Exam fx life
Under which of the following circumstances would an insurer pay accelerated benefits?
An insured is diagnosed with cancer and needs help paying for her medical treatment.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clause
Which of the following best describes the MIB?
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
Which of the following is called a "second-to-die" policy?
Survivorship life
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase.
Which of the following best describes the unfair trade practice of defamation?
Making derogatory oral statements about another insurer's financial condition
Which of the following types of policies will provide permanent protection?
Whole life
All of the following are dividend options EXCEPT
Fixed-period installments.
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
Which of the following is TRUE regarding the insurance amount in a credit life policy?
The creditor can only insure the debtor for the amount owed.
Which is true about a spouse term rider?
The rider is usually level term insurance.
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
All the following statements are false regarding licensing EXCEPT
Applicants must pass a state-licensing exam.
What is the minimum number of insureds required for group life coverage to be issued to a trade association?
25
Which of the following would NOT be a violation of state insurance regulations?
Agent C uses her license to write only business other than controlled.
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceased the insured
All of the following are requirements for life insurance illustrations EXCEPT
They must be part of the contract.
If a policyowner has a participating policy, when is the insurer required to start payment of dividends?
3rd year policy
The Commissioner will adopt a system of examination necessary for the administration of insurance and insurance-related laws. Examiners may not be appointed if they, at the time of examination,
Are affiliated with the management or owns a monetary interest in any person being examined.
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?
It determines who receives policy benefits if the primary beneficiary is deceased.
Which of the following is NOT true regarding policy loans?
A policy loan may be repaid after the policy is surrendered.
Which of the following would be considered an unfair claims settlement practice?
A claims adjuster advises the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered.
In life insurance, producers are permitted to share or split commissions providing
Both are properly licensed for the line of insurance
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
Life insurance death proceeds are
Generally not taxed as income.
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
Paid up additions
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of premium
If an agent fails to obtain an applicant's signature on the application, the agent must
Return the application to the applicant for a signature.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
A life insurance producer may share commissions with
A licensed life insurance producer for the sale of a life insurance policy.
Which of the following persons is required to hold a producer license?
A person who negotiates insurance contracts
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
Buy-sell agreement
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?
It will likely be higher because the applicant is a substandard risk.
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
A policy which stipulates that the company will return any unused premiums to policyowners, is called
Participating. — A policy that stipulates that the company will return any unneeded premiums to policyowners, is called a "participating policy." This return of premium is the surplus after the company has deducted for claims and expenses.
An insured is covered under his employee's group life plan. His son has been covered as a dependent under this policy and is now attending college on a full-time basis. What is the maximum age that his son could be covered under this policy, provided that he remains in college?
Under 23
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
War or military service
Insurer XYZ is planning to start issuing variable contracts in this state. XYZ is a subsidiary of a larger insurance company authorized to transact variable insurance. Which of the following statements is true?
XYZ is considered authorized.
Which of the following best describes annually renewable term insurance?
It is level term insurance.
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
Joint
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)
403(b) Plan (TSA).
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT
Applicants past income
A nonresident producer or broker is authorized to insure a subject of insurance located in Hawaii only under which of the following conditions?
All of the above — The Commissioner may license a nonresident producer or broker for all classes of insurance an individual who is otherwise qualified. Any such license will be subject to the same obligations and limitations, and to the Commissioner's supervision, as though a resident of this state.
All of the following would be considered rebating EXCEPT
An agent misrepresents policy benefits to convince a policyowner to replace policies.
What would be included in the premium amount stated in the insurance policy?
Fees, charges, and any other consideration
Which statement is true regarding the proceeds of a life insurance policy?
The lawful beneficiary is entitled to all policy benefits free from all claims of creditors or representatives of the insured's estate.
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
If a company has a Simplified Employee Pension plan, what type of plan is it?
A qualified plan for a small business
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer.
The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application?
Return the application for completion
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.— If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.
What is a foreign insurer?
An insurer with a home office in another state
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans. — Whole life policies offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans.
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
Illegal
A producer in another state wants to become a producer in Hawaii. The other state gives the same privileges to Nebraska producers wanting to be licensed in that state as it does its own producers. Hawaii therefore extends the privileges of its producers to the prospective producer of the other state. What is this called?
Reciprocity
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years
Which of the following is true about the premium on the children's rider in a life insurance policy?
It remains the same no matter how many children are added to the policy
Which type of life insurance policy generates immediate cash value?
Single Premium
Which of the following is a risk classification used by underwriters for life insurance?
Standard
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
The death benefit will be smaller.
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT
The employer can receive a current tax deduction for any contributions made to the plan. — Employers do not receive a current tax deduction for any contributions made to a nonqualified plan. The plans are legal; however, they do not qualify for any favorable tax treatment under the IRS rules.
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
A broker, no matter where located, may act as a broker for a life insurance producer in Hawaii so long as the producer has been licensed to sell life insurance for at least
1 year
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
Where may insurers allocate funds for settlement and dividend options for variable life policies?
One or more separate accounts
What is a definition of a unilateral contract?
One-sided: only one party makes an enforceable promise.
Before the Commissioner will renew or extend an insurance license, the licensee must
Pay fees and complete the required number of credit hours every 2 years.
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
The insureds estate
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable.— Money borrowed from the cash value is not taxable. Policy loans can be repaid at any time, including surrender and death. An insurer can charge interest on outstanding policy loans.
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy.
A transaction where new life insurance is purchased, and as part of the transaction, existing life insurance is lapsed or surrendered, is known as
Replacement
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy?
Return of premium
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing commissions
If a life insurance policy has an irrevocable beneficiary designation,
The beneficiary can only be changed with written permission of the beneficiary.
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
Attained age.
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible term policy
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity.
In life insurance policy replacement, which of the following entities is responsible for sending a letter notifying the policyowner of the right to receive information regarding the values of the existing policy?
The existing insurer — The existing insurer must send a letter to the policyowner of the right to receive information regarding the values of the existing policy within 5 business days.
In a direct rollover, how is the money transferred from one plan to the new one?
Trustee to trustee
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
Unilateral
In the event of the death or disablement of a licensee, the Commissioner may issue a temporary license to another person to continue the business of insurance. A temporary license is issued for a period NOT to exceed
180 days
After receiving an application for a hearing, the Commissioner must hold a hearing within
30 days
What type of premium do both Universal Life and Variable Universal Life policies have?
Flexible Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, as long as there is enough value in the policy to fund the death benefit
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
Foreign
How many days does the producer have to remit all the premiums to the insurer?
30 days
For how long are licensees required to keep records of continuing education completion?
4 years
If an annuity application is taken in a face-to-face meeting, when is the latest the producer must provide the disclosure document and the buyer's guide to the applicant?
At time of application
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option— With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.
