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An agent must complete __ biennial continuing education credit hours to maintain his/her license

24

The underwriting process involves all of these, EXCEPT for

Credit Report

A variable insurance policy

Does not guarantee a return on its investment accounts

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key person insurance

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level term

Which of these is NOT considered to be right given to a policy

Modify a provision in the insurance contract

Which of these is NOT an element of Life insurance premiums?

Morbidity rate

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

None

Which statement is true regarding a minor beneficiary

Normally, a guardian is required to be appointed in the beneficiary clause of the contract

T would like to he assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase

Ten-Year Endowment

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

Term life

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

third-party with no insurable interest

K pays on a $20,000 20 year endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

_____ of personal life insurance premiums is usually deductible for federal income tax purposes.

0%

Which of the following types of Term Life policies most likely contains a renewability feature

10 Year Convertible Term

G purchased a Family income policy at age 40. The policy has a 20 year rider period. If G were to die at age 50, how long would G's family receive an income?

10 years

D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with

Extended Term

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F

What does a Face amount Plus Cash Value Policy pay upon the insured's death

Face Amount plus the policy's cash value

A life insurance application may be rejected on the basis of all of these factors except

Gender

A Nonforfeiture clause gives the policyowner

Guaranteed values even if the policy has lapsed

Which of these is NOT a reason for purchasing life insurance on the life of a minor

If both parents were to die, it would provide death benefits to the child

When must insurable interest exist for a life insurance contract to be vaild

Inception of the contract

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over

Income taxes plus a 10% penalty tax on $24,000

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide

Income that cannot be outlived by the owner

Which of the following actions require a policyholder to provide proof of insurability in an adjustable life policy?

Increases face amount

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

Insurable interest in the proposed insured

An agent who solicits applications for life insurance in North Carolina is considered to represent the

Insurance Company

Who does an insurance broker in North Carolina represent

Insured

Who has the option to renewable term policy?

Insured

what does a insurance broker in North Carolina represent

Insured

all of these statements about the waiver if premium provision are correct, EXCEPT

Insured must be eligible for Social Security disability for claim to be accepted

What type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner

Irrevocable beneficiary

A license may be denied, suspended, or revoked if the licensee

Is founded guilty of misrepresentation

What is the purpose of a Policy Summary

It highlights the critical parts of the policy issued

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

On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy on January 15. The producer delivered the policy on January 26 and collected the first premium. when did the coverage become effective

January 26

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this

Life Annuity with Period Certain

The Life and Health Insurance Guaranty Association in North Carolina has regulations that apply ONLY to

Life and Health policies issued by companies authorized in North Carolina

The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)

Living Benefit

Which of these is NOT relevant when determining the amount of personal life insurance needed

Local unemployment rate

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

Ordinary income tax and a 10% tax penalty for early withdrawal

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability

P will still receive declared dividends

Insurance policies are considered aleatory contracts because

Performance is conditioned upon a future occurence

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan Provision

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction

A policyowner is able to choose the frequency of premium payments through what policy feature

Premium Mode

The law doesn't prohibit a lender from refusing to accept a binder as evidence of insurance, as long as the refusal is

Reasonable

When an existing life insurance policy is terminated so that a new life insurance policy can be purchased, this transaction is referred to as

Replacement

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

An agent inducing an insured to lapse, forfeit, or surrender insurance through misrepresentation is committing the illegal act of

Twisting

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this

Unilateral

K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a ____ life policy

Universal

S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be

Universal Life

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

When is the face amount of a whole life policy paid

When the insured dies or at the policy's maturity date, whichever happens first

Variable whole life insurance can be described as

both an insurance and securities product

All individuals covered under a group contract will receive a(n)

certificate

A(n)__________Contained in a life insurance policy states that the policy will not cover certain risks

exclusion

An example of an unfair claims practice would be

failing to effectuate prompt, fair, and equitable settlements of a claim

A Limited-Pay Life policy has

premium payments limited to a specified number of years

What is the Suicide provision designed to do

safeguard the insurer from an applicant who is contemplating suicide

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

Under a Graded Premium Whole life policy

the premium increases each year during the early years of the contract and remains the same after that time

The free-look provision begins

upon receipt of the policy by the policy owner

Within ____ years a life policy can be reinstated upon meeting company requirements

5

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion

A policyowner may generate taxable income from which of the following Dividend Options?

Accumulation at Interest

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatements of age provision, the insurer will

Adjust the death benefit to a reduced amount

An agent who sells insurance policies for an unauthorized insurer in North Carolina may be personally liable for

All claims from policies sold by the agent

The consideration clause in a life insurance contract contains what pertinent information

Amount of premium payments and when they are due

The amount of monthly disability benefits payable under social security is affected by which of the following factors?

Amount of the benefits available from other sources

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid

At the time of application

Who is NOT required to sign a life insurance application

Beneficiary

N is covered by a Term Life policy and does not make the required premium payment which was due august 1. N dies September 15. What action will the insurer take

Claim will be denied

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

T is employed by an amusement park from June through September, working 50 hours per week. the amusement par's Group Policy would

Consider T NOT eligible for the insurance because as a seasonal employee, T does not meet the definition of "employee" under North Carolina law

Which of the following consists of an offer, acceptance , and consideration

Contract

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability

Convertible

Which of the following types of insurance is exempt from the Rules Governing life insurance and annuity Replacements

Credit Life

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Employee

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Equity index insurance

How often must an insurance agent's license be renewed?

Every 2 years

A ____ beneficiary may be changed by the policy owner without the consent of the beneficiary.

Revocable

Which of the following are equity-indexed annuities typically invested in

S&P 500

Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________________ option is a method of distributing a life insurance policy's death benefit OTHER than by lump sum payment

Settlement

Which of the following types of permanent life insurance policies offers the highest initial cash value

Single premium

What is Old Age and Survivors Health Insurance (OASDHI) Also known as

Social Security

Which of the following BEST describes a warranty

Statement guaranteed to be true

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

Straight Life Annuity

What is the underlying concept regarding level premiums

The early years are changed more than what is needed

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

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premiums can be lowered or raised, based on investment performance

An agent completes an application with a client for a $50,000 Life insurance policy. At what point is the LATEST policy Summary and buyers Guide must be given to the applicant

Upon policy delivery

A ____ life policy offers the owner investment in products such as money-market funds, long term bonds and equities

Variable

A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)

Variable Universal Life policy

S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own

Variable Whole life

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the contestable period and proven to be material


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