Life License Exam
The Insurance Director shall examine every authorized insurer. How long must insurers keep records pertaining to the insurance transactions under the license? A) 7 years B) 1 year C) 3 years D) 5 years
3 years
Notice of a hearing for a cease and desist order must be given at least how many days in advance? A) 15 B) 30 C) 7 D) 10
7
What documentation grants express authority to an agent? A) Agent's contract with the principle B) Agent's insurance license C) Fiduciary contract D) State provisions
Agent's contract with the principle
Which of the following insurance providers must be nonprofit and sell insurance only to its members? A) Service B) Mutual C) Reciprocal D) Fraternal
Fraternal
Which of the following entities is not an insurer but an organization formed to provide insurance benifits for members of an ffiliated lodge or religious organization? A) Stock company B) Reciprocal association C) Fraternal benifit society D) Mutual company
Fraternal benifit society
In a direct rollover, how is the money transferred from one plan to the new one? A) From the participant to the new plan B) From the original plan to the original custodian C) From the trustee to the trustee D) From the trustee to the participant
From the trustee to the trustee
Why is an equity indexed annuity considered to be a fixed annuity? A) It is not tied to an index like the S&P 500 B) It has a guaranteed minimum interest rate C) It has modest investment potential D) It has a fixed rate of return
It has a guaranteed minimum interest rate
Which of the following is NOT true regarding policy loans? A) An insurer can charge interest on outstanding policy loans B) A policy loan may be repaid after the policy is surrendered C) Money borrowed from the cash value is taxable. D) Policy loans can be repaid at death.
Money borrowed from the cash value is taxable.
What is the primary purpose of a 401(k) plan? A) Life insurance distribution B) Retirement C) Education funds D) To receive dividends over a certain period
Retirement
Annuities can be used to fund which of the following? A) Estates creation B) Retirement plans C) Variable life insurance D) Group life insurance
Retirement plans
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A) FINRA registration B) A securities license C) A life insurance license D) SEC registration
SEC registration
Traditional IRA contributions are A) Deducted based on the income level B) Never tax deductible C) Partially tax deductible depending on the income level D) Tax deductible
Tax deductible
Which of the following insurance options would be considered a risk-sharing arrangement? A) Surplus lines B) Reciprocal C) Stock D) Mutual
Reciprocal
Which is true about a spouse term rider? A) The rider is decreasing term insurance B) Coverage is allowed up to age 75 C) The rider is usually level term insurance D) Coverage is allowed for an unlimited time
The rider is usually level term insurance
How many hours of Ethics must a producer complete as part of continuing education every 2 years? A) 2 B) 3 C) 4 D) 5
3
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? A) $10,000 B) $7,000 C) $3,000 D) $13,000
$3,000
Within what time period can a producer reinstate a lapsed license without having to pass a written examination? A) 90 days B) 6 months C) 3 years D) 12 months
12 months
What is the minimum age requirement for applicants for insurance license? A) 19 B) 18 C) 21 D) 16
18
The equity in an equity index annuity is linked to A) The returns from teh insurance company's seperate account B) The annuitant's individual stock portfolio C) The insurance company's general account investments D) An index like Standard & Poor's 500
An index like Standard & Poor's 500
Under the 401(k) bonus or thrift plan, the employer will contribute A) All of the money to the plan B) 30% of what the employee contributes C) 75% of what the employee contributes D) An undetermined percentage for each dollar contributed by the employee
An undetermined percentage for each dollar contributed by the employee
An insured recieves an annual life insurance dividend check. What term best describes this arrangement? A) Accumulation of Interest B) Cash option C) Reduction of Premium D) Annual Dividend Provision
Cash option
Which of the following are true regarding payment of claims by an insurer? A) If a claim investigation is extended beyond the initial period, the insurer must keep the claimant informed of the progress every 30 days B) Claims must be either paid or acknowledged within 30 days of notification C) Insurers must investigate all claims within 30 days of the receipt of notification D) Upon an inquiry, the insurer must furnish a response to the Director within 30 days
Claims must be either paid or acknowledged within 30 days of notification
Which is TRUE about the cash surrender nonforfeiture option? A) The policy remains active for some time after the policyholder opts for cash surrender B) The policyholder receives the original cash value of the policy C) Funds exceeding the premium paid are taxable as ordinary income D) After the cash surrender, the insured is covered for a grace period of 1 month
Funds exceeding the premium paid are taxable as ordinary income
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? A) Neither principal nor interest B) Principal only C) Interest only D) Both principal and interest
Interest only
When a beneficiary receives payments consisting of both principle and interest portions, which parts are taxable as income? A) Neither principal nor interest B) Principal only C) Interest only D) Both principal and interest
Interest only
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? A) It is a flat fee determined by the annuity owner when the annuity is purchased B) It will increase as the accumulation period increases C) It is a percentage of the cash value and decreases over time D) It is always 7% of the cash value
It is a percentage of the cash value and decreases over time
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? A) Whole Life B) Ordinary Life C) Joint Life D) Decreasing Term
Joint Life
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? A) Graded Premium Life B) Limited-pay Life C) Variable Life D) Adjustable Life
Limited-pay Life
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A) Must be advised that a copy fo the report is available to anyone who requests it. B) May sue the reporting agency in order to get inaccurate data corrected. C) Must be informed of the source of the report D) Are entitled to obtain a copy of the report from the party who ordered it.
Must be informed of the source of the report
All of the following are factors that an underwriter could use to select and classify risk EXCEPT A) Morals B) Occupation C) Avocation D) National origin
National origin
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 disovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? A) Pay the full death benefit and refund excess premium B) Pay a reduced death benefit C) Pay the full death benefit D) Pay nothing; there was a misrepresentation on the application.
Pay a reduced death benefit
All the following are examples of risk retention EXCEPT A) Copayments B) Self-Insurance C) Premiums D) Deductibles
Premiums
Who may contribute to an HR-10 plan? A) Manager of a store B) Corporate executive C) Parner with at least 5% ownership D) Self-employed plumber
Self-employed plumber
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a A) Settlement option B) Nontaxable exchange C) Nonforfeiture option D) Rollover
Settlement option
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called A) Modified Endowment Contract (MEC) B) Level term life C) Graded premium whole life D) Single premium whole life
Single premium whole life
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable? A) Annuitant B) Spouse C) Charitable Organization D) Dependents
Spouse
Who establishes the fees that must be paid in conjunction with an application for an insurance license? A) The insurer B) A group of producers C) A group of reinsurers D) The Director
The Director
What authority issues a Cease and Desist Order? A) Federal Board of Insurance Fraud B) The Director of the Department of Consumer and Business Services C) Law Enforcement Officials D) National Association of Insurance Commissioners (NAIC)
The Director of the Department of Consumer and Business Services
If the annuitant dies during the accumulation period, who will receive the annuity benefits? A) The insurance company B) The annuitant's estate C) The beneficiary D) the annuity owner
The beneficiary
Which of the following describes the tax advantage of a qualified retirement plan? A) Distributions prior to age 59 1/2 are tax deductible B) Employer contributions are deductible as a business expense when the employee receives benefits C) Employer contributions are not taxed when paid out to the employee D) The earnings in the plan accumulate tax deferred
The earnings in the plan accumulate tax deferred
Which of the following best describes what the annuity period is? A) The period of time from the accumulation period to the annuitization period B) The period of time during which money is accumulated in an annuity C) The period of time from the effective date of teh contract to the date of its termination D) The period of time during which accumulated money is converted into income payments
The period of time during which accumulated money is converted into income payments
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A) The length of coverage B) The premium C) The amount of insurance D) The type of investment
The type of investment
In a survivorship life policy, when does the insurer pay the death benefit? A) Upon the last death B) Upon the first death C) Half at the first death, and half at the second death D) If the insured survives to age 100
Upon the last death
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? A) Withdrawn amounts are taxed on a first in, last out basis B) Taxes are deferred on withdrawn amounts, but a flat penalty is charged C) Taxes are deferred on withdrawn amounts D) Withdrawn amounts are taxed on a last in, first out basis
Withdrawn amounts are taxed on a last in, first out basis
How long must insurers keep records of transactions under the license? A) 3 years after the policy expiration B) 5 years after policy issue C) 7 years D) Permanently
3 years after the policy expiration
How long must insurers keep records of transactions under the license? A) 3 years after the policy expiration B) 5 years after the policy issue C) 7 years D) Permanently
3 years after the policy expiration
How long must records associated with an insurance policy be kept? A) Until the insurance company is no longer in business B) 10 years C) 3 years after the policy terminates D) 5 years after the policy terminates
3 years after the policy terminates
An insurance producer moves into a new house. How many days does he have to notify the Director of his address change? A) 30 days B) He does not need to notify the Director because the change of address involves his residence, not his business C) 10 days D) 15 days
30 days
In Oregon, how long does a producer have to notify the Director of a change in location or name? A) 7 days B) 10 days C) 30 days D) 45 days
30 days
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) A) SEP B) 403(b) Plan (TSA) C) Keogh Plan D) Roth IRA
403(b) Plan (TSA)
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? A) Consumer's guide B) SEC C) AM Best D) NAIC
AM Best
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? A) Subrogation B) Warranty C) Aleatory D) Adhesion
Aleatory
In an annuity, the accumulated money is converted into a stream of income which time period? A) Conversion period B) Annuitization period C) Payment period D) Amortization period
Annuitization period
Which of the following scenarios will incur a 10% tax penalty on distributions? A) Distributions are made prior to the age of 70 1/2 B) Distributions are made to the beneficiary C) Distributions are made as part of a qualified rollover D) Distributions are made on a policy before age 59 1/2
Distributions are made on a policy before age 59 1/2
A tax-sheltered annuity is a special tax-favored retirement plan available to A) Certain groups depending on factors such as race, gender, and age B) Certain groups of employees only C) Anyone D) Certain age groups only
Certain groups of employees only
Which of the following would be an example of an insurer participating in an unfair competition practice of discrimination? A) Charging different premium rates to the inusred in different insuring classes B) Charging the insured higher premiums based on their life expectancy C) Charging the insured higher premiums based on their race D) Making malicious statements about the insured based on their race.
Charging the insured higher premiums based on their race
Which of the following is true regarding taxation of dividends in participating policies? A.) Dividends are not taxable B.) Dividends are taxable only after a certain amount is accumulated annually C) Dividends are taxable in some life insurance policies and nontaxable in others D) Dividends are considered income for tax purposes.
Dividends are not taxable
An insurer recieves a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? A) Underwriter's Report B) Inspection Report C) Medical Information Bureau's report D) Agent's Report
Inspection Report
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? A) Fixed amount option B) Interest only option C) Life income with period certain D) Joint and survivor
Interest only option
When an applicant purchased a life insurance policy, the agent dated the application 4 month prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would A) Eliminate pre-existing conditions B) Help him meet a sales quota for that period C) Lower the insured's premium D) Shorten the contestability period
Lower the insured's premium
The purpose of insurance regulations is to A) Keep producers honest B) Make insurance companies pay taxes C) Promote the public welfare D) Make insurance statutes uniform between states
Promote the public welfare
If a Cease and Desist Order is issued, what must the violator do? A) Quit all insurance transactions. B) Quit the actions stipulated in the order C) Suspend all insurance transactions until the insurer can be investigated for possible violations D) Quit selling insurance
Quit the actions stipulated in the order
Which services are associated with Standard & Poor's and AM Best? A) Storing medical information collected by insurance companies B) Rating the financial strength of insurance companies C) Investigating violations of the Fair Credit Reporting Act D) Providing employment histories for investigative consumer reports
Rating the financial strength of insurance companies
Which type of retirement account allows contributions to continue beyond 70 1/2 and does not force distributions to start at age 70 1/2? A) Standard IRA B) Traditional IRA C) Roth IRA D) Flexible IRA
Roth IRA
Which of the following statements about a suicide clause in a life insurance policy is TRUE? A) Suicide is covered for a specific period of years and excluded thereafter B) Suicide is covered as long as the policy is in force C) Suicide is excluded as long as the policy is in force D) Suicide is excluded for a specific period of years and covered therafter
Suicide is excluded for a specific period of years and covered therafter
After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called? A) Inflation adjustment B) Surrender charge C) Termination penalty D) Bail-out charge
Surrender charge
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? A) The owner's estate will receive the money paid into the annuity B) The insurance company will retain the cash value and pay back the premiums to the owner's estate C) The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. D) The beneficiary will receive the greater of the money paid into the annuity or the cash value
The beneficiary will receive the greater of the money paid into the annuity or the cash value
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then A) The benefit is subject to the exclusionary rule B) IRS has no jurisdiction C) The benefit is received as taxable income D) The benefit is received tax free
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? A) The premium value will be paid to the annuitant's estate B) All benefits will be forfeited C) The cash value will be paid to the state government D) The cash value will be paid to the annuitant's estate
The cash value will be paid to the annuitant's estate
What is the clause that describes the method of paying the death benefit in the event that the insuredd and beneficiary are both killed in the same accident? A) Spendthrift Clause B) Settlement Clause C) Nonforfeiture Clause D) Common Disaster Clause
Common Disaster Clause
Which of the following is licensed solely to advise insureds about their policies? A) Broker B) Actuary C) Consultant D) Agent
Consultant
Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? A) Any federal report B) Consumer report C) Inspection report D) Agent's report
Consumer report
Which of the following would NOT be considered an unfair and deceptive practice? A) Controlled business B) Rebating C) Defamation D) Misrepresentation
Controlled business
Which of the following wound NOT be considered an unfair and deceptive practice? A) Rebating B) Defamation C) Misrepresentation D) Controlled business
Controlled business
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A) False advertising B) Defamation C) Coercion D) Misrepresentation
False advertising
What is the penalty for IRA distributions that are below the required minimum for the year? A) 10% B) 25% C) 50% D) 60%
50%
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay? A) 15% for early withdrawal B) 50% tax on the amount not distributed as required C) No penalties, since the owner is older than 59 1/2 D) 10% for early withdrawal
50% tax on the amount not distributed as required
Which of the following persons is required to hold a producer license? A) A person who takes messages related to claims B) A person who administers employee benefits C) A person who negotiates insurance contracts D) A person who creates insurance advertisements
A person who negotiates insurance contracts
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? A) A notice regarding replacement B) A privacy notice C) A buyer's guide D) A policy summary
A policy summary
Which of the following is an example of a producer's fudiciary responsibilities? A) A producer helping clients to file claims B) A producer doing a review of his client's coverage C) A producer offering additional coverage to his client D) A producer promptly forwarding premiums to the insurance company
A producer promptly forwarding premiums to the insurance company
Who can make a fully deductible contribution to a traditional IRA? A) A person whose contributions are funded by a return on investment. B) An individual not covered by an employer-sponsored plan who has earned income C) Anybody: all IRA contributions are fully deductible regardless of income D) Someone making contributions to an educational IRA
An individual not covered by an employer-sponsored plan who has earned income
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially abl eto buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? A) Term insurance only B) Permanent insurance only C) Universal life insurance only D) Any form of life insurance
Any form of life insurance
All the following are personal uses of life insurance EXCEPT A) Estate creation B) Cash accumulation C) Buy-sell agreement D) Survivor protection
Buy-sell agreement
If the director finds a license in violation of the Insurance Code on unfair practices or methods of competition, he/she will issue a A) Rebate B) Criminal penalty C) Cease and Desist Order D) Complaint record
Cease and Desist Order
A long stretch of nathional economic harship causes 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? A) Value Adjustment Rider B) Return of Premium Rider C) Inflation Rider D) Cost of Living Rider
Cost of Living Rider
A rider that may be attached to a life insurance policy that will adjust the face amoutn based upon a specific index, such as the Consumer Price Index, is called A) Accelerated benefit rider B) Living need rider C) Payor rider D) Cost of living rider
Cost of living rider
Which of the following will NOT be an appropriate use of a deferred annuity? A) Accumulating retirement funds B) Accumulating funds in an IRA C) Funding a child's college education D) Creating an estate
Creating an estate
Which of the following is NOT an example of insurable interest? A) Business partners in each other B) Employer in employee C) Child in parent D) Debtor in creditor
Debtor in creditor
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? A) Universal life B) Whole life C) Decreasing term D) Variable life
Decreasing term
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) A) Flexible Annuity B) Immediate Annuity C) Equity Indexed Annuity D) Variable Annuity
Equity Indexed Annuity
The requirement that producers must account for all insurance funds collected, and are not permitted to commingle those funds with their own funds (without the expressed consent of the insurance company) is known as A) Premium accountability B) Fiscal responsibility C) Accepted accounting principal D) Fiduciary responsibility
Fiduciary responsibility
Under which of the installment options does the annuitant select the amount of each payment, and the insurer determines how long they will pay the benefits? A) Variable amount B) Fixed period C) Fixed amount D) Variable period
Fixed amount
What provision in a life or health insurance policy extends coverage beyond the premium due date? A) Free look B) Automatic premium loan C) Waiver of premium D) Grace period
Grace period
A Universal Life insurance policy has two types of interest rates that are called A) Option A and Option B B) Fixed and Variable C) Minimum and Targe D) Guaranteed and Current
Guaranteed and Current
Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose A) Section 457 Deferred Compensation Plan B) 403(b) plan C) 401(k) plan D) HR-10 (Keogh Plan)
HR-10 (Keough Plan)
An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? A) He will have to pay a penalty regardless of his age. B) He will not have to pay a penalty, regardless of his age C) He cannot withdraw money from his MEC before age 59 1/2. D) He will have to pay a penalty if he is younger than 59 1/2.
He will have to pay a penalty if he is younger than 59 1/2.
An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? A) He will have to pay a penalty regardless of his age B) He will not have to pay a penalty, regardless of his age C) He cannot withdraw money form his MEC before age 59 1/2 D) He will have to pay a penalty if he is younger than 59 1/2.
He will have to pay a penalty if he is younger than 59 1/2.
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A) Implied B) Apparent C) Assumed D) Express
Implied
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? A) Capitol gains tax on distributions plus 10% penalty B) Income tax on distributions and no penalty C) Income tax on distributions plus 10% penalty D) Capitol gains on distributions and no penalty
Income tax on distributions and no penalty
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? A) Cash refund B) Installments for a fixed period C) Installments for a fixed amount D) Installment refund
Installments for a fixed period
The mode of premium payment A) Is the method used to compute the cash surrender value of the policy B) Does not affect the amount of premium paid C) Is defined as the frequency and the amount of the premium payment D) Is the factor that determines the amount of dividends in a policy
Is defined as the frequency and the amount of the premium payment
Which of the following best describes a misrepresentation? A) Making a deceptive or untrue statement about a person engaged in the insurance business B) Making a maliciously critical statement that is intended to injure another person C) Discriminating among individuals of the same insuring class D) Issuing sales material with exaggerated statements about policy benefits
Issuing sales material with exaggerated statements about policy benefits
Which of the following is TRUE of a qualified plan? A) It may allow unlimited contributions B) It has a tax benefit for both employer and employee C) It does not need to have a vestng schedule D) It may discriminate in favor of highly paid employees.
It has a tax benefit for both employer and employee
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A) The insurer determines the amount for each payment B) It is a life contigency option C) It will pay the benefit only for a designated period of time D) The payments are not guaranteed for life.
It is a life contigency option
If a retirement plan or annuity is "qualified" this means A) It accepts after tax-contributions B) It is noncancellable C) It is approved by the IRS D) It has a penalty for early withdrawal
It is approved by the IRS
Which of the following is NOT true regarding the Certificate of Authority? A) It is equivalent to an insurance lisence B) It is issued by the state department of insurance C) It is issued to group insurance participants D) It may be necessary for transacting business in a specific state.
It is issued to group insurance participants
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? A) It is only taxable if the cash value exceeds the amount paid for premiums B) It is not considered to be taxable C) It is taxable only if it exceeds the amounts paid for premiums by 50% D) It is automatically taxable
It is only taxable if the cash value exceeds the amount paid for premiums
Which of the following is NOT true regarding a nonqualified retirement plan? A) Earnings grow tax deferred B) It needs IRS approval C) Contributions are not currently tax deductible D) It can discriminate in benefits and selecting participants
It needs IRS approval
Concerning Juvenile Life insurance, which of the following statements is INCORRECT? A) It can be a limited premium payment policy B) Juvenile LIfe is classified as any life insurance written on the life of a minor C) Juvenile Life is classified as any life insurance purchased by a minor. D) Usually a parent or guardian is the applicant for insurance on the life of a minor
Juvenile Life is classified as any life insurance purchased by a minor.
Which of the following is an IRS qualified retirement program for the self-employed? A) Buy and Sell agreemnet B) 401(k) C) Keogh D) Split Dollar
Keogh
Which of the following is an IRS qualified retirement program for the self-employed? A) Keogh B) Split Dollar C) Buy and Sell Agreement D) 401(k)
Keogh
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? A) Life annuity with period certain B) Increasing term C) Limited pay whole life D) Interest-sensitive whole life
Limited pay whole life
Which of the following best describes the unfair practice of defamation? A) Assuming the name and identity of another person B) Issuing false advertising material C) Refusing to deal with other insurers D) Making derogatory oral statements about another insurer's financial condition
Making derogatory oral statements about another insurer's financial condition
Which of the following is NOT true regarding policy loans? A) A policy loan may be repaid after the policy is surrendered B) Money borrowed from the cash value is taxable C) Policy loans can be repaid at death. D) An insurer can charge interest on outstanding policy loans.
Money borrowed from the cash value is taxable
Which of the following premium modes would result in the highest annual cost for an insurance policy? A) Monthly B) Quarterly C) Semi-annual D) Annual
Monthly
Which of the following best describes gross annual premium? A) Annual loading B) Basic insurance rate plus commisions C) Expense premium D) Net premium plus expenses
Net premium plus expenses
Producer A is prosecuted for a crime. He must notify the Director within what time frame after the initial pretrial hearing date? A) 10 days B) No later than 30 days C) 3 months D) Immediately
No later than 30 days
Which of the following can surrender a deferred annuity contract? A) A deferred annuity cannot be surrendered B) Only the annuity owner C) Only the insurance company for nonpayment of premiums D) The beneficiary after the owner's death
Only the annuity owner
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? A) The Consideration Clause B) Assignment Rights C) Owner's Rights D) The Entire Contract Provision
Owner's Rights
Which option is being utilized when the insurer accumulates dividends at interest and then used the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? A) Dividend Accumulation option B) Paid-up option C) Accumulation at Interest D) Paid-up additions
Paid-up option
Which of the following is another term for the accumulation period of an annuity? A) Pay-in period B) Premium period C) Liquidation period D) Annuity period
Pay-in period
Which of the following is NOT true about a joint and survivor annuity benefit option? A) The surviving annuitant may receive reduced payments B) Payments stop after the first death among the annuitants C) A period certain option may be included D) This option guarantees income for two or more recipients
Payments stop after the first death among the annuitants
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? A) Jumping Juvenile B) Juvenile Premium Provisions C) Waiver of Premium D) Payor Benefit
Payor Benefit
Which of the following woud not be a violation of State insurance regulations? A) Producer C uses her license to write uncontrolled business only B) Producer D collects premiums due on policies and deposits the funds in his own personal account C) Producer A uses her license to write only insurance for herself and her immediate family D) Producer B charges his clients, in addition to the premium, a consulting fee.
Producer C uses her license to write uncontrolled business only
Paul is a producer in Washington and wants to become a producer in Oregon. The Director will waive certain examination requirements, provided that Washington would waive these same requirements if an Oregon producer sought licensure in Washington. What term is used to describe this phenomenon? A) Equality B) Fair exhange C) Equanimity D) Reciprocity
Reciprocity
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a progarm 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? A) Retention B) Reduction C) Transfer D) Avoidance
Reduction
A man decided to purchase $1000,000 Anually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy A) Decreased death benefit at each renewal B) Required a premium increase each renewal C) Built cash values D) Required proof of insurability every year.
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 A) Send an actual certified copy of the entire report to the consumer B) Respond to the consumer's complaint C) Defend the report if the agency feels it is accurate D) Change the report
Respond to the consumer's complaint
In case of a loss, the idemnity provision in insurance policies A) Allows the insured to collect 20% more than the actual loss B) Pays the insured a percentage of the loss above and beyond the loss C) Pays the insured as much as 95% of the loss D) Restores an insured person to the same financial state as before the loss
Restores an insured person to the same financial state as before the loss
What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences? A) Section 457 Deferred Compensation Plan B) Section 1035 Policy Exchange C) Modified Endowment Exchange D) 401(k) Plan
Section 1035 Policy Exchange
Equity indexed annuities A) Seek higher returns B) Are more risky than variable annuities C) Are secruity instruments D) Invest conservatively
Seek higher returns
All of the following are unfair claims settlement practices EXCEPT A) Failing to adopt and implement reasonable standards for settling claims B) Failing to acknowledge pertinent communication pertaining to a claim C) Suggesting negotiations in settling the claim D) Refusing to pay claims without conducting a reasonable investigation
Suggesting negotiations in settling the claim
What type of annuity activity will cause immediate taxation of the interest earned? A) Failing to make a planned contribution B) Surrendering the annuity for cash C) Using the contract as collateral for a loan D) Changing a settlement option
Surrendering the annuity for cash
The interest earned on policy dividends is A) Tax deductible B) 40% taxable, similar to a capital gain C) Taxable D) Nontaxable
Taxable
Which of the following best describes taxation during the accumulation period of an annuity? A) The growth in subject to immediate taxations B) Taxes are deferred C) The annuity is subject to state taxes only D) The annuity is subject to both state and federal taxation
Taxes are deferred
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? A) The annuitant must be a natural person B) A corporation can be an annuitant as long as it is also the owner C) A corporation can be an annuitant as long as the beneficiary is a natural person D) The contract can be issued without an annuitant
The annuitant must be a natural person
Which of the following would qualify as a competent party in an insurance contract? A) The applicant is intoxicated at the time of application B) The applicant is a 12-year-old student C) The applicant is under the influence of a mind-impairing medication at the time of application D) The applicant has a prior felony conviction
The applicant has a prior felony conviction
An Adjustable Life policyowner can change which of teh following policy features? A) The insured B) The coverage period C) The mortality expense D) The investment account
The coverage period
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A) The death benenfit can be increased by providing evidence of insurablility B) The death benefit cannot be increased. C) The death benefit can be increased only when the policy has developed a cash value D) The death benenit can be increased only by exchanging the existing policy for a new one
The death benenfit can be increased by providing evidence of insurablility
Who can make changes to the policy once it is in effect? A) The agent B) The executive officer of the insurer C) The insured D) The policyowner
The executive officer of the insurer
Which of the following are generally NOT considered when underwriting group insurance? A) The nature of the group B) The group's past claim experience C) The size of the group D) The insured's medical history
The insured's medical history
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? A) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. B) The insurer will pay the full death benefit from the group policy to the beneficiary. C) The insurer will pay a reduced death benefit to the beneficiary D) The insurer will pay the death benefit minus one month's premium
The insurer will pay the full death benefit from the group policy to the beneficiary.
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT A) The loss may be intentional B) The loss must not be catastrophic C) There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable D) The loss produced by the risk must be definite
The loss may be intentional
Which of the following is true regarding a modified guaranteed annuity? A) It provides a level benefit payment B) The owner is guaranteed a fixed interest rate for a specific time period C) The insurer bears all the market risk of changing interest rates D) There are no penalties for a premature surrender of the annuity
The owner is guaranteed a fixed interest rate for a specific time period
All of the following are true of an annuity owner EXCEPT A) The owner must be the party to receive benefits B) The owner pays the premiums on the annuity C) The owner has the right to name the beneficiary D) The owner is the party who may surrender the annuity
The owner must be the party to receive benefits
All the following are true regarding a decreasing term policy EXCEPT A) The payable premium amount steadily declines throughtout the duration of the contract B) The death benefit is $0 at the end of the policy term C) The contract pays only in the event of death during the term and there is no cash value D) The face amount steadily declines throughout the duration of the contract
The payable premium amount steadily declines throughtout the duration of the contract
All the following statements are true regarding installments for a fixed amount EXCEPT A) This option pays a specific amount until the funds are exhausted B) The annuitant may select how big the payments will be C) The payments will stop when the annuitant dies D) Value of the account and future earnings will determine the time period for the benefits.
The payments will stop when the annuitant dies
All the following statements are true regarding installments for a fixed amount EXCEPT A) Value of the account and future earnings will determine the time period for the benefits B) This option pays a specific amount until the funds are exhausted C) The annuitant may select how big the payments will be D) The payments will stop when the annuitant dies
The payments will stop when the annuitant dies
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 they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? A) There are not enough people in the group to qualify for group life insurance B) The group has not been established for long enough C) The purpose of the group was to purchase life insurance D) Their profession poses too high of a risk for the insurer.
The purpose of the group was to purchase life insurance
How are contributions to a tax-sheltered annuity treated with regards to taxation? A) They are taxed as income for the employee B) They are taxed as income for the employee, but are tax free upon withdrawal C) They are not included as income for the employee, but are taxable upon distribution D) They are never taxed
They are not included as income for the employee, but are taxable upon distribution
Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings? A) Taxes must be paid in full B) Employer's matching contribution can be 50% of employee's salary C) 75% of employee's contribution are taxed D) They are tax deferred until withdrawn
They are tax deferred until withdrawn
Which of the following is NOT true regarding Equity Indexed Annutities? A) They have guaranteed minimum interest rates B) They are less risky than variable annuities C) They earn lower interest rates than fixed annuities D) The insurance company keeps a percentage of the returns.
They earn lower interest rates than fixed annuities
Which of the following is TRUE for both equity indexed annuities and fixed annuities? A) They are both tied to an equity index B) Both are considered to be more risky than variable annuities C) They invest on a conservative basis D) They have a guaranteed minimum interest rate
They have a guaranteed minimum interest rate
Which of the following is NOT a goal of risk retention? A) To minimize the insured's level of liability in the event of loss. B) To reduce expenses and improve cash flow C) To increase control of claim reserving and claims settlements D) To fund losses that cannot be insured
To minimize the insured's level of liability in the event of loss.
An absolute assignment is a A) Transfer of some ownership rights in a policy B) Change of beneficiary C) Change of insurer D) Transfer of all ownership rights in a policy
Transfer of all ownership rights in a policy
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? A) Policy loans are taxable distributions B) Accumulations are tax deferred C) Withdrawals are not taxable D) Distributions before age 59 1/2 incur a 10% penalty on policy gains
Withdrawals are not taxable
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A) A husband or wife has an insurable interest in their spouse B) An individual has an insurable interest in his or her own life C) A debtor has an insurable interest in the life of the lender D) Business partners have an insurable interest in each other.
A debtor has an insurable interest in the life of the lender
The term "illustration" in a life insurance policy refers to A) A presentation of non-guaranteed elements of a policy B) A depiction of policy benefits and guarantees C) Pictures accompanying a policy D) Charts and graphs
A presentation of non-guaranteed elements of a policy
Who can make a fully deductible contribution to a traditional IRA? A) Anybody: all IRA contributions are fully deductible regardless of income level B) Someone making contributions to an educational IRA C) A person whose contributions are funded by a return on investment D) An individual not covered by an employer-sponsored plan who has earned income.
An individual not covered by an employer-sponsored plan who has earned income.
All other factors being equal, the least expensive first-year premium payment is found in A) Level Term B) Annually Renewable Term C) Increasing Term D) Decreasing Term
Annually Renewable Term
Which of the following is NOT true about an insurance consultant int he State of Oregon? A) Any attorney-at-law may be considered a consultant B) Consultants offer advice for a fee C) Individual may act as consultants in both life and health, and property and casualty insurance. D) A consultant must hold a valid license.
Any attorney-at-law may be considered a consultant
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become affective? A) As of the first of the month after the policy issue B) As of the policy issue date C) As of the application date D) As of the policy delivery date
As of the application date
A producer who fails to segregate premium monies from his own personal funds is guilty of A) Commingling B) Larceny C) Embezzlement D) Theft
Commingling
Which nonforfeiture option has the highest amount of insurance protection? A) Conversion B) Decreasing Term C) Reduced Paid-Up D) Extended Term
Extended Term
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called A) Guaranteed insurability B) Waiver of cost of insurance C) Supplemental add on D) Cost of living
Guaranteed insurability
What type of insurance would be used for a Return of Premium rider? A) Annually Renewable Term B) Increasing Term C) Level Term D) Decreasing Term
Increasing Term
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) A) Medical examination B) Attending Physician Statement C) Inspection report D) Medical Information Bureau report
Inspection report
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, payments stop. What settlement options did they select? A) Straight life B) Joint and survivor C) Joint annuity D) Cash refund annuity
Joint and survivor
A couple receives a set amoutn of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did theh couple buy? A) Joint and survivor B) Life with period certain C) Joint limited annuity D) Joint life
Joint life
How often may a life settlement provider contact an insured regarding the insured's health status if the insured's life expectancy is more than one year? A) Not more often than once a year B) Any time C) One a month D) Once every 3 months
Once every 3 months
What is the definition of a unilateral contract? A) If one party makes a condition, the other party can couteroffer B) One-sided: only one party makes an enforceable promise. C) Two or more parties go into a contract understanding there may be an unequal exchange of value. D) One author: the company wrote the contract; the insured must accept it as written.
One-sided: only one party makes an enforceable promise.
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT A) Alcohol and tobacco consumption B) Recent surgeries C) Other insurance coverages D) Family health history
Other insurance coverages
A producer is helping a marrried 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 A) Survivorship insurance B) Juvenille protection provision C) Survivor protection D) Life planning
Survivor protection
If the annuitant dies during the accumulation period, who will receive the annuity benefits? A) The annuitant's estate B) The beneficiary C) The annuity owner D) The insurance company
The beneficiary
Peril is most easily defined as A) An unhealthy attitude about safety. B) The chance of a loss occuring C)Somthing that increases the chance of loss D) The cause of loss insured against
The cause of loss insured against
In a life settlement contract, whom does the life settlement broker represent? A) The insurer B) The beneficiary C) The life settlement intermediary D) The owner
The owner
The Waiver of Cost of Insurance rider is found in what type of insurance? A) Joint and Survivor B) Juvenile Life C) Universal LIfe D) Whole LIfe
Universal LIfe
If the Director requests information regarding a claim, within how many days must the insurer provide a response? A) 3 days B) 10 days C) 21 days D) 31 days
21 days
The Insurance Director shall examine every authorized insurer. How long must insurers keep records pertaining to the insurance transactions under the license? A) 3 years B) 5 years C) 7 years D) 1 year
3 years
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? A.) Unilateral B.) Conditional C.) Personal D.) Adhesion
Adhesion
Employer contributions made to a qualified plan A) Are taxed annually as salary B) Are subject to vesting requirements C) May discriminate in favor of highly paid employees D) Are after-tax contributions
Are subject to vesting requirements
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? A) A complete medical record B) Sworn health affidavit from the applicant C) Statement of Continued Good Health D) Attending Physician Statement
Attending Physician Statement
What does "liquidity" refer to in a life insurance policy? A) The insured receives payments each month in retirement B) Cash values can be barrowed at any time C) The death benefit replaces the assets that would have accumulated if the insured had not died. D) The policyowner receives dividend checks each year
Cash values can be barrowed at any time
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A) Conditional B) Aleatory C) Personal D) Unilateral
Conditional
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A) Legal purpose B) Contract of adhesion C) Acceptanc D) Consideration
Consideration
Your client owns a Market Value Adjustable Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that the annuity owner will have to pay? A) Current interest rate at the time of surrender B) Flat fee determined by an index of interest gains, combined with the amount of time the annuity would take to mature C) There are no penalties imposed for surrendering annuities prematurely. D) Guaranteed minimum interest rate stipulated in the contract.
Current interest rate at the time of surrender
For a retirement plan to be qualified, it must be desigened for the benifit of A) IRS B) Employees C) Key employee D) Employer
Employees
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the A) Entire contract B) Total contract C) Aleatory contract D) Complete contract
Entire contract
When an employer offers to give an employee a wage increase in the amount of premium on a new life insurance policy, this is called a(n) A) Aleatory contract B) Executive bonus C) Key person policy D) Fraternal association
Executive bonus
The authority granted to an agent through the agent's contract is referred to as A) Absolute authority B) Express authority C) Apparent authority D) Implied authority
Express authority
What insurance concept is associated with the names Weiss and Fitch? A) Guides describing company financial integrity B) Policy dividends C) Types of mutual companies D) Index used by stock companies
Guides describing company financial integrity
Which of the following methods of calculating the amount of life insurance needed takes into account eh insured's wages, years until reutremnet, and inflation? A) Needs approach B) Blackout approach C) Lump-sum approach D) Human life value approach
Human life value approach
The Medical Information Bureau (MIB) was created to protect A) Insurance departments from lawsuits by policyowners B) Insureds from unreasonalbe underwriting requirements by the insurance companies. C) Medical examiners that perform insurance physical examinations D) Insurance companies from adverse selection by high risk persons
Insurance companies from adverse selection by high risk persons
Which statement regarding insurable risks is NOT correct? A) Insurance cannot be mandatory B) The insurable risk needs to be statistically predictable. C) An insurable risk must involve a loss that is definite as to cause, time, place and amount D) Insureds cannot be randomly selected
Insureds cannot be randomly selected
An applicant wants to buy a policy that has a cash value element. Which type should she buy? A) Investment B) Term C) Permanent D) Stock
Permanent
Which of the following individuals must have insurable interest in the insured? A) Beneficiary B) Underwriter C) Producer D) Policyowner
Policyowner
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? A) Insured's annual expenses B) Effect of inflation on income over time C) Predicted needs of the family after the insured's death D) Insured's current and future income
Predicted needs of the family after the insured's death
Which of the following will be included in a policy summary? A) Copies of illustrations and application B) Comparisons with similar policies C) Primary and secondary beneficiary designations D) Premium amounts and surrender values
Premium amounts and surrender values
All of the following are characteristics of group life insurance EXCEPT A) Certificate holders may convert coverage to an individual policy without evidence of insurability B) Premiums are determined by the age, sex and occupation of each individual certificate holder C) Group life insurance is written as a master policy D) Individuals covered under the policy receive a certificate of insurance
Premiums are determined by the age, sex and occupation of each individual certificate holder
Which of the following statements is an accurate comparison between private and government insurers? A) Private insurers provide insurance in areas where the government will not B) Private insurers may be authorized to transact insurance by state insurance departments C) Insurance provided by the government is called federal insurance. D) Private insurers offer fewer lines of insurance than governmnet insurers
Private insurers offer fewer lines of insurance than governmnet insurers
When an insured under a life insurance policy died, the designated beneficiary recieved the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? A) Premature death B) Return of premium C) Cost of living D) Decreasing term
Return of premium
An individual has been contributing to a retirement account after taxes are taken out of his paychekc. His financial advisor told him that he will be allowed to make contributions after age 70 1/2. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it? A) Roth IRA B) 403(b) plan C) Simplified Employee Pension Plan D) Traditional IRA
Roth IRA
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A) Delivery receipt B) Signed waiver of premium C) Statement of good health D) Payment of premium
Signed waiver of premium
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed? A) The insurance company's general account B) Forwarded to an investor C) Each contract's seperate account D) The annuity owner's account
The insurance company's general account
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit? A) The insured's estate B) The primary beneficiary's estate C) The insured's contigent beneficiary D) The insurance company
The insured's contigent beneficiary
Which of the following is NOT a characteristic of an insurable risk? A) The loss must be measurable B) The loss exposure must be large C) The loss must be catastrophic D) The loss must be due to chance
The loss must be catastrophic
All the following are true of key person insurance EXCEPT A) The key employee is the insured B) The plan is funded by permanent insurance only C) There is no limitations on the number of key employee plans in force at any one time. D) The employer is the owner, payor and beneficiary of the policy
The plan is funded by permanent insurance only
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? A) The policy will be reduced to an exteded term option B) The policy will terminate when the loan amount with interest equals or exceeds the cash value C) The insurer will increase the interest rate on the loan and charge a penalty D) The insurer will not permit the policyowner to take out an more loans
The policy will terminate when the loan amount with interest equals or exceeds the cash value
What is the main purpose of the regulation on life insurance policy illustrations? A) To compare life policies B) To help producers submit proper reports to the department of insurance C) To present a life policy in a visual way D) To help customers make educated decisions in buying life insurance
To help customers make educated decisions in buying life insurance
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? A) Withdrawn amounts are taxed on a last in, first out basis B) Withdrawn amounts are taxed on a first in, last out basis C) Taxes are deferred on withdrawn amounts, but a flat penalty is charged. D) Taxes are deferred on withdrawn amounts.
Withdrawn amounts are taxed on a last in, first out basis
Which of the following is considered to be a morale hazard? A) Driving recklessly B) Smoking C) Working as a firefighter D) Engaging in illegal activities
Driving recklessly
All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT A) Occupation B) Education C) Age D) Gender
Education
An agent and an applicant for a life insurace policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? A) When the agent submits the application to the company and the company issues a conditiional receipt. B) When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health C) On the designated effective date D) On the application date
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
