Exam FX Life
No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice
Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?
For continuation of business in case the licensed producer dies or becomes disabled
For what reason can a temporary license be issued?
Cease and desist order
If the Commissioner/ Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
complete continuing education hours and pay a renewal fee
What are producers required to do in order to renew their license?
medical information about the prospective insured
What is included in Part 2 of a life insurance application?
life insurance
What type of insurance creates an immediate estate?
Broker
What type of licensee represents the insured?
permanent insurance (usually, whole life)
What type of life insurance offers an applicant a cash value element?
Investigative Consumer Report
What type of report provides information about the applicant's hobbies, habits, and financial status?
Whenever deemed necessary, but at least once every few years
When can the Commissioner or Director examine insurers?
at the time of policy delivery
When must the policy summary for a life insurance policy be delivered to the policyowner?
the insured's current assets, liabilities, and survivor's needs
When planning for survivor protection life insurance, what needs to be considered?
Producer's spouse or designee in case the licensed producer dies or becomes disabled
Who can usually be granted a temporary license?
a person authorized to sell, solicit, and negotiate insurance contracts
Who is an insurance agent?
the benefit is received tax free
a business is the owner and beneficiary of a key-person life policy. when the business collects the policy benefit, how is it taxed?
the benefit is received tax free
a corporation is the owner and beneficiary of the key person life policy. if the corporation collects the policy benefits, then
Fiduciary Capacity
all funds collected by an intermediary for prompt payment to insured, insurers, or producers as entitles are received in what is known as?
buy-sell agreement
all of the following are personal uses of life insurance EXCEPT
they must be part of the contract
all of the following are requirements for life insurance illustrations EXCEPT
education
all of the following information about the applicant is identified in the general information section of a life insurance application EXCEPT
Defamation
if a producer makes maliciously, critical statements about another insurer, what is this illegal practice called?
the existence of insurable interest between the applicant and the insured
if an applicant for a life insurance policy and the potential insured are two different people, what would bet the underwriter's main concern?
it will decrease
if an insured changes his payment plan from monthly to annually, what happens to the total premium?
Authorized or Admitted
if an insurer holds a certificate of authority, it is known as what type of insurer?
authorized or admitted
if an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
30 days
if the commissioner issues an order without having conducted a hearing the person aggrieved by the order may demand a hearing within how many days after the order was mailed?
the owner
in a life settlement contract, whom does the life settlement broker represent?
the insured's attained age
in annually renewable term policies, what is the annual premium based upon?
the premiums remains level
in term policies, what happens to the premium throughout the term of the policy?
blackout period
in terms of social security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits?
estate conservation
life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate/ What is this called?
life expectancy and the death rates for specific groups of individuals
mortality tables are used by insurance companies to predict what?
Misrepresentation
on its advertisement, a company claims that is has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?
guaranteed and current
universal life policies have two types of interest rates. what are they?
risk selection
what is the main responsibility of a company's underwriting unit?
viator
what is the name of the insured who enters into a viatical settlement?
to prevent a producer or insurer from further violating laws for transacting insurance
what is the purpose of a cease and desist order?
to minimize the risk of financial loss caused by the death of a key employee
what is the purpose of key person insurance?
premium mode
what is the term that describes the frequency and the amount of the premium payment?
premium
what term describes the fee a person pays an insurance company to receive coverage?
the agent
what type of licensee represents the insurance company?
twisting
what type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
group policy
what type of policy issues certificates of insurance to the insureds?
when the insured reaches age 100
what would a 20-pay whole life policy endow?
at the time of application
when must insurable interest exist in a life insurance policy?
net premium plus expenses
which of the following best describes gross annual premium?
debtor in the life of the creditor
which of the following is not an example of a valid insurable interest?
every insurer must provide such notice to its policyholder when the policy is issued
which of the following is true regarding the notice of the insured's right to file a complaint?
buy-sell agreements are normally funded with a life insurance policy
which of the following statements concerning buy-sell agreements is true?
they are usually qualified plans
which of the following statements regarding deferred compensation funds is INCORRECT?
vacation travel expenses
which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds?
the insurance company
who is responsible for the contents of insurance advertisements?
Only producers properly licensed for the type of insurance transaction
who may share in commission from the sale of life insurance policy?
all insurers authorized to write insurance within a state
who must be a member of insurance guaranty associations?
the policyowner
who must have insurable interest in the insured?
Viatical Settlement
an insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. the insured knows that his financial state will worsen even more with the upcoming medical expenses. what option could the insured utilize?
the department of insurance (commissioner/ director/ superintendent)
Who must be notified of a producer's change of address?
limited-pay whole life
a whole life policy that requires that the policy owner only pays premiums for a specified number of years is known as what kind of policy?
monthly
all other factors being equal, which premium payment mode will require an overall higher premium: monthly or annual?
rebating
an agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy? what is the agent guilty of?
permanent
an applicant wants to buy a policy that has a cash value element. which type should she buy?
60 days
an insurance policy is considered a "new policy" of it has been in effect for what maximum time period?
variable
an insured receives a monthly summary for his life insurance policy. he notices that the cash value of the policy is significantly lower this month than it was last month. what type of policy does the insured have?
The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process
What is the purpose of the agent's report during the application process?
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
Who is considered a nonresident agent?
the commissioner's office may pay all or part of the costs
the commissioner conducts an examination of a domestic insurer and believes that the cost of examination places an unreasonable financial burden on the insurer. Which of the following will happen?
group's purpose, size, financial strength, and turnover
what are the characteristics of the group that underwriters will consider before issuing a group life policy?
loan values
what are the living benefits of whole life insurance?
mortality, interest, and expense
what are the three factors that determine the premium for a particular life insurance policy?
Presentations of nonguaranteed elements of the policy
What are illustrations in a life insurance policy?
a cease and desist order, a fine, and license suspension and revocation
What are the most common penalties for violations of insurance statutes?
survivor protection, estate creation and conservation, cash accumulation and liquidity
What are the personal uses of life insurance?
Policy summary
What document describes the specific information about a policy?
the process of risk selection and classification
What is insurance underwriting?
To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers.
What is the purpose of insurance guaranty associations?
higher frequency of premium payments will result in higher overall premium
How does the premium mode affect the total premium paid for insurance for the year?
annually
How often must insurers provide a current copy of the privacy policy and practices to each customer?
the predicted needs of a family after the premature death of the insured
In calculating the amount of life insurance needed, what is the needs approach based on?
to the insurer authorized to transact business in this state
To whom may a certificate of authority be issued?
the death benefit increases each year by the amount of the cash value increases
Under option B in a universal life policy, what happens to the death benefit?
6 months
at times, it is possible for a life insurance agent to affect a savings of premium rates by backdating an application for life insurance. what is the maximum amount of time that an application may be backdated?
Either on the date of the application or the date of the medical exam (whichever occurs last)
at what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?
universal life
between adjustable life and universal life policies, which one provides more flexibility to the policyowner?
the premium is based on the average age of the insureds
how is the premium determined in a joint life insurance policy?
insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive, or clerical)
in general, who can be excluded from producer licensing and examination requirements?
60 days
the commissioner issued an order without holding a hearing. the person aggrieved by this order demands a hearing shortly after receiving the order. the hearing must be held within a maximum of how many days?
$0
the commissioner obtains a restraining order against a person who has violated insurance law. the person continues the violation for 10 days. the person will have to pay a fine of
discrimination
two individuals who are in the same risk and age classes are charged different rates for their insurance policies due to insignificant factors. What is it called?
respond to the consumer's complaint
under the fair credit reporting act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
insuring own life, life of a family member, and the life of a business partners or someone who has a financial obligation to the policyowner
what are the three main instances when insurable interest exists in life insurance?
policy summary
what describes the specific information about a policy?
availability of cash value
what does liquidity mean in a life insurance policy?
Misrepresentation
what illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
group policy
what type of policy is typically issues without proof of insurability from the insured?
single premium whole life
what type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?
adverse selection
when risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?
Issue the policy anyway and pay the face value to the beneficiary.
when y applied for insurance and paid the initial premiums on August 14, he was issued a conditional receipt. during the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. in this case, the insurance company will?
they offer guaranteed stock performance
which of the following is not a characteristic of variable annuities?
The insurer who is being examined
who is responsible for the costs associated with the examination of insurers?
the employer
who is the beneficiary on a key-person life insurance policy?
