Ucanpass

What describes the specific information about a policy? a) Buyer's guide b) Producer's report c) Policy summary d) Illustrations

A policy summary describes the features and elements of the specific policy for which a person is applying.

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary? a)It will decrease the benefits paid to the beneficiary. b)It will not affect the benefits paid to the beneficiary. c)It will reduce the benefits by 70%. d)It will increase the benefits paid to the beneficiary.

Accelerated Benefit provision allows the early payment of some portion of the death benefit if the insured becomes terminally ill or is confined to a long-term care facility. The face amount of insurance is therefore reduced, which will decrease the benefits paid to the beneficiary.

Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updated at least a) Monthly b) Quarterly c) Annually d) Semiannually

According to CIC 10234.93, the insurer must submit an updated list semiannually of all agents authorized to solicit long term care insurance.

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) Contract of adhesion b) Acceptance c) Consideration d) Legal purpose

Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a) Premiums are determined by age, occupation, and individual underwriting. b) 100% participation of members is required in noncontributory plans. c) Each member covered receives a policy. d) Coverage cannot be converted when an individual leaves the group.

If the employer pays all of the premium, then all employees must be included.

All of the following statements are correct regarding credit life insurance EXCEPT a) Benefits are paid to the borrower's beneficiary. b) The amount of insurance permissible is limited per borrower. c) Premiums are usually paid by the borrower. d) Benefits are paid to the creditor.

In credit life insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.

Variable Whole Life insurance is based on what type of premium? a) Flexible b) Graded c) Level fixed d) Increasing

Variable Whole Life insurance is a level fixed premium investment-based product.

What element is tied to an Indexed Universal Life policy?

cash value

Which of the following best defines earned surplus? a) Dividends paid to policyholders. b) Insurer's unassigned funds. c) Insurer's expenses and liabilities. d) None of the above.

As defined by the California Insurance Code 1152, "earned surplus is unassigned funds, as required to be reported on the insurer's annual statement."

Which of the following is an example of liquidity in a life insurance contract? a) The money in a savings account b) The cash value available to the policyowner c) The death benefit paid to the beneficiary d) The flexible premium

Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.

What is the purpose of the buyer's guide? a) To allow the consumer to compare the costs of different policies b) To provide the name and address of the agent/producer issuing the policy c) To list all policy riders d) To provide information about the issued policy

The buyer's guide provides generic information about life insurance policies and allows the consumer to compare the costs of different policies. The policy summary provides specific information about the issued policy, as well as the insurer's information.

All of the following are requirements for life insurance illustrations EXCEPT a) They may only be used as approved. b) They must identify nonguaranteed values. c) They must differentiate between guaranteed and projected amounts. d) They must be part of the contract.

An illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list nonguaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values.

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits? a) Flexible payment annuity b) Deferred interest annuity c) Immediate annuity d) Variable annuity

An annuity purchased with a single lump-sum payment, with a 25-year fixed-period distribution will be most suitable for this arrangement.

Which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity? a) Guaranteed Minimum Accumulation b) Guaranteed Lifetime Earning c) Guaranteed Lifetime Withdrawal d) Guaranteed Minimum Income

The Guaranteed Lifetime Withdrawal Benefit protects annuity owners from losing their investments if the annuity value drops.

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) Rollover. b) Settlement option. c) Nontaxable exchange. d) Nonforfeiture option.

A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.

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.

Funds contributed are excluded from the employee's current taxable income, but are taxable upon withdrawal.

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be a) Qualified. b) Approved. c) Authorized. d) Certified.

Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.

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) Entire contract clause b) Beneficiary clause c) Consideration clause d) Insuring clause

The insuring clause states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party to be covered by the policy and names of the beneficiary who will receive the policy proceeds in the event of the insured's death. If no beneficiary is named, the policy proceeds will be paid to the insured's estate.

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT a) Mutual funds (only upon the investor's request). b) Value funds. c) Fixed-income investments. d) Money-market funds.

During the 30-day cancellation (free-look) period, the premium for a variable annuity may only be invested in fixed-income investments and money-market funds, unless the investor specifically requests that the premiums be invested in the mutual funds.

Which of the following is true regarding a policy with a face value less than $10,000? a) If it's returned during the free look period, the contract will be cancelled, but the insurer will retain the premium paid. b) The policy can be cancelled with full refund of premium at any time. c) If it's returned during the free look period, the agreement will be void. d) An insured cannot return the policy.

If the owner returns the policy within the free-look period, the agreement will be void from its beginning. All premiums and any policy fees that have already been paid must be refunded to the owner.

Which of the following best describes the policy nonrenewal?a)Voiding of a policy due to a misrepresentation on the application. b)Revocation of one's insurance policy by the insurer. c)Discontinuance of an insurance policy by the insured on the policy anniversary date. d)Return of the policy after a 10-day free look.

Nonrenewal is the discontinuance of an insurance policy beyond its original term, usually on the policy anniversary or premium due date.

Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? a) Oral statements cannot be considered fraud. b) Omissions of material fact on insurance application are fraud. c) False statements about financial condition of an insurer are unlawful. d) Statements made with the intent to deceive are unlawful.

According to Title 18, Sections 1033 & 1034 of the US Code, any oral or written statements by any person engaged in the business of insurance that are false or any omissions of material fact are considered unlawful insurance fraud.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of medical exam b) The date of policy delivery c) The date of issue d) The date of application

If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? a) The group has not been established for long enough. b) The purpose of the group was to purchase life insurance. c) Their profession poses too high of a risk for the insurer. d) There are not enough people in the group to qualify for group life insurance.

In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT a) Fully insured status. b) Waiting period of 5 months. c) Being age 65. d) Inability to perform any gainful work.

The term fully insured refers to someone who has earned 40 quarters of coverage (the equivalent of 10 years of work), and is therefore entitled to receive Social Security retirement, Medicare, and survivor benefits. The waiting, or elimination period for Social Security disability benefits is 5 months.

When the partners of a business develop an arrangement whereby should one of them die or become permanently disabled, the other partners would purchase the interest of the deceased or disabled partner at a predetermined price, this is called a/an a) Executive bonus plan. b) Business continuation plan. c) Key person plan. d) Business overhead expense plan.

A business continuation plan is an agreement between business owners whereby they agree, should one of them die or become disabled, the surviving owners will purchase the interest of the deceased or disabled owner at a predetermined price. Such a plan is usually funded by each owner purchasing insurance on each of the other owners.

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the a) Secondary beneficiary. b) Contingent beneficiary. c) Irrevocable beneficiary. d) Revocable beneficiary.

The policyowner may change a revocable designation at any time and without the consent of the beneficiary. Irrevocable beneficiaries, on the other hand, have a vested interest in the policy, so the policyowner may not be able to exercise certain rights without their consent.

All of the following are true regarding a qualified annuity EXCEPT a) Funds accumulate on a tax-deferred basis. b) Employer contributions are not counted as income to the employee while the plan is in force. c) At distribution, all amounts received by the employee are tax free. d) Employer contributions are tax deductible as ordinary business expense.

Funds in a qualified plan accumulate on a tax-deferred basis; however, at distribution any amount received by the employee will be treated as ordinary income for tax purposes.

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must a) Respond to the consumer's complaint. b) Defend the report if the agency feels it is accurate. c) Change the report. d) Send an actual certified copy of the entire report to the consumer.

The consumer has the right to request the information on the report, the reasons for turn down and any adverse underwriting decisions. The reporting agency is required to respond to the consumer's complaint, and, if necessary, to reinvestigate the report.

The premium of a survivorship life policy compared with that of a joint life policy would be a) As high. b) Half the amount. c) Lower. d) Higher.

Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

In terms of parties to a contract, which of the following does NOT describe a competent party? a)The person must not be under the influence of drugs or alcohol. b)The person must be of legal age. c)The person must be mentally competent to understand the contract. d)The person must have at least completed secondary education.

The parties to a contract must be capable of entering into a contract in the eyes of the law. Generally, this requires that both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol.

Which is NOT true about beneficiary designations? a) Trusts can be valid beneficiaries. b) The beneficiary must have insurable interest in the insured. c) The beneficiary may be a natural person. d) The policy does not have to have a beneficiary named in order to be valid.

A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have to have an insurable interest in the policyholder.

If found material for underwriting, a misrepresentation a) Must have been in writing to affect a contract. b) Can void a contract. c) May be withdrawn. d) Does not affect either of the parties.

A misrepresentation is a written or oral declaration that is stated to intentionally distract, deceive or mislead a party to a contract. If found material for underwriting, it can void a contract.

All of the following are dividend options EXCEPT a) Paid-up additions. b) Fixed-period installments. c) Accumulated at interest d) Reduction of premium.

Fixed-period installments is a settlement option, and not one of the dividend options.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than a) Upon issuance of the policy. b) Within 30 days after the first premium payment was collected. c) Prior to filling out an application for insurance. d) With the policy.

If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in a) Recession of the policy. b) Adjustment in the amount of death benefit. c) No change whatsoever. d) Automatic lapse.

If the applicant has misstated his or her age or gender on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age or gender would have otherwise purchased.

What happens when a policy is surrendered for its cash value? a) Coverage ends but the policy can be reinstated at any time. b) The policy can be reinstated by paying back all policy loans and premiums. c) The policy can be converted to term coverage. d) Coverage ends and the policy cannot be reinstated.

Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.

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

Survivorship life pays on the last death rather than upon the first death.

A key person insurance policy can pay for which of the following? a)Workers compensation b)Hospital bills of the key employee c)Costs of training a replacement d)Loss of personal income

costs of training a replacement