Life insurance Exam

Anyone who violates the Insurance Code of Texas may be fined up to

$25,000

The commissioner of insurance issued a Cease and Desist Order to an agent. If agent wishes to consent the charges in court, how many days after the order was issued does the agent have to make the request?

30 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefit rider. Which of the following is true regarding taxation of the accelerated benefit?

A portion of the benefit up to the limit is tax free; the rest is taxable income

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance

To which of the following situations does the Replacement Regulation apply?

A whole life policy reissued with reduction in cash value

To which of the following situations does the Replacement regulation apply?

A whole life policy reissued with reduction in cash value.

All of the following statements about continuing education requirement in this state are true EXCEPT

All licensed agents must comply by January 1 of even-numbered years

When an annuity is written, whose life expectancy is taken into account?

Annuitant

Which of the following is the basic source of information used by the company in the risk selection process?

Application

Employer contributions made to a qualified plan

Are subject to vesting requirements (Qualified plans must have a vesting option)

Which member of a corporation or partnership are required to obtain an individual insurance agent's license in order for the association to be licensed?

At least one officer or partner and any other person acting as an agent

Which of the following is a generic consumers publication that expires life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

an insured recieves an annual life insurance dividend check. what term best describes this arrangement?

Cash option

The type of policy that can change from one that does accumulate cash value to one that does is a

Convertible term policy

The type of insurance sold to a debtor and designed to pay the amount due on loan if the debtor dies before the loan is repaid is called

Credit life

The term "Fixed" in a fixed annuity refers to all of the following EXCEPT

Death Benefit

Which of the following actions is NOT in violation of the Unfair Claims Settlement practice act?

Denying an unsubstantiated claim

All of the following statements concerning dividends are true EXCEPT

Dividend amounts are guaranteed in the policy

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

In the Executive Bonus plan, who is the owner of the policy, and who pay the premium?

Executive is the owner, and the executive pays the premium

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

What are two components of a universal policy?

Insurance and cash account

An applicant for a license in Texas must include a statement with his application that provides information about all the following EXCEPT

Intending to apply for another license

The policyowner wants to makes sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but the principal will be paid to their children when they reach a curtain age. What settlement option should the policyowner choose?

Interested only option

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

As a field underwriter, a producer is responsible for all the following task EXCEPT

Issue the policy that is requested

As a field underwriter, a producer is responsible for all of the following tasks ECCEPT

Issue the policy that is requested.

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

Which of the following is true about the mandatory free look in Life insurance policy?

It commences when the policy is delivered

Which of the following is TRUE of a qualified plan?

It has a tax benefit for both employer and employee.

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies

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

Modified Endowment Contract

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report

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

Notice Regarding Replacement

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers at the time that the insured had misstated information about her insurance history on the application. What will the insurer do?

Pay the death benefit

For which of the following actions can an agent's license be suspended or revoked?

Rebates of premium

According to the state nonforfeiture law for life insurance policies, insurers must offer at least on or the following nonforfeiture option EXCEPT

Reduction of premium

The regulation a regarding replacement apply to which of the following?

Renewable term

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement options

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?

Size of each installment

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation

Which of the following, when attached to a permanent life insurance policy, allow the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family member?

Term rider

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of a 20% withholding tax.

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

Upon death of the insured, the primary beneficiary discovers that the insured choose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit.

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies

A temporary license holder can receive commission from a sale made to all of the following EXCEPT

The license holder's sister-in-law

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company

Which of the following best defines the "owner" as it pertains to settlement contract?

The policyowner of the life insurance contract

The responsibility of making certain that an application for insurance is filled completely, correctly, and to the best of his or her knowledge is the responsibility of whom?

The producer

An insured had chosen joint and 2/3 survivors as the settle option. What does this mean for the beneficiary?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution.

What is the purpose of a disclosure statement in life insurance policies?

To explain features and benefits of a proposed policy to the consumer

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

a) Conditions. *** b) Consideration. c) Legal purpose. d) Offer and acceptance. Conditions are part of the policy structure. Consideration is an essential part of a contract.

A universal life insurance policy is best described as a/an

annually renewable term policy with a cash value account

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

mutual

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

refund the premiums paid

Which of the following is NOT true regarding a Variable Universal Life policy?

the death benefit is fixed

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

unilateral