Insurance

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

$2,500

On June 1, 2004 G takes out a $20,000 Whole Life insurance policy with an Accidental Death and Dismemberment rider. On July 15, 2005 G intentionally overdoses on sleeping pills and takes her own life. What will G's beneficiary receive as a death benefit?

$20,000

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a:

$25,000 individual whole life policy

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000

An producer who violates a cease and desist order may, after a hearing, be fined up to

$500

Under the suicide clause, a life insurance claim cannot be denied due to suicide after a period of ___ ____ from the policy's effective date.

1 year

All of the following statements about traditional individual retirement accounts are false EXCEPT

10% penalty is applied to withdrawals before age 59 1/2

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

In Colorado, a life insurance applicant has __ days after policy delivery for a full refund of premium if not satisfied for any reason.

15days

What year was the McCarran-Ferguson Act enacted?

1945

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

Renewing a producer's license requires __ hours of continued education every 2 years

24 hours

An insurer that terminates a producer's appointment must inform the Commissioner within how many days?

30 days

One becomes eligible for Social Security disability benefits after having been disabled for:

5

Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?

5

When replacing an existing life insurance policy, the replacing insurer must notify the existing insurer within

5 business days

How long must a replacing insurer maintain the records of a replacement transaction?

5 years

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

A Loss-Purchase Buy and Sell agreement among three partners, funded with individual life insurance, would require how many policies?

6

Which of the following annuities pays benefits based on units rather than specific dollar amounts?

A Variable annuity

If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase:

A Whole Life Policy with an Other Insured Rider

Which of the following is an example of defamation?

A brochure including an untrue statement regarding a competitor's ability to pay claims

Which of the following statements regarding the Notice Regarding Replacement of Life Insurance is CORRECT?

A copy of the notice must be signed by the applicant and submitted with the application

Which statement is TRUE regarding a Variable Whole Life policy?

A minimum guaranteed Death benefit is provided

Which of the following statements about noncontributory employee group life insurance is FALSE?

A minimum number of employees is required to participate

Which of the following potential insurance sales would be subject to replacement regulations?

A new policy that causes an existing life insurance policy to be surrendered

Which of the following statement is CORRECT regarding insurable interest in a life insurance contract?

A person generally is considered to have an unlimited insurable interest in himself or herself

Select the appropriate response Which of the following is CORRECT regarding a producer's fiduciary responsibility with client's funds?

A producer may never commingle personal funds with funds paid by or to a client

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policyowner, C is the insured, and ABC is the beneficiary

Which provision is NOT a requirement in a group life policy?

Accidental

Which of the following types of policies pays a benefit if the insured goes blind?

Accidental Death & Dismemberment (AD&D)

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)

Accidental Death and Dismemberment rider (AD&D)

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

Aleatory

An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called:

An installment Refund annuity

Which premium schedule results in the lowest cost to the policyowner?

Annual

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n):

Anti-Money Laundering violation

When can a policyowner change a revocable beneficiary?

Anytime

A life insurance applicant realized he failed to disclose material medical history and calls the producer. Any changes made to the application must be initialed by the

Applicant

An incomplete life insurance application submitted to an insurer will result in which of these actions?

Application will be returned to the writing agent

How does the Commissioner attain this position?

Appointed by the Governor

Traditional individual retirement annuity (IRA) distributions must start by:

April 1st of the year following the year the participant attains age 70 1/2

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:

Bilateral

Which of these is NOT considered to be a cost connected with an individual's death?

Business expenses

A Whole Life Insurance Policy endows when the:

Cash value equals the death benefit

Which statement about a whole life policy is correct?

Cash value may be borrowed against

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

A person who is insured within a group contract will be given a:

Certificate

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child

S is covered by a whole life policy. Which insurance product can cover his children?

Child term rider

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider

What type of employee welfare plans are not subject to ERISA regulations?

Church plans

N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?

Claim will be denied

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

Collateral assignment

Which of the following is NOT a problem when existing life insurance is replaced with new coverage?

Comprehensive coverage may increase under the new policy

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?

Conditional receipt

Which of the following consists of an offer, acceptance, and consideration?

Contract

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

Contributory

A producer that only sells insurance to family members is said to be engaging in

Controlled Business

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

Conversion

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term

Who is not eligible to receive commissions from the sale of an insurance product?

Corporate executive

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

From what point must the insurer pay interest on the proceeds of a death claim?

Date of Death

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing Term

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term

A Family Income Policy is a combination of Whole Life and

Decreasing Term insurance

Additional coverage can be added to a Whole Life policy by adding a(n):

Decreasing term rider

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

Circulation of a maliciously critical statement about an insurer's financial condition meant to damage the insurer's reputation or business is called

Defamation

Which of the following is an example of a misrepresentation?

Describing a universal life policy as a security

When recommending the purchase or exchange of an annuity, a producer must determine the suitability of the purchase by performing all of the following EXCEPT

Determining the marital status of the applicant

Which of the following does Social Security NOT provide benefits for?

Dismemberment

How are Roth IRA distributions normally taxed?

Distributions are received tax-free

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner's life

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Employee

K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?

Endowment at Age 65

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Equity index insurance

Which of the following is an important underwriting principle of group life insurance?

Everyone must be covered in the group

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Exclusion

Term insurance has which of the following characteristics?

Expires at the end of the policy period

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policy's cash value

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the:

Fair Credit Reporting Act

What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?

Fair Credit Reporting Act

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed Deferred

N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities?

Flexible Installment Deferred

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

Which requirement must be met for an association to be eligible for a group life plan?

Group was formed for a purpose other than acquiring insurance

Which of the following words may be used in the advertisement of life insurance or annuities?

Guaranteed

Which of these is NOT a reason for purchasing life insurance on the life of a minor?

If both parents were to die, it would provide death benefits to the child

In regards to representations or warranties, which of these statements is TRUE?

If material to the risk, false representations will void a policy

When may the Commissioner issue an emergency cease and desist order?

If there is suspicion of an unauthorized person engaging in insurance business without being licensed

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n):

Immediate annuity

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?

Income taxes plus a 10% penalty tax on $30,000

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

Who makes the legally enforceable promises in a unilateral insurance policy?

Insurance Company

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

Insured

All of these statements about the Waiver of Premium provision are correct, EXCEPT:

Insured must be eligible for Social Security disability for claim to be accepted

Ultimately, who is responsible for a producer-generated advertisement?

Insurer

Variable annuities may invest premiums in each of the following, EXCEPT:

Insurer's corporate business account

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

A life insurance arrangement which circumvents insurable interest statutes is called

Investor Originated Life Insurance

Which of these arrangements allows one to bypass insurable interest laws?

Investor-Originated Life Insurance

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?

Irrevocable

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

In Colorado, which of the following is true regarding the commingling of an insured's funds with the funds of the producer?

It is never okay

Which of the following statements is CORRECT about the period in which a Term Policy can be converted?

It varies according to the contracts

Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?

Joint Life

An engineering firm that would suffer financially from the death of a project manager should purchase a:

Key Person Life Policy

L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances?

L's spouse dies at age 66

Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?

Legal Purpose (Insurable Interest)

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

Life Annuity with Period Certain

Which of these are NOT an example of a Nonforfeiture option?

Life Income

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?

Life settlement contract

Which of these is NOT relevant when determining the amount of personal life insurance needed?

Local unemployment rate

Which of these is an element of a Single Premium annuity?

Lump-sum payment

A producer license may be suspended or revoked if the producer is found to be engaging in

Misrepresentation

A policyowner is allowed to pay premiums more than once a year under which provision?

Mode of Premium

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is:

Modified Premium Life

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for:

Modified Whole Life

Which of the following statements is CORRECT about accelerated death benefits?

Must have a terminal illness to qualify

All of these statements concerning Settlement Options are true, EXCEPT:

Only the beneficiary may select

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends

A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?

Paid-Up Additional Insurance

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium

Which of these statements concerning an Individual Straight Life annuity is accurate?

Payments are made to an annuitant for life

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit rider

Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?

Payor clause

Which of the following best describes a contingent beneficiary?

Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:

Policy Loan provision

The underwriting process involves all of these, EXCEPT for:

Policy loan

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will be fully refunded

Who elects the governing body of a mutual insurance company?

Policyholders

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

Policyowner

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

Which of these describe a participating life insurance policy?

Policyowners are entitled to receive dividends

Select the appropriate response Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction

A policyowner is able to choose the frequency of premium payments through what policy feature?

Premium Mode

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if the payor becomes disabled

Which of the following actions is NOT possible with a Universal Life policy?

Premiums may be applied as a credit against income tax

Which of these is NOT a type of agent authority?

Principle

If a producer chooses to conduct business under an assumed name, when must notification be given to the Commissioner?

Prior to using the assumed name

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to K's estate if P dies within a specified time

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit to a named beneficiary

Which of the following is required for a life insurance Lapse Notice?

Reason stated why the policy will lapse

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called:

Reinstatement

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement provision

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:

Representations

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

Which of the following is a duty of the Commissioner?

Reviewing and approving license applications

J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?

Revocable

Equity indexed annuities are invested in which of the following:

S&P 500

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n):

Straight Life annuity

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Term Life

Which of these life insurance riders allows the applicant to have excess coverage?

Term rider

The USA Patriot act was signed in to law as a response to

The 9/11 terrorist attacks

The investment gains from a Universal Life Policy usually go toward:

The Cash Value

C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most?

The Cost

Which of the following factors affects the amount of monthly disability benefits payable under Social Security?

The amount of the benefits available from other sources

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

If an annuity is terminated prior to beginning of the income payment period, the contract owner receives:

The contract surrender value at that time

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

The employee

J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?

The gross premium is higher on a monthly payment mode as compared to being paid annually

A policy of adhesion can only be modified by whom?

The insurance company

Which statement regarding the Change of Beneficiary provision is true?

The policyowner can change the beneficiary

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

What type of reinsurance contract involves two companies automatically sharing their risk exposure?

Treaty

Which of the following is a characteristic of a variable annuity?

Underlying equity investments

All of these are considered to be a benefit under Social Security, EXCEPT for:

Unemployment

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

Unilateral

Life and health insurance policies are:

Unilateral contracts

A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?

Universal Life

A(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.

Variable

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the Contestable period and proven to be material

When is it appropriate for a producer's spouse to be the primary beneficiary on an applicant's life insurance policy?

When insurable interest exists

Which situation allows the producer to also be the beneficiary on a client's application for life insurance?

When insurable interest exists

When does a life insurance contract become effective if the initial premium is not collected during the application process?

When insurer receives initial premium from the producer

At what point does an informal contract become binding?

When one party makes an offer and the other party accepts that offer

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole Life

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?

Whole life policy with other insured rider

Upon request, when must the Colorado Supplement to the Summary of Benefits and Coverage Form be provided?

Within 7 business days

The Commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances EXCEPT

Writing Controlled Business

A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:

a fraternal benefit society

When a minor is designated as the sole primary beneficiary,

a guardian will be court-appointed in the event of a death claim

A fiduciary responsibility is defined as

a relationship of special trust and confidence when a person is entrusted with another's funds

A qualified profit-sharing plan is designed to:

allow employees to participate in the profits of the company

Group life insurance policies are generally written as:

annually renewable term

To be eligible for Social Security disability benefits, an employee must be unable to perform:

any occupation

When may the Commissioner conduct an examination of an insurance company?

as often as deemed necessary

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance

The automatic premium loan provision is designed to:

avoid a policy lapse

A life insurance application must be signed by all of these, EXCEPT:

beneficiary

According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud EXCEPT

certificates of authority

All of the following are considered a form of advertisement EXCEPT

communication or materials used within an insurer's own organization

Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.

conditional

The incontestable clause allows an insurer to

contest a claim during the contestable period

What type of group insurance plan involves employees sharing the cost?

contributory plan

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be:

converted to an individual permanent policy at an individual rate

If a producer completes an insurance application, collects the initial premium, and issues the appropriate receipt,

coverage will be contingent upon the insurer's underwriting policies

A variable insurance policy

does not guarantee a return on investment accounts

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)

exclusion

Taking receipt of premiums and holding them for the insurance company is an example of:

fiduciary responsibility

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect, EXCEPT:

free-look period has expired

All of the following penalties apply to anyone giving intentional false testimony during an insurance examination EXCEPT

guilty of a felony

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

increase face amount

A life insurance policy would be considered a wagering contract WITHOUT:

insurable interest

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:

insurable interest in the proposed insured

Employer noncontributory group life policies must allow for all of the following EXCEPT

insured can determine the benefit amount

Quarterly premium payments increase the annual cost of insurance because

interest to the insurer is decreased while the administrative costs are increased

what is a warranty?

is a statement guaranteed to be true

When a claim has been denied, the insurer must

issue a statement to the policyowner explaining the coverage, provision, or laws on which denial was based

In addition to suspending/revoking licenses and issuing fines, the Commissioner has the authority to do all of the following EXCEPT

issue prison sentences

Credit Life insurance is:

issued in an amount not to exceed the amount of the loan

What kind of premium does a Whole Life policy have?

level

An employer that offers a qualified retirement plan to its employees is eligible to:

make tax-deductible contributions to the plan

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

mandatory income tax withholding on the transfer amount

To be valid, a group life insurance policy

may not be issued to a group formed solely for the purpose of obtaining insurance

A verbal or written statement which misleads a policy's features, benefits, or coverage is considered

misrepresenation

Which of these is NOT considered to be an element of an insurance contract?

negotiating

In an individual retirement account (IRA), rollover contributions are:

not limited by dollar amount

As a condition to be approved for a loan, a creditor may require the borrower to

obtain an insurance policy through an insurer of the borrower's preference

If an applicant for an annuity refuses to provide suitability information, the producer should

obtain the consumer's signed statement documenting his or her refusal to provide suitability information

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the:

policy proceeds

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a:

profit-sharing plan

If a producer offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy, the producer is committing the illegal act of

rebating

If an insurer is authorized to conduct business in another state and wishes to conduct business in Colorado, it must

receive a certificate of authority from Colorado

In Colorado, all of the following are considered unfair trade practices EXCEPT

replacement

Interest on life insurance proceeds is

required if the claim was not paid within 30 days of the date insurer received the claim

The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called

reserves

Which of the following is an example of rebating?

returning a portion of a premium as inducement to purchase insurance

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

Licensing is required for all of the following EXCEPT

selling prepaid legal services

If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a

separate insurance trust account

When a life insurance underwriter is determining insurability, it is illegal to base these decisions on

sexual orientation

Colorado's replacement rules apply to all of the following types of insurance EXCEPT

single premium whole life

Insurance policies are offered on a "take it or leave it" basis, which make them

take it or leave it

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:

the amount of coverage being converted

A noncontributory group term life plan is characterized by:

the entire cost of the plan is paid for by the employer

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

A license is deemed to be used for controlled business if during any 12-month period

the licensee's total premiums on controlled business exceeded the total premiums on all other business

The Consideration clause of an insurance contract includes:

the schedule and amount of premium payments

An insurer cannot deny a claim unless

there is a reasonable explanation of the claim

At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?

upon completion of the application

A term life insurance policy matures:

upon the insured's death during the term of the policy

The part of a life insurance policy guaranteed to be true is called a(n):

warranty

When must insurable interest be present in order for a life insurance policy to be valid?

when the application is made

If an annuity application was not taken in person, an insurer must provide the applicant a Buyer's Guide

within 5 business days of the insurer receiving the application