ExamFX: Life Insurance Practice Exam.
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Which of the following best details the underwriting process for life insurance?
Selection, classification, and rating of risks
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
Rebating.
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of
Twisting.
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice.
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions
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.
Who is a person, other than a viator, that enters into a viatical settlement contract?
Provider
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?
A policy summary
Concerning insurance, the definition of a fiduciary is
A producer who handles insurer funds in a trust capacity.
A Return of Premium term life policy is written as what type of term coverage?
Increasing
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?
The insured's contingent beneficiary
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy.
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
Which of the following types of policies allows for a flexible premium and a variable investment component?
Variable universal life insurance
What is the major difference between a stock company and a mutual company?
Ownership
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
How many years must a policy have been in force in order for an insurer to loan an amount equal to the cash surrender value of the policy?
3
What percentage of a company's employees must take part in a noncontributory group life plan?
100%
If a company has a Simplified Employee Pension plan, what type of plan is it?
A qualified plan for a small business
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of
Coercion.
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
A participating insurance policy may do which of the following?
Pay dividends to the policyowner
A domestic insurer issuing variable contracts must establish one or more
Separate accounts.
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
Which of the following entities issues Certificates of Authority?
Director
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
The employer is the owner and beneficiary.
All of the following would be eligible to establish a Keogh retirement plan EXCEPT
The president and employee of a family corporation.
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?
Lump sum
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
When transacting business in this state an insurer formed under the laws of another country is known as a/an
Alien insurer.
If a producer's license has been revoked, the producer must
Return the license to the Department of Insurance
A producer who was born in 1990 became licensed in 2015. When will the producer be required to renew his license?
Every even-numbered year
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000
The policy owner 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
Which statement best describes agreement as it relates to insurance contracts
One party accepts the exact terms of the other party's offer
Traditional IRA contributions are tax deductible based on which of the following?
Owner's income
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
The customer's associates, friends, and neighbors provide the report's data.
After being placed on a noncompliance list, an obligor may be eligible for a temporary license, lasting no longer than
150 days.
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than
With the policy.
For how long is an insurance company allowed to defer policy loan requests?
6 months
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is
A nonqualified annuity plan.
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adhesion
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term.
Who has the ability to reassign a policy?
Policyowner
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?
Prior to performance of the test
Which of the following insurers are owned by stockholders?
Stock
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)
403(b) Plan (TSA).
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100,000
When does a license renewal period begin?
90 days before expiration
An initial temporary license in this state may be issued for up to
90 days.
The Director is asked to examine documentation regarding the investigation of a life insurance claim. The Director can expect to find all of the following in the records EXCEPT
An expert's conclusions regarding the initial investigation.
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
Which of the following products will protect an individual from outliving their money?
Annuity
Chris, who is unlicensed, works part-time in her father's insurance agency. She may perform all of the following activities EXCEPT
Collect premium for in-force policies and explain coverages to existing clients.
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
Common Disaster
A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
Decreasing term
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
Which of the following is a correct statement about annuities?
Fixed annuities do not provide protection against inflation
Which of the following does NOT apply to variable contracts?
Insurers do not have to provide any financial information or history of the company.
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint Life
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 Life Policy
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Mutual
Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Alaska?
Nonresident producer
Which of the following statements about a suicide clause in a life insurance policy is true?
Suicide is excluded for a specific period of years and covered thereafter.
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor protection.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on accumulation
Children's riders attached to whole life policies are usually issued as what type of insurance?
Term
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam
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.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
This state provides for a temporary license to be issued to a producer's representative for all of the following reasons EXCEPT
A producer's retirement.
Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose
HR-10 (Keogh Plan).
Which of the following best describes annually renewable term insurance?
It is level term insurance.
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life.
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
Which of the following types of risk will result in the highest premium?
Substandard risk
Which of the following is called a "second-to-die" policy?
Survivorship life
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
The amount of the distribution is reduced by the amount of a 20% withholding tax.
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
All of the following statements about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of return.
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
Which of the following is NOT a type of whole life insurance?
Level term
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
If the provider of a viatical settlement transfers ownership or changes the beneficiary of the insurance policy, the provider must communicate the change in ownership or beneficiary to the insured within how many days after the change?
20
Each policy must contain a table showing the loan value in figures, as well as any options available if a default occurs in the payment of premiums, either during the term of the policy or during the first
20 years
The Director has a question for a producer about a transaction that occurred under an employment contract with a former firm. The producer must respond to the Director within
3 days.
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
All of the following would be considered an insurance transaction EXCEPT
Obtaining an insurance license.
Life income joint and survivor settlement option guarantees
Income for 2 or more recipients until they die.
If a Director receives a written statement requesting a hearing, within what period of time must a trial be held?
30 days
A paid-up nonforfeiture benefit will become effective as specified in the policy unless the person entitled elects another available option within how many days after the due date of the premium in default?
60
Life insurance policies that have been in force for three years must provide for maximum policy loan interest rate of not more than
8% per year.
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
Who assumes control over an insurance company's funds and management if it becomes insolvent?
The Guaranty Association
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
All group life insurance policies must be incontestable after how many years?
2
Individual licenses must be renewed every
2 years.
Which of the following is a key distinction between variable whole life and variable universal life products?
Variable whole life has a guaranteed death benefit.
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?
$200,000
Any person investigating or settling a claim must inform the claimant in writing if the claim was accepted or denied within how many working days after all evidence of loss is received?
15
Which of the following is NOT an essential element of an insurance contract?
Counteroffer
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider.
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor.
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower.
What describes the specific information about a policy?
Policy summary
Policies written on a third-party ownership basis are usually written to cover which of the following?
Policyowner's minor children or business associates.
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required.
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Set premium rates.
Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs?
Term insurance
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?
Term rider
The annuitant 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.
Which of the following is INCORRECT concerning a noncontributory group plan?
The employees receive individual policies.
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?
The policy will be interpreted as if the insurer waived its right to have an answer on the application.
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans.
An aleatory contract is based on what kind of exchange?
Unequal exchange of values
Each viatical settlement contract entered into in this State must provide the viator with an unconditional right to rescind the contract for at least how many days?
15
What is the purpose of settlement options?
They determine how death proceeds will be paid.
What does "level" refer to in level term insurance?
Face amount
What type of premium do both Universal Life and Variable Universal Life policies have?
Flexible
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not tax deductible as a business expense.
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it is in the best interest of the client.
Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?
Renewable
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
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.
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?
Return the application to the applicant for completion
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
All of the following are true about key-person insurance EXCEPT
The death benefit is taxable to the business
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account.
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
The primary beneficiary died before the insured
If an applicant submits the initial premium with an application, which actual constitutes acceptance?
The underwriter approves the application
Which of the following is TRUE about nonforfeiture values?
They are required by state law to be included in the policy.
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
How does an individual become the Insurance Director in this state?
Appointed by the Commissioner
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
Aleatory
What is another name for interest-sensitive whole life insurance?
Current assumption life
What is the purpose of a free-look period in insurance policies?
It allows the insured to reject the policy with a full refund.
Which of the following statements is true regarding requirements for applicants for an insurance license?
They must provide information about their personal history and experience.
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
Conditional.
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
The maximum civil penalty that may be assessed for a willful violation of the Insurance Code is
$25,000.
When a licensee changes his residence address, the Insurance Department must be notified within
30 days.
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in
Adjustment in the amount of death benefit.
In order to get a nonresident license in this state, a producer must
Apply and pay a fee to a nonresident state that reciprocates.
Employer contributions made to a qualified plan
Are subject to vesting requirements.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time.
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration
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
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
Continue to increase
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)?
Equity Indexed Annuity
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?
Insuring clause
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
Variable Whole Life insurance is based on what type of premium?
Level fixed
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited-pay Life
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement.
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
If a producer's license has been revoked, the producer must
Return the license to the Department of Insurance.
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.
Which type of retirement account does not require the owner to start taking distributions at age 72?
Roth IRA
Methods used to pay the death benefits to a beneficiary upon the insured's death are called
Settlement options.
Which of the following may NOT be included in an insurance company's advertisement?
That its policies are covered by a state Guaranty Association
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy.
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination.
All of the following are true regarding a decreasing term policy EXCEPT
The payable premium amount steadily declines throughout the duration of the contract.
What is the purpose of the Agent's Report in the application process?
To provide additional information about the applicant to the underwriters
When would a 20-pay whole life policy endow?
When the insured reaches age 100
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability
The renewable provision that allows the policy owner to renew the coverage at the expiration date
Without evidence of insurability
To legally transact insurance in this state, an insurer must obtain which of the following?
Certificate of Authority
How many continuing education credits must be completed every 2 years?
24
Who is protected from financial loss by the Guaranty Association?
Policyholders
What kind of policy allows withdrawals or partial surrenders?
Universal life
All of the following are true of an annuity owner EXCEPT
The owner must be the party to receive benefits.
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?
$100,000
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
Which of the following settlement options in life insurance is known as straight life?
Life income
Who might receive dividends from a mutual insurer?
Policyholders
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.
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
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?
A minor son of the insured
The two types of assignments are
Absolute and collateral.
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
Conditional
Concerning insurance, the definition of a fiduciary responsibility is
Handling insurer funds in a trust capacity.
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
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
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 is INCORRECT regarding a $100,000 20-year level term policy?
At the end of 20 years, the policy's cash value will equal $100,000.
The Director must examine insurers at least
Every 3 years.
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)
Executive bonus.
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
Fixed Amount
The document that indicates that an insurer has been approved and is authorized to transact insurance in a particular state is known as a
Certificate of Authority.
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
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT?
SEPs are suitable for large companies.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of adhesion.
Which of the following statements is true regarding SIMPLE plans
Contributions and earnings are tax-deferred until funds are withdrawn
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status.
Which of the following is TRUE of level term insurance?
It is temporary protection
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
Signed waiver of premium.
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
The policy is owned by the company.
How long must a standard insurance transaction remain on file?
5 years
Which of the following is another term for an authorized insurer?
Admitted
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider.
When Y applied for insurance and paid the initial premium 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
Issue the policy anyway and pay the face value to the beneficiary.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
In insurance, an offer is usually made when
An applicant submits an application to the insurer.
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
An insurance license cannot be issued to a person who would, during the first year, earn an aggregate amount in commissions that would exceed what percentage of the aggregate amount represented by all other insurance business that would be procured through the applicant?
50%
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy.
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
All of the following are duties and responsibilities of producers at the time of application EXCEPT
Change any incorrect statement on the application by personally initialing next to the corrected statement.
Which of the following is an example of an agent's fiduciary responsibilities?
Forwarding premiums to the insurer
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any circumstances
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity.
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
Reinstatement provision
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
The annuitant must be a natural person.
Which of the following terms is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract?
Viatical settlement provider
Who bears all of the investment risk in a fixed annuity?
The insurance company
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
All of the following statements concerning dividends are true EXCEPT
Dividend amounts are guaranteed in the policy.
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income.
Which of the following applicants would NOT qualify for a Keogh Plan?
Someone who works 400 hours per year
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 insured's estate.
Whose responsibility is it to determine if an annuity is suitable for an applicant?
The producer
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.
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
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits?
Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued the original policy.
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
Waiver of premium.
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must
Respond to the consumer's complaint.
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 the Director receives written notice demanding a hearing regarding an order, and if the order is scheduled to go into effect during the trial, then the order will be delayed. This is called
Stay of Action.
What is the minimum age for insurance license applicants in this state?
18
An insurer's employee is investigating a claim and documents each action that is taken in the investigation. The insured believes that the employee's methods violated his constitutional rights. Which of the following entities should be consulted?
Director
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
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
