XCEL Solutions Life Insurance Final Exam
Which of these is an element of a Single Premium annuity?
Lump-sum payment
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
A producer license may be suspended or revoked if the producer is found to be engaging in
Misrepresentation
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Ordinary income tax and 10% tax penalty for early withdrawals
Which life insurance rider typically appears on a Juvenile life insurance policy?
Payor Benefit rider
Which of the following is an example of a nonforfeiture option?
Reduced Paid-Up Option
In Colorado, all of the following are considered unfair trade practices except
Replacement
Interest on Life Insurance Proceeds is
Required if the claim was not paid within 30 days of the date insurer received the claim
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
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
The initial premium
What advantage does the renewability feature give to term policy?
The insured may extend the coverage period
Which of the following statements is true regarding the replacement of a life insurance policy in Colorado?
The replacing insurer must maintain copies of all records regarding replacement for at least 5 years
An insurer cannot deny a claim unless
There is a reasonable explanation of the claim
Life and health insurance policies are
Unilateral contracts
Which of the following Life insurance policies combine term insurance with an investment element?
Universal Life
In order to sell a (n)____ Life policy, a producer is required to register with 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
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
Upon request, when must the Colorado Supplement to the Summary of Benefits and Coverage Form be provided?
Within 7 business days
The commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances EXCEPT
Writing controlled business
When may the Commissioner conduct an examination of an insurance company?
as often as deemed necessary
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a
$25,000 individual whole life policy
A producer who violates a cease and desist order may, after a hearing, be fined up to
$500
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
Which of the following does Social Security NOT provide benefits for?
Dismemberment
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
P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at age 70
In a life insurance policy, which feature states that the policy will not cover certain risks?
Exclusion
P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the
Fair Credit Reporting Act
Which of the following offers an insurance applicant the right to review the contract and receive a full refund?
Free-look period
Ultimately, who is responsible for producer-generated advertisment?
Insurer
A life insurance arrangement which circumvents insurable interest statutes is called:
Investor-Originated Life Insurance
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?
Irrevocable beneficiary
What type of life policy covers two lives and pays the face amount after the first one dies?
Joint Life Policy
Under the suicide clause, a life insurance claim cannot be denied due to suicide after a period of ___ from the policy's effective date.
1 year
In Colorado, a life insurance applicant has ___ days after policy delivery for a full refund of premium if not satisfied for any reason
15
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster that Straight Life
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay Life
Renewing a producer's license requires __ hours of continued education every 2 years.
24
An insurer that terminates a producer's appointment must inform the Commissioner within how many days?
30
A producer must remit premiums to the insurer within ___ days after receipt.
45
Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?
5
The incontestable clause allows an insurer to:
contest a claim during the Contestable Period
Which of the following is an example of defamation?
A brochure including an untrue statement regarding a competitor's ability to pay claims
Which of the following statements regarding the Notice Regarding Replacement of Life Insurance is CORRECT?
A copy of the notice must be signed by the applicant and submitted with the application
Which of the following potential insurance sales would be subject to replacement regulations?
A new policy that causes an existing life insurance policy to be surrendered
Which of the following is CORRECT regarding a producer's fiduciary responsibility with client funds?
A producer may never commingle personal funds with funds paid by or to a client
Before a life insurance policy is issued, which of these components of the contract is required?
A signed application by the prospect
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?
ABC is the policy owner, C is the insured, and ABC is the beneficiary
All are true statements regarding the underwriting process, EXCEPT:
AIDS and HIV virus exams can be conducted in a discriminatory fashion
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
What does the insuring agreement in a Life insurance contract establish?
An insurer's basic promise
Any changes made on an insurance application requires the initials of whom?
Applicant
How does the Commissioner attain this position?
Appointed by the Governor
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
At future dates specified in the contract with no evidence of insurability required
According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud EXCEPT
Certificates of authority
Which of the following documents are not required to mention the Colorado Fraud Statute
Certificates of authority
Which rider provides coverage for a child under a parent's life insurance policy?
Child Term Rider
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
Collateral Assignment
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
Which of the following is NOT a problem when existing life insurance is replaced with new coverage?
Comprehensive coverage may increase under the new policy
Which of the following consists of an offer, acceptance, and consideration?
Contract
What type of group insurance plan involves employees sharing the cost?
Contributory Plan
D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST
Correct the information and have the prospect initial the change
The combination of Whole Life and _____ Term Insurance is referred to as a Family Income Policy
Decreasing
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
Circulation of a maliciously critical statement about an insurer's financial condition meant to damage the insurer's reputation or business is called
Defamation
Which of the following is an example of a misrepresentation?
Describing a universal life policy as a security
When recommending the purchase or exchange of an annuity, a producer must determine the suitability of the purchase by performing all of the following EXCEPT
Determining the marital status of the applicant
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums
what is considered a valid reason for small businesses to insure the lives of its major shareholders?
Fund a buy-sell agreement
Which of the following may be used in the advertisement of life insurance or annuities?
Guaranteed
Paying insurance premiums on a more frequent basis will cause the policy to have
Higher premiums
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Inability of the insured to perform more than 2 Activities of Daily Living (ADLs)
A life insurance policy would be considered a wagering contract WITHOUT:
Insurable interest
Employer noncontributory group life policies must allow for all of the following EXCEPT
Insured can determine the benefit amount
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
Pay face amount minus the past due premium
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the:
Policy proceeds
On a life insurance policy, who is qualified to change the beneficiary designation?
Policyowner
A policyowner is able to choose the frequency of premium payments through what policy feature?
Premium Mode
Which of the following is required for a life insurance Lapse Notice?
Reason stated why the policy will laspe
Which of these Nonforfeiture Options continue a build-up of cash value?
Reduced Paid-Up
Which of the following are Equity Indexed annuities typically invested in?
S&P 500
When a life insurance underwriter is determining insurability, it is illegal to base these decisions on
Sexual Orientation
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
Signed HIPAA disclosure
Which of the following types of permanent life insurance policies offers the highest initial cash value?
Single Premium
Colorado's replacement rules apply to all of the following types of insurance EXCEPT
Single premium whole life
What type of life policy covers two people and pays upon the death of the last insured?
Survivorship
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
When the conditions of the receipt are met
If an annuity application was not taken in person, an insurer must provide the applicant a Buyer's Guide
Within 5 business days of the insurer receiving the application
Variable Whole Life Insurance can be described as
both an insurance and securities product
Dividends paid from a life insurance policy are
issued by the insurer
If an applicant for an annuity refuses to provide suitability information the producer should
obtain the consumer's signed statement documenting his or her refusal to provide suitability information
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:
probability of making timely premium payments
If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a
separate insurance trust account
The advantage of reinstating an original life policy is
the premiums are based on a younger age
P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?
An immediate annuity
Which type of contract liquidates an estate through recurrent payments?
Annuity
Who is NOT required to sign a life insurance application?
Beneficiary
When may the commissioner issue an emergency cease and desist order?
If there is suspicion of an unauthorized person engaging in insurance business without being licensed
The type of annuity that can be purchased with one monetary deposit is called a(n):
Immediate annuity
Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
What benefit does the Payor clause on a Juvenile Life policy provide?
Premiums are waived if the payor becomes disabled
A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies?
Proceeds will go to the contingent beneficiary
Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?
Risk classification
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term Life
What kind of life insurance product covers children under their parent's policy?
Term Rider
Which statement regarding a Key Employee Life policy is NOT true?
The beneficiary is named by the key employee
The investment gains from a Universal Life Policy usually go toward
The cash value
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be:
converted to an individual permanent policy at an individual rate
All of the following penalties apply to anyone giving intentional false testimony during an insurance examination EXCEPT
guilty of a felony
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
A license is deemed to be used for controlled business if during any 12-month period
the licensee's total premiums on controlled business exceeded the total premiums on all other businesses
Under a Graded Premium Whole Life policy,
the premium increases each year during the early years of the contract and remains the same after that time
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
Additional coverage can be added to a Whole Life policy by adding a(n)
Decreasing Term Rider
T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life Annuity with Period Certain
Which of the following is a duty of the commissioner?
Reviewing and approving license applications
A(n) ______ beneficiary may be changed by the policyowner WITHOUT the consent of the beneficiary
Revocable
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable
