INSURANCE PRACTICE TEST REVIEW
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
Pay the death benefit to the estate of the insured.
Which of the following does not constitute false advertising?
Stating that a dividends are not guaranteed
Which of the following groups is NOT eligible for group life insurance?
Social groups
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policy owner?
When the policy is delivered
All of the following could qualify as a group for the purpose of purchasing group life insurance except
an Association formed one year ago
Which of the following is consideration on the part of an insurer?
Paying a claim
In contrasting stock insurers with mutual insurers, which statement is true
Stock insurers are owned by the shareholders and issue non-participating policies
All of the following are true of the survivorship life policy except
The premium is based off of the age of the insured
Which of the following is TRUE regarding premium in a 10-year level premium policy?
The premium will remain level for 10 years.
What is the maximum amount of individual life insurance coverage that a person can convert to If the existing group policy has been terminated?
$10,000
What is the maximum amount of individual life insurance coverage that a person can convert to if the existing group policy has been terminated?
$10,000
Within how many days after receiving a written communication of replacement must in existing insurer provide a policy owner with a policy summary?
10 days
In order for a business partner to be eligible for a keel plan he or she must work full time and own and at least how much of the business?
10%
An insured is issued a life insurance policy in Florida and wishes to return it for a refund. How many days does the insured have for such an action?
14
An insurer must notify the consumer in writing that an investigative consumer report had been requested within how many days of the initial request?
3 days
How long does the law require agents to maintain records of transactions pertaining to premium payments?
3 years
A distribution from an employer-sponsored retirement plan or from an IRA is eligible for a tax free rollover if it is reinvested in in IRA within
60 days
A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years?
7 years
In whole life insurance, when is the policy cash value scheduled to equal the face amount?
At age 100
Who does the Spendthrift Clause in a life insurance policy protect?
Beneficiary
Which of the following losses would likely be covered under the Accidental Death rider?
Death caused by a head-on collision.
If an insurer appoints a customer representative, the appointment needs to be filed with which of the following entities?
Department
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family term
Premiums collected on behalf of the insurance company by an agent will be held in what capacity?
Fiduciary
All of the following statements regarding life policy summary are correct except
It must illustrate all guaranteed policy dividend values
Which of the following is true regarding a Pure Life annuity settlement option?
It provides the highest monthly benefit
Which of the following best describes Pure Life annuity?
It provides the highest monthly benefits
Which of the following best describes pure life annuity?
It provides the highest monthly benefits.
When comparing a joint life policy to two individual Life policies of the same amount on the same insurance, which condition is true?
Joint life has a lower premium than the total of the two individual policies
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
An insurance company that is owned by the policy owner is called a
Mutual Insurer
All of the following are true regarding a producer's fiduciary responsibilities except
Producers may commingle personal funds with company funds
Which of the following will be eligible for tax sheltered annuity?
Public School teachers
Variable insurance and variable annuities are regulated by.
SEC FINRA and Department of Insurance
If an agent wants to represent more than one insurer which of the following would be true?
The agent must be appointed by each insurer
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in application?
The application contains material misstatements.
What is the cost of coverage based on for group life insurance?
The average age And ratio of men to women
Who does the spendthrift clause in a life insurance policy protect?
The beneficiary
What happens to the face amount of a whole life policy if the insured reaches the age of 100?
The face amount is paid to the insured.
A life insurance application, all of the following signatures will be required EXCEPT
The home office underwriter
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
Which of the following entities is considered the principle?
The insurer issuing a policy
As it relates to life settlements, the term "owner" means
The owner of the original life policy.
All of the following are general requirements of a qualified plan EXCEPT
The plan must be temporary.
Because of an injury, an insured has been unable to work for 9 months. He paid the policy premium for his life insurance for the first 6 months of disability, but didn't have to pay anything for the remaining 3 months, yet the policy remained in force. The policy includes
Waiver of premium
Which of the following types of insurance policies would perform the function of cash accumulation?
Whole life
Annuity Certain limit the amount paid by the annuity to a certain fixed
period or fixed amount
Agent R is charged with committing a crime in another state, and is sentenced to 1 year in prison. Who is required to report the charges to the Florida Department of Insurance?
Agent R
Which of the following is true of level term insurance?
It is temporary protection
If an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answers to those questions?
Never; the insurer has waived its right to those answers by issuing the policy
Which of the following best defines the unfair trade practice or rebating?
Offering an inducement of something of value not specified in the policy
A stock insurer is defined as an insurer
Owned by its stockholders
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?
Paid up additions
A life insurance company advertises several types of policies. At the end of the advertisement, there is a statement printed in small type explaining that coverage is provided by the guaranty association. Which of the following is true?
This is illegal
An agent who knowingly misrepresents material information for the purpose of including an insured to lapse, forfeit, change or Surrender a life insurance policy or annuity has committed an illegal practice known as
Twisting
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. one policies are issued by the same insurer, the premium rates are different based off of the insurance age. what practice does this describe?
Unfair discrimination
How long is the grace period for an individual life insurance policy?
1 month
Within how many days after receiving written communication of replacement must an existing insurer provide a policyowner with a policy summary?
10 days
An IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed?
10% bc it was opened before 591/2
How many days' notice must an insurer provide to an insured regarding the lapse of a policy due to outstanding loans?
30
How many days' notice must an insurer provide to an insured regarding the lapse of a policy due to outstanding loans
30 days
If a licensee changes his/her address, within how many days must the department be notified?
30 days
An insurer recently collected info from a senior consumer and used that info to make recommendations regarding insurance transactions. For how many years must this info be maintained after transaction has been completed?
5 years
An insurer recently collected information from a senior consumer, and used that information to make recommendations regarding insurance transactions. For how many years must this information be maintained after the transaction has been completed?
5 years
Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
Which statement below is incorrect regarding the type of term insurance that fits best with the applicants needs?
Applicants who may require a larger death benefit in the future should buy convertible term insurance.
Under which of the following conditions would life insurance proceeds be taxable by the federal government?
If there's a transfer for value
Which of the following terms refers to solicitation, negotiations, effectuation or advising related to an insurance contract?
Insurance transaction
As an insurer's field underwriter, a producer has all of the following responsibilities except
Issuing policies on behalf of the insurer
Which of the following best describes life annuity with period certain option?
It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary.
An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
Misrepresentation
Dividends received on participating life insurance policies are
Not taxable because they are a return of unused premiums
Among the applicants in the same class and life expectancy, which of the following factors can be used to determine premium rates?
Occupation
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
All of the following are true of annually renewable term insurance except
Proof of insurability must be provided at each renewal
S set up an individual retirement account that her employer is now contributing to. Her employer's contributions are not included in her gross income. What kind of retirement plan does S have?
Simplified Employee Pension (SEP)
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the shareholders and issue nonparticipating policies
Life insurance can provide which of the following ?
Survivor protection
When term insurance is added to the main policy to enhance the policy or provide added benefit or coverage, it's called a
Term rider
Which of the following statements regarding HIV testing is not true?
Test results must be sent to the Department of Insurance
All of the following are consideration in an insurance policy EXCEPT
The cash value in the policy.
In the state of florida, which of the following government entities is responsible for the administration and regulation of insurance?
The department of financial services
An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would become taxable?
The difference between the premiums paid and the cash value
Which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy?
They're received tax free
Failing to acknowledge and act reasonably promptly upon communications with respect to an insurance claim in violation of what insurance regulation?
Unfair claims settlement
A policyowner who purchases an individual insurance policy and then asks for a refund within 2 weeks after the policy was delivered will receive
A full refund of the premium.
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
A policy is reissued with a reduction in cash value
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will
Continue to increase
A whole life policy is surrendered for a reduced paid-up policy. the cash value in the new policy will
Continue to increase
Which of the following statements is true regarding SIMPLE plans?
Contributions and earnings are tax-deferred until funds are withdrawn.
Which distribution from a modified endowment contract would be taxable as income at the time received to the extent that the cash value of the contract immediately before the payment exceeds the investment in the contract?
Both partial cash surrender and policy loan
A producer advises a policy holder that he should replace his life insurance policy with another similar policy. The agent is advising this, however, for the sole purpose of earning a commission. What violation has the agent committed?
Churning (Churning is replacing insurance policies for the sole purpose of making a commission.)
Jay is receiving fixed amount benefit payments from his late wife's insurance policy. he was told that if he dies before all the benefits are paid, the remaining amount will go to the contingent beneficiary. What settlement option did Jay choose?
Fix amount
According to the Fair Credit Reporting act, all of the following statements are true EXCEPT
If an applicant is declined for an insurance policy, he she has no right to know what was in the report.
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
Immediately
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the
Insuring clause
Which of the following statements is incorrect concerning modified endowment contract (MECs)?
An MEC must always pass the 7-pay test
All of the following information needs to be included on an application for life insurance except
Health insurance policies in force
In social security blackout period, the surviving spouse will not receive benefits until the age of....
60
The entire contract includes all of the following except
A buyers guide
Which of the following would be required to become licensed as an insurance producer?
A customer service representative who solicits no more than one policy a year
Where are premiums from fixed annuities invested?
A general account
Which of the following indicates the person upon whose life the annuity income amount is determined?
Annuitant
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value?
Automatic Premium Loan option
In a variable life insurance policy, all of the following assets are held in the insurance company's general account except
Cash surrender values
Agents in the state are required to promptly report all of the following to the department except
Change in marital status
Which of the following elements of insurance contract requires payment of premium?
Consideration
An insurance mails an insurance policy to a new policy owner. When the insurer relinquishes control of the policy, the policy is considered
Delivered
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate conservation
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this?
Grace period
The provision that sets forth the basic agreements between the insurer and the insured and states the insurer is called the
Insuring clause
Life insurance creates an immediate estate. Which of the following best explains this statement?
The face value of the policy is payable to the beneficiary upon the death of the insured.
All of the following are advantages of a qualified retirement plan EXCEPT
The income at retirement is tax free.
Considering the principles of liquidity, how would the policy owner use today's Cash values in a life insurance policy?
Use it for emergency expenses
Which of the following types of insurance is investment based, has a level fixed premium, and a non guaranteed cash value?
Variable whole life
If an insured dies, and it is discovered that the insured misstated his or her age or gender the life insurance company will
Adjust the death benefit to what the premium would have purchased at the actual age or gender
Which of the following is a correct statement about annuities?
Fixed annuities do not provide protection against inflation
Which of the following statements describes one of the reasons individuals purchase life insurance
It creates an immediate estate
What is the purpose or key-person insurance?
To cover decreased business revenues as a result of the death of a key employee
Joe moved last year and forgot to notify the Department of its change of address. He was charged a $250 fine. This year, Joe moves again and forgets to notify the Department within the required time. What will Joes penalty be?
Minimum fee of $500 or suspension/ revocation of license
What does the application of contract of adhesion mean?
Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.
J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan?
Qualified
When one insurer buys insurance from another company to minimize the effects of catastrophic losses, they are
Reinsuring
Which of the following rules would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase New Life insurance?
Replacement rule
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT
Reports may be sent to anyone who requests one.
Which of the following types of policies would NOT be subject to Florida regulations on life insurance solicitation?
Annuities
A married couple purchases a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?
Payor benefit
An applicant for a disability insurance policy has a heart condition of which they are unaware of and therefore they answer no to the question pertaining to heart problems on their application. the answer is considered to be a
Representation
In a life insurance policy is purchased by someone who has no insurable interest in the insured, it is considered
STOLI.
All of the following statements about indexed whole life insurance are correct except
The policy face amount remains level throughout the life of the policy
Which of the following bears the investment risk in a variable life insurance policy?
The policy owner
If an applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriters approve the application.
In a group life policy with a death benefit of more than $50,000
Premium cost above $50,000 is taxable as income to the employee
To purchase insurance the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
What does the guaranty Association guard against ?
Insurer insolvency
The provision that sets forth the basic agreement between the insurer and the insured and states that the insurer's promise to pay the death benefit upon the insured's death is called the
Insuring clause
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.
All of the following statements about mutual insurance companies are correct EXCEPT
Policy dividends issued by mutual companies are guaranteed and not taxable.
