its participants?
Salary-deferral contributions
K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?
Single Premium Immediate Joint with Survivor Annuity
Warranty
Statement guaranteed to be true
Whole Life insurance is sometimes referred to as "Straight Life." What does the word "Straight" indicate when using this phrase?
The duration of premium payments
In Tennessee, the definition of "individual" may include which of the following?
The individual's legal representative
Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?
The initial premium was NOT submitted with the application.
What advantage does the renewability feature give to a term policy?
The insured may extend the coverage period.
A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the
cost of insurance
What is the purpose of the USA Patriot Act?
detect and deter terrorism
An underwriter determines that a life insurance applicant's risk should be reclassified due to a health issue. This policy may be issued with a(n)
extra premium
In Tennessee, a(n) ______ insurance company is one formed under the laws of a state outside of Tennessee.
foreign
In Tennessee, an insurer that is incorporated in New Jersey and conducts business in Tennessee is called a(n)
foreign insurer
A Nonforfeiture clause gives the policyowner
guaranteed values even if the policy has lapsed
All of these are powers of the Commissioner EXCEPT:
incarcerate a producer
The AD&D provision in a life insurance policy would pay additional benefits if the insured
is blinded in an accident
Insurance policies are considered aleatory contracts because
performance is conditioned upon a future occurrence.
Installment Refund Annuity
promises to continue the periodic payments after the death of the annuitant, until the combined benefits paid to the annuitant and his beneficiary have equaled the purchase price of the annuity
The Tennessee Insurance Guaranty Association is
protects Tennessee insurance policyowners in the event an insurance company becomes insolvent.
A contract owner terminates an annuity before the income payment period begins. The owner will then receive
the current contract surrender value. If an annuity is terminated prior to beginning of the income payment period, the contract received the contract surrender value at this time.
A noncontributory group term life plan is characterized by
the entire cost of the plain is paid for by the employer.
The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and
the initial premium.
When a life insurance application is complete, a Policy Summary must be given to the applicant. The Policy Summary MUST include:
the premium cost for basic coverage applied for
A level premium indicates
the premium is fixed for the entire duration of the contract
The advantage of reinstating an original life policy is that
the premiums are based on a younger age.
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
the probability of making timely premium payments.
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age.
What is the maximum fine that can be imposed by the Commissioner to a producer who violates an insurance law?
$1,000 per violation
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of
$10,000
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
$50,000 - Suicide occurred outside of the suicide clause period (usually 1-2 years)
Which of the following types of Term Life Policies most likely contains a Renewability feature?
10-year convertible term
How long is a temporary license valid?
180 days
The USA Patriot Act was enacted in
2001
The Commissioner notifies the association of an insolvent insurer no later than ______ after receiving notice of the insurer's insolvency
3
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
A policy loan is made possible by which of these life insurance policies features?
Cash value provision
Which of the following is an example of defamation?
Circulating brochures that falsely denounce the financial condition of an insurer
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
Claims are denied under the Suicide clause of the policy.
Who determines the education credits needed for a producer's continuing education?
Commissioner of Commerce and Insurance
The Tennessee Guaranty Association is subject to review and regulation by the Commissioner. A financial statement must be submitted no later than ________ of each year.
March 30th
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as
A representation
Before a life policy is issued, which of these contract elements is necessary?
A signed application by the prospect
Who would qualify for a temporary license in Tennessee?
A surviving spouse of a deceased producer
Which of the following is NOT included in an annuity contract?
AD&D
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory
P is a 40-year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age 60. Which of the following did she NOT buy?
An immediate annuity
When a policyowner cash surrenders a Universal Life insurance policy in its early years, this may be considered a red flag for a(n)
Anti-Money Laundering violation
A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n)
Aviation exclusion
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be paid the Death Benefit, because the contestable period has passed.
A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?
Company X
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the info with the customer prior to obtaining the customer's signature, then send the application off to the insurance company.
Which of these require an offer, acceptance, and consideration?
Contract
An employee of 20 years recently retired at age 59 ½. This employee's group life contract can be
Converted to an individual permanent policy at an individual rate
Which statement regarding the Misstatement of Age provision is considered to be true?
Coverage will be adjusted to reflect the insured's age if a misstatement of age is discovered
Credit Life Insurance is typically issued with which of the following types of coverage?
Decreasing term
Additional coverage can be added to a Whole Life policy by adding a(n):
Decreasing term rider
Which of the following does Social Security NOT provide benefits for?
Dismemberment
When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?
Establishes the needs of the individual and his dependents
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
Ex-wife
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?
Exclusion, which is a specific hazard listed in a policy for which benefits will not be paid.
P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the
Fair Credit Reporting Act
Taking receipt of premiums and holding them for the insurance company is an example of
Fiduciary responsibility
N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?
Fixed Deferred, which pays out a fixed amount for life starting at a future date
The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?
Flexible Installment Deferred
If a producer commits an act of coercion or intimidation, how would the producer's insurance company be held responsible for this act?
If the insurer approves of the act
K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)
Installment Refund Annuity
Who makes the legally enforceable promises in a unilateral insurance policy?
Insurance company
All of these statements about the Waiver of Premium provision are correct EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted.
Which of these needs is satisfied by Adjustable Life insurance?
Insured's need for flexible premiums.
In a Life insurance, an insurance company's promise to pay stated benefits is called the
Insuring clause, which establishes the basic promise of an insurance company
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT
Interest only
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?
Irrevocable beneficiary
Which statement regarding third-party ownership of a life insurance policy is true?
It is used extensively in estate-planning as well as business circumstances.
Which of these would be considered a Limited-Pay Life policy?
Life Paid-Up at age 70
Which of these is an element of a Single Premium annuity?
Lump-sum payment
Which statement regarding the Change of Beneficiary provision is true?
The policyowner can change the beneficiary.
What is the basic function of an annuity?
The systematic liquidation of accumulated funds
Life and health insurance policies are
Unilateral contracts
Life and health insurance policies are:
Unilateral contracts, because one party makes a promise, and the other party can only accept by performance.
A producer MUST leave a buyer's guide with an applicant for which type of policy?
Universal Life Insurance
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
Variable
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyholder is entitled to
A return of Premium life insurance policy is
Whole life and Increasing term.
Return of Premium life insurance policy
Whole life insurance with a death benefit rider of increasing term insurance equal to the amount of premiums paid. If the insured dies within the period of term, the beneficiary will receive face amount plus the value of all paid premiums.
Aleatory Contract
a contract where the values exchanged may not be equal but depend on an uncertain event
Group life insurance policies are generally written as
annually renewable term
A business entity can be defined as a(n)
association or a limited liability company
The Automatic Premium Loan Provision is designed to
avoid a policy lapse
