Life insurance
a person who willfully engages in an unfair claims practice or unfair method of competition must pay the commissioner how much?
$1,000-$5,000 for each violation
any licensee who fails to keep adequate books and records may have their license suspended for how long
1 to 6 months
the commissioner must give how many day notice of all hearings?
10 days written notice
modified endowment contracts (MEC) have what percentage IRS penalty for premature distribution
10%
IRs levies a ______ % penalty for cash surrenders on annuities, IRA, TSA and Keogh pans prior to age _____ unless the individual has died or become disabled.
10% 59 1/2
premature distributions may be made to a first-time homebuyer from an IRA without incurring a
10% penalty, subject to a lifetime dollar limit
a temporary license is good for how many days?
180 days
what is the prelicensing education requirement?
20 hours for each license
what is the continuing education requirement?
24 hours every 2 years. 3 hours must be ethics
replacement policies must contain a how many day free look period?
30 day free look
the commissioner serves how long in office?
4 years
copies of all records related to viatical statements must be kept for ___ years
5 years
paperwork related to completion of continuing education must be kept for how long?
5 years
records related to replacement life policies must be kept on file for how many years
5 years
an agent can share up to what percentage of their commission with another agent? Does the other agent have to be appointed by the paying insurer?
50% No
if a serving spouse inherits an IRA they myst start withdrawals no later than
April 1st of the year they reach age 72
person who knowingly obtains information about an individual from an or insurer under false pretenses is guilty of a
Class 1 misdemeanor
a person who commits a fraudulent act in connection with a viatical settlement is guilty of what type of felony
Class H felony
a person who attempts to obtain anything of value from another by false pretenses with the intent to cheat or defraud is guilty of a
Felony
All authorized life and health insurers must participate in what association?
Life and health insurance guaranty association
any question on an application used for ____ must be clearly marked as such
Marketing or research
selling insurance for an insurer a agent thought was property licensed but was not is a
Misdemeanor
a person who knowingly presents a fraudulent claim to an insurer is guilty of
a felony
an insurance agent who embezzles a clients monies is guilty of
a felony
a cashs urgenter where the amount received is more than the amount paid in premiums would cause
a taxable event
an insurer with a home office in another country
alien insurer
deferred annuities may be used to fund
an IRA
an Insurance contract is
an agreement between the insurer and the insured
an insurance company transacting business in North Carolina without a license is
an unauthorized insurer and is unlawful
IRAs may be funded with ________ but not with
annuities, whole life policies
premature distribution penalties are not waived due to
bankruptcy
in order to obtain an agents license one must...
be 18 years old, pass examination, complete pre-licensing training, be a good person, pay fees, submit an application to the commissioner
requiring that a borrower buy insurance as an condition to a loan is
coercion
when a clients funds are deposited with the general funds is
commingling
if an agents license is suspended or revoked it must be returned to?
commissioner
whenever an insurer knows that a person has violated the fraudulent claims provisions it is that persons duty to notify the
commissioner
every licensee myst report any change in residence or email address to ____________ within ____________ days. penalty for violating this requirement is a __________ administrative fee paid to _______________
commissioner, 10, $50, commissioner
if licensee is convicted in any court for any fine other than traffic violation, the licensee must notify who? how much time?
commissioner, within 10 days of the conviction date
Roth IRA are different from traditional iras in these ways
contributions are not tax deductible, but distributions are tax free do not have any required distribution rate
a licensed resident agent or broker doesn't need to __________ an application on behalf of a nonresident agent or broker
countersign
contributions to a traditional IRA will always be tax deductible if an individual and spouse arent
covers by a retirement plan at work
a limited representative could sell what?
credit life, travel accident or dental services coverages
an insurer with a home office in this state
domestic insurer
intimidating or discouraging a claimant from seeking legal advice would be a violation of
ethical standards
selling insurance for an insurer that is not properly licensed in North Carolina is a
felony
an insurer with a home office in another state
foreign insurer
premature distributions made from a deductible IRA from qualified educational expenses are exempt from
from the 10% penalty, not exempt from income tax
failure to pay child support, use of fraudulent practices and making an untrue statement on the license application are all
grounds for license suspension, revocation or refusal
if the commissioner finds that their is sufficient evidence to charge a person with a. criminal violation, what may they do?
have the person arrested
Terminally ill
having a sickness or illness that results in death in 24 months or less
an agent represents
insurer
MEC lose their favored tax treatment as life insurance since the IRS considers them to be
investments
if an insurance licensee is convicted of a criminal violation, what happens?
license is automatically suspended
viatical settlement providers and brokers must be
licensed
what would cause the 7 pay test to be applied again, and cause the policy to be classified as a modified endowment contract?
making a material change to a cash value life insurance policy
an agent who signs a blank policy is guilty of
misdemeanor and may be fined from $1,000 to $5,000
Unfair trade practices specific to North Carolina are
misrepresentation and false advertising of policies, defamation false financial statements, unfair discrimination, rebates and twisting
MEC stands for
modified endowment contracts
in the case of insurance applications, notice must be provided when?
no later than the policy delivery date when personal information is only collected from the applicant or public records or when personal information is collected from a source other than the applicant or public records
the direct transfer to Ira funds from one trustee to another is not
not taxable
dividends which are paid out by mutual insurers are not
not taxable to the policy owner
a person who willfully misstates information in any financial statement is guilty of
perjury
if an individual submits a written request for access to recorded personal information , the insurer must
permit the individual access to such information within 30 days
insurers may not discriminate against and applicant because of
race, color or national or ethnic orgin
offering a client something of value that is not specified in the policy is
rebate and illegal
an insurer cannot require that the insured use a ______ ________ for the repair of property damage
specific source
a person holding a resident insurance license moves out of state that person must
surrender their license to the commissioner within 30 days of terminating residence
a broker represents
the insured
a person who acts without the proper license may be deemed guilty of a misdemeanor and fined how much? how often?
$1,000-$5,000, each day violation occurs
the commissioner may order the payment of a monetary fine of __________ instead of _____________________________ a persons license
$100 and $1000 suspending or revoking
giving a special advantage as an inducement to buy insurance is
prohibited
distributions from a Roth IRA are not taxable if
the participant held the contract for at least 5 years and is at least age 59 1/2
in order to obtain a brokers license, the applicant must maintain a bond of how much?
$15000
a person who violated a cease and desist order may be fined up to how much?
$50,000
a producer that initiates an application must submit what to the insurer? to see what?
a statement signed by both the producer and the applicant, as to whether the applicant has existing policies or contracts
the commissioner is required to investigate all domestic insures how often
at least once every 5 years
the commissioner is required to report any violation of insurance law to who?
attorney general
a person holding a nonresident ,license that moves into the state is allowed to apply for a resident license without needing to
take relicensing training or pass the examination, as long as they apply within 90 days of establishing legal residence in the state.
Death benefits paid to beneficiaries are
tax free on all life insurance
surrending a life insurance policy for cash and using the proceeds to buy new life insurance policy from a different insure is a
tax-differed 1035 exchange
on cash surrender of a life insurance policy, amounts received in excess of premiums paid in are
taxable
dividends received by the owner of stock in a stock company are
taxable as ordinary income. dividends are never taxed as capital gains
MEC that is classified as life insurance but fails the 7-pay test would have
taxable loans and withdrawals
business may be conducted under an assumed name so long as
the commissioner is notified of the assumed name prior to use
when an insurer will be collecting personal information from a source other than the applicant or public records, the applicant must be advised as to the insurers information practices no later than when?
the date when personal information is collected
MEC are classified that way for how long?
the life of the contract
the commissioner of insurance is elected by
the people of North Carolina
the commissioner is required to review what reports of the insurers
their annual report filings
what will happen to a persons license who is not in compliance with continuing education requirement? how can it be reinstated?
their license will lapse proper completion of education within 120 days of the persons previous compliance year.
using blindness or deafness as an underwriting factor is
unfair discrimination
unfair trade practice include
unfair methods of competition, unfair or deceptive act or practices and unfair claims settlement practices
upon written request for access to recorded personal information, the insurer or agent must what?
within 30 business days inform the individual of the nature of the information and permit the individual to receive a copy of it
insurers and agents must provide ______ to all applicants or policyholders
written notice of information practices
universal life is a combination of
1 year renewable term and a cash value
whole life and limited pay life both reach maturity at the same age which is
100
limited pay whole life policies do not mature until the insured reaches age
100 years
in a noncontributory plan, how many employees must participate?
100% of all eligible employees
life insurance polices are incontestable after they have been in force for how long?
2 years
suicide is covered after how many years for the beneficiary to receive benefits?
2 years
ordinary life insurance has a grace period of how many days?
30 days
conversion from a group life policy to an individual policy is permitted for how many days
31 days regardless of health
in a contributory plan how many employees must participate?
75% of all eligible employees
failure to repay a loan will have a permanent effect on what?
Cash value accumulation
when a policy owner lists a group of people as beneficiaries it is know as what kind of designation?
Class designation
life insurance proceeds create an immediate ________ for the beneficiary
Estate
to sell variable products, an agent must be registered with
FINRA
what annuity has the least amount of risk?
Refund annuity
universal life benefits are
Transparent (stand alone)
the waiver of premium rider does not pay?
a cash benefit to the insured
policy modifications must be in writing and signed by who?
a company officer
fixed annuities guarantee what? backed by who?
a fixed rate of return and are backed by the state guaranty fund
a flexible premium fixed deferred annuity has
a flexible premium, minimum guaranteed rate of return and a death benefit equal to its cash value
a defined benefit qualified plan is structured based on what?
a pre-determined benefit amount
what is the name of the assignment that allows the policy owner to transfer their ownership to another person?
absolute assignment
this rider will pay proceeds prior to death for those with terminal illness
accelerated benefits rider
if the insured has misstated their age on the policy application, the insurer will do what?
adjust the premiums and benefits according to correct age of the insured
group insurance participation requirements help to avoid what
adverse selection
partial surrender are usually allowed in what policies?
annuities, universal life and variable life policies
a loan may be taken from a whole life policy as soon as when?
as soon as it develops a cash value
the face amount of a mortgage protection life insurance policy will decrease at the same rate as what
at the same rate as the mortgage balance declines
coverage requirement in a qualified plan is
broad range of employees
whole life benefits are
bundled
how are deferred annuities purchased
by making periodic payments over a period of time
if the insured names an individual as their irrevocable beneficiary how can they change it?
cannot change without the beneficiarys consent
in group life insurance, the employees receive _____________________ which summarizes coverage and lists the employees beneficiary
certificate of insurance
this rider is utilized by an employer who wants to transfer a key person life insurance policy from on key person to another
change of insured rider
what assignment lets owners. of life insurance policies temporarily assign their policy to a bank as collateral for a loan?
collateral assignment
this beneficiary will receive the policy proceeds if the primary beneficiary dies before the insured
contingent beneficiary
under this provision, it is assumed that the insured died last
contingent beneficiary
convertible term is
convertible based upon the current or attained age of the insured
Although Keogh plans are available to self-employed sole proprietors, partners, and their employees, its not available to
corporate officers
when adding a children's term rider to a life insurance policy, all of the insured children are
covered for a single, flat premium charge, no matter how many
what type of policy is used to provide credit life insurance
decreasing term
A plan where a employee forgoes current pay in exchange for future benefits is known as a
deferred compensation plan
employers may use annuities to fund what
deferred compensations plan, not corporate pension plans
when can a deferred annuity be surrendered
during its accumulation period
If the insured understates their age, it is ____________ that is reduced
face amount
a combination policy that automatically covers all family members including new born children at no extra premium charge is
family policy
if an annuitant selects a pay-out option that will pay for a specified period of time, the annuitant has seated what option?
fixed-period option
universal life have premiums that are
flexible
universal life offers
flexible premiums and a minimum guaranteed rate of return
adjustable whole life policy may be suitable for someone with what type of income
fluctuating
new life insurance policies are contestable for material misrepresentation for how long
for the first 2 years
extended term is the automatic
forfeiture option
fixed annuities go into what kind of account
general account
whole life policies must contain a table that shows their
guaranteed cash value at the end of each year for the first 20 years
guaranteed purchase benefit is also know as
guaranteed insurability rider
this riders allows the insured to increase coverage periodically without a physical exam
guaranteed insurability rider
variable products have no guarantees and are not backed by who
guaranty fund
an irrevocable beneficiary has what type of rights over the policy
has a vested interest in the policy
a single premium policy has what type of cash value
immediate cash value
an immediate annuity begins paying out when?
immediately after the initial premium is paid
upon policy reinstatement what 2 clauses start over
incontestability and suicide
on a annually renewable level term policy, the premium will
increase every year, the face amount remains the same
the return of premium rider and the return of cash value rider are both what types of term coverage
increasing term
the rate of return an insurer pays on fixed annuities might not keep up with what
inflation
all annuities are
insurance products
universal life insurance is also known as
interest sensitive whole life
if an outstanding policy loan, plus interest, exceeds the cash value of the policy what will happen to the policy?
it will lapse
the death benefit on an annuity during the accumulation period is equal to what
its cash value
straight or traditional whole life have what type of premium?
level premium that will provide coverage to age 100
this rider is added to a parents life policy in order to insure that child
level term rider
in a level term policy the premium and the amount of coverage are
level throughout the term
annuities are the opposite of
life insurance
endowments provide
life insurance protection
annuities are often used as what?
life insurance settlement options
annuities systematically
liquidate an este over a period of time
credit life is usually not used for what protection
mortgage protection
decreasing term is the type of insurance provided in
mortgage redemption insurance
Are policy loans taxable?
no
can a group be formed just to buy insurance?
no
can a life insurance policy that was surrendered for cash be reinstated?
no
if the owner of a 10 year period certain dies 13 years later will the beneficiary receive anything?
no
what kind of benefits will a beneficiary receive for a suicide occurring in the first 2 years
no benefit is payable, but all premiums are refunded
a revocable beneficiary has what type of rights over the policy?
no vested rights under a life policy
does a life income annuity have a beneficiary? how risky is this choice?
no, it is the riskiest choice
If a policy with a cash value lapses for nonpayment, the client has 60 days from the Premium Due date to select this?
nonforfeiture
in group life insurance benefits ________ taxable to the beneficiary should the employee die
not
premiums paid for individual life insurance and key person life insurance are
not tax deductible nor are the benefits taxed
survivorship life insurance is commonly used in estate planning to the death benefit of the policy can be used to
pay estate taxes when due
if an insured buys a policy and dies one month later, the insurer must
pay the claim
when the parent paying the premium on a Childs life insurance policy dies, the provision that allows the premium to be waived is what?
payor benefit rider
this annuity pays remaining benefits to beneficiary after policy owners death
period certain annuity pay-out option
No notice is required in connection with a policy renewal if
personal information is collected only from the policyowner, from public records or a notice was given within the previous 24 months
term insurance is renewable without
physical examination, up to a certain age.
offering an applicant shares of stock in the company as an inducement to buy is
prohibited
if an insured whose policy has lapsed wants it back the insured can apply for what?
reinstatement
most annuities are used for what
retirement, long term investments
this type of beneficiary can be changed at any time
revocable beneficiary
if the policy proceeds are paid out in a lump sum, this clause will not apply
spendthrift
life annuity start or stop making payments at death?
stops at death
joint life annuities start or stop making payments at death? 1st or 2nd person?
stops at the first death
life insurance e policy owners who gift their policies to a charity are entitled to
tax deduction in the year of the gift
this rider is added to a parents policy to cover the life of a child, which terminates at age 18 unless the child converts the rider to permanent coverage.
term life rider
the automatic premium loan rider can be added to a whole life policy but not to what policies?
term or credit life policies
if an insured dies during the accumulation period of an annuity what happens
the account value will be paid to the beneficiary who is responsible for taxes on interest earned
policy limits on credit life cannot exceed what
the amount of the loan
on group credit life, who is the policyholder and who is the beneficiary
the creditor is both the policyholder and the beneficiary
what decreases on a decreasing term policy
the face amount
adjusting the premium paid on an adjustable who life policy will affect what
the face amount and vice versa
when an insured dies during the grace period without paying the premium due, what will get paid to the beneficiary
the face amount minus the overdue premium
a joint life policy pays out when
the first insured dies
if a terminated employee dies within the grace period of their employer provided group life policy without converting, how much will the beneficiary get?
the full death benefit will be paid to the beneficiary
a life insurance policy provision that allows coverage to continue even if the premium is not paid on time is know as
the grace period
the misstatement of age provision runs for how long?
the life of the policy
who is responsible for paying the premium
the owner of the annuity
a joint surveyor policy pays out when
the second insured dies
survivorship life pays when
the surviving insured dies
children cannot buy an IRA uness
they have earned income
if the commissioner denies an initial application for an agent, what can the applicant do?
they may request a review within 30 days of receiving notification of denial
if a person purchases a whole life policy and adds a return of premium rider what kind of coverage will they have?.
they will have level coverage from whole life policy and increasing coverage from the rider
insurers take the money from annuitants who die to soon and pay it to who
those who live too long
what is the purpose of insurance information and privacy protection act>
to establish standards for the collection and use of information gathered by insurers and agents
_____ is not an unfair claims settlement practice
twisting
making a statement misrepresenting or incompletely comparing the terms of any policy to induce a policyholder to drop an existing policy is
twisting
in a traditional whole life policy how long are premiums due
until age 100
the free look period starts when?
upon policy delivery
a life insurance policy that invests its cash values in equities is known as
variable life
a life insurance policy that has a flexible premium and allows the policy owner to self-direct their cash values into equities is known as
variable universal life
a universal life policy that has an investment component is
variable universal life
a rider that will pay the premium on behalf of a disable insured until the insured either recovers or dies
waiver of premium rider
the owners right section of a policy state what?
who can change the beneficiary, who can take a loan, and who can take cash surrender
term insurance may be converted to
whole life, but not the reverse. conversion based on insureds attained age
taking a partial surrender on a universal life policy allows the policy owner to do what
withdraw some of the cash value without paying tax on the interest
if the interest settlement option is selected is it subject to taxes?
yes
