Type of Policies

Whole Life

Everything is guaranteed (face amount, perineum, and cash value) until death or age 100. Cash value is dependent up on face amount of premiums and how long the policy has been in force.

In an insurance contract, consideration refers to?

Exchange of something of value by both parties.

A spouse receives $5000. a month until the principal and interest on her husband's life insurance policy have been paid out. Which settlement option did his beneficiary choose?

Fixed Amount

What features allow an insurance policy to remain in force for a specific number of day beyond the premium due date?

Grace Period Provision

Under what circumstances will the contingent beneficiary receiver the death benefit?

If the primary beneficiary dies before the insured.

What is a major disadvantage of term insurance?

If the the insured died after the end of the term, there is not death benefit to the beneficiary.

A life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is is know as the...

Incontestability clause

If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must the agent do?

Inform the insurance company.

In an insurance transaction, what does the licensed agent represent?

Insurer

What happens if a life policy doesn't pass the 7-day test?

It becomes a"Modified Endowment Contract."

Name 1 thing that is not true concerning the insurability of the rider?

It is available automatically for not extra premium.

Which is NOT a requirement of a qualified retirement plan?

It must be temporary

When does a free look period start on a life Insurance policy?

It starts when the policy is delivered

Give an example of a limited-pay life policy?

LIfe Paid-up at age 65

With Personal life insurance; is the lump sum death benefit received by the beneficiary taxable?

NO! it is tax free.

Is having a disability a standard exclusion in a life insurance policy?

No

What is the requirement for a number of employees in a SIMPLE palm?

No more than 100

Arlene, age 72, does not have an employer-retirement plan. Is she able to set-up contributions to a traditional IRA?

No. She is over the age limit to make contributions to a traditional IRA account.

Generally, the premium paid for a personal life insurance is

Not tax deductible

All of the following world be consider a insurance transaction EXCEPT?

Obtaining an insurance license.

An insured submits the full premium along with a completed application, and the policy is issued 10 day later. When does coverage begin?

On the date of the application

An employee quits his job and converts his group insurance to an individual policy. How will the premium be determined?

On the insured's attained age.

When the death claim is submitted, the insurer discovered that the insured understated her age on the application for a life policy. What action will the insurer take?

Pay a reduces death benefit based on the insured's actual age

If no receipt is issued at the the time of application, a statement of good health is usually required at the time of...?

Policy Delivery

Annual Renewable Term

Policy renews each year without proof of inscrutability,-premiums increase due to attained age

On a joint life policy what are the premiums based on?

Premiums are based of the average age of the insured.

What Is Term Life

Pure protection, last for specific term insurance for least premium

An agent who offers you a cash reward in exchange for purchasing a policy is guilty of?

Rebating

The insured usually pays $1,200. annually for her life insurance premium. This year, she has accumulated $175 in dividends, and applied that to her next premium, reducing it to $1,025. What dividend option has the insured chosen?

Reduction of Premium

If an agent fails to obtain an applicant's signature on the insurance application what must he do?.

Return the application to the applicant for signature.

What is the main responsibility of a company's underwriting unit?

Risk selection and classification.

Which type of life insurance policy generates immediate cash value?

Single Premium

What agency provides retirement, disability, and survivor benefits ?

Social Security

Who has an insurable interest in the insured?

Spouse, the Insured's Children & the employer

What are the advantage of qualified IRA plans to employees ?

Tax-deductible contributions

Is borrowed money from the cash value taxable or nontaxable?

Taxable

The time period during which an annuitant contributes to an annuity is call?

The Accumulation Period

Who is the main source of underwriting information used by the company in the risk selection process?

The Application

What feature of the "Indexed Whole life Policy" is not fixed?

The Cash Value growth

Which provision of a life insurance policy states that the application is part of the contract?

The Entire Contract

If a life insurance policy has an irrevocable beneficiary designation...

The beneficiary can only be changed with the written permission of the beneficiary.

Which part of the Indexed Whole Life" policy is not fixed?

The cash value growth.

What does the renewable provision provide the policy owner?

The renewable provision allows the policyowner to renew the policy at the expiration date without evidence of insurability.

What does the fixed-period and the fixed-period amount have in common.

They both guarantee that the principal and interest will be fully paid out.

What is the best the best insurance arrangement for a business purchasing life insurance on its general manager?

Third-party ownership.

What is the purpose of the USA PATRIOT Act with regards to the insurance industry?

To prevent terrorism activities through monitoring of financial transactions.

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

To protect the general public

An insured receives a monthly summary of his life insurance policy. The cash value this month is significantly lower than it was last month. What type of policy is it?

Variable

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called?

Waver of Premium

Limited-pay

-Premiums are paid until a certain age or time(Ex, 20 Pay Life, Life paid up at 65 -Although premiums are paid up, coverage remains to age 100

Name 3 nonforfeiture options in a life insurance policy

1. Cash Surrender 2. Extended Tern 3. Accumulation at interest

Name 3 nonforfeiture options in life insurance?

1. Cash Surrender Value 2. Extended Term 3. Reduced paid-up insurance

Name 3 things that are true concerning the insurability of the rider?

1. It allows the insurer to purchase additional coverage without proof is insurability 2. The insured may purchase additional coverage without proof if insurability 3. It usually expires at age 40

Name 3 requirement of a qualified retirement plan.

1. It must have a vesting schedule. 2. It cannot discriminate if favor of highly paid employees. 3. It must be written and communicated to all participants.

Name 3 examples of a company's location or incorporation.

1.Domestic 2. Foreign 3. Alien

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

100 yrs.

The commissioner of Insurance issues a "Ceases & Desist Order" and immediately receives a request for the chargers to be reviewed in a hearing. WIthin how many day must the hearing be held?:

19 days

What is the minimum required number of continuing education credits in ethics every lifessing period.?

2 hours

How many credits are required to obtain a fully insured status to receive Social Security benefits?

40

Agents whose license has been revoked will not be able to receive another license in Texas for at least...?

5 years

How long is a temporary license valid?

90 days

Who is required to hold a producer license?

A nonresident agent who negotiates insurance contracts.

The Medical Information Bureau is...

A source of medical information to alert insurers to adverse medical history.

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

Who is a Field underwriter?

An Agent

Who is considered an nonresident agent?

An agent who resides in another state, but is licensed to write insurance in this state.

Re-entry Term

An insured with a guaranteed renewable option may choose ot answer medical question for a reduced premium rate. (Prove Insurability)

What life insurance policy renews each year with and increased premium?

Annually renewable Term Policy

Whose life expectancy is taken into consideration in an annuity?

Annuitant

When must insurable interest exist in life insurance?

Application Date

What term refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another?

Assignment

Name 1 forfeiture option in life insurance?

Automatic Premium Loans

Name one forfeiture option in a life insurance policy?

Automatic premium loans

Continuous Premium

Basic policy, level death benefit-the insured pay premiums for life or until age 100

What do the fixed-period and fixed account have in common?

Both guarantee that the principal and interest will be fully paid out.

The 10% early withdrawal penalty from an IRA can be waived for

Catastrophic medical expenses

Representations are statements made by the applicant that are...

Considered true to the best of the applicant's knowledge.

What report includes information regarding a person's character, reputation and habits?

Consure report

What does a "key-person" insurance policy pay for?

Cost of training a replacement

Decreasing Term

Coverage decreases at predetermined times gradually-best used when the need for protection declines from year to year. Example: Mortgage and credit insurance

Level Premium Term

Coverage stays the same for the specified period. It pays a benefit if the insured dies.

The insured purchased a new home; what life insurance policy would protect his family against loss should he die before the mortgage was paid off?

Decreasing Term

An insurer who deliberately makes a malicious statement about another insurance company is guilty of an illegal trade practice called?

Defamation

An individual inherited a large sum of money at age 40 and wanted to provide a guaranteed income after his retirement at age 60. What would be the best type of annuities to meet his needs?

Deferred

In group life policies, who is given a certificate?

Each insured person

How often is a life agent's license renewed?

Every 2 years

how often must producers renew their licenses?

Every 2 years

Can premiums be decreased by the insured on a "Universal Life" Policy?

Yes

Can the premiums be decreased by the insured regarding a universal life policy?

Yes

With a traditional "Whole Life Policy" do the death benefits remain constant over time?

Yes

With a traditional whole life policy do the death benefits remains the same?

Yes

Name 3 things the Commissioner of Insurance is responsible for ..

a. Issuing Certificates of Authority b. Enforcing the Insurance Code c. Issuing cease and desist orders.