Life Licensing Review Questions
Every 2 years
How often must producer licenses be renewed
To create an estate
Annuities can be used for all of the following reasons EXCEPT a. To accumulate retirement finds b. To liquidate an estate c. To fund a child's education d. To create an estate
Employees
For a retirement plan to be qualified, it must be designed for the benefit of the
Tax free
For personal life insurance, the lump-sum death benefit is received
Not tax deductible
Generally, the premium paid for personal life insurance is
Securities
If an agent wishes to sell variable life policies, what license must the agent obtain in addition to a life insurance license?
Conditional receipt
If an applicant for insurance submits the application and pays the premium at the same time, the insurer must give which of the following to the applicant
SEC, FINRA, and Departments of Insurance
Variable insurance and variable annuities are regulated by
Indemnity
Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
Life annuity
Which type of annuity settlements stops when the annuitant dies?
1035 exchange
A policy owner cancels his life policy but instructs the insurance company to transfer the cash value of the policy to an annuity. This nontaxable transaction is called a
Universal Life, Option B
A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is
An appointment with the company
A producer CANNOT act as agent of an insurer without which of the following? a. A signed contract b. A certificate of insurance c. An appointment with the company d. A posted bond
A higher premium
A substandard risk compared to a standard risk would pay
Insurance company
According to agency law, an insurance producer always represents the
7 years
According to the Fair Credit Reporting Act, consumer reports are prohibited from reporting negative information about a customer after how many years?
Suggesting negotiations in settling the claim
All of the following are unfair claims settlement practices EXCEPT a. Refusing to pay claims without conducting a reasonable investigation b. Failing to adopt and implement reasonable standards for settling claims c. Failing to acknowledge pertinent communication pertaining to a claim d. Suggesting negotiations in settling the claim
Straight life
All other facts being equal, which of the following types of annuities will provide the highest monthly income? a. Installment refund b. Joint and survivor c. Straight life d. Life with a 10-year period
Single premium immediate annuity
An annuity begins payments to the annuitant one month after it is purchased. What type is it?
Fixed annuity
An annuity that guarantees a minimum rate of return is known as a
A domestic insurer
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered
Deferred
Annuities may be purchased with all of the following payment methods EXCEPT a. Single b. Level c. Flexible d. Deferred
6%
Excess contributions to a Roth IRA are subject to what tax penalty?
$3,000
If $100,000 of life insurance proceeds were used in a settlement option which is paid $13,000 per year for 10 years, which of the following amounts would be taxable annually?
Require evidence of insurability
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
25%
In a 12-month period, commissions earned from controlled business must NOT exceed what portion of producer's aggregate commissions?
Policyowners
Mutual companies are owned by
100
The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?
Utmost good faith
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as
The accumulation period
The time period during which an annuitant contributes that annuity is called
Money borrowed from the cash value is taxable
Which of the following is NOT true regarding policy loans? a. Money borrowed from the cash value is taxable b. Policy loans can be repaid at death c. An insurer can charge interest on outstanding policy loans. d. A policy loan may be repaid after the policy is surrendered
Remains constant over time
With a traditional WHOLE LIFE policy, the death benefit
Promptly forwarding premiums to the insurer
Which of the following is an example of an agent's fiduciary responsibilities? a. Reviewing the client's insurance coverage b. Offering additional coverage to a client c. Promptly forwarding premiums to the insurer d. Helping a client to file claims
Premium is based on the average age of the insureds.
Which of the following is true regarding a joint life policy?
If the insured dies after the end of the term, there is no death benefit to the beneficiary
Which of the following is true regarding term insurance? a. If the insured dies during the term, the policy only the accumulated cash value b. If the insured dies after the end of the term, there is no death benefit to the beneficiary c. The policy provides the smallest amount of coverage for the highest premium d. It cannot be renewed or converted to a permanent policy.
$1,000
A producer didn't realize that he had committed an act in violation of the Insurance Code. What would be the producer's penalty?
3 hours
What is the minimum required number of continuing education credits in ethics every licensing period? a. 2 hours b. 3 hours c. 5 hours d. 12 hours
30 days
A producer receives a written notification regarding a Commissioner's order against the producer. Within how many days must the producer request a hearing?
180 days
A temporary license is normally valid for
Rebating
An agent who offers a cash reward to a prospect for buying a policy is guilty of
Living longer than expected
What does an annuity protect the contract owner against?
Needs approach
The approach is determining the amount of personal life insurance that an applicant needs that considers such factors as the cost associated with death, costs of education children, and costs of housing is called the
Apparent
An agent's actions show what kind of authority?
Renews each year with an increased premium
An annually renewable term policy...
Policy delivery
If no receipt is issued at the time of application, a statement of good health is usually required at the time of
Master contract
In a single employer group plan, what is the name of a document that is issued to the employer?
Exchange of something of value by both parties
In an insurance contract, consideration refers to
Statement that must be true
In insurance contracts, a warranty is a
The uncertainty of financial loss
Risk insurance terminology refers to
A source of medical information to alert insurers to adverse medical history
The Medical Information Bureau (MIB) is
Annually renewable term
What type of life insurance is most commonly used for group plans?
The death benefit can be increased by providing evidence of insurability
An individual owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding this change? a. The death benefit cannot be increased b. The death benefit can only be increased when the policy has developed cash value c.The death benefit can only be increased by exchanging the existing policy for a whole life. d. The death benefit can be increased by providing evidence of insurability.
Foreign
An insurance company that is formed under the laws of another state is known as what type of insurer?
Hazards
Conditions that increase the chances of an insured loss occurring are referred to as
Life paid-up at age 65
Which of the following is an example of a limited-pay life policy?
The agent is disabled and the disability keeps him from working
A temporary license may be issued for which of the following reasons? a. The agent is disabled and the disability keeps him from working b. The agent is taking an extended vacation out of the country c. The agent's license has been temporarily suspended d. The agent has retired and is selling the business
Premiums
All of the following are examples of risk retention EXCEPT a. Self-Insurance b. Premiums c. Deductible d. Copayments
Blackout period
Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches the retirement age. What is the time period called during which the surviving spouse does not receive benefits?
Catastrophic medical expenses
The 10% early withdrawal penalty from an IRA can be waived for
Only the annuity owner
Which of the following has the RIGHT to surrender a deferred annuity contract? a. Only the annuity owner b. Only the insurance company for nonpayment of premiums c. The beneficiary after the owner's death d. Deferred annuity cannot be surrendered
Insured's close friend
All the following may have an insurable interest in the insured EXCEPT a. The spouse b. Insured's children c. The employer d. Insured's close friend
Underwriting
Which division of an insurance company is responsible for the selection, evaluation, and classification of risks?
Agent
Who acts on behalf of the principal?
Occupation
Among the applicants in the same class and life expectancy, which of the following factors can be used codetermine premium rates? a. Race b. Occupation c. Marital status d. Ancestry
Benefits stop at the annuitant's death
Which of the following is NOT true regarding an annuity certain? a. There are no life contingencies. b. It is a short-term annuity c. Benefits stop at the annuitant's death d. It will pay until a fixed amount is liquidated
Variable
An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have?
Beneficiary's consent
An insurance contract must contain all of the following elements to be considered legally binding EXCEPT a. Offer and acceptance b. Competent parties c. Beneficiary's consent d. Consideration
Single premium whole life
An insurance policy requires A PAYMENT of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called
Coercion
A person who attempts to unreasonably restrain or monopolize the business of insurance is guilty of
8am until 9pm
According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls?
Stop committing a particular violation
If the Commissioner issues a cease and desist order, that means the insurer must
If it is intentional and material
When would a misrepresentation on the insurance application be considered fraud
The plan is funded by permanent insurance only.
All of the following are true of key person insurance EXCEPT a. The employer is the owner, payor and beneficiary of the policy b. The key employee is the insured c. The plan is funded by permanent insurance only d. There is no limitation on the number of key employee plans in force at any one time
The life expectancy of the proposed insured
Life insurance companies use mortality tables to predict
Survivor Protection
Life insurance death benefits can be used to fund funeral and other expenses that could be otherwise difficult to fund with a loss of the insured's income. Which term is most closely associated with this?
Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
All of the following violations may result in agent's imprisonment EXCEPT a. Embezzling funds from the insurer b. Knowingly obtaining information about a customer under false pretenses c. Engaging in the business of insurance after being convicted of breach of trust d. Failing to reports to the department a criminal prosecution taken against the agents in another jurisdiction
Defamation
An agent who deliberately makes a malicious statement about another insurance company is guilty of an illegal trade practice is called
The Fair Credit Reporting Act
Consumers are protect against the distribution of incorrect and obsolete information through which of the following? a. HIPPAA b. The Consumer Protection Credit Act c. The Fair Credit Reporting Act d. The Medical Information Bureau
Tax-sheltered Annuity 403(b)
Which of the following retirement plans is for nonprofit, charitable, education or religious organizations? a. 401 (k) b. SIMPLE Plan c. Tax-Sheltered Annuity 403(b) d. Simplified Employee Pension (SEP)
They can provide a lifetime income
Which of the following statements is true about annuities? a. They are never subject to income tax b. They use the same mortality tables as life insurance c. They are a type of life insurance d. They can provide a lifetime income
The insurance company
Who bears the investment risk in a fixed annuity
Tax deferred
In life insurance policies, cash value increases are
Decreasing Term
When the insured purchased a new home he wanted to purchase a life insurance policy that would protect his family against losing the home should he die before the mortgage was paid. The most INEXPENSIVE type of policy that would accomplish this need would be
Race
Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? a. Age b. Medical History c. Gender d. Race
Dividend
Which of the following terms is used to name the nontaxable return of unused premiums? a. Interest b. Surrender c. Dividend d. Cash Value
In benefits on the basis of different life expectancies
Which of the following types of underwriting discrimination would be considered legal a. In rates for persons within the same class b. In premiums for persons within the same life expectancy c. In benefits on the basis of different life expectancies d. In policy benefits on the basis of marital status
Deferred
An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet the need?
Setting premium rates
The Commissioner of Insurance is responsible for all of the following actions EXCEPT a. Issuing or suspending insurance licenses b. Enforcing the Insurance Code c. Issuing cease and desist orders d. Setting premium rates
Date of application
When must insurable interest exist in life insurance?
30 days
When producers change the address of their residence or office, the Insurance Department must be notified within
Earned Income
What qualifies an individual to contribute to an IRA?
On the date of the application
An insured submits the full premium along with a completed application for life insurance. Once the policy is issued, when does the coverage begin?
Accumulation of retirement funds
What is the primary purpose of a 401(k) plan? a. Accumulation of education funds b. Accumulation of retirement funds c. Distribution of dividends d. Distribution of life insurance proceeds
Direct rollover from one plan to the other
Avoiding tax consequences when transferring assets from one IRA to another can be accomplished by which of the following? a. Withholding of 20% of the funds b. Partial distribution c. Waiting until after 60 days to deposit funds in a new plan d. Direct rollover from one plan to the other
Annuitant
When an annuity is written, whose life expectancy is taken into consideration? a. Owner b. Annuitant c. Beneficiary d. Life expectancy is not a fact in annuities
To protect the public
What its the main justification for the existence of the State Insurance Department?
Interest only
When a beneficiary in a life insurance policy receives payments consisting of both principal and interest portions, what will be taxed as income?
Transfer
Which method of dealing with risk is applied when a person purchases insurance?
The insurer will be obligated to pay the claims regardless of its certificate of authority
An insurer conducts business in Louisiana without a certificate of authority. The Department of Insurance issued a cease a desist order for the insurer to suspend its operations in this state. Which of the following is true regarding payment of claims on the policies issued by the insurer? a. The insurer will void all the policies b. Because the insurer is not authorized, the Guaranty Association will pay the claims c. Because the insurer is not authorized, it is not required to pay the claims d. The insurer will be obligated to pay the claims regardless of its certificate of authority
Monthly
Which of the following premium payment modes would result in the highest overall premium for life insurance?
