Guarantee Exam
What is the maximum fine for violating a cease and desist order?
$5,000
How long must insurers keep records of claims?
6 years
Which of the following is NOT true of Section 1035 Policy Exchanges?
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?
Attending Physician Statement
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
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
What type of insurance would be used for a Return of Premium rider?
Increasing Term
Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
Needs approach.
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
Which of the following characteristics applies to defined benefit plans but not defined contribution plans?
The amount of contributions made by the employer is determined by an actuarial formula.
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.
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
What documentation grants express authority to an agent?
Agent's contract with the principal
An independent adjuster may include which of the following?
A firm who acts on behalf of the insurer
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease.
All of the following statements are true regarding tax-qualified annuities EXCEPT AWithdrawals are taxed. BEmployer contributions are not tax deductible. CAnnuity earnings are tax deferred. DThey must be approved by the IRS.
Employer contributions are not tax deductible.
In a defined contribution plan,
The contribution is known and the benefit is unknown.
Jason wants to advertise his life insurance practice. Which of the following must he include in his advertisements?
The name of the city in which he has his principal office
Employer contributions made to a qualified plan
are subject to vesting requirements.
When would a 20-pay whole life policy endow?
When the insured reaches age 100
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
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?
Blackout period
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.
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
Credit life.
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.
Who does the agent represent?
The insurer
If an insured continually uses the automatic premium loan option to pay the policy premium,
The policy will terminate when the cash value is reduced to nothing.
Which of the following will NOT be considered unfair discrimination by insurers? ADiscriminating in benefits and coverages based on the insured's habits and lifestyle BCharging applicants with similar health histories different premiums based on their ethnicity CCancelling individual coverage based on the insured's marital status DAssigning different risk classifications to applicants based on gender identity
Discriminating in benefits and coverages based on the insured's habits and lifestyle
Which of the following statements about the reinstatement provision is true?
It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.
Regarding the free-look provision, the insurance company
Must allow the policyowner to return the policy for a full refund.
According to the Insurance Frauds Prevention Act, will the person who suspects a fraudulent transaction be penalized for reporting it to the Superintendent?
No, as long as the act is reported in good faith
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
The Waiver of Cost of Insurance rider is found in what type of insurance?
Universal Life
Which of the following insurance options would be considered a risk-sharing arrangement?
Reciprocal
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
In insurance, an offer is usually made when
An applicant submits an application to the insurer.
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans
Which of the following is the best reason to purchase life insurance rather than annuities?
To create an estate
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
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to
The contingent beneficiary.
Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? ATravel expenses for family to come to the funeral BDebt cancellation CDay care DVacation travel expenses
Vacation travel expenses
What is a foreign insurer?
An insurer with a home office in another state
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed.
Which of the following types of risk will result in the highest premium?
Substandard risk
The Superintendent has the power to perform all of the following EXCEPT AIssue a license to a person under 18 years of age. BExamine and investigate any licensed person and insurer. CLevy fines for not complying with the requested information within the allotted time. DRefuse to issue a license to anyone who is found to be not trustworthy and competent
Issue a license to a person under 18 years of age.
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
Which of the following is TRUE of a qualified plan?
It has a tax benefit for both employer and employee.
The main difference between immediate and deferred annuities is
When the income payments begin.
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance?
AM Best
The minimum interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500.
An agent has recently changed his email address. What must the agent do to comply with the regulation for change of address?
Inform the Department within 30 days
Which of the following is NOT true regarding a nonqualified retirement plan? AContributions are not currently tax deductible. BIt can discriminate in benefits and selecting participants. CEarnings grow tax deferred. DIt needs IRS approval.
It needs IRS approval.
All of the following apply to defined benefit plans EXCEPT ABenefits are based on a specified formula that incorporates years of service, salary and age of retirement. BThe employer is responsible for providing promised retirement benefits. CThey are qualified plans and cannot discriminate. DContributions are tied to the company profits.
Contributions are tied to the company profits.
Which of the following will NOT be an appropriate use of a deferred annuity?
Creating an estate
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
False advertising
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
An insurance agent was born in 1983. He obtained his New York insurance license in 2014. When will the agent's license expire?
On the agent's birthday every odd-numbered year
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
Which of the following is NOT an example of a business use of Life Insurance? AExecutive Bonuses BKey Person CWorkers Compensation DBuy-sell Funding
Workers Compensation
All of the following could own group life insurance EXCEPT AAn alumni group. BA debtor group. CA group needing low-cost life insurance. DA group sponsored by an employer
A group needing low-cost life insurance.
All of the following information about a customer must be used in determining annuity suitability EXCEPT
Beneficiary's age.
Which of the following is NOT true regarding an annuity certain?
Benefits stop at the annuitant's death.
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Decreases
What does "level" refer to in level term insurance?
Face amount
Which of the following will be included in a policy summary?
Premium amounts and surrender values
What happens if a deferred annuity is surrendered before the annuitization period?
The owner will receive the surrender value of the annuity.
All of the following are true about variable products EXCEPT APolicyowners bear the investment risk. BThe premiums are invested in the insurer's general account. CThe minimum death benefit is guaranteed. DThe cash value is not guaranteed.
The premiums are invested in the insurer's general account.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
The mode of premium payment
Is defined as the frequency and the amount of the premium payment.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
The New York Superintendent has the responsibility to make sure each entity transacting insurance in this state remains solvent. Insurers are required to file a statement with the Superintendent
Annually on or before March 1st.
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
Cost of Living Rider
A Universal Life insurance policy has two types of interest rates that are called
Guaranteed and Current.
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.
An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceases the insured
Which is INCORRECT concerning a Section 457 Deferred Compensation plan? AIt is a means of deferring current income until later when the employee is in a lower tax bracket. BIt has a vesting requirement. CThe deferred amount is paid upon death, disability, or retirement. DIt is a nonqualified plan.
It has a vesting requirement.
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.
An IRA purchased by a small employer to cover employees is known as a
Simplified Employee Pension plan
All of the following would be different between qualified and nonqualified retirement plans EXCEPT AIRS approval requirements BTaxation on accumulation CTaxation of withdrawals DTaxation of contributions
Taxation on accumulation
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment.
In a group life insurance policy, the employer may select all of the following EXCEPT The type of insurance. The amount of insurance. The premium payor. The beneficiary.
The beneficiary.
Which of the following are generally NOT considered when underwriting group insurance? AThe nature of the group BThe group's past claim experience CThe size of the group DThe insureds' medical history
The insureds' medical history
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but are taxable upon distribution.
The Superintendent may refuse to renew a license if a licensee is receiving more than 10% of the aggregate commissions from controlled business in how many months?
12
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy
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
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
Premium receipt.
All of the following are characteristics of group life insurance EXCEPT ACertificate holders may convert coverage to an individual policy without evidence of insurability. BPremiums are determined by the age, sex and occupation of each individual certificate holder. CAmount of coverage is determined according to nondiscriminatory rules. DIndividuals covered under the policy receive a certificate of insurance.
Premiums are determined by the age, sex and occupation of each individual certificate holder.
All of the following are examples of risk retention EXCEPT Self-insurance. Premiums. Deductibles. Copayments.
Premiums.
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium
Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called
Suitability.
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?
Monthly premium waiver and monthly income
The law states that an insurer is allowed to pay the entire Death Benefit to the insured if they qualify to use the Accelerated Death Benefit Rider; however, most insurers limit the amount of the Death Benefit paid to
50%
Which of the following is the basic source of information used by the company in the risk selection process?
Application
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.
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
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
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? AThe policy will expire at the end of the 20-year period. BAt the end of 20 years, the policy's cash value will equal $100,000. CThe policy premiums will remain level for 20 years. DIf the insured dies before the policy expired, the beneficiary will receive $100,000.
At the end of 20 years, the policy's cash value will equal $100,000.
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.
How long will the beneficiary receive payments under the single life settlement option?
Until the beneficiary's death
Can the Superintendent investigate fraudulent claims if they occurred outside of the resident's state according to the Insurance Fraud Prevention Act?
Yes. The Superintendent has the power to make an investigation within this state or outside of the state.
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
All of the following statements are correct regarding credit life insurance EXCEPT Benefits are paid to the borrower's beneficiary. The amount of insurance permissible is limited per borrower. Premiums are usually paid by the borrower. Benefits are paid to the creditor.
Benefits are paid to the borrower's beneficiary.
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
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A securities license. A life insurance license. SEC registration. FINRA registration.
SEC registration.
Which of the following would help prevent a universal life policy from lapsing?
Target premium
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?
Permanent
How long does a licensee have to notify the Superintendent of a change of address?
30 days
SIMPLE Plans require all of the following EXCEPT No more than 100 employees. Employees must receive a minimum of $5,000 in annual compensation. At least 1,000 employees. No other qualified plan can be used.
At least 1,000 employees.
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up option
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurability.
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend
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.
All of the following are true about variable products EXCEPT The minimum death benefit is guaranteed. The cash value is not guaranteed. Policyowners bear the investment risk. The premiums are invested in the insurer's general account.
The premiums are invested in the insurer's general account.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT AThe insurer determines the amount for each payment. BIt is a life contingency option. CIt will pay the benefit only for a designated period of time. DThe payments are not guaranteed for life.
It is a life contingency option.
