Life insurance study exam
Term life insurance provides
Temporary coverage
Which of the following is true regarding commission sharing by insurance agents?
Commissions can only be shared with a person authorized and licensed in the same line of authority.
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?
Need is predicted using the number of years until the insured's retirement
Attempting to determine how much insurance a family would require based upon their financial objectives is known as
Needs approach
A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will
Never receives less than 4% interest
Regular premium payments made to purchase an individual non qualified annuity are
Nondeductible
Regular premium payments made to purchase an individual nonqualified annuity are
Nondeductible
Regular premium payments made to purchase and individual non qualified annuity are
Nondeductible
Which of the following types of policies are issued by stock companies?
Nonparticipating
All of the following are true regarding the guaranteed insurability ride EXCEPT
The rider is available to all insureds with no additional premium
Which is true about a spouse term rider?
The rider is usually level term insurance
An insured has chosen joint 2/3 and survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
Which of the following is an example of a producer's fiduciary duty?
The trust that a client places in the producer in regard to handling premiums.
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
An individual has been making periodic premium payments on a annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
Deferred
Which of the following would NOT be considered an improper claims practice?
Denying a claim after proof of loss statements are completed and submitted by insureds
Under which of the following riders will the insurer both waive policy premium and pay monthly income to the insured if the insured is disabled?
Disability income benefit rider
Under which of the following riders will the insurer both waive policy premiums and pay monthly income to the insured if the insured is disabled?
Disability income benefit rider
All of the following statements are true regarding tax-qualified annuities EXCEPT
Employer contributions are not tax deductible
which of the following is correct regarding a 401(k) plan?
Employer may match the employee's contributions to the plan.
Which of the following is correct regarding a 401(k) plan?
Employer may match the employees's contributions to the plan
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
Which of the following nonforfeiture options would be automatically implemented by the insurer if none of the other options has been selected by the policyowner
Extended term
Which of the following nonforfeiture options would be automatically implemented by the insurer if none of the other options has been selected by the policyowner?
Extended term
What does "level" refer to in level term insurance?
Face Amount
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed Amount
Under which installment option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
Which of the following are the features of a variable life insurance policy?
Fixed premium, guaranteed minimum death benefit, separate accounts
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first
All of the following are business uses of life insurance EXCEPT
Funding against company's general loss
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection
Greatest
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
All of the following are characteristic of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants
Which of the following is true about warranties
They are guaranteed to be true
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
When an individual purchases insurance, what risk management technique is he or she practicing?
Transfer
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
Which of the following CANNOT be included along with illustrations used to sell life insurance?
Vanishing premium information
A policyowner wants to change the beneficiary designated irrevocable on a life insurance policy. What will the policyowner need?
Written consent of the current beneficiary
The interest earned on policy dividends is
taxable
An individual purchased a $100,000 joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100,000
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years
How long must insurers keep records of claims
6 years
Which of the following may share in the commissions from the sale of a life insurance policy?
A licensed life insurance agent of the same insurer involved with the sale of the transaction
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
When an annuity is written, whose life expectancy is taken into account?
Annuitant
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
In order for a nonresident licensee to become a resident producer in New York, the licensee must
Apply within 90 days of becoming a resident
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
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed
All of the following statements are correct regarding credit life insurance EXCEPT
Benefits are paid to the borrower's beneficiary
What does "liquidity" refer to in a life insurance policy?
Cash value can be borrowed at any time
In increasing and decreasing term policies, which policy component fluctuates during the policy term?
Death benefit
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Decreases
An agent selling variable annuities must be registered with
FINRA
A universal life insurance policy has two types of interest rates that are called?
Guaranteed and Current
A lucky individual who won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use provide thee benefits?
Immediate annuity
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
Implied
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
Joint life annuity
Which of the following is NOT a type of whole life insurance
Level term
In a single employer group plan, what is the name of the policy issued to the employer?
Master Contract
What is the definition of a unilateral contract?
One-sided: only one party makes an enforceable promise
Which of the following can surrender a deferred annuity contract?
Only the annuity owner
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT
Other insurance coverages
Traditional IRA contributions are tax deductible based on which of the following?
Owner's income
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
When the insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid.
Return of premium
Which type of life insurance policy generates immediate cash value
Single Premium
Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly?
The Producer
Which of the following is an example of liquidity in a life insurance contract?
The cash value available to the policyowner
In comparison to consumer reports, which of the following describes a unique characteristics of investigation consumer reports?
The consumer's associates, friends, and neighbors provide the report's data
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam
If an insurer withdraws a portion of the face amount in the form of acceleration benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
The death benefit will be smaller
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
If an insured continually uses the automatic premium loan option to pay the policy premium,
The policy will terminate when the cash value is reduced to nothing
Which of the following is NOT a characteristic of variable annuities
They offer guaranteed stock performance
For what reason may a life insurance producer backdate a life insurance policy?
To avoid an increase in premium rate for the insured
Which of the following products requires a securities license?
Variable annuity
Which of the following is a key distinction between whole life and variable universal life products?
Variable whole life has a guaranteed death benefit
When would a 20-pay whole life policy endow?
When the insured reaches age 100
Which of the following is NOT an example of a business use of life insurance?
Workers Compensation
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly
Which of the following is NOT true regarding a nonqualified retirement plan?
it needs IRS approval
If a certificate of appointment is terminated, a statement must be filed with the superintendent within
30 days
Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fall to preform contractual obligations due to financial impairment?
Insurance Guaranty Association
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
Jack has a a $20,000 life insurance policy on himself. He wants to insure the life of his 13 year-old daughter. According to New York law, what is the maximum amount of life insurance he can purchase on his daughter?
$50,000
A tornado that destroys property would be an example of which of the following?
A peril
Which of the following is NOT considered Business of Life Settlement?
A producer discusses the advantages of a universal life policy and how the flexible premium allows the owners to control the cash value and death benefit income
Who is included in the definition of an agent?
A producer who owns his own field office
If a company has a Simplified Employee Pension plan, what type of plan is it?
A qualified plan for a small business
Which of the following individuals must pass a written examination to be licensed as a life insurance agent
A resident of new york wishing to transact business in new york
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance?
AM Best
Steven prints a pamphlet to advertise business. In the pamphlet, he includes the full name of his insurance agency and the type of insurance that he offers. What else must he include?
Address of his principal office
If an individual's license has been revoked, how soon can he or she obtain a new license?
After 1 year of the revocation
All of the following information about a customer must be used determining annuity suitability EXCEPT
Beneficiary's age
How are state Insurance Guaranty Associations funded?
By their members - authorized insurers
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash Option
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
What characteristic makes whole life permanent protection?
Coverage until death or age 100
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
Defamation
When the inured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
Which of the following best describes the aleatory nature of an insurance contract
Exchange of unequal values
The authority granted to an agent through the agent's contract is referred to as
Express authority
An insurance company has published a brochure that inaccurately portrays the advantages of the a particular insurance policy. What is this an example of?
False advertising
The automatic premium loan provision is activated at the end of the
Grace period
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?
Income tax on distributions and no penalty
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installments for a fixed period
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option
Which of the following best describes MIB?
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
Joint-Life policy
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited Pay whole life
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit Rider
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
Permanent
Who might receive dividends from a mutual insurer?
Policyholders
Another name for a substandard risk classification is
Rated
Which services are associated with Standard & Poor's and AM Best?
Rating the financial strength of insurance companies
If an agent in another state wants to become an agent in new york. The other state gives the same privileges to new york agents wanting to be licensed in that state as it does its own agents. New York therefore, extends the privileges of its agents to the prospective agent of the other state. What is this called?
Reciprocity
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?
The insured may choose to convert to term or permanent individual coverage
A father owns a life insurance policy on his 15- year- old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21.
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
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal life
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
A domestic insurer issuing variable contracts must establish one of more
Separate accounts
Which of the following types of agent authority is also called "perceived authority"?
Apparent
When dividends are available to the owner of a participating policy, which of the following dividend options can the policyowner exercise?
Apply the dividends to reduce the next year's premiums
All of the following characteristics of a group considered in group underwriting EXCEPT
Medial Conditions
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account
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 consequences
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
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
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
How long is the grace period for an individual life insurance policy?
1 month
If a hearing is scheduled for a producer who has violated regulations regarding unfair trade practices, the Superintendent must send a prior notice within how many days of the hearing?
10 days
A whole life policy's cash value will equal the face amount when the insured reaches what age?
100
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
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%
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 Days
In an IRA rollover, the rollover must be completed within how many days of the time the funds are taken out of the first plan?
60 days
In and IRA rollover, the rollover must be completed within how many days of the time the funds are taken out of the first plan?
60 days
How long is a temporary license valid in New York
90 days
The New York Superintendent has the responsibility to make screech entity transacting insurance in this state remains solvent. Insurers are required to file a statement with the Superintendent
Annually on or before March 1st
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?
Annuity certain
Which of the following is NOT true of section 1035 policy exchange?
Any exchange made under section 1035 of the internal revenue code must be completed within 30 days
Under a universal life insurance policy, policyowners have a choice between what two types of premiums?
Minimum premium and target premium
An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?
Apparent
Because on agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
A STOLI policy
A striaght life policy has what type of premium?
A level annual premium for the life of the insured.
Which of the following best defines the owner of a life settlement contract?
A person who is selling the contract
If a term life policy id convertible, that means that at the end of the policy term, the policyowner may convert coverage to
A whole life policy
After an insured's death, the insurer determined that the insured misstated his age on the application for life insurance What action will the insurer likely take in this case?
Adjust the death benefit to the amount that the premium at the correct age would have purchased
After an insured's death, the insurer determines that the insured misstated his age on the application for life insurance. What action will the insurer likely take in his case?
Adjust the death benefit to the amount that the premium at the correct age would have purchased?
Which of the following is another term for an unauthorized insurer?
Admitted
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Which of the following actions would be considered an offer?
An applicant submitting the application
The minimum interest rate on an equity index annuity is often based on
An index like standard & Poor's 500
The death protection component of Universal Life Insurance is always
Annually Renewable Term
The death protection component of universal life insurance is always
Annually Renewable Term
Which dividends are available to the owner of a participating policy. Which of the following dividends options can the policyowner exercise?
Apply the dividends to reduce the next year's premiums
Employer contributions made to a qualified plan
Are subject to vesting requirements
SIMPLE Plans require all of the following EXCEPT
At least 1,000 employees
For which of the following reasons can the Department of Financial Services issue a temporary license?
Servicing existing business
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
What license or licenses are required to sell variable annuities?
Both a life insurance and a securities license
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time
Which of the following would qualify as a Section 1035 exchange?
Cash Value Life insurance to a cash value life insurance policy
Which of the following features of the Indexed Whole Life policy is NOT fixed?
Cash value growth
If an applicant for a life insurance policy is found to be substandard risk, the insurance company is most likely to
Charge a higher premium
Which of the following riders usually expires when the covered insured reaches a specific age?
Children's Term
A producer who fails to separate premium monies from his own personal fund is guilty of
Commingling
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
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common disaster clause
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
All of the following apply to defined benefit plans EXCEPT
Contributions are tied to the company profits
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term Policy
A long stretch of national economic hardship cases a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
Cost of living rider
Which of the following will NOT be an appropriate use of deferred annuity?
Creating an estate
Increasing and decreasing term policies, which of the following component fluctuates during the policy term?
Death benefit
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death benefit
An insured just got married and would like to purchase additional coverage existing life insurance policy. Which of the following policy riders will allow the insured to purchase additional coverage without evidence of insurability?
Guaranteed insurability
An insured just got married and would like to purchase additional coverage on his existing life insurance policy. Which of the following policy riders will allow the insured to purchase additional coverage without evidence of insurability.
Guaranteed insurability
Which of the following methods of calculating the amount of life insurance needs takes into account the insured's wages, years until retirement, and inflation?
Human Life value approach (HLVA)
An individual purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
Immediate
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
Incontestability clasue
What type of insurance would be used for a Return of Premium rider?
Increasing Term
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?
Inspection report
What are the two components of a universal policy?
Insurance and cash account
Which statement regarding insurable risk is NOT correct?
Insureds cannot be randomly selected
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement options should the policyowner chooses?
Interest only option
Which of the following is a characteristic of an equity indexed annuity?
Interest rates are often associated with a stock index
As a field underwriter, a producer is responsible for all of the following tasks EXCEPT
Issue the policy that is requested
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principal amount will be paid out
Which is INCORRECT concerning a section 457 Deferred Compensation plan?
It has a vesting requirement
Which of the following best describes annually renewable term insurance?
It is level term insurance
For federal tax purposes, which of the following is true regarding lump-sum life insurance benefits?
It is received tax free
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 statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, the payments stop. What settlement option did they select?
Joint and survivor
Variable whole life insurance is based on what type of premium?
Level Fixed
The form used to establish the terms for both parties when a person sells his life insurance policy to the 3rd unrelated person is called a
Life Settlement Contract
The form used to establish the terms for both parties when a person sells his life insurance policy to a 3rd unrelated person is called a
Life Settlement clause
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 person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract is the
Life settlement broker
your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
If an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to
Live at least to the age of the life expectancy
In whole life insurance, which of the following term describes features such as cash value and loan provisions?
Living benefits
In whole life insurance, which of the following terms describes features such as cash values and loan provisions?
Living benefits
The premium of a survivorship life policy compared to a joint life policy would be
Lower
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
When assessing needs for life insurance, an individual may use retention, which means
Maintaining assets at death
When assisting needs for life insurance, and individual may use retention, which means
Maintaining assets at death
One of the participating insurance policy issued by a mutual insurance company, dividends paid to policyholder are
Not taxable since the IRS treats them as a return of a portion of the premium paid
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease
All of the following affects the policy's loan value EXCEPT
Number of beneficiaries
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
One-year term option
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
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
The Medical Information Bureau (MIB) helps insurers compare medical information they have collected on a potential insured with the information received from
Other member insurers
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
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
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
A participating insurance policy may do which of the following?
Pay dividends to the policyowner
An insured purchased a life policy in 2010 and died in 2020. The insurance company discovers a that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
Pay the death benefit
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy
In variable life and variable universal life insurance policies, who decides where premiums will be invested?
Policyowner
The guaranteed association is formed to protect which of the following?
Policyowners
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death
Which of the following policy elements remains constant in Level, increasing and decreasing policies?
Premium
Which of the following will be included in a policy summary?
Premium amounts and surrender values
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex and occupation of each individual certificate holder.
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not tax deductible as a business expense
Which of the following is TRUE regarding a joint life policy?
Premiums is based on the average age of the insureds
Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility?
Promptly forwarding premiums to the insurance company
Term insurance pays the death benefit to the beneficiary if the insured dies while the policy is in effect, but pays nothing if the insured dies after the policy's cancellation or expiration. This is known as
Pure death protection
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?
Pure life
For which the following reasons can the Department of Financial Services issue a temporary license?
Servicing existing business
Which of the following practices would be allowed in regards to life settlements?
Sharing commissions with more than one licensed life settlement broker
Which type of life insurance policy generates immediate cash value?
Single Premium Whole life
Which of the following applicants would NOT qualify for a Keogh Plan
Someone who works 400 hours per year
Annuities can be used to fund which of the following?
Retirement plans
In insurance, the uncertainty of an individual sustaining a loss in the future is classified as a/an
Risk
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
Agent A offers a prospective client two tickets to a Yankees baseball game with the condition that the client will purchase a family life insurance policy. This practice is known as
Rebating
An agent who gives special favors or advantages in dividends or other benefits is guilty of
Rebating
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?
Reduction
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium
The policyowner pays for her life insurance annually. Until, now she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of Premium
An annuity pays a monthly amount for the remainder of the annuitant's life. If death occurs before the principal is exhausted, the remaining amount will be paid to a designated beneficiary. Which payment option has this annuitant selected?
Refund life
An insured committed suicide one year after his life insurance policy was issued. The insurer will
Refund the premiums paid
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance
Statements made by an applicant for a life insurance policy which are true to the best of one's knowledge are referred to as
Representations
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the consumer's complaint
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend
Straight life
Which of the following falls under an agent's fiduciary responsibilities?
Submitting premiums to the insurer
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor protection
Which of the following is called a "second-to-die" policy?
Survivorship life
All of the following would be different between qualified and non qualified retirement plans EXCEPT
Taxation on accumulation
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
Which of the following, when attached to a permanent life insurance policy, allows 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 members?
Term rider
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance to cover other family members?
Term rider
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
Which of the following would provide an underwriter with information concerning an applicant health history?
The Medical Information Bureau
Which of the following would provide an underwriter with information concerning an applicant's health history?
The Medical Information Bureau
Who has the authority to regulate the issuance and sales of variable contracts?
The Superintendent
A certificate of appointment is valid until any of the following EXCEPT
The agent becomes a nonresident licensee in another state
Which of the following characteristics applies to defined benefit plans but not defined contribution plans?
The amount of contributions made by the employer is determined by an actual formula.
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.
All of the following statements about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of returns
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate
A spouse was granted a temporary license for her deceased husband's agency on March 1st. On May 1 she processed an application for life insurance on a new applicant. Which of the following is true?
The application was processed without a valid license
In group life insurance policy, the employer may select all of the following EXCEPT
The beneficiary
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?
The cash value will be paid to the annuitant's estate
Which of the following statements about group life is correct?
The cost of coverage is based on ratio of men and women in the group?
An insured covered by a life insurance policy with an accidental death rider was injured in an accident and died 120 days later. The policy had $50,000 coverage with triple indemnity. What will the beneficiary receive?
The face amount
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's salary and years until retirement?
The human life value approach
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
The insured will need a written consent of the insurer
Which of the following are generally NOT covered when underwriting group insurance?
The insured's medical history
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 are true of a key person insurance EXCEPT
The plan is funded by a permanent insurance only
All of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only
Which of the following is NOT an IRS requirement for a qualified retirement plan?
The plan must favor shareholders
Which of the following is NOT an IRS requirement plan?
The plan must favor shareholders
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits
Who bears the investment risk in a fixed annuity?
The policyowner
Who bears the investment risk in variable life insurance products?
The policyowner
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans
All advertisements are the responsibility of the
insurer
According to New York law, hearings ordered by the superintendent must be
open to the public
