WI LIFE
All of the following are purposes of insurance EXCEPT to a)Regulate insurance marketing practices. b)Earn commissions .c)Protect the best interests of the public. d)Limit the adverse effects of competition on the cost of insurance.
Earn commissions
What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months
6 months
An insurer decides to renew a life policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified? a)30 b)60 c)90 d)100
60
All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity? a)A 50-year-old woman b)A 60-year-old man c)A 60-year-old woman d)A 50-year-old man
A 60-year-old man
f a company has a Simplified Employee Pension plan, what type of plan is it? a)An undefined contribution plan for large businesses b)A qualified plan for a small business c)The same as a 401(k) plan d)The same as an IRA, with the same contribution limits
A qualified plan for a small business
Which of the following terms describes a situation in which an agent and policyholder act together to defraud the insurer? a)Teaming b)Collaboration c)Collusion d)Coercion
Collusion
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? a)Survivorship Life Policy b)Second-to-Die c)Family Income Policy d)Joint Life Policy
Joint Life Policy
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
In a group life insurance policy, the employer may select all of the following EXCEPT a)The amount of insurance. b)The premium payor .c)The beneficiary .d)The type of insurance.
The beneficiary
Which of the following would NOT fall into the category of costs associated with death? a)Day to day expenses of maintaining the family b)The expense of a vacation for surviving family members c)Funeral expenses d)Final medical expenses of the insured
The expense of a vacation for surviving family members
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become a)More active .b)Larger. c)Smaller. d)Older.
larger
Every producer must maintain a place of business in this state a)And maintain an approval rating of 60%. b)That is approved by the Department. c)Accessible to the public. d)With the exception of resident licensees.
Accessible to the public.
When an annuity is written, whose life expectancy is taken into account?a)Annuitant b)Beneficiary c)Life expectancy is not a factor when writing an annuity. d)Owner
Annuitant
Which of the following is a statement made in an insurance application by the insured that is the absolute truth? a)Warranty b)Oath c)Claim d)Representation
Warranty
An insurance producer just sold an insurance policy to his sister. What kind of business is this? a)Controlled b)Illegalc)Internal d)Personal
controlled
When replacing a policy, an insurer must maintain a file containing copies of all statements for a)5 years. b)10 years. c)As long as the insurer remains in business. d)3 years.
5 years.
An intermediary failed to complete the CE requirements by the due date 14 months ago. What must they do to reinstate their license? a)File an extension with the Commissioner b)Pay a $1,000 fine in addition to completing the CE requirements c)Complete a prelicensing education course and pass the state exam d)Complete the CE requirements as usual
Complete a prelicensing education course and pass the state exam
What term best describes the act of withholding material information that would be crucial to an underwriting decision? a)Concealment b)Withholding c)Leading d)Breach of warranty
Concealment
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is a)Personal. b)Unilateral. c)Conditional. d)Aleatory.
Conditional.
A long stretch of national economic hardship 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)Inflation Rider b)Cost of Living Rider c)Value Adjustment Rider d)Return of Premium Rider
Cost of Living Rider
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?a)Independent agency marketing b)Illegal c)Insurance telemarketing d)Direct response marketing
Direct response marketing
According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT a)Late payments. b)Failure to pay off a loan. c)Disputes regarding consumer report information. d)Tax delinquencies.
Disputes regarding consumer report information.
Which of the following is a presentation that includes nonguaranteed elements of a policy over a period of years? a)Agent's report b)Illustration c)Prospectus d)Policy summary
Illustration
Which of the following is usually true of a participating life insurance policy? a)It pays dividends to policyowners. b)It may be converted to a term life policy. c)It pays dividends to stockholders. d)It assesses premiums against stockholders.
It pays dividends to policyowners.
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? a)Risk exposure b)Morbidity c)Life expectancy d)Mortality rate
Life expectancy
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
Which of the following is NOT a characteristic of an insurable risk? a)The loss must be catastrophic. b)The loss must be due to chance. c)The loss must be measurable. d)The loss exposure must be large.
The loss must be catastrophic.
Which of the following determines the cash value of a variable life policy? a)The company's general account b)The policy's guarantees. c)The premium mode d)The performance of the policy portfolio
The performance of the policy portfolio
Which of the following is an example of a producer's fiduciary duty? a)An obligation to state every known fact about the policy the producer is selling. b)A duty to base all transactions upon the principle of Utmost Good Faith. c)The obligation to tell the truth to the best of one's knowledge d)The trust that a client places in the producer in regard to handling premiums.
The trust that a client places in the producer in regard to handling premiums.
No individual life insurance policy may be contested after it has been in force for a)1 year. b)2 years. c)3 years. d)5 years.
2 years.
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a)Unfair claims b)Twisting c)Defamation d)False advertising
False advertising
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? a)Fraud b)Defamation c)Unfair discrimination d)Errors and omissions
Fraud
Which is TRUE about the cash surrender nonforfeiture option? a)Funds exceeding the premium paid are taxable as ordinary income. b)After the cash surrender, the insured is covered for a grace period of one month. c)The policy remains active for some time after the policyholder opts for cash surrender. d)The policyholder receives the original cash value of the policy.
Funds exceeding the premium paid are taxable as ordinary income
Which of the following is NOT true regarding the accumulation period of an annuity? a)It is also known as the pay-in period. b)It would not occur in a deferred annuity. c)It is the period during which the annuity payments earn interest. d)It is the period over which the owner makes payments into an annuity.
It would not occur in a deferred annuity.
In order for an intermediary to sell or offer to sell a variable contract, the intermediary must have which of the following types of licenses? a)Life and Series 24 b)Life and Variable contract license c)Variable contracts and Series 7 d)Life and Series 6 or Series 7
Life and Series 6 or Series 7
What is the other term for the cash payment settlement option? a)Face amount b)Proceeds c)Lump sum d)Principal amount
Lump sum
The Federal Fair Credit Reporting Act a)Regulates telemarketing. b)Prevents money laundering. c)Regulates consumer reports. d)Protects customer privacy.
Regulates consumer reports.
Which of the following persons is required to complete prelicensing education in Wisconsin? a)Resident applicant with a 2-year associate's degree in business management b)Any person who has completed a 4-year college degree in business with an insurance emphasis c)Any person who has completed a 2-year Wisconsin vocational school degree in insurance d)Limited lines title insurance applicant
Resident applicant with a 2-year associate's degree in business management
An IRA purchased by a small employer to cover employees is known as a a)403(b) plan. b)Simplified Employee Pension plan. c)401(k) plan. d)Defined contribution plan.
Simplified Employee Pension plan.
Which type of life insurance policy generates immediate cash value?a)Decreasing Term b)Continuous Premium c)Single Premium d)Level Term
Single Premium
Which of the following best describes taxation during the accumulation period of an annuity? a)The annuity is subject to both state and federal taxation. b)The growth is subject to immediate taxation. c)Taxes are deferred. d)The annuity is subject to state taxes only.
Taxes are deferred.
All of the following are true of an annuity owner EXCEPT a)The owner is the party who may surrender the annuity. b)The owner must be the party to receive benefits. c)The owner pays the premiums on the annuity. d)The owner has the right to name the beneficiary.
The owner must be the party to receive benefits.
Which of the following is FALSE regarding variable contracts? a)The contract must state when it can be amended. b)The contract must explain how the benefits are determined. c)The rate of return must be guaranteed. d)The contract must provide for nonforfeiture of benefits.
The rate of return must be guaranteed.
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a)Guaranteed insurability. b)Waiver of cost of insurance. c)Payor benefit. d)Waiver of premium.
Waiver of premium.
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)50% tax on the amount not distributed as required b)No penalties, since the owner is older than 59 ½ c)10% for early withdrawal d)15% for early withdrawal
50% tax on the amount not distributed as required
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a)Business partners have an insurable interest in each other. b)A married person has an insurable interest in their spouse. c)An individual has an insurable interest in their own life. d)A debtor has an insurable interest in the life of a lender.
A debtor has an insurable interest in the life of a lender.
Why is an equity indexed annuity considered to be a fixed annuity? a)It has a fixed rate of return. b)It is not tied to an index like the S&P 500. c)It has a guaranteed minimum interest rate. d)It has modest investment potential.
It has a guaranteed minimum interest rate.
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? a)It will decrease for the new 5-year term since the insured is now a lesser risk to the company. b)It will increase each year during the next 5 years as the face amount increases each year. c)It will increase because the insured will be 5 years older than when the policy was originally purchased. d)It will remain the same for the new 5-year term.
It will increase because the insured will be 5 years older than when the policy was originally purchased.
Which of the following is any person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer? a)Reinsurance broker b)Reinsurance agent c)Reinsurance manager d)Managing general agent
Reinsurance manager
All of the following are true of an annuity owner EXCEPT a)The owner is the party who may surrender the annuity. b)The owner must be the party to receive benefits. c)The owner pays the premiums on the annuity .d)The owner has the right to name the beneficiary.
The owner must be the party to receive benefits.
If an agent wishes to sell variable life policies, what license must the agent obtain? a)Securities b)Adjuster c)Surplus Lines d)Personal Lines
Securities
Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Juvenile life b)Term insurance c)Option B d)Option A
Option A
An applicant wants to buy a policy that has a cash value element. Which type should she buy? a)Term b)Permanent c)Stock d)Investment
Permanent
The owner of a life insurance policy dies, and no beneficiary is named. One of the owner's friends paid for part of the funeral costs. What is the maximum amount of money that the friend could be issued from the insurance policy? a)None b)The cost of the funeral c)$1,000 d)$2,000
$1,000
The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place? a)10 days after the notice was delivered to the policyholder b)10 days after the notice is sent out to the policyholder c)Immediately d)10 days after the decision was made
10 days after the notice was delivered to the policyholder
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 best describes what the annuity period is? a)The period of time from the effective date of the contract to the date of its termination b)The period of time during which accumulated money is converted into income payments c)The period of time from the accumulation period to the annuitization period d)The period of time during which money is accumulated in an annuity
The period of time during which accumulated money is converted into income payments
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to a)3 years .b)5 years. c)10 years. d)12 years.
10 years
What license or licenses are required to sell variable annuities? a)Only a securities license b)No license is required c)Both a life insurance license and a securities license d)Only a life insurance license
Both a life insurance license and a securities license
An insurance producer who by contract is bound to write insurance for only one company is classified as a/an a)Solicitor. b)Broker. c)Independent producer. d)Captive agent.
Captive agent.
Which of the following would be considered a violation of Life Insurance Advertising regulations? a)Calling an insurance policy an investment plan b)Not guaranteeing dividends c)Making oral sales presentations d)Informing the applicant the sole subject of the sale is insurance
Calling an insurance policy an investment plan
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? a)Reduced paid-up b)Paid-up options c)Extended term d)Cash surrender
Cash surrender
When an employer offers to give an employee a wage increase in the amount of the 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.
An intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years? a)12 b)20 c)22 d)24
24
The Commissioner issues an order without having conducted a hearing. Within how many days of receiving the order can the person aggrieved by the order request a trial? a)60 b)90 c)15 d)30
30
In this state, insurers must pay a claim within how many days of receiving proof of loss? a)10 days b)15 days c)30 days d)90 days
30 days
What is the grace period of a life insurance policy? a)10 days b)15 days c)20 days d)31 days
31 days
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 must not be catastrophic. b)There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable. c)The loss produced by the risk must be definite. d)The loss may be intentional.
The loss may be intentional.
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.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? a)Her parents' federal income tax receipts b)Medical exam and parents' medical history c)Proof of insurability is not required. d)Medical exam
Proof of insurability is not required.
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of a)Coercion. b)Twisting. c)Controlled business. d)Rebating.
Rebating.
Annuities can be used to fund which of the following? a)Group life insurance b)Estate creation c)Retirement plans d)Variable life insurance
Retirement plans
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.
They earn lower interest rates than fixed annuities.
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of a)Rebating. b)Twisting. c)Defamation. d)Misrepresentation.
Twisting.
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
Unilateral
Which of the following Life Insurance policies would be considered interest sensitive? a)Increasing term b)Universal life c)Adjustable life d)Whole life
Universal life
An insured receives a monthly summary for 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 the insured have?a)Term b)Securities c)Stock d)Variable
Variable
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? a)Credit term life b)Decreasing term life c)Variable universal life d)Increasing term life
Variable universal life