Full Insurance exam part 2

96. Each insurer must maintain a complete file containing one copy of both the Buyer's Guide and policy summary used by the insurer for a period of how many years following the date of its last authorized use?

3 years

99. Replacing insurers must notify existing insurers regarding a replacement within:

5 days

56. The time period during which children are young and financially dependent upon their parents is termed the:

Family dependency period

88. Which of the following is not part of the regulations pertaining to the advertisement of insurance products in New Jersey?

The name, address, business and home numbers of the producer must be on advertisements.

13. Which of the following policies allows the policyowner to buy term and direct the investments made in the cash value account?

Variable universal life

11. Which policy has fixed premiums, a guaranteed minimum death benefit and nonguaranteed cash values?

Variable whole life

59. The third party that purchases a life insurance policy death benefit from a terminally ill insured is termed:

Viatical settlement provider

57. All of the following are true regarding viatical settlements, EXCEPT:

Viatical settlements are a type of life insurance contract.

32. The appropriate rider allows premium payments to be waived in theevent of disability. What is the normal waiting period for premiums to be waived?

3 to 6 months

116. Variable annuities have:

Variable interest rates and benefits

77. Who are the named individuals or entities the policyowner designates to receive life insurance policy proceeds upon the insured's death?

Beneficiaries

19. Gerald wants a life insurance policy in which he can choose the investment vehicle. Which policy would you recommend to him?

Variable life

39. Which life insurance rider pays an amount equal to the total premiums paid as long as the insured dies during a certain time period, as stated in the policy?

Return of premium

26. When a juvenile covered by a payor rider reaches the specified age, what happens to the ownership of the policy?

The juvenile can assume ownership of the policy.

41. When a juvenile covered by a payor rider reaches the specified age, what happens to the ownership of the policy?

The juvenile can assume ownership of the policy.

103. A debtor group must have at least how many members to qualify for debtor insurance?

100

8. An insurer requests that an applicant for life insurance undergo an HIV test. Which of the following is true?

A consent form must be signed by the applicant prior to the test.

104. Which of the following entities is not able to hold a producer's license in New Jersey?

A controlled business producer

3. The MIB is best described as:

A nonprofit organization that supplies insurability information

25. The principal sum of a AD&D rider attached to a life insurance policy pays:

A principal sum if the insured loses both arms

40. The principal sum of a AD&D rider attached to a life insurance policy pays:

A principal sum if the insured loses both arms

100. Which of the following can be considered an advertisement?

All of the above

84. In order to be sure an agent's presentation is compliant, the agent must do which of the following?

All of the above

Which of the following is not considered an advertisement?

Amortization tables

60. What is business life insurance used for?

An employee benefit, A funding tool & Business interruption insurance

23. Which life insurance rider affecting the policy's death benefit protects against the chance of depleting income during prolonged life?

Annuity Rider

38. Which life insurance rider affecting the policy's death benefit protects against the chance of depleting income during prolonged life?

Annuity Rider

115. What accounting unit is used during the annuity phase of a variable annuity?

Annuity unit

1. If Becky wants to take a distribution from her qualified retirement plan, she should know that distributions can be made:

Answer: Distributions from a qualified retirement plan may be made regardless of age when an employee retires, the employee ceases employment, or the plan is terminated. However, if distributions from a qualified plan are made prior to the age of 59

6. The term attributed to the person who applies for insurance coverage is _______; the term attributed to the person insured by the policy is ________.

Applicant; insured

10. What is the basic source of information for life insurance underwriting and policy issue?

Application

20. All of the following are guaranteed features in a variable life insurance policy, EXCEPT:

Cash value

78. Which of the following is a beneficiary designation based on a group of people with shared characteristics?

Class Designation

55. All of the following statements regarding key person insurance are true, EXCEPT:

The key employee is the policyowner and pays the premiums; the company is the beneficiary.

90. The purpose of group life and health coverage regulations is to set forth requirements regarding the discontinuance and replacement of all group life, accident and health insurance policies and contracts. All of the following fall under the regulations, EXCEPT:

Contracts issued in connection with temporary disability benefits or workers' compensation laws.

109. The value of each accumulation unit varies:

Daily

53. Judith is injured in a car accident. She incurs a covered loss of $50,000. She is required to pay $3,000 before the insurer will cover 80% of the covered loss. Which of the following terms best describes the $3,000 Judith must pay?

Deductible

17. What is the primary purpose of the Securities Act of 1933?

Defines a securities product

92. New Jersey requires insurers and producers to use reasonable efforts to do all of the following prior to selling a fixed, deferred or immediate annuity contract, EXCEPT:

Determine the consumer's marital status

110. What is a disadvantage of fixed annuities?

Earning potential may not be enough to offset the effects of inflation

114. Which of the following fixed annuities has a minimum rate of return and a current rate of return that is connected to the S&P 500?

Equity indexed annuity

107. Which annuity provides a guaranteed minimum rate of return?

Fixed annuity

113. Which of the following is characteristic of fixed annuities?

Fixed interest rates during the payout period

97. Replacement is defined as any life insurance transaction in which existing life insurance:

Has lapsed, Is continued as extended term insurance & Is being reissued with a reduction in cash value

61. The ___________ approach calculates the amount of money a person is expected to earn over their lifetime to determine the face amount of life insurance needed, thereby placing a dollar value on the life of an individual.

Human life value

33. Under what conditions will the waiver of premium rider pay benefits?

If the insured is totally and permanently disabled

67. The nonguaranteed elements of an insurance policy are:

Illustrations

71. All of the following are true regarding claims for life insurance policies, EXCEPT:

In order for death benefits to be paid, the insurer must receive notice of the insured's death, but does not need the death certificate

85. One of the requirements for an insurance policy to be issued for any type of insurance is:

Insurable interest

72. All of the following are considered minimum information that must be on a life insurance illustration, EXCEPT:

Insured's marital status

18. All of the following statements are correct regarding variable universal life contract charges and fees, EXCEPT:

Interest earned is credited to the death benefit.

2. Which report may contain information gathered through interviews with friends and neighbors, employers and coworkers, who know the insured?

Investigative report

50. Which of the following correctly describes the law of large numbers?

It states that as a group's size increases, it is easier to predict the number of future losses over a specific time period

31. Which of the following explanations best describes the purpose of the waiver of premium provision of a life insurance policy?

It waives the insured's premiums if the insured is totally disabled before a specified age.

46. Which of the following explanations best describes the purpose of the waiver of premium provision of a life insurance policy?

It waives the insured's premiums if the insured is totally disabled before a specified age.

83. No insurance institution, agent or insurance-support organization shall obtain information in connection with an insurance application through the use of:

Pretext interviews

63. Mary's Cosmetics purchases a life insurance policy on Samantha, the leading makeup salesperson in the nation. Which business continuation plan did Mary's Cosmetics buy?

Key person insurance

98. Mary's husband recently died and left her with a $500,000 life insurance settlement. One collector has threatened to attach the life insurance proceeds to cover an obligation. What should Mary do?

Know that life insurance proceeds are exempt from creditor's claims

102. False advertising can include any false information that is circulated to the public in which form?

Letters, Newspapers & Radio or television

69. Which of the following does not constitute policy replacement?

Life insurance coverage in which a loan is not repaid to the insurer

35. Which of the following riders can decrease the death benefit?

Long-term care rider

49. Which of the following riders can decrease the death benefit?

Long-term care rider

5. All of the following are important underwriting factors for risk classification in a health insurance policy, EXCEPT:

Marital status

34. The Guaranteed Insurability Rider, or GIR, allows the insured to buy:

More insurance coverage at specified points in the future, without proof of insurability Some riders can affect the death benefit of a life insurance policy.

48. The Guaranteed Insurability Rider, or GIR, allows the insured to buy:

More insurance coverage at specified points in the future, without proof of insurability. Some riders can affect the death benefit of a life insurance policy.

54. The ____________ approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities.

Needs

95. A person has an insurable interest in their own life, health, and personal safety. Which of the following is true about insurable interest?

No insurance policy may be issued unless the benefits are payable to a person or entity with an insurable interest in the individual.

91. Which of the following is not an accurate representation of a duty or responsibility of the replacing insurer?

Notify any other existing insurer that may be affected by the proposed replacement within ten business days of receipt of a completed application indicating replacement and/or accompanying statement indicating replacement

66. For replacement transactions, an insurance producer's duties include all of the following, EXCEPT:

Notify existing insurers of policies to be replaced

68. Life insurance policy illustrations must contain all of the following, EXCEPT:

Only the guaranteed policy elements

7. Which part of the insurance application is described by the following: the applicant's general information, including name, date of birth, age, sex, social security number, marital status, address, occupation and income are collected?

Part 1

93. All of the following are considered unfair practices, EXCEPT:

Paying claims without conducting a reasonable investigation based upon all available information

21. Of the following life insurance policy riders, which does not alter the amount of the death benefit?

Payor

36. Of the following life insurance policy riders, which does not alter the amount of the death benefit?

Payor

75. Mary and Philip are married. Philip named Mary as the primary beneficiary of his life insurance policy. His children from a prior marriage are contingent beneficiaries. Under the Uniform Simultaneous Death Act, who will receive the death benefit if Mary and Philip are in a car accident and there is no evidence of who died first?

Philip's children from his prior marriage

70. A life insurance policy summary includes all of the following, EXCEPT:

Policy Illustrations

82. If an irrevocable beneficiary is named on a life insurance policy, all of the following statements are true, EXCEPT:

Policy owners can borrow from cash value without consent.

73. The insured and the primary beneficiary are killed in a car accident. Which of the following is true according to the Uniform Simultaneous Death Act?

Policy proceeds are paid as if the primary beneficiary died first.

6. James has above average health and is physically active. He has never smoked. Which risk classification will James most likely be rated?

Preferred

51. Which of the following is the consideration an insured pays for insurance coverage?

Premium

4. What action will the life insurance company most likely take when an applicant for a life insurance policy is discovered to be substandard risk?

Require the applicant pay additional premium

79. The Common Disaster Clause:

Requires the primary beneficiary to outlive the insured by a certain number of days in order to receive the death benefit

24. Which life insurance rider pays an amount equal to the totalpremiums paid as long as the insured dies during a certain time period, as stated in the policy?

Return of premium

80. Which beneficiary designation is most appropriate for a person who wants to name his spouse as a beneficiary of his life insurance policy, and simultaneously retain full policy ownership rights?

Revocable beneficiary

43. What is the term for a policy element that adds or takes away coverage?

Rider

15. Which of the following laws defined a security product?

Securities Act of 1933

111. In addition to a life insurance producer license, producers sellingvariable products must have a(n):

Series 6 or 7 license

106. Melinda was covered by her employer's group policy. The policy had an expiration date of July 31, 2012. She sustained an injury requiring hospitalization while doing yard work on August 22, 2012. She remained in the hospital until September 3rd, 2012. How will her benefits be handled?

She is covered because she incurred the injury during the policy grace period

81. Which of the following prevents creditors from seizing life insurance policy proceeds as long as there is at least one living named beneficiary, excluding the insured's estate?

Spendthrift clause

117. Reinsurance is defined as:

Spreading risk from one insurer to another

14. Because variable contracts are equity products, they are subject to various regulations. Which of the following applies to variable contracts?

The 12% rule

27. All of the following statements are true about the accidental death benefit (ADB) Except:

The amount paid is one half of the face amount of the life insurance policy.

42. All of the following statements are true about the accidental death benefit (ADB), EXCEPT:

The amount paid is one half of the face amount of the life insurance policy.

76. All of the following options are available if the only logical beneficiary is a minor, EXCEPT:

The benefits can go directly to the estate of the insured.

65. Angela took out a $2,000 policy loan from her whole life insurance policy. The policy face amount is $200,000. If Angela does not repay the loan, how will the death benefit be affected?

The death benefit will be decreased by $2,000 plus interest.

30. Jon's life insurance policy contains a disability income benefit thatwill pay him a periodic income in the event he becomes disabled. What factor determines the amount of the benefit?

The face amount of the policy

45. Jon's life insurance policy contains a disability income benefit that will pay him a periodic income in the event he becomes disabled. What factor determines the amount of the benefit?

The face amount of the policy

58. All of the following are true regarding purchase of personal life insurance for charity, EXCEPT:

The person purchasing life insurance for charity must have insurable interest in the lives of the charity's members

16. Which of the following is true with regards to a Variable Universal life policy?

The policyowner controls the investment choices and the premium amounts

74. There are different kinds of beneficiaries in a life policy. When Alice dies, the death benefit will be paid to Walter. If Walter dies before Alice, the benefit would go to Alexander. Which of the following statements is true?

The primary beneficiary is Walter and Alexander is the contingent beneficiary.

22. Which of the following best describes the return of premium rider?

The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy.

37. Which of the following best describes the return of premium rider

The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy.

86. Which of the following is not true about credit life insurance?

The term of such insurance may not extend more than 30 days beyond the scheduled maturity date of the indebtedness, or a maximum of 3 years.

52. In life and health insurance, a person's greatest asset is:

Their earning power

94. Mary is considering the purchase of an annuity contract. The agent gave Mary a dividend schedule showing a potential 8% return and said it is guaranteed. Which of the following is true?

This statement is false and misleading, since dividends are never guaranteed.

9. The process of selecting and classifying risks is best described by which of the following terms?

Underwriting

105. Failing to maintain records of complaints filed against an insurer since their last examination is an example of:

Unfair trade practice

64. When must insurable interest be shown for a life insurance policy?

Upon policy application

12. Which life policy offers the owner the opportunity to invest in products such as money -market funds, long -term bonds and the stock market?

Variable Life

108. This annuity is regulated as a securities product and agents selling this product must have a securities license:

Variable annuity

112. For which of the following annuities must an agent have a securities license in order to sell?

Variable annuity

29. Riders covering additional insureds can be added to life policies. A popular rider is the children's term rider. All of the following can be covered by the children's term rider, EXCEPT:

Younger siblings of the policyholder

44. Riders covering additional insureds can be added to life policies. A popular rider is the children's term rider. All of the following can be covered by the children's term rider, EXCEPT:

Younger siblings of the policyholder

101. Prior to accepting an applicant's initial premium, insurers must provide a Buyer's Guide and a policy summary to all prospective purchasers. The producer and insurer have what additional disclosure requirements?

all of the above

89. A replacement is a transaction in which a new policy is purchased, and it is known or should be known to the proposing producer, or insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be:

all of the above

87. Which of the following is not a forbidden act under the Marketing Methods and Practices regulations?

false discrimination

62. Ben applies for a life insurance policy on himself. How much insurable interest does Ben have in his own life?

unlimited