life simulated
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 a) Survivor protection b) Life planning c) Survivorship insurance d) Juvenile protection provision
a
All of the following are personal uses of life insurance EXCEPT a) Buy-sell agreement. b) Survivor protection. c) Estate creation. d) Cash accumulation.
a
All of the following are true regarding a decreasing term policy EXCEPT a) The payable premium amount steadily declines throughout the duration of the contract. b) It has a lower premium than level 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.
a
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) Equity Indexed Annuity. b) Variable Annuity. c) Flexible Annuity. d) Immediate Annuity
a
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? a) Common Disaster b) Accidental Death c) Survivor Life d) Second-to-Die
a
An insured committed suicide 6 months after his life insurance policy was issued. The insurer will a) Refund the premiums paid. b) Pay the policy's cash value. c) Pay the full death benefit to the beneficiary. d) Pay nothing.
a
Children's riders attached to whole life policies are usually issued as what type of insurance? a) Term b) Variable life c) Adjustable life d) Whole life
a
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is a) A Modified Endowment Contract. b) An Accelerated policy. c) An endowment. d) A Multiplicative Policy.
a
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a) An unfair trade practice. b) A misrepresentation. c) A required disclosure. d) A legal representation of the Association.
a
In a life settlement contract, whom does the life settlement broker represent? a) The owner b) The insurer c) The beneficiary d) The life settlement intermediary
a
Life income joint and survivor settlement option guarantees a) Income for 2 or more recipients until they die. b) Payment of interest on death proceeds. c) Payout of the entire death benefit. d) Equal payments to all recipients.
a
Methods used to pay the death benefits to a beneficiary upon the insured's death are called a) Settlement options. b) Designation options. c) Beneficiary provisions. d) Death benefit options.
a
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT a) Other insurance coverages. b) Family health history. c) Alcohol and tobacco consumption. d) Recent surgeries.
a
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a) One-year term option. b) Paid-up option. c) Accelerated endowment. d) Paid-up additions.
a
The two types of assignments are a) Absolute and collateral. b) Absolute and partial. c) Complete and partial. d) Complete and proportionate.
a
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 contingent beneficiary b) The insurance company c) The insured's estate d) The primary beneficiary's estate
a
Which is true about a spouse term rider? a) The rider is usually level term insurance. b) Coverage is allowed for an unlimited time. c) The rider is decreasing term insurance. d) Coverage is allowed up to age 75.
a
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a) Size of each installment b) Predetermined length of time stated in the contract c) Length of income period d) Amount of interest
a
Which of the following is NOT true regarding Equity Indexed Annuities? a) They earn lower interest rates than fixed annuities. b) The insurance company keeps a percentage of the returns. c) They have guaranteed minimum interest rates. d) They are less risky than variable annuities.
a
Which of the following products will protect an individual from outliving his or her money? a) Annuity b) Joint and survivor policy c) Adjustable life policy d) Permanent life insurance
a
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? automatic a) Automatic premium loan b) Extended term c) Reinstatement d) Reduce-paid up
a
Which of the following statements about a suicide clause in a life insurance policy is true? a) Suicide is excluded for a specific period of years and covered thereafter. b) Suicide is covered for a specific period of years and excluded thereafter. c) Suicide is covered as long as the policy is in force. d) Suicide is excluded as long as the policy is in force.
a
Who makes up the Medical Information Bureau? a) Insurers b) Hospitals c) Former insured d) Physicians and paramedics
a
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days
a
All of the following are examples of third-party ownership of a life insurance policy EXCEPT a) When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. b) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. c) An insured couple purchases a life insurance policy insuring the life of their grandson. d) A company purchases a life insurance policy on their manager, who is an important part of the operation.
b
All of the following are true regarding rebates EXCEPT a) Dividends are not considered to be rebates. b) Rebates are allowed if it's in the best interest of the client. c) Rebates are only allowed if specifically stated in the policy. d) Rebating can be anything of economic value, given as an inducement to buy.
b
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.
b
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a) Nonforfeiture options b) Guaranteed insurability option c) Dividend options d) Guaranteed renewable option
b
An insurance producer license may be renewed if the producer has paid the applicable fees, submitted the renewal form to the Commissioner, and a) Passed the required renewal examination. b) Completed all continuing education requirements. c) Claimed residence in the State of Tennessee. d) Met all sales goals of the insurer to which he/she is appointed.
b
An insurer must keep a copy of each authorized form it uses until __ year(s) after the date of its last authorized use. a) 1 b) 3 c) 5 d) 10
b
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) Third-party ownership. b) A STOLI policy. c) A prearranged funeral plan. d) A viatical settlement.
b
Any person acting as an insurance producer without a valid license may be fined up to a) $500 for all violations. b) $1,000 for each violation. c) $1,000 for all violations. d) $500 for each violation.
b
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? a) Interest only b) Fixed period c) Life with period certain d) Fixed amount
b
If a producer continues to violate the Insurance Code, a new civil penalty will be assessed every a) Year. b) Day. c) Week. d) Month.
b
What is the purpose of a disclosure statement in life insurance policies? a) To protect agents and insurers against lawsuits b) To explain features and benefits of a proposed policy to the consumer c) To obtain important underwriting information from the applicant d) To help consumers compare policy prices
b
Which non-forfeiture option provides coverage for the longest period of time? a) Accumulated at interest b) Reduced paid-up c) Extended term d) Paid-up option
b
Which nonforfeiture option provides coverage for the longest period of time? a) Accumulated at interest b) Reduced paid-up c) Extended term d) Paid-up option
b
Which of the following features of the Indexed Whole Life policy is NOT fixed? a) Policy period b) Cash value growth c) Premium d) Death benefit
b
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? a) The policy will expire at the end of the 20-year period. b) At the end of 20 years, the policy's cash value will equal $100,000. c) The policy premiums will remain level for 20 years. d) If the insured dies before the policy expired, the beneficiary will receive $100,000.
b
Which of the following is an example of an agent's fiduciary responsibilities? a) Offering additional coverage to a client b) Forwarding premiums to the insurer c) Helping clients to file claims d) Performing a review of clients' coverage
b
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
b
Which statement best defines an insurance producer? a) A person, partnership or corporation which has a proprietor, partners or employees engaged in the insurance business b) An individual who has a contract or agreement with an insurer to solicit or negotiate insurance policies on behalf of that insurer c) A person who rates and classifies applicants for insurance policies d) An individual who solicits or negotiates contracts for limited lines of insurance that do not require a high level of professional competency
b
Which type of life insurance policy generates immediate cash value? a) Continuous Premium b) Single Premium c) Level Term d) Decreasing Term
b
n insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a) One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. b) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. c) The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. d) The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.
b
A temporary insurance License may be issued without examination in all of the following instances EXCEPT a) To a producer replacing a licensed agent who is retiring. b) To the surviving spouse of a deceased producer. c) To an applicant who fails to pass an insurance producer's examination. d) To a designee of a producer who enters active duty with the US Armed Service.
c
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.
c
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) As high b) Half the amount c) Lower d) Higher
c
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
c
An insurance producer may not act as an agent for an insurer unless he/she has become which of the following? a) Commissioned b) Licensed c) Appointed d) Approved
c
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? a) Reduction of premium b) Accumulation at interest c) Paid-up option d) One-year term
c
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? a) Agent's Report b) Underwriter's Report c) Inspection Report d) Medical Information Bureau's report
c
If a life insurance policy has an irrevocable beneficiary designation, a) The owner can always change the beneficiary at will. b) The beneficiary cannot be changed. c) The beneficiary can only be changed with written permission of the beneficiary. d) The beneficiary cannot be changed for at least 2 years.
c
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a) Cost of living provision. b) Nonforfeiture option. c) Guaranteed insurability rider. d) Paid-up additions option.
c
If a resident insurance producer moves from Tennessee to another state, he/she must file a change of address and provide certification from the new resident state within how many days of the change of legal residence? a) 10 days b) 20 days c) 30 days d) 60 days
c
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's a) Habits. b) Prior insurance. c) Ancestry. d) Credit history.
c
If an insured continually uses the automatic premium loan option to pay the policy premium, a) The cash value will continue to increase. b) The insurer will increase the premium amount. c) The policy will terminate when the cash value is reduced to nothing. d) The face amount of the policy will be reduced by the automatic premium loan amount.
c
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? a) It is taxable only if it exceeds the amounts paid for premiums by 50% b) It is automatically taxable. c) It is only taxable if the cash value exceeds the amount paid for premiums. d) It is not considered to be taxable.
c
The Ownership provision entitles the policyowner to do all of the following EXCEPT a) Assign the policy. b) Designate a beneficiary. c) Set premium rates. d) Receive a policy loan
c
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? a) $0 b) $50,000 (50% of the policy value) c) $100,000 d) $300,000 (triple the amount of policy value)
c
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) Joint and survivor b) Fixed amount option c) Interest only option d) Life income with period certain
c
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a) Waiver of cost of insurance. b) Payor benefit. c) Waiver of premium. d) Guaranteed insurability.
c
Under an extended term nonforfeiture option, the policy cash value is converted to a) A lower face amount than the whole life policy. b) A higher face amount than the whole life policy. c) The same face amount as in the whole life policy. d) The face amount equal to the cash value.
c
What is a foreign insurer? a) An insurer with licensed agents doing business in other countries b) An insurer with licensed agents who are citizens in more than one country c) An insurer with a home office in another state d) An insurer with a home office in another country
c
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered a) Controlled business. b) Adverse selection. c) Discrimination. d) Twisting.
c
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a) An irrevocable beneficiary b) A buy-sell agreement c) Family term rider d) Third-party ownership
c
Which of the following is an example of a limited-pay life policy? a) Level Term Life b) Straight Life c) Life Paid-up at Age 65 d) Renewable Term to Age 70
c
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
c
Which of the following would NOT be considered an unfair and deceptive practice? a) Defamation b) Misrepresentation c) Controlled business d) Rebating
c
Which of the following would be considered false advertising? a) Stating that a policy has limitations and exclusions b) Failing to include premiums in sales materials c) Implying that the agent is the insurer d) Stating the differences in benefits between Whole Life Insurance and Term Life Insurance
c
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) Beneficiary clause b) Consideration clause c) Insuring clause d) Entire contract clause
c
A producer's license may be suspended for all of the following reasons EXCEPT a) Knowingly accepting insurance business from an individual who is not licensed. b) Being convicted of a felony. c) Having a producer's license suspended in another state. d) Failing to meet the goals set by the producer's agency.
d
All of the following are Non-forfeiture options EXCEPT a) Cash surrender b) Extended term c) Reduced paid-up d) Interest only
d
All of the following are Nonforfeiture options EXCEPT a) Cash surrender b) Extended term c) Reduced paid-up d) Interest only
d
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a) An offer of employment. b) Stocks, securities, or bonds. c) An offer to share in commissions generated by the sale. d) Dividends from a mutual insurer.
d
All of the following employees may use a 403(b) plan for their retirement EXCEPT a) A school bus driver. b) A part-time classroom aide. c) The vice president of a charitable organization. d) The CEO of a private corporation.
d
An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step? a) The agent must collect the existing policies and turn them over to the replacing insurer. b) The agent must get his supervisor involved in the transaction. c) The agent has no further duties. d) The agent must provide a replacement notice to the applicant.
d
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable? a) $50,000 b) $18,000 c) $15,000 d) $3,000
d
An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Reduction of Premium b) Annual Dividend Provision c) Accumulation at Interest d) Cash option
d
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? a) Waiver of premium provision b) Incontestable clause c) Grace period d) Reinstatement provision
d
During replacement of life insurance, a replacing insurer must do which of the following? a) Guarantee a replacement for each existing policy b) Designate a new producer for a replaced policy c) Send a copy of the Notice Regarding Replacement to the Department of Insurance d) Obtain a list of all life insurance policies that will be replaced
d
For an individual who is NOT covered by an employer-sponsored plan, 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.
d
How long must an insurer keep a copy of an authorized form in its records? a) 5 years following the date of its last authorized use b) As long as the form is being used c) As long as the insurer is in business d) 3 years following the date of its last authorized use
d
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a) 7 days b) 10 days c) 3 days d) 5 days
d
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? a) Unidirectional b) Aleatory c) Conditional d) Unilateral
d
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 able to 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
d
The purpose of the Tennessee Guaranty Association is to a) Encourage Life insurers to write substandard business. b) Allow producers to continue to solicit insurance even if the company they represent is financially impaired. c) Protect the reputation of the Insurance Department if they issue a Certificate of Authority to a company that becomes insolvent. d) Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company.
d
Variable Life insurance is based on what kind of premium? a) Increasing b) Decreasing c) Graded d) Level fixed
d
What is the number of credits required for fully insured status for Social Security disability benefits? a) 4 b) 10 c) 30 d) 40
d
What is the purpose of establishing the target premium for a universal life policy? a) To accumulate cash value faster b) To pay up the policy faster c) To cover all policy expenses d) To keep the policy in force
d
What percentage of a company's employees must take part in a noncontributory group life plan? a) 0% b) 25% c) 75% d) 100%
d
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? a) Domestic b) Alien c) Nonadmitted d) Foreign
d
Which of the below statements is FALSE concerning a Modified Endowment Contract (MEC)? a) Distributions before age 59 1/2 have a penalty tax of 10% on the gain in the policy. b) Policy loans are taxable distributions. c) MECs lose some of the favorable tax treatment of distributions. d) The policyholder can receive distributions at any time without being penalized.
d
Which of the following information will be stated in the consideration clause of a life insurance policy? a) The parties to the contract b) The time period allowed for the payment of premium c) The conditions for insurability d) The amount of premium payment
d
Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term? a) Decreasing b) Level c) Increasing d) Renewable
d
Which of the following is TRUE regarding the annuity period? a) During this period of time the annuity payments grow interest tax deferred. b) It is also referred to as the accumulation period. c) It is the period of time during which the annuitant makes premium payments into the annuity. d) It may last for the lifetime of the annuitant.
d
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death? a) A business partner of the insured b) The wife of the deceased insured c) The former wife of the deceased insured d) A minor son of the insure
d
Which of the following policies would be classified as a traditional level premium contract? a) Adjustable Life b) Universal Life c) Variable Universal Life d) Straight Life
d
Which of the following riders would NOT cause the Death Benefit to increase? a) Guaranteed Insurability Rider b) Cost of Living Rider c) Accidental Death Rider d) Payor Benefit Rider
d
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) Variable life b) Decreasing term c) Straight whole life d) Universal life
d
Who is a third-party owner? a) An insurer who issues a policy for two people b) An employee in a group policy c) An irrevocable beneficiary d) A policyowner who is not the insured
d
