Dohrn Insurance Simulated Life Exam Flash Cards
H has told his client that in order to procure an annuity, he must see the client's financial statements but his client refuses. Which of the following, under Life Solicitation Rule, must H comply with? A: H has no obligation since the client did not cooperate B: H must report them to the Director C: H must figure out a different policy D: H must offer to pay for some of the annuity
A: H has no obligation since the client did not cooperate Because the client has refused to give required information, H has no obligation to a consumer under Life Solicitation Rule.
All of the following are requirements to reinstate a lapsed producer license, EXCEPT: A: the continuing education requirement is waived. B: payment of a $215 penalty in addition to the regular biennial $215 fee is required. C: the producer has up to 12 months from the date of lapse to seek reinstatement. D: the producer must still comply with the continuing education requirement to renew a producer license.
A: the continuing education requirement is waived. Complying with the continuing education requirement is required in order to reinstate a lapsed producer license.
J is interested in receiving her annuity benefits over the next twenty years only. J should select: A: Period Certain Annuity B: Life with Period Certain C: Life Annuity D: Joint and Survivor Annuity
A: Period Certain Annuity Since J wants income over the next 20 years only, a period certain would pay all accumulated principal an interest over the next 20 years.
If an insured has a policy with a Waiver of Premium rider and is disabled for a year, how many months would the life policy's premium be waived for? A: 6 Months B: 12 Months C: 9 Months D: Forever
B: 12 Months Waiver of Premium usually has a six month waiting period when an insured is first disabled before premiums are waived, however the insured is always reimbursed for that waiting period thus the premiums would be waived for the full year of disability.
What is the maximum number of continuing education credits which can be earned by taking a single certified course? A: 3 hours B: 12 hours C: 15 hours D: 24 hours
B: 12 hours No continuing education course may be certified for more than 12 credit hours.
Which of the following is a short term strategy for funding an annuity? A: Flexible Premium B: Single Premium C: All of the Above D: None of the Above
B: Single Premium Single Premium is the most limited way to fund an annuity.
The fine for willful violation of the Fair Credit Reporting Act is? A: $1,500 B: $5,000 C: $2,500 D: The amount of loss caused to the customer
C: $2,500 The fine for willful violation of the Fair Credit Reporting act is a civil penalty of up to $2,500
F insured his only son as an other insured by a child's term rider. F's son is about to turn 18 and therefore is no longer able to insured as a rider. F wants to buy a new policy for his son, but four years ago, his son contracted Juvenile Diabetes. Which of the following actions should F take? A: Buy his son a new policy, even though it will probably be rated B: Let coverage lapse C: Convert the term rider to a permanent policy since the rider allows conversion regardless of insurability. D: None of the Above
C: Convert the term rider to a permanent policy since the rider allows conversion regardless of insurability. With a Child's Term rider, when the minor insured hits a specified age, they are allowed to convert from the rider to a permanent policy regardless of insurability.
Which of the following is considered to be a Term Rider? A: Guaranteed Insurability Rider B: Waiver of Premium Rider C: Payor Benefit Rider D: All of the Above
D: All of the Above All of the listed riders are Term riders because they expire at some point in time.
Adverse Selection would fall under which underwriting class? A: Standard Risk B: Substandard Risk C: Preferred Risk D: Uninsurable Risk
D: Uninsurable Risk Adverse Selection is just another way of saying an individual is uninsurable because the risk potential is too great for the insurer.
Life Settlements are: A: situations in which a terminally ill insured sells their policy while they are alive for immediate cash payment before they die B: the same as STOLI considering there is intent to sell a life policy when purchasing it C: transactions in which a deceased policyholder sells their death benefit for more than the cash value but less than the face amount D: transactions in which a living policyholder sells their death benefit for more than the cash value but less than the face amount
D: transactions in which a living policyholder sells their death benefit for more than the cash value but less than the face amount Life Settlements allow an insured to sell their policy for more than the surrender value and less than the face amount. There are many situations in which an insured would consider life settlements including, divorce, loss of job, retirement, and sale/termination of a business.
The subject of a market conduct examination for non-financial matters may request a hearing within how many days after receiving the examination report? A: 10 days B: 15 days C: 20 days D: 30 days
A: 10 days A person being examined for their conduct has the right to request a hearing within 10 days after receiving a written report by the examiner.
How long must insurers keep copies of all advertising materials? A: 4 years B: 3 years C: 2 years D: 1 year
A: 4 years An insurer must keep a copy of all advertising materials for 4 years or the next examination report, whichever is longer.
Which of these statements referring to a Premium Fund Trust Account (PFTA) is FALSE? A: A producer may keep a credit balance due to an insured past 15 days without written authorization to do so. B: A PFTA investment must be made in the name of the PFTA. C: Any PFTA investments made must be evidenced by the producer who must keep detailed records of such investment cash flows. D: PFTA bank statements must be balanced monthly.
A: A producer may keep a credit balance due to an insured past 15 days without written authorization to do so. A producer retaining any insured's credit balances past 15 days must have written authorization to do so.
Which of the following sales is classified as controlled business? A: A producer places a one million dollar life policy on the life of his employer B: A producer places a one million dollar life policy on the life of his son C: A producer places a one million dollar life policy on the life of his niece D: A producer places a one million dollar life policy on the life of his neighbor
A: A producer places a one million dollar life policy on the life of his employer Controlled business pertains to insurance written on the life, property or risks of the producer, their spouse or their employer.
A policyholder has just suffered renal failure. Which of the following laws may allow them to accept a portion of the death benefit before the insured would die? A: Accelerated Benefits B: Accelerated Cash Value C: All of the Above D: None of the Above
A: Accelerated Benefits Under Accelerated Benefit law, an insured may receive 75% of their death benefit for a qualified condition such as renal failure.
C, who is currently a college student, wants a short term, inexpensive temporary policy with a level death benefit. C should buy: A: Annual Renewable Term B: Straight Whole Life C: 10 Year Level Term D: 30 Year Increasing Term
A: Annual Renewable Term Being that C is a young person and wants inexpensive premiums, Annual Renewable Term would give short term coverage and the cheapest rates due to the fact that C is so young and ART cost is based off attained age rates.
Which of the following best describes personal life insurance needs analysis/suitability? A: Buying a policy to provide cash to meet funeral expense. B: An individual buying a policy to protect their resale shop if their manager were to die. C: A person buying a policy to fund a business if an owner dies. D: An Individual buying a policy to profit from loss.
A: Buying a policy to provide cash to meet funeral expense. Buying a policy to pay for funeral expense is an example of personal needs analysis and suitability.
Selling insurance without a license without misappropriating premium funds is a A: Class A misdemeanor B: Class C misdemeanor C: Class 4 felony D: not a crime
A: Class A misdemeanor If no money is collected by an unlicensed person selling insurance which is misappropriated or converted (stolen) the person is guilty of a Class A misdemeanor.
If a producer is found to have failed to maintain the proper surety bond due to the brokering of business, would could be the result of this failure? A: It could result in the revocation or denial of the producer's license. B: It could result in the suspension only of the producer's license. C: There is only the possibility of a fine levied in the amount of from $1,000 to $2,500. D: There is no penalty possibility in this situation.
A: It could result in the revocation or denial of the producer's license Placing insurance business with an insurer without an agent contract is considered to be brokering business and a surety bond is required. Failure to maintain a bond can resulting the revocation of a producer's license.
Which of the following is the term for when the group sponsor is responsible for paying all the premiums in a group life policy? A: Non-contributory B: Contributory C: Credit life D: Group Life
A: Non-contributory In a Non-contributory group policy, the sponsor is solely responsible for paying all group life premiums.
Which of the following Whole Life policies would probably have the most expensive premium? A: Single Premium Whole Life B: Life Paid @ Age 65 C: 20 Pay Life D: Straight Whole Life
A: Single Premium Whole Life Single Premium will have the most expensive premium for a whole life policy because the policy is paid for life in one lump sum payment.
An annuitant is deferring their income payments until a later date. What are the tax considerations during the accumulation period? A: The principal and interest grows tax deferred until annuitization. B: The principal is tax deferred but taxes will be paid on interest while the annuity is accumulating. C: The principal and interest are taxable and the sum grows over time. D: The principal and interest is tax free while accumulation takes place and is still tax free when payments are made.
A: The principal and interest grows tax deferred until annuitization. An annuity grows tax deferred with interest until it pays out in which interest is taxable income.
Which of the following actions on the part of a producer could lead to license denial? A: The producer signed an insurance application on behalf of the applicant with the applicant's full knowledge and verbal permission to do so. B: The producer truthfully compares the benefits of one policy against those of another in an explanation to a consumer. C: A producer is more than six months late in completing continuing education requirements. D: A producer fails to inform the Director of a residential move within 30 days.
A: The producer signed an insurance application on behalf of the applicant with the applicant's full knowledge and verbal permission to do so. A producer is never allowed to sign an insurance application on behalf of an applicant or proposed insured because such an action constitutes forgery, punishable by termination of license plus a fine.
The best definition of a "fiduciary" is A: any licensed person who collects money in the course of their employment. B: a person who works in a bank. C: a limited lines producer. D: any person who is entrusted temporarily with the property of others.
A: any licensed person who collects money in the course of their employment. A fiduciary is a person who is in a position of trust in which they handle the money of other people in the course of their employment and who are expected to tender the funds to the appropriate party in a timely manner.
The purpose of insurable interest is to: A: protect and preserve life against foul play B: experience a profit if someone were to die C: allow someone to buy a life policy on any person they so choose D: establish a new form of gambling
A: protect and preserve life against foul play By having a loss exposure tied to a person's life, insurable interest is meant to protect and preserve a life against foul play for profit upon death.
A consumer report: A: provides credit background from public sources. B: allows the insurer to ask friends, family and work associates about the insured's lifestyle. C: is illegal for a company. D: is never used in underwriting.
A: provides credit background from public sources. A consumer report is a basic credit check from public sources like employment records or credit bureau reports. These reports can be written or oral without notice to the insured.
All of the following information is stated in the Insuring Clause EXCEPT: A: the Settlement Option under which benefits will be paid B: the amount of benefits that will be paid C: when benefits will be paid D: to whom benefits are paid
A: the Settlement Option under which benefits will be paid The Settlement Option selected by the applicant is not listed in the Insuring Clause. The beneficiary information and the amount of proceeds paid are listed in the Insuring Agreement.
A licensing candidate must have obtained a license from the Department of Insurance A: within one year from the first date of class attendance in the line of authority obtained. B: within one year from passing the state exam. C: within one year from successfully completing the prelicensing course. D: within 90 days from successfully completing the prelicensing course.
A: within one year from the first date of class attendance in the line of authority obtained. Once the licensing candidate first attends a prelicensing class, they must have their state producer license within one year from that date.
G has just applied for a life policy and paid the initial premium at application time. G should receive: A: Coverage guaranteed no matter what underwriting finds B: A Conditional Receipt C: A free rider D: Part of the Agent's commission
B: A Conditional Receipt
Which of the following advertising concepts would violate the misrepresentation statute if an insurer engaged in such a practice? A: An insurer is not known for health policies and advertises that their new line of hospital coverages are "second to none" in the industry. B: A carrier advertises that their life insurance policies are the highest rated by the State Department of Insurance. C: A property insurer uses talking pigs in their television ads even though actual pigs cannot speak. D: A casualty insurance company proclaims that they have more reserves to handle liability claims than more than 95% of other insurers in the United States.
B: A carrier advertises that their life insurance policies are the highest rated by the State Department of Insurance. Governmental bodies or agencies do not endorse private insurance products and any such statement that they do is misrepresentation as a matter of law.
A famous actor endorses a whole life policy and states that he has had the same coverage and is extremely happy with the policy. It is found soon thereafter that the actor does not currently have or previously had a policy. Under which regulation would this be considered an unlawful action? A: Replacement Law B: Advertising Law C: This is not illegal. D: None of the Above
B: Advertising Law Under advertising law, all testimonials and endorsements must be truthful and genuine.
An insurance commission may be paid to all of the following persons, EXCEPT A: A resident licensed producer B: An attorney licensed to practice law C: A non-resident licensed producer D: A limited lines producer
B: An attorney licensed to practice law A license to practice law does not entitle an attorney to receive insurance commissions; the attorney must also have an appropriate producer license to receive commissions.
B has a Waiver of Premium rider on his life policy and is disabled at age 66. Which of the following will occur? A: B's premiums are fully waived until he is healthy again. B: B's premiums are not waived because the rider has expired. C: B's premiums are reduced by half. D: B will never have to pay premium again.
B: B's premiums are not waived because the rider has expired. B's Waiver of Premium rider will not take effect because the rider expires at age 60-65 depending on the contract.
It is very common for term riders to: A: Be added only on term policies B: Be added on permanent policies C: Be declined often because they are temporary. D: Be really expensive
B: Be added on permanent policies Although term riders are temporary, it is very common for the option to be available on permanent policies.
What is the greatest level of criminal prosecution that can result from producer rebating? A: Rebating is not a crime, it is just a licensing violation. B: Both the offer and the acceptance of a rebate is a Class B misdemeanor. C: Rebating is a Class B misdemeanor that can only be assessed against the producer, never the insurance applicant. D: Rebating is a Class 4 felony.
B: Both the offer and the acceptance of a rebate is a Class B misdemeanor. Both the producer and the client could be found guilty of a Class B misdemeanor.
Which of the following situations best represents an Aleatory Contract: A: J has sole right to renew the policy. B: Company N is paying a $500,000 claim after only collecting 1 year of premium from a deceased insured. C: Both the insured and insurer must preform specific duties when a loss occurs. D: B gets his policy delivered and requests a change after issuance, but the contact is a "take it or leave it" proposition.
B: Company N is paying a $500,000 claim after only collecting 1 year of premium from a deceased insured. An Aleatory contract means unequal consideration is exchanged between the parties, such as an insurer paying much more money on a claim than they collect in premium from an insured.
Which of the following statements about continuing education requirements for non-resident producers is TRUE? A: Non-resident producers must complete the same continuing education requirement as resident producers. B: If the state the non-resident lives in does not require non-resident producers to complete CE requirements, Illinois will not require CE of the non-resident. C: Illinois offers no reciprocity when it comes to non-resident continuing education requirements. D: Whether or not CE is required is based on Federal, not State law.
B: If the state the non-resident lives in does not require non-resident producers to complete CE requirements, Illinois will not require CE of the non-resident. Illinois is a reciprocal state which means our requirements will match the requirements another state has toward their non-resident producers,
An insured commits suicide after the suicide clause expires. Which of the following is true? A: Any premiums paid plus interest is refunded B: The face amount of the policy will be paid C: All of the Above D: None of the Above
B: The face amount of the policy will be paid If an insured commits suicide after the exclusion period has expired, only the death benefit is paid to the beneficiary.
Which of the following is TRUE regarding Annual Renewable Term insurance: A: It is the most expensive term policy one can purchase. B: The policy must be renewed annually and cost is based off attained age and will increase every year. C: It is permanent protection. D: The death benefit will decrease over time.
B: The policy must be renewed annually and cost is based off attained age and will increase every year. ART must be renewed every year and price will increase because of attained age of the insured at renewal.
If an insurance company issues deceptive statements about its assets, this action is A: false advertising. B: an unfair trade practice. C: unfair discrimination. D: falsification.
B: an unfair trade practice. It is an unfair trade practice for a carrier to be deceptive in relating financial information through reports to the public.
Joint Life premiums are: A: paid by each individual insured separately B: based off a joint average age C: are more expensive than if individuals had separate policies D: are inexpensive no matter what insurability of the insureds would be
B: based off a joint average age Premiums for a Joint life policy are paid based off a joint average age and cheaper than insureds having separate policies.
If a company charges two separate prospective insureds a different premium rate without a sound actuarial basis, this is an example of A: an unfair trade practice. B: unfair discrimination C: an unfair claims practice D: insurance company prerogative.
B: unfair discrimination Insureds who are in the same rate class cannot be charged different amount of premium and to do so is unfair discrimination.
If a group is non-contributory, what percentage of members must be insured by the policy? A: 75% B: 50% C: 100% D: 0%
C: 100% In a non-contributory group policy, the sponsor is solely responsible for paying all group life premiums and all members must be covered by the policy.
How many different forms of temporary producer licensing authority exist in Illinois? A: 4 B: 3 C: 2 D: 1
C: 2 There are two types of temp license: the Temporary License and the Temporary License for Producer Application.
The length of an incontestable clause is A: 1 year from policy issue B: 2 years from policy delivery C: 2 years from policy issue D: 3 years from policy delivery
C: 2 years from policy issue The incontestable clause is two years from issue date of the policy.
The civil fine amount that may be imposed for not complying with a lawful subpoena of the Director is A: 500 B: 1000 C: 2000 D: 5000
C: 2000 Ref. 5/403 stipulates a $2,000 civil fine.
On which date was the USA Patriot Act/Anti-money Laundering enacted? A: 22-Jun-88 B: 11-Sep-01 C: 26-Oct-01 D: 3-Jun-08
C: 26-Oct-01 The USA Patriot Act/Anti-Money Laundering was enacted on October 26, 2001.
How long is the waiting period before benefits are paid under Social Security Disability standards? A: 12 months B: 6 months C: 5 months D: 3 months
C: 5 months There is a 5 month waiting period before a qualified insured receives Social Security disability.
Which of the following MAY NOT engage in the business of offering insurance advice for a fee? A: An attorney licensed to practice law who advises his client about a life insurance matter. B: A licensed insurance producer offering advice on a line of insurance for which they hold licensing authority. C: A Certified Public Accountant who solicits a client for the sale of an insurance policy. D: An actuary engaged in a consulting capacity performing incidental duties.
C: A Certified Public Accountant who solicits a client for the sale of an insurance policy. A CPA can offer advice about insurance matters and charge a fee but cannot solicit the sale off insurance without the appropriate producer licensing authority.
Which of the following policies are exempt from replacement regulation? A: A term policy that is convertible that expires in 6 years. B: A whole life policy that has 25% of its cash value loaned C: A variable life policy D: A policy that is surrendered
C: A variable life policy Of all the listed answers, Variable life is the only situation that is exempt from replacement regulations. All of the other listed answers are policies that are defined by replacement regulation.
Under Social Security, when do dependent parent survivor benefits begin? A: age 59 1/2 B: whenever the insured dies, regardless of age C: Age 62 or older D: age 25
C: Age 62 or older
G has a policy with a face value of $5,000,000. Although G trusts her beneficiary, she would prefer that the proceeds not be paid lump sum. Which of the following settlement options should G select? A: Fixed Amount Option B: Fixed Period Option C: All of the Above D: None of the Above
C: All of the Above With a Fixed Amount Option, the proceeds are paid in a designated amount at regular intervals over time until all money guaranteed is paid out to the beneficiary. The Fixed Period Option shares the same guarantees but states the proceeds be paid out over time (5, 10, 20 years). In either case if the beneficiary dies, a contingent receives benefits.
If a policy does not lapse at the end of the grace period because money is taken from the cash values to pay the premiums, what provision is in effect? A: Insuring Clause B: Extended Term Insurance C: Automatic Premium Loan D: Automatic Dividend Option
C: Automatic Premium Loan The Automatic Premium loan provision is not required, but found in some cash value building policies that keeps the contract in force by taking a loan automatically from the cash value to keep the policy in force.
How often does a resident producer license renew in Illinois and what is the fee? A: Every year for $180 B: Biennially for $360 C: Biennially for $215 D: Annually for $215
C: Biennially for $215 A resident producer license renews every two years (biennially) for $215.
What is the acceptable form(s) of purchase payment frequency during the pay-in period of an annuity? A: Single Premiums B: Flexible Premiums C: Both A and B, above. D: 20 Payments
C: Both A and B, above. An annuitant can fund their annuity with single or deferred payments.
All of the following are true about decreasing term insurance EXCEPT: A: The coverage will decline over time B: It is the least expensive term policy C: Cash Value is guaranteed D: Uniformly decreasing term death benefit goes down by the same dollar amount every year until the policy expires.
C: Cash Value is guaranteed Decreasing term does not build cash value.
Renewal commissions are also called A: Residual income B: Referral income C: Deferred compensation D: Repeat revenue
C: Deferred compensation Commissions that are paid on a regular schedule after the commission for initially placing insurance business has been paid is called deferred compensation.
Which of the following is CORRECT about policy delivery? A: The policy is sent directly to the insured in a situation that requires an agent. B: The policy cannot be sent by mail service. C: Extra premium on a rated policy will be collected upon delivery. D: A policy cannot be delivered in person by the agent and must be mailed.
C: Extra premium on a rated policy will be collected upon delivery. Upon deliver any extra premium due for a rated policy must be collected.
F is in the underwriting process for her policy. She gets a notice that the insurer will be interviewing her family about her. The insurer is performing a(an): A: MIB Report B: Consumer Report C: Investigative Consumer Report D: APS
C: Investigative Consumer Report An Investigative Consumer Report is a type of credit report that allows the insurer to interview family and friends about the insured lifestyle and/or habits.
Statements made by an applicant for Life Insurance which, in the opinion of the applicant, are true to the best of his or her knowledge are called: A: Misrepresentations B: Warranties C: Representations D: Concealment
C: Representations Representations are statements made by the applicant to be of their best knowledge and belief.
C is applying for a life policy. In general C is in pretty good shape, does not smoke and will probably live a usual life span. C will probably get approved for which risk class? A: Substandard B: Preferred Risk C: Standard D: Uninsurable Risk
C: Standard Average health and mortality will most likely warrant a standard rate.
All of the following are true regarding the Guaranty Association EXCEPT: A: A claimant may receive less benefits than what they had from a policy. B: The Association is comprised of All member insurers C: The Association is comprised of All member insurers and have a right to end membership while still transacting business in IL D: There is a $250,000 limit on the present value of annuity benefits.
C: The Association is comprised of All member insurers and have a right to end membership while still transacting business in IL The Guaranty Association is comprised of all member insurers but must remain a member of the association to write policies in IL.
The regulation that requires a producer to reveal their name and the name of the insurer or firm that they are representing when soliciting the sale of an insurance policy is called A: The Replacement Rule B: The Unfair Trade Practice Act C: The Disclosure Rule D: The Insurance Fraud Prevention Act
C: The Disclosure Rule The disclosure rule requires a producer to reveal who they are and who they work for when soliciting the sale of an insurance policy.
Which of the following is not true about the Accelerated Death Benefit? A: Proceeds are paid to the beneficiary after all Accelerated benefit is deducted B: The insured can take up to 75% of their face value for a qualifying condition. C: The insured has a right to take 75% of their face amount, but must pay taxes on proceeds taken D: Is a modern provision that was not found in policies forty years ago.
C: The insured has a right to take 75% of their face amount, but must pay taxes on proceeds taken The insured has a right to take 75% of proceeds tax free which is deducted from the face value upon the insured's death.
If a client is turned down for a life policy and one of the factors for being declined was credit, who must send the insured a copy of their credit report? A: The insurer B: The FTC C: The original credit reporting agency D: The Department of Insurance
C: The original credit reporting agency Any copy of a credit report that is owed to an insured is sent by the original credit reporting agency.
The incontestability clause found in a life policy, allows the insurer to terminate a policy within _______ of issuance. A: Three Years B: Anytime C: Two Years D: One Year
C: Two Years The incontestability clause must be enforced by the insurer within two years of issuance.
All of the following are fixed premium policies EXCEPT: A: Whole Life B: Variable Whole Life C: Universal Life D: Interest Sensitive Whole Life
C: Universal Life Universal Life policies have flexible premiums, whereas the listed whole life policy have fixed premiums.
K has a life insurance policy that allows him to skip premium payments but still keeps the policy in force. What type of policy does K have? A: Term Life B: Straight Whole Life C: Universal Life D: All of the Above
C: Universal Life Universal life allows a minimum and target premium in which the policyholder can flexibly pay for their premiums.
Defamation occurs when A: a producer demonstrates that the premium rates for an insurance plan he is promoting is less expensive than the plan a competitor is promoting. B: an insurance company advertises that their industry rating is better than 99% of all other carriers in the country. C: an agency prints and distributes flyers claiming that a competitor will soon be filing bankruptcy and they are a better choice therefore with whom to do business. D: The President of a life insurance company signs off on a plan to advertise for prospects in a state his company is not licensed in.
C: an agency prints and distributes flyers claiming that a competitor will soon be filing bankruptcy and they are a better choice therefore with whom to do business. Stating a licensed entity is about to be in financial trouble to induce the public to steer away from them is an act of defamation by the maker of such statements.
If an insurer has a right to renew a contract along with the insured this is known as a: A: contract of adhesion B: unilateral contract C: bilateral contract D: voluntary contract
C: bilateral contract If two parties have aright to renew a policy, it is known as a bilateral contract under law.
If a producer is found guilty of defamation, their producer license may be suspended, revoked or denied and additionally they may be assessed a civil penalty of A: up to $5,000 for a business offense. B: up to $1,000 for violating a cease and desist order of the Director. C: from $200 to $10,000. D: a minimum of $1,000 to a maximum of $10,000.
C: from $200 to $10,000 The statutory civil fine structure for defamation by a producer is a minimum of $200 and a maximum of $10,000.
A producer who places insurance with an insurer, either directly or indirectly, with whom the producer does not have an agent contract A: is grounds for license revocation. B: requires a special limited license. C: requires that the producer must post a surety bond in favor of the people of Illinois. D: must pay a state fee based on volume of business placed with such an insurer.
C: requires that the producer must post a surety bond in favor of the people of Illinois. A bond must be posted in favor of the people when a producer places business either directly or indirectly with any insurer with whom they are not contracted as an agent.
All of the following are characteristics of a TRADITIONAL IRA, EXCEPT: A: contributions can be made in cash B: contributions are tax deducted C: the withdrawals are tax free D: the IRS limits contributions per year
C: the withdrawals are tax free IRAs are Tax-Qualified plans and therefore even though contributions are tax deductible, all withdrawals at retirement are taxed.
Which of the following policy death benefit amounts would not warrant an illustration for a product that may normally require one? A: $40,000 B: $30,000 C: $20,000 D: $10,000
D: $10,000 In policies with $10,000 or less death benefit, an illustration is not required.
Once a producer has been notified that her license has been suspended by the Director, how many days does she have in which to request a hearing, in writing, from the date the Director mailed the termination notice? A: 10 days B: 15 days C: 20 days D: 30 days
D: 30 days A producer has 30 days from the date a suspension, revocation or denial notice is mailed by the Director in which to make a written demand for a hearing on the matter.
How many days does the Director have to issue a final written order once a hearing has been held pertaining to a market conduct examination? A: Within 20 to 30 days B: 30 days C: 60 days D: 90 days
D: 90 days The Direct has 90 days from the filing of an examination report or within 90 days after a hearing is held regarding a market conduct examination to issue a written order.
Each of the following is true regarding Viatical Settlements EXCEPT: A: They allow some who has less than two years to live from a terminal illness to sell a portion of their death benefit. B: The Viator is the terminally ill insured. C: The Viator must sign a statement regarding that they are willfully seeking the Viatical contract. D: A Viator has 15 days to rescind a Viatical Settlement even though payment has not yet been processed.
D: A Viator has 15 days to rescind a Viatical Settlement even though payment has not yet been processed. A Viator has 30 days to stop a Viatical Settlement if no payment has yet been made.
Which of the following would be examples of illegal advertising? A: A producer implying that a policy is approved by a state agency B: An advertisement stating that enrollment to a group is limited when using rolling enrollment periods C: A funeral director omitting that any unused preneed benefit will go to a secondary beneficiary. D: All of the Above
D: All of the Above A producer implying a government entity endorses a product, an insurer stating group enrollment is limited when it is successive or a funeral director not explaining excess preneed benefit allocation are all examples of illegal advertising methods.
Absolute assignment: A: Allows the policyholder to transfer partial ownership on a temporary basis. B: Changes the owner of a policy once insurable interest is proven. C: Allows the policyholder to take a loan from a term policy. D: Allows the policyholder to change the owner of a policy fully and on a permanent basis, regardless of insurance interest.
D: Allows the policyholder to change the owner of a policy fully and on a permanent basis, regardless of insurance interest. Absolute assignment is an ownership right that changes the policy owner on a full and permanent basis. Insurable interest is NOT required to assign a policy to another owner.
If an insured has suffered a qualified condition to qualify for Accelerated Benefits, who are the potential parties that must sign off on accepting accelerated benefits? A: The Applicant and the insured B: The Applicant C: The Irrevocable beneficiary D: Answers A and C
D: Answers A and C For Accelerated Benefits to be paid in a qualifying condition, the Applicant, insured and irrevocable beneficiary (if designated) must sign for benefits to be paid.
IRA's are: A: Available to anyone B: Available to anyone that has a 401K C: Available to anyone with earned income who has not attained age 70 1/2 D: Available to anyone with earned income.
D: Available to anyone with earned income. IRA are available to anyone with earned income regardless of what plans they may have individually or through an employer.
Which of the following factors is acceptable to use on the part of an insurer in determining premium pricing in the insurance marketplace? A: Basing increased cost for a life insurance policy on total blindness. B: Basing rejection of health insurance coverage on partial blindness. C: Basing rejection of property insurance to an insured on the basis geographical location of the property. D: Charging an fifty-year old person more premium for life insurance than a thirty-year old.
D: Charging an fifty-year old person more premium for life insurance than a thirty-year old. Basing premium rates on blindness, whether partial or total or property insurance based on geography are illegal trade practices. Basing life insurance rates on the age of the insured is accepted and sound actuarial science.
Each of the following is true regarding dividends EXCEPT: A: Dividends are offered by Mutual insurers through participating policies B: Dividends are paid tax free because they are a refund of excess premiums C: Insurers charge grossed up premiums based off potential loss and refund excess money if the insurer does not need the extra premium for actual loss D: Dividends are always guaranteed
D: Dividends are always guaranteed Dividends are never guaranteed because actual loss maybe unpredictable for an insurer and thus may need all premiums charged.
Insurable Interest is a relationship defined by; A: Financial gain if one were to die. B: Whoever pays the premium. C: Whoever the named beneficiary is. D: Financial or emotional loss.
D: Financial or emotional loss. insurable interest in one's life is dictated by having an emotional and/or financial loss exposure based on an insured's death.
Which of the following product does not require securities licensing? A: Variable Life B: Variable Annuity C: Variable Universal Life D: Indexed Annuity
D: Indexed Annuity
J has had a whole life policy for 40 years and has hit the lottery. Since J doesn't need the coverage anymore, he wants to surrender the policy and cash in the 40 years of cash value. What are the concerns when J surrenders the coverage? A: The policy will never be able to be reinstated B: Since the cash value will exceed premium payments, J must pay taxes on the excess amount C: The policy will convert to Extended term D: Only answers A and B
D: Only answers A and B When a policyholder surrenders a policy it cannot be reinstated and taxes apply on excess of benefits that exceed premium payments.
Which of the following dividend options can a policy holder select to completely pay their policy off before endowment? A: Acceleration of Endowment B: Reduce Premiums C: Accumulation at Interest D: Paid-Up Option
D: Paid-Up Option A Paid-Up Option is a dividend option that will allow the policyholder to pay off the policy by accumulating dividends at interest plus use the cash value when equal to the net single premium prior to endowment.
D has a policy with a rider that will increase coverage amount, but still lowers the overall cost per thousand dollars of coverage. D has which of the following riders? A: Long Term Care Rider B: Accidental Death and Dismemberment C: Whole Life D: Term Rider
D: Term Rider A term rider allows the insured to have higher benefits but still have lower cost per thousand of coverage because the rider will expire whereas a rider that does not expire, factors into the cost for the life of a policy.
K let her whole life policy lapse 6 years ago and is applying for reinstatement. Which of the following will most likely occur? A: The insurer will grant reinstatement no matter what. B: The insurer will grant reinstatement pending K is still healthy C: The insurer will grant reinstatement pending K is still healthy and pays all back premiums and interest D: The Insurer will deny reinstatement
D: The Insurer will deny reinstatement The insurer will deny reinstatement on K's policy because the reinstatement is usually 3-5 years from lapse. Since K's policy lapsed 6 years ago, she will not be able to reinstate the policy.
The entire contract provision of a life policy states which of the following? A: Premiums must be paid before an insurance company is obligated to pay benefits B: Material misrepresentations will void the policy as a matter of contract C: Riders do not require a countersignature D: The policy and the application are considered to be all one agreement
D: The policy and the application are considered to be all one agreement In the Entire Contract clause, the policy and application is the entire agreement.
What is the main purpose of Regulation 919? A: To assure that insurance claimants are treated in a prompt and courteous manner B: To encourage insurance companies to make claim forms available to all claimants within 30 days. C: To help minimize groundless legal actions by insureds against insurance companies relating to claims. D: To help the Director decide which insurance companies doing business in the state should be examined based on their business conduct.
D: To help the Director decide which insurance companies doing business in the state should be examined based on their business conduct. When complaints against insurance companies are made to the Department of Insurance regarding claims practices, they are recorded and analyzed to help the Director decide which companies need to be examined for their nonfinancial conduct.
Which of the following is subject to the Individual and Group Life Insurance Policy Illustrations Rule? A: Variable life insurance B: Group life and Individual Annuities. C: Credit life insurance D: Universal Life insurance
D: Universal Life insurance Variable life, Group life and annuities, and credit life are all exemptions under Illustration regulations.
A producer uses sign language to explain an insurance policy to a prospect who is hearing impaired and the producer is purposely communicating false information to make a sale. Has the producer broken any insurance rules or regulations? A: No, because using sign language is neither verbal nor written communication and the producer has discovered a legal loophole. B: Yes, the producer is engaging in twisting C: Yes, the producer is using the illegal tactic of diversion. D: Yes, the producer is guilty of misrepresentation.
D: Yes, the producer is guilty of misrepresentation. Each and every medium of communication is subject to the misrepresentation law, even nonverbal communication.
All of the following are valid examples of a life settlement EXCEPT: A: a 76 year old insured is retiring and wants to sell a policy for extra living expenses B: a married couple has decided to divorce and would like to sell their policies for extra funds for their children's education C: an insured has just lost their job and wants to sell part of their life policy to help make ends meet D: an insured has just been diagnosed with a terminal illness and wants to sell the policy to help pay medical bills
D: an insured has just been diagnosed with a terminal illness and wants to sell the policy to help pay medical bills Life Settlements allow an insured to sell their policy for more than the surrender value and less than the face amount. There are many situations in which an insured would consider life settlements including, divorce, loss of job, retirement, and sale/termination of a business. When an insured sells a policy due to terminal illness it is known as a Viatical Settlement.
All of the following statements are correct about federal income tax treatment of Group Term Life Insurance EXCEPT: A: premiums paid by the employer are usually tax deductible to the employer B: premiums paid by an employer are usually tax free to the employees C: lump sum Death Benefits paid to a beneficiary are usually income tax free D: proceeds paid to an insured's estate are usually taxable as income
D: proceeds paid to an insured's estate are usually taxable as income Even though an Employer can deduct premiums paid, in most cases, benefits are paid tax free.
All of the following statements are correct about federal income tax treatment of Group Term Life Insurance EXCEPT: A: premiums paid by the employer are usually tax deductible to the employer B: premiums paid by an employer are usually tax free to the employees C: lump sum Death Benefits paid to a beneficiary are usually income tax free D: proceeds paid to an insured's estate are usually taxable as income
D: proceeds paid to an insured's estate are usually taxable as income. Even though an Employer can deduct premiums paid, in most cases, benefits are paid tax free.
A Temporary License (180 days) allows the holder to engage in all of the following activities, EXCEPT: A: a surviving spouse of a producer can use the authority to help effect the sale of the insurance business. B: make certain that insureds are paying renewal premiums in a timely manner. C: ask the Director to extend the authority if an anticipated agency sale is taking longer than 180 days. D: sell a new policy to an existing client.
D: sell a new policy to an existing client. The 180 day temp license is strictly used to service existing customers and the sale, solicitation or negotiation of business is prohibited.
A Temporary License (180 days) allows the holder to engage in all of the following activities, EXCEPT: A: a surviving spouse of a producer can use the authority to help effect the sale of the insurance business. B: make certain that insureds are paying renewal premiums in a timely manner. C: ask the Director to extend the authority if an anticipated agency sale is taking longer than 180 days. D: sell a new policy to an existing client.
D: sell a new policy to an existing client. The 180 day temp license is strictly used to service existing customers and the sale, solicitation or negotiation of business is prohibited.
