Insurance
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
All life insurance and health insurance contracts contain all of the following EXCEPT
Representations
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
Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries ?
loan based on the They are MORE likely to receive a expectations of the proceeds .
Which of the following is true about the mandatory free
look period in a life insurance policy? - It commences when the policy is delivered.
All of the following are classifications of risk EXCERT
non - nicotine .
Which of the following is an example of a limited
pay life policy? - Life paid up at 65
In order to reinstate a life insurance policy the insured must do all the following except
pay next year's premium in advance
Which of the following is characteristic of a nonqualified plan ?
plan does not meet federal guidelines for tax benefits
If no receipt is issued at the time of application, a statement of good health is usually required at the time of
policy delivery
How might someone cover the extra expenses of child care and home - related costs ?
purchasing family term insurance
Which of the following is an example of a non
qualified retirement plan? - Section 457 deferred compensation
Which of the following is an IRS
qualified retirement program for the self-employed? - Keogh/HR-10
In which of the following must a beneficiary change request be filed in writing to the insurer and is made effective by the insurance company recording the change in its records ?
recording method
In order to AVOID being classified as an MEC , a policy must pass which of the following ?
seven - pay test
Which of the following would be most likely to start a tax
sheltered annuity? - Public school teachers
An insurance policy that only requires a payment of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called
single premium whole life
All of the following persons who does not have an employer
sponsored retirement plan would be eligible to set up contributions to a Traditional IRA EXCEPT - Arlene, age 72, a nurse
What is the order in which beneficiaries receive proceeds from a life insurance policy ?
succession of beneficiaries
All of the following are ownership rights EXCEPT
switching the policy from one insured M to another
All of the following are features of the spendthrift clause EXCEPT
the beneficiary may encumber the proceeds
The time period during which an annuitant contributes to an annuity is called
the deferred growth
Group AD & D policies may be deducted by whom and i under which deduction category ?
the employer under business expenses
When the courts look at a contract to determine intent of the parties which of the following is considered ?
the entire contract
All of the following are TRUE regarding incomplete applications EXCEPT
the incomplete application can be accepted with the missing information added later .
Life insurance companies use mortality tables to predict
the life expectancy of the proposed insured
All of the following are required signatures on a life insurance application EXCEPT
the minor in a juvenile policy .
What is the purpose of Stranger - originated life insurance ( STOLI ) ?
the policy is originated primarily or solely for the purpose of resale
If the insurer wishes to share an applicant's HIV status , the applicant must be given full notice of all of the following EXCEPT
the treatment procedures that are covered by the policy .
Which of the following occurs immediately after the application is submitted and the initial premium paid ?
the underwriting process begins
Which of the following statements is tru about annuities
they can provide a lifetime income
Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account ?
variable
Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit
variable universal life
How long is the grace period in individual life insurance policies?
30 days
In a traditional IRA plan, at what age may the plan owner begin withdrawing funds without incurring a penalty:
59 1/2
Which of the following is not an essential element of an insurance contract?
A Counteroffer In order for insurance contracts to be legally binding, they must have four essential elements: agreement (offer and acceptance), consideration, competent parties, and legal purpose. Counteroffer is not required.
If a company has a simplified employee pension (SEP) plan, what type of plan is it?
A defined contribution plan for a small business
An annuity that guarantees a minimum rate of return is known as a/an
A fixed annuity
A substandard risk compared to a standard risk would pay
A higher premium
the Medical Information Buereau (MIB) is
A source of medical information to alert insurers to adverse medical history
An annually renewable term policy
Renew each year with an increased premium.
A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is
Universal life option B
With a traditional whole
life policy, the death benefit - remains constant over time
The insured is also the policy owner of a whole
life policy. What age must the insured attain in order to receive the policy's face amount? - 100
Which of the following is the time limit on certain defenses after which the policy becomes incontestable ?
2 years
What is the primary purpose of a 401(k) plan?
Accumulation of retirement income
Insurance policies are not drawn up through negotiations, and an insured has little to say about his provisions. What contract characteristics does this describe?
Adhesion. A contract of adhesion is prepared by only the insurer. The insured's only option is to accept or reject the policy as it is written.
What documentation gives express authority to an agent?
Agents contract with the principal
What is reinsurance?
An agreement between a crediting insurer, and assuming insurer
What type of life insurance is most commonly used for group plans?
Annual Renewable term
When an annuity is written, whose life expectancy is taken into consideration?
Annuitant
Which of the following is the basic source of information used by the company in the risk selection process?
Application
Which of the following terms refers to the transfer of some or all of the ownership rights of a life insurance policy from one individual to another?
Assignment
All of the following are nonforfeiture options in life insurance except
Automatic premium loans
Which of the following entities is not an insurer but an organization form to provide insurance benefits for members of an affiliate lodge or religious organization
Fraternity benefit society
Illegally transact insurance in the state insure must obtain which of the following
Certificate of authority
If an applicant for insurance submits the application and pays the premium at the same time. the insurer must give which of the following to the applicant?
Conditional reciept
Because an insurance policies are legal contract. It must conform to the state laws, governance contracts, which require all of the following elements, except.
Conditions. Conditions are part of the policy structure considerations is an essential part of a contract
Which of the following terms means something of value for each party gifts to the other under an insurance contract?
Consideration
Representations are written, or oral statements, made by the applicant that are
Considered true to the best of the applicant's knowledge
Which of the following is TRUE of the limited pay whole life policy ?
Coverage continues after the policy is paid - up .
Which of the following would be the beneficiary in credit life insurance
Creditor
Which of the following is NOT allowed in credit life insurance?
Creditor requiring that a debtor buys insurance from a certain insurer
When must insurable interest exist in life insurance?
Date of application
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the 5th anniversary of the owners death
When the insured purchased a new home he wanted 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 inherited a large sum of money at the age of 40 and wanted to use it to provide a guaranteed income after his retirement at 60. Which of the following types of annuities would best meet his need?
Deferred
Annuities may be purchased with all of the following payment methods except
Deferred
Which of the following is not a standard exclusion in life insurance policies?
Disability
What qualities an individual to contribute to an IRA?
Earned income
For a retirement plan to be qualified, it must be designed for the benefit of
Employees
The authority granted to an agent through the agents contract is referred to as
Express authority: express powers are written into the contract between the insurer and the agent
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
An agent selling variable annuities must be registered with
FINRA and hold a securities license as well
Obtaining consumer information reports under false pretenses is prosecutable by which of the following ?
Fair Credit Reporting Act
A spouse receives $5,000 a month until the principal and interest on her husband's life insurance policy have been paid out. Which settlement option did this beneficiary choose?
Fixed amount
Which policy provision permits the policyowner to take a specified number of days to examine the contract , and allows for cancellation and a full refund if the policyowner rejects the terms or costs ?
Free look
Which of the following features allows an insurance policy to remain in force for a specific number of days beyond the premium due date?
Grace period provision
Events or conditions that increase the chances of insured loss occurring our referred to as
Hazard
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?
Human life value approach {HLVA}
Which of the following is true regarding term insurance?
If the insured dies after the end of the term. there is no death benefit to the beneficiary.
Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before the insured
the life insurance policy clause that prevents an insurance company from denying payment of death claim after a specified period of time is known as
Incontestability clause
A life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestable clause
What type of insurance would be used for a Return of Premium rider?
Increasing Term
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?
Inspection report
Which of the following is not true regarding a certificate of authority
Issued to Group insurance participants
Which of the following is common in an increasing term life policy ?
It begins with little or no insurance protection .
Which of the following is TRUE of an equity - indexed annuity ?
It has a guaranteed minimum interest rate
Which of the following is correct regarding credit life insurance?
It insures the life of the debtor
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time
Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs ?
It is financially insufficient to cover end of life expenses ..
Which of the following IS NOT a requirement of a qualified plan?
It must be temporary
Why is the accidental death benefit referred to as double indemnity ?
It provides twice the face value in the policy for death due to accident .
If a retirement plan or annuity is qualified,
It satisfies he requirements of the Internal Revenue Service for favorable tax treatment.
Which of the following is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person.
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
It will increase because the insurer will be 5 years older than when the policy was originally purchased
Which statement is TRUE concerning the accidental death rider?
It will pay double or triple the face amount
Which annuity settlement option provides a stated monthly amount to the annuitant and upon the annuitant ? s death the same or a lesser amount paid for the lifetime of the survivor ?
Joint and survivorship option
Which type of annuity settlement stops when the annuitant dies?
Life Annuity
The form used to establish the terms for both parties when a person sells his life insurance policy to a 3rd unrelated person is called
Life settlement Contract
What does an annuity protect the contract owner against?
Living longer than expected
In a single employer group plan, what is the name of a document that is issued to the employer?
Master contract
Which of the following premium payment modes would result in the highest overall premium for life insurance?
Monthly
An insured purchase an insurance policy five 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. Fund is not paid out after paying claims, and other operating costs are returned to the policy owners in the form of a dividend. If all funds are paid out no dividends are paid.
The approach to determining the amount of personal life insurance that an applicant needs that considers such factors as the costs associated with death, costs of educating children, and costs of housing is called the
Needs approach
What is the requirement for a number of employees in a SIMPLE plan?
No more than 100
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation be federal government
An insured submits the full premium along with a completed application for life insurance. Once the policy is issued when does the coverage begin?
On the date of the application
When a death claim is submitted, the insurer discovered that the insured understated her age on the application for a life policy. What action will the insurer take?
Pay a reduced death benefit based on the insured's actual age
Which of the following is NOT true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants
Which of the following is a characteristic of revocable beneficiary designation?
Policy owners can change beneficiary designation anytime without the consent of the beneficiary.
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 will be included in a policy summary
Premium amounts and surrender value
Which of the following is true regarding a joint life policy?
Premium is based on the average age of the insureds
All of the following are examples of risk retention except
Premiums
All of the following are examples of risk retention except
Premiums. Retention is a planned assumption of risk or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments or self insurance
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
Retirement plans can be broadly divided into which of the following categories?
Qualified and non-qualified
Which of the following factors is not considered by an underwriter when determining the premium rates for an individual seeking insurance?
Race
Which of the following factors is not considered by underwriter when determining the premium rates for an individual seeking insurance?
Race
The insured pays $1,200 annually for her life insurance premium. This year, she has accumulated $17 worth of dividends, which she applies to her next premium, thus reducing it to $1,025. What dividend option has the insured chosen?
Reduction of premium.
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. which policy provision allow this?
Reinstatement Provision
Adverse selection is a concept best described as
Risks with higher probability of law, seeking insurance more often than other risks. Every selection means that there are more risk with higher probability of loss seeking to purchase and maintain insurance, and a risk of lower probability underwriters must guard against us.
Variable insurance and annuities are regulated by
SEC, FINRA, and the department of insurance
All of the following are tax qualified retirement plans EXCEPT
Section 529 plan .
EXCEPT All of the following are tax qualified retirement plans
Section 529 plan .
If an agent wishes to sell variable life policies, what license must the agent obtain in addition to a life insurance license?
Securities
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
What type of life insurance policies generates immediate cash value?
Single premium
All other factors being equal, which of the following types of annuities will provide the highest monthly income?
Straight life
A producer is helping a married couple determine the financial needs of their children in the event one or both should die. This is a personal use of life insurance known as
Survivor protection
Life insurance death benefits can be used to fund funeral and other expenses that could be otherwise difficult to fund with a loss of the insured's income. Which term is most closely associated with this?
Survivor protection
Which of the following retirement plans is for nonprofit, charitable, educational, or religious organizations?
Tax-sheltered annuity 403(b)
What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application ?
The applicant and possibly the agent initial any changes made .
Which of the following is not the consideration in a policy?
The application given to a prospective insured
Peril is most easily defined as
The cause of loss insured against
Who bears the investment risk in a fixed annuity?
The insurance company
excluding life insurance, under what condition may a policy owner transfer their personal insurance policy to another person
The insured will need a written consent of the insurer.
Which entity determines the amount of accelerated death benefits that will be paid to an insured?
The insurer
Which of the following is NOT a characteristic of an insurable risk?
The loss must be catastrophic
What will happen if the insured stops making payments on a loan taken from the cash value policy?
The policy will terminate when the loan amount with interest equals or exceeds the cash value
The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policyowner UNLESS which of the following is true ?
The policyowner has named an irrevocable beneficiary .
How does the per capita rule apply to proceeds from a life insurance policy ?
The proceeds are divided equally among living primary beneficiaries .
Which of the following is TRUE for a flexible premium annuity ?
The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount .
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy
Apparent authority, also known as perceived authority is the assumption of authority based on actions, words, or deeds of the principle, or because of circumstances the principle created
True
Which division of an insurance company is responsible for the selection, evaluation, and classification of risks?
Underwriting
I've only one party to an insurance contract has made a legal enforceable promise. What kind of contract is this?
Unilateral
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%
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay that was cleaned in the forming of an insurance contract. This is referred to as
Utmost good faith
An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have?
Variable
Which of the following lists the three common types of permanent individual life insurance ?
Variable Life , Whole Life , Universal Life
An insurance company receives an application with some information missing and issues of policy anyway, what is this called?
Waiver. in insurance policies, a waiver is giving up one's known right or privilege*
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes
Wavier of premium rider
Informing an insurance contract when does acceptance usually occur
When an insurer underwriter approves coverage
How do warranties differ from representations ?
a warranty is guaranteed to be true a representation is believed to be true to the best of one's knowledge .
For an individual long - term care policy there is an annual dollar limit for tax deductions that is based on which of the following ?
age
Which of the following is an example of a premium payment mode ?
annual premium payment
Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy ?
any exclusions
Under the misstatement of at at age provision what happens if it is determined death death that that , the the insured's age or gender was misstated on a life insurance policy application ?
benefits are adjusted to an amount that the premium would have purchased at the correct age or gender
Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches the retirement age. What is the time period called during which the surviving spouse does not receive benefits?
blackout period
Which of the following statements is true of both fixed period and fixed amount settlement options?
both guarantee that the principal and interest will be fully paid out.
An insurance producer who by contract is bound to write insurance for only one company is classified as a/an
captive agent
All of the following Forel are common exclusions from loss found in disability income policies EXCEPT for that incurred while
commiting a misdemeanor
An insured and the beneficiary are both killed in a fatal accident . Which provision presumes the insured survived the beneficiary ?
common disaster clause
Which whole life policy premium type is the most common ?
continuous premium
Which of the following term insurance types provides temporary protection that can be changed to some type of permanent protection without evidence of insurability ?
convertible
In a level term life policy , which ALWAYS remains constant
death benefit
The group conversion option is allowed for all of the following EXCEPT
during the annual benefits enrollment period .
Which is a common approach to addressing the problems a minor as a beneficiary inherent in naming to a life insurance policy ?
establishing a trust to administer proceeds
Which of the following is exempted from the incontestability provision in insurance policies ?
fraudulent misstatements
Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms ?
insuring clause
Current assumption whole life policies are sensitive to which of the following ?
interest rates
All of the following are true rearguing the guaranteed insurability rider except
it is available automatically, for no extra premium
What type of insurance should a company purchase if it wants to insure the life of its CEO ?
key person insurance