Review 1

An example of false advertising would

An insurer exaggerating its dividends in a magazine advertisement

In Texas, which of these statements regarding the Suicide clause is TRUE?

An insurer may not use suicide as a defense against payment after the second year.

A nonforfeiture clause gives the policyowner

guaranteed values even if the policy has lapsed

A policy of adhesion can only be modified by whom?

insurance company

During a sales presentation for a participating life insurance policy, an agent MUST

make a prospect understand that dividends are NOT guaranteed

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid

mandatory income tax withholding on the transfer amount

Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.

settlement

G purchased a Family Income policy at age 40. The policy has 20-year rider period. If G were to die at age 50, how long would G's family receive an income

10 years

In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?

2 years

The USA patriot act was enacted in

2001 - to detect and deter terrorism

In Texas, an individual life insurance policy is REQUIRED to have a grace period of

31 days

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

50%

Policy that pays a benefit if the insured goes blind

AD&D (Accidental Death and Dismemberment)

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment clause

S is covered by a whole life policy. Which insurance product can cover his children?

Child term rider.

T applies for a liofe insurance policy and is told by the producer that the insurer is bound to 9the coverage as of the date of the apllication or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T

Conditional receipt

Which statement regarding the Misstatement of Age provision is considered to be true

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

Which of these types of policies may not have the Automatic Premium Loan provision attached to it .

Decreasing Term

How are surrender charges deducted in a life policy with a rear-end loaded provision

Deducted when the policy is discontinued

How are Roth IRA distributions normally taxed?

Distributions are received tax-free

Two partners own equal shares in a buisness worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement

Each partner owns a $500,000 policy on their partners life

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Equity index insurance

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Exclusion

Who has the option to Renewable Term policy

Insured

All of these statements about the Waiver of Premium provision are correct Except

Insured must be eligible for Social Security disablity for claim to be accepted

B recieves yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes.

Interest only

What kind of premium does a Whole Life policy have?

Level

P and Q are married and have three kids, P is primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P & Q and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to

P only P survived and is the primary beneficiary

Which action will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application.

Pay an amount reduced by a specified percentage of the face amount

Which of the following best describes a contingent beneficiary?

Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured

A Medical Information Report (MIB) report may disclose

Prior use of marijuana. DA MARY JANE

All of these are considered sources of underwriting information about an applicant EXCEPT

Rating Services

Which of the following is NOT required provision in group life policies

Right to Loan

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with applicant to answer the remaining questions

Why must an insurance applicant answer all questions on the application

Statement and representations on the application are part of the consideration for issuing a policy

A (n) _____ rider may be used to include coverage for children under their parents' life insurance policy

Term

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

A Variable Annuity has which of the following characteristics

Underlying equity investments

In order to sell a ——- life policy a producer is required to register with the financial industry regulatory authority (FINRA)

Variable

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

Which parts of a life insurance policy are guaranteed to be true?

Warranty

Group life insurance policies are generally written as

annually renewable term

Any chages made on an insurance application requires the initals of whom

applicant

an applicant medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

does NOT have to make any further payments

Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas?

the agent

Whole Life Insurance is sometimes referred to as "straight life". What does the word "straight" indicate when using this phrase?

the duration of premium payments

An example of an unfair claims settlement practice is

turning down a claim without providing the basis of denial

All of these are considered to be a benefit under Social Security, Except for

unemployment

The free lock provision begins

upon receipt of the policy by the producer