Insurance Test

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation..

be fined a sum of $1000

An insured has the right to return the new insurance policy for a full refund during the...

free-look period

if a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

modified endowment contract

An adjustable life policyowner can change which of the following features?

the coverage period

The main difference between immediate and deferred annuities is

When the income payments begin.

What kind of policy issues certificates of insurance to insureds?

Group insurance

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

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

Stock

What type of annuity activity will cause immediate taxation of the interest earned?

Surrendering the annuity for cash

All of the following employees may use a 403(b) plan for their retirement except

The CEO of a private corporation.

As it pertains to IRA eligibility, which of the following would NOT be considered earned income?

Unemployment benefits

Which of the following are NOT fundable by annuities?

Death Benefits

What is the major difference between a stock company and a mutual company?

Ownership

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration

The commissioner of insurance supervises and regulates the insurance affairs in the state of california and is chosen by

The people

Which concept is associated with "exclusion ratio"?

annuities payments

An insured committed suicide one year after his life insurance policy was issued. The insurer will

Refund the premiums paid.

Which of the following would be considered refund of unearned premium?

Dividends

Which allows an individual to contribute to an IRA

Earned income

all of the following benefits are available under social security except

welfare benefits

What type of insurance would be used for a return of premium rider?

Increasing Term

Which of the following persons represents several insurance companies but owns the records of the policies sold?

Independent Agent

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

Which of the following is TRUE about a class designation?

Beneficiaries are not identified by name.

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period.

The right of the applicant to rescind the policy for a full refund of all premiums...

Must be clearly stated in the policy's text

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why

The purpose of the group was to purchase life insurance

An insured wants to change from an annual premium mode to a monthly premium mode. Which of the following true>

This change can only be made on the policys anniversary?

an insured has a life insurance policy from a participating company and receives quarterly dividends. he has instructed the company to apply the policy dividends to increase the death benefit. the dividend option that the insured has chosen is called

paid up additions

To which of the following products does the Replacement Regulations apply

Whole life insurance

For a retirement plan to be qualified, it must be designed for whose benefit?

employees

Which nonforfeiture option has the highest amount of insurance protection?

extended term

If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?

$3000

The minimum number of credits required for partially insured status for social security disability benefit is

6 credits

All of the following would be considered rebating except

An agent misrepresents policy benefits to convince a policyowner to replace policies

Which of the following is a primary difference between a life and disability analyst and a life agent?

An analyst receives compensation from his client, and the agent receives compensation from the insurance company.

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

When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?

Distributions are taxable

Which special policy combines decreasing term insurance with whole life insurance to provide the insureds family with a monthly income upon the death of the insured while maintaining permanent coverage until the end of the income payments

Family Income Policy

both universal life and variable life have a 1. flexible premium 2. level fixed premium 3. decreasing premium 4. increasing premium

Flexible Premium

"Discontinuance" is a term used to describe the termination of what type of insurance?

Group

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is an MEC.

An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. Which of the following is true?

It will be liable for penalties of no less than $30,000 and no more than $300,000

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

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

Which of the following is authorized to transact insurance on human lives?

Life-Only Agent

all of the following topics may be included in the continuing education requirement for long term care insurance except

Sales techniques and overcoming client objectives in the purchase of long-term care insurance

Which of the following is the most accurate concerning the Commissioner's term of office?

Serves 4 year terms, limited to not more than 2

During the accumulation period in a non qualified annuity, what are the tax consequences of a withdrawal?

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2

Which of the following best describes taxation during the accumulation period of an annuity?

Taxes are deferred

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step?

The agent must provide a replacement notice to the applicant

An agent may satisfy the continuing education requirement by attending any course approved by the Commissioner, as long as...

The course satisfies the minimum time requirements for continuing education credit.

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third Party Ownership

California law requires an insurance company's dividends be credited

To participating policies on the anniversary date of the policy provided all premiums are current.

An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?

the interest will continue to accumulate tax deferred

which of the following is not a factor in determining eligibility for social security benefits

occupation

What is the penalty for IRA distributions that are below the required minimum for the year?

50%

The maximum penalty for failure to print an individual agents license number on printed documents is

$1000

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.

A tax-sheltered annuity is a a special tax-favored retirement plan available to

Certain groups of employees only

Which of the following best describes what policy dividends are?

Distribution of excess funds

Which of the following best describes earned surplus?

Insurer's unassigned funds

One of the advantages of a family life insurance policy that provides coverage for children is that it

May be converted to permanent insurance for their children without requiring evidence of insurability

all of the following are responsibilities of every long term care insurer in California except

Provide enough business to solicit long-term care insurance

An insured pays 1200 annually for her life life insurance premium. The insured applies this years 300 worth of accumulation dividends to the next years premium thus reducing it to 900. What option does this describe

Reduction of premium

The annuity owner dies during the accumulation period of his annuity. The cash value of his annuity exceeds the premiums he paid. There is no named beneficiary. What is true?

The cash value will be paid to the annuitants estate.

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner does not amend the beneficiary designation, what will happen to the policy's death benefit?

The insured's estate.

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

Which of the following statements regarding deferred compensation funds is INCORRECT?

They are qualified plans

An employee quits her job where she has a balance of $10,000 in her qualified plan. if she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other

A natural person that is employed to aid an insurance agent or insurance broker in the transacting of insurance business other than life insurance transactions is called

An insurance solicitor.

Which of the following best describes

Both the principal and interest will be liquidated over a selected period of time.

Which of the following must an insurer obtain in order to transact insurance in a given state?

Certificate of Authority

An agent with an active license cannot act as a broker unless

He does not have an appointment with the company that he is brokering

Which of the following persons would not lose all of their coverage due to a discontinuance of their emplyers group medical policy

A disabled employee or dependent

Which of the following entities or individuals evaluates requests for payment by insureds after a loss has occurred?

Claims Department

all of the following are true regarding the insurance of group life insurance to labor unions except

Members cannot be excluded from coverage on the basis of insurability

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest is an example of

Twisting

social security was created to provide for all of the following except

Unemployment

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

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called

1035 exchange. In accordance with Section 1035 of the Internal Revenue Code, certain exchanges of life insurance policies and annuities may occur as nontaxable exchanges.

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

what is the waiting period on a waiver of premium rider in life insurance policies?

6 months

A long stretch of national economic hardship causes a 7% rate of inflation. A policy owner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider cause this change?

Cost of Living Rider

Which of the following is NOT a legitimate use of annuities by businesses?

Creating a tax shelter

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

Which of the following is an eligibility requirement for Social Security disability income benefits?

Fully insured status

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.

If a life policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement.

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do?

Pay the death benefit

An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will...

Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer

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

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit.

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?

They can covert their coverage to permanent life insurance without evidence of insurability

All of the following are true regarding the guaranteed insurability rider except

This rider is available to all insureds with no additional premium

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

Which of the following statements best describes the effect the Accelerated benefit provision would have on the benefits paid to the beneficiary? a. it will not affect the benefits paid to the beneficiary b. it will reduce the benefits by 70% c. it will increase the benefits paid to the beneficiary d. it will decrease the benefits paid to the beneficiary

it will decrease the benefits paid to the beneficiary

Which type of beneficiary is changeable at any point?

revocable

Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updated at least

semiannually

within how many days of termination of employment must an employer give notice of the employees right to convert group insurance to individual

15 days

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders?

2.5%

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least..

30 days

An International Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) Plan (TSA)

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

50% tax on the amount not distributed as required

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

Which of the following is true of a qualified plan?

D) It has a tax benefit for both employer and empoloyee

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

The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called

Life income with period certain.

Which of the following statements is INCORRECT concerning an IRA?

Married individuals must contribute into one account for both spouses, up to a specified amount for each person.

What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences?

Section 1035 Policy Exchange

Which of the following would be the beneficiary in credit life insurance?

The creditor

An agent has completed 30 hours of continuing education by the end of a license period instead of the required 24 hours. What will happen to the 6 hours in excess?

They will be carried over into the next licensing period.

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his

attained age

What percentage of a companys employees must take part in a noncontributory group life plan?

100%

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called

Cost of living rider

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse may receive retirement benefits?

Blackout period

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

Which of the following is another term for the accumulation period of an annuity?

Pay-in Period

all of the following statements are true concerning debtor groups except

the amount of insurance on the life of any debtor may exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor

In a group life insurance policy, the employer may select all of the following EXCEPT

the beneficiary

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for

An administrative penalty of no less that $5,000 and no more the $50,000 per violation

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability

Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits

$50,000

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?

100% participation of members is required in noncontributory plans

Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees?

30 days

Which of the following is the required number of participants in a contributory group plan?

75%

j applied for a life insurance policy on January 10th. The policy was issued January 31. j's agent was vacationing at the time the policy was issued, so j did not receive the policy until February 18. j decides that he does not want the policy. when would j need to return to the insurer in order to receive a full refund of premium paid? 1. February 28th, or 10 days after the time the policy is delivered 2. the time varies from one policy to another 3. it was already to late when j received the policy because the 10-day free-look period has expired 4. anytime, because the agent did not deliver the policy promptly

1.

Every individual life insurance policy must provide for a free-look provision that last for at least...

10 days

The provision in a life insurance policy that provides for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury is called

Accelerated benefit provision

If an annuitant dies during the accumulation period, which benefit will be included in the annuitants estate

Accumulated cash value

In which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contract with the insurer?

Direct Response System

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.

If an agent unwittingly gives a client incorrect information, what professional insurance would pay for losses or defend the agent against any resulting lawsuits?

Errors and Omissions

Which of the following is true regarding a policy with a face value less than $10,000?

It it's returned during the free look period, the agreement will be void.

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant.

Which of the following is true regarding a single life settlement option?

It provides income the beneficiary cannot outlive

Which of the following is not correct regarding false statements by a person engaged in the business of insurance?

Oral statements cannot be considered fraud.

Which of the following are generally NOT considered when underwriting group insurance?

The insureds medical history

What is the official name for the Social Security program?

old age survivors disability program

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