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Comprehension Questions Flashcards

1
Q

What is the process called for converting the group insurance plan to an individual plan?

A

The process of converting a group insurance plan to an individual plan is called a conversion plan

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2
Q

For how many months a person needs to remain disabled before getting Social Security disability benefits?

A

5 months

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3
Q

When renewable term life insurance policies can be renewed?
1. at predetermined date or age, regardless of ensured health.
2. Only if they insured provides evidence of insurability.
3. Typically with no change in premium.
4. anytime add policy owners request

A
  1. at predetermined date or age, regardless of ensured health.
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4
Q

What is level premium term life insurance policies?

A

Level premium term (LPT) life insurance is a type of term life insurance policy that has premiums that remain the same for the entire term of the policy

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5
Q

Apartment life insurance policy where the policy owners pays premiums for a specified number of years is called?
1. Limited to pay policy
2. Adjustable policy
3. Variable universal policLimited to pay policy
3. Level term policy

A
  1. Limited to pay policy
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6
Q

In what part of nations policy are policy benefits found?
1. Waivers
2. Conditions
3. Declarations
4. Entire contract

A

3. Declarations

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7
Q

what is the name of the provision which states that a copy of the application must be attached to the policy when issued?
1. Entire contract
2. Buyer’s guide
3. Entire policy
4. Policy summary

A
  1. Entire contract
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8
Q

An entity that acts as an insurance producer
1. As the same bond requirement as an individual producer
2. May offer something of value to induce an insurance transaction
3. Must be incorporated as an llc
4. Is not required to renew the license

A
  1. As the same bond requirement as an individual producer
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9
Q

The director of insurance is authorized to evaluate.
1. Established sales quotas
2. That insurance rates for foreign insurers
3. Pass state laws relating to insuranceRegulations
4. Make reasonable insurance rules and Regulations

A

4. Make reasonable insurance rules and Regulations

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10
Q

Q the producer gave his client a debate on the entitlement to purchase insurance.
1. Class B misdemeanor
2. Class A misdemeanor
3. Moral transcription
4. Felony

A
  1. Class B misdemeanor
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11
Q

what is insured consideration in insurance?

A

This is the premium or the future premiums that you have to pay to your insurance company.

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12
Q

In a viatical statement how much does the policy owner receive for a life insurance policy?
1. Amount greater than the Dealth benefit
2. Amount less than the death benefit
3. Amount is equal to a sum of all premium paid
4. Amount equal to does benefit

A

2. Amount less than the death benefit

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13
Q

In Illinois, Which of the following must be delivered to a policy owner upon the sale of a individual life insurance policy?
1. insurer’s AM best rating
2. The return sales proposal
3. Buyers guide only
4. Policy summary and buyers guide

A

4. Policy summary and buyers guide

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14
Q

What is the meaning of paying up the policy

A

A paid-up life insurance is a life insurance policy that is paid in full, remains in force, and you don’t have to pay any more premiums. It stays in-force until the insured’s death or if you terminate the policy.

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15
Q

It is acceptable to discriminate the amount of benefits for life and health policies between individuals of
1. Different religious faiths
2. Different classes
3. The same racial category
4. the same country of origin

A

2. DIfferent classes

It is fair to discriminate in the amount of benefits for life and health policies

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16
Q

T has an annuity that Guarantees an income stream 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 and his son for the balance of the 20 years what type of annuity is this?
1. Fixed certain
2. Joint and full survivor
3. life annuity with period certain
4. installment refund

A

life annuity with period certain

The company guarantees to make payments for a set number of years even if you die. If you die before the end of the period referred to as the “period certain,” the annuity will be paid to your beneficiary for the rest of that period. A typical period certain is usually 10 or 20 years.

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17
Q

Who negotiates viatical settlement between a policy owner and a viatical settlement provider?
1. Registered Beater
2. viatical settlement broker
3. Investment advisor
4. viatical settlement negotiator

A

2. Viatical settlement broker

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18
Q

Car producer knowingly misappropriated judiciary money in the amount of $150. Is his second offense. Will likely be charged with?
1. Class 4 felony
2. Class B misdemeanor
3. class 3 felony
4. class A misdemeanor

A
  1. Class 4 Felony.
    If a insurance producer knowingly misappropriates or converts producer money in the amount of $150 or less he or she is guilty of Class A misdemeanor. Repeated occurrences of such actions are subsequently rated as class 4 felony
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19
Q

how soon can the benefit payments begin with a deferred annuity?

A

12 Months
Benefit payments from a deferred annuity can begin at least one year after the purchase date, meaning you typically need to wait a minimum of 12 months before receiving income from the annuity;

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20
Q

What kind of annuity will pay income to the surviving spouse and then to the children after the death of a spouse?

A

Temporary Annuity certain

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21
Q

which of the following is a reinstatement condition?
1. Change in the insuring clause
2. Proof of insurability
3. Premium Increase
4. Premium Decrease

A

proof of insurability

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22
Q

Which military service exclusion class would pay upon the death while the person is on leave

A

If a person dies while on military leave, generally, a “status” military service exclusion clause in an insurance policy would not pay out a benefit, as the mere fact of being in the military, even while on leave, would trigger the exclusion; however, a “results” clause would only apply if the death was directly related to military service, even if occurring during leave.

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23
Q

A life insurance policy that has premiums fully paid up within a stated time period is called?

A

Limited payment insurance

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24
Q

How does life insurance create an immediate estate?
1. That ensures a state received the death benefit
2. Nonforfeiture options are immediately available
3. Cash value may be borrowed upon at anytime
4. After first premium is paid, the phase amount may be available to the beneficiary

A

4. After first premium is paid, the face amount may be available to the beneficiary

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25
With settlement options involved having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary? 1. Extended interest 2. Dividends only 3. Fixed period 4. Interest only
#4. Interest only The settlement option that allows proceeds to remain with the insurer and earnings to be paid to the beneficiary on the monthly basis is called interest only
26
life insurance policies will normally pay for losses arising from
Life insurance policies usually pay for losses arising from most causes of death, but there are some exclusions. These exclusions include: suicide, illegal activities, substance abuse, misrepresentation, war, riot, and civil commotion. It is generally true that life insurance policies cover losses arising from commercial aviation. This means that if an insured individual dies as a result of a commercial plane crash, the policy will typically pay out to the beneficiaries.
27
Which factor would an insured consider when determining whether to accept a group life plan
An insurer considering a group life plan primarily looks at the average age of the group, among other factors, to determine the risk and insurance premiums, whereas number of dependents, incontestable period, and grace period do not generally impact the acceptance of the plan.
28
A life in trans policy that is subject to a contract interest rate is Referred to as?
A life insurance policy that is subject to a contract interest rate is typically referred to as a Universal Life (UL) policy. Explanation: Universal Life policies are designed to fluctuate with current interest rates, meaning the cash value within the policy grows based on a set contract interest rate, allowing for more flexibility in premium payments and potential for higher returns depending on market conditions.
29
Which type of life insurance policy pays the face amount at the end of the specified period if the insured insured is still alive?
A life insurance policy that pays the face amount at the end of a specified period if the insured is still alive is called an endowment life insurance policy. Explanation: Unlike a term life insurance policy which only pays out if the insured dies within the policy term, an endowment policy will pay the death benefit to the policyholder if they are still living at the end of the policy term.
30
a non-contributory health insurance plan helps the insurer avoid
A non-contributory health insurance plan helps the insurer avoid adverse selection. A non-contributory plan is one where the employee pays the entire cost of the plan. In contrast, a contributory plan is one where the employees share the cost. To avoid adverse selection, insurance companies may also establish criteria for issuing group insurance plans, such as: The group must be large Most or all members of the group must participate Insurance must be incidental to the group's operation
31
Once a producers insurance License has been revoked the producer must wait for how many years
A person whose license is revoked or whose application is denied pursuant to this Section is ineligible to apply for any license for 3 years after the revocation or denial.
32
how do interest earnings accumulate in a deferred annuity?
On a tax deferred basis. The distributions of interest (or earnings) are taxed as ordinary income but you won't pay taxes on distributions of the premium or principal you initially deposited.
33
Are Annuities taxable or non taxable?
Annuities can be either qualified or nonqualified, depending on how they are funded and how they are taxed: **Qualified annuities** These are funded with pre-tax dollars, such as money from a 401(k) or IRA, and are subject to certain IRS guidelines. Qualified annuities are taxed as ordinary income, and you may need to make minimum withdrawals starting at age 73. **Nonqualified annuities** These are funded with after-tax dollars, such as money from an individual or joint account. Nonqualified annuities are partially tax-free, with the original contributions returned tax-free and any earnings taxed as ordinary income. There are generally no required minimum withdrawals for nonqualified annuities.
34
Which of the clause protects a policyowner from a misrepresentation caused by an innocent mistake?
An "incontestable clause" protects a policyowner from a misrepresentation caused by an innocent mistake. Explanation: This clause states that after a certain period (usually two years), an insurance company cannot contest a policy based on a misrepresentation unless there was intentional fraud involved, even if the mistake was made innocently by the policyholder.
35
Which annuity payout option allowed the publicity owner to choose a predetermined number of benefit payouts?
The annuity payout option that allows the owner to choose a predetermined number of benefit payouts is called the "Fixed Period" or "Period Certain" option; this option lets you select a specific timeframe (like 10 or 20 years) to receive payments, regardless of when you pass away during that period.
36
What is an alternative to a life settlement?
Accelerated death benefit rider
37
what is a conditional insurance contract?
A conditional insurance contract is one that requires the fulfillment of specific conditions by the insured for the contract to be enforced. This distinguishes it from other types of contracts, which may not have such specific requirements.
38
A rollover from a traditional IRA to another IRA must be done within how many days to avoid tax consequences
60 days
39
An individual most likely will have an insurable interest in ensuring a person's life if.......
An individual is most likely to have an insurable interest in insuring a person's life if: an economic interest exists for the continuance of the insured's life, a financial interest exists at the time of insured's death, there is any blood relationship
40
Intentional withholding of material fact would affect an insurance policy validity is called.......
Concealment
41
what is a guaranteed issue insurance policy?
A guaranteed issue insurance policy is a type of life insurance that doesn't require a medical exam or health questions for approval. It's also known as guaranteed acceptance or guaranteed life insurance.
42
Maria would like an annuity that provides a guaranteed Accumulation or payout what kind of annuity she is looking for?
Maria is seeking an annuity that provides a guaranteed accumulation or payout. The type of annuity she is looking for is called an annuity certain. An annuity certain is a financial product that offers a fixed sum of money paid regularly, which is bought either in a lump sum or over time.
43
What is the difference between fixed annuity and an annuity certain?
A "fixed annuity" guarantees a set interest rate on your investment, meaning you know exactly how much your money will grow over time, while an "annuity certain" refers to a specific type of annuity payout structure where you receive payments for a predetermined period (like 10 years), regardless of how long you live, unlike a life annuity which pays out until you die; essentially, the key difference is that a fixed annuity defines the rate of return, while an annuity certain defines the duration of the payout period.
44
Ownership of life insurance policy may be temporarily transferred with the...
A collateral assignment allows the policy owner to use the policy as collateral for a loan, meaning the lender temporarily gains certain rights to the policy until the loan is repaid, after which full ownership reverts back to the original owner.
45
The stated amount or percentage of liquid assets that an insurer must have on hand that will satisfy future obligation to its policyholder is called....?
Reserves
46
When are policy pays dividends to its policyholders it is said to be...
When a policy pays dividends to its policyholders, it is called a participating policy. Explanation: A participating policy is a type of insurance contract, usually whole life insurance, where the policyholder is entitled to a share of the insurance company's profits in the form of dividends, depending on the company's financial performance.
47
A nonprofit incorporated society that does not have capitalist stock and operates for the sole benefits of its member is known as
fraternal benefit society
48
A group owned insurance company that is formed to assume and describe the liability risk of number is known as a
Risk Retention Groups (RRGs) are insurance companies organized by a group of businesses or institutions in the same line of business to provide liability insurance for the owners or organizers.
49
49
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
Treaty. Under treaty reinsurance each party automatically accepts specific percentage of the insurers business
50
Apni's life insurance that provides coverage for a limited amount of time whether that benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy A decreasing term life insurance policy is a type of life insurance that provides coverage for a set period of time, but the death benefit decreases over time. This type of policy is often used to cover a financial obligation, like a mortgage or loan, that decreases as it's paid off.
51
Does renewing a life insurance policy increases cost?
Yes
52
Would renewing a policy needs a proof of insurability?
No
53
What is the difference between a family maintenance policy and a family income policy
Our family maintenance policy pays a monthly income from the date of death of the insured to the end of pre selected.. Of the face amount of the policy is payable at the end of such reselected. A family maintenance policy allows for the death benefit to be paid out in installments if you die younger than a certain age.
54
A universal life policy is sometimes referred to as an unbundled life poilcy because the owner can see the interest earned, expense charges, expense charges and the 1. inherent risk 2. comission rate 3. inflation factor 4. cost of insurance
#4. cost of insurance
55
Which of the following actions require a plicyowner to provide a proof of insurability in an adjustable life policy?
increase face amount
56
What is the combination of whole life and decreasing term policy insruance is called?
Family Income policy
57
Under a grded premium policy, the premium is higher or lower during the early years of the policy?
Lower during the earlier years of the policy
58
The face value of whole life policy is paid at the time of 1. insured's death 2. insured's death or policy maturity date, which happens first
#2
59
at what point does a whole life insurance policy endow?
A whole life policy endows when the policyholder's cash value equals the death benefit. When this happens, the policyholder receives a tax-free check for the full death benefit, and the policy automatically ends.
60
61
is accumulated interest earned on dividends from an insurance policy taxable?
Yes, accumulated interest earned on dividends from an insurance policy is considered taxable income, meaning you will need to report it on your taxes; while the dividends themselves are usually not taxed as they are considered a return of premium, any interest earned on those accumulated dividends is taxable income
62
Typically a life insurance death benefit is paid by a lump sum payment. A_________ options is a method of distributing a life insurance policy's death beenfit other than byh a lump sum payment.
Settlement
63
What is a single premium immediate annuity?
A single premium immediate annuity (SPIA) with a joint and survivor option provides a guaranteed income for the life of the annuitant and their spouse, with a percentage of the initial payment continuing for the surviving spouse after the annuitant's death
64
A whole life insurance policy owner does not wish to continue making premium payments. Which of the following enables the policy owner to sell the policy for more than its cash value? 1. Cash surrender 2. Life settlement contract 3. buy-Sell arrangement 4. 1031 exchange
A life settlement is when a policy owner sells their life insurance policy to a third party for a cash payment. The payment is usually more than the policy's cash surrender value, but less than the death benefit. In a life settlement, the policy owner sells their life insurance policy to an investor for a lump sum payment. The investor then becomes responsible for the policy, including paying any remaining premiums and collecting the death benefit. The policy owner receives a cash payment that's usually more than the cash surrender value, but less than the policy's death benefit.
65
An insurer may normally delay the payment of a cash value loan or surrender value up to how many months?
6 Months
66
67
When funds Are shifted state from one IRA to another IRA what percentage of the taxes is withheld?
none
68
69
70
71
Additional coverage can be added to a whole life policy by adding a: 1. Payor rider 2. acceleated benefit rider 3. decreasing term rider 4. automatic premium loan rider
#3 decreasing term rider
72
Which of the following non forfeiture options offers the highest death benefit? 1. cash Surrendered 2. reduced paid-up 3. Extended term 4. dividend
#3 extended term
73
The Universal Life Policy is called an unbundled Life Policy because the policyholder can see......
the expense charges, the interest earned, and the cash value.
74
which of these factors do not play a role in the underwriting of a life insurance policy? 1. Avocations 2. Credit status 3. Marital status 4. Occupration
#3 Marital status
75
A life insurance plicy would be considered a wagering contract without? 1. Insurable interest 2. premium payment 3. agent solicitation 4. constructive delivery
1. Insrauble interest
76
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with? 1 Extended term 2 Loan provision 3 Reduced Paid-up 4 Cash Surrender
The correct answer is "Extended term". Choosing the nonforfeiture extended term option allows the policyowner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. Extended-term insurance is often the default nonforfeiture option in the event of nonpayment of premiums.
77
What is the underlying concept regarding level premiums? • Level premiums build cash value quicker in the early years • The early years are charged more than what is needed The early years are charged less than what is needed • Level premiums can only be paid annually
The correct answer is "The early years are charged more than what is needed". The concept of level premiums charges more than needed in early years.
78
Which provision is NOT a requirement in a group life policy? Conversion * Conversion * Grace period * Incontestable period * Accidental
Accidental
79
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n): • 1035 exchange • Inter vivos gift • Non-forfeiture option • Living Benefit
The Accelerated Death Benefit provision in a life insurance policy is also known as a "Living Benefit".
80
Which of these provisions require proof of insurability after a policy has lapsed? • Insuring • Conversion • Reinstatement • Consideration
Reinstatement
81
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? • Interest Only Fixed Period Fixed Amount • Life Income
The Life Income settlement option pays a specified amount to the annuitant with no residual value payable to a beneficiary.
82
A policyowner is able to choose the frequency of premium payments through what policy feature? • Consideration • Payor benefit • Premium Mode • Assignment provision
Premium Mode
83
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? • Extended term option Conversion provision 1035 Exchange Incontestable period
Conversion provision
84
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? • One policy is owned and paid for by the company • Each partner must own a policy on the other partners One policy is owned by the company and premiums are split equally among the partners • Each partner owns their own individual policy
Each partner must own a policy on the other partners
85
All are true statements regarding the underwriting process, EXCEPT: • Signed consent from the applicant must be provided in order to test for AIDS and HIV virus • AIDS and HIV virus exams can be conducted in a discriminatory fashion The cost of any examination is paid for by the insurer • The original application is the primary source of information used in the underwriting process
AIDS and HIV virus exams can be conducted in a discriminatory fashion
86
The amount of coverage on a group credit life policy is limited to: • half of the insured's total loan value the insured's total loan value 75% of the insured's total loan value • $25,000
the insured's total loan value
87
K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs? • Endowment Straight life • 10-Year Renewable Term • Joint life
Straight life insurance
88
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of additional Term Life coverage at any time additional Term Life coverage at specified intervals additional Whole Life coverage at any time additional Whole Life coverage at specified times
additional Term Life coverage at specified intervals
89
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? Collect premium from M's estate • Deny the claim Pay face amount minus the past due premium Subtract past due premium from cash value
Pay face amount minus the past due premium
90
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the: Policy Loan provision • Automatic Premium Loan provision Accelerated Benefits provision Consideration clause
Policy Loan provision
91
A Life insurance policyowner would like to take out a policy loan against the cash value in his Whole Life policy. The interest rate applied to this loan may vary over time. This is referred to as a(n) rate loan. Fluctuating Fixed • Variable Increasing
The interest rate on a Variable rate cash value loan may vary over time.
92
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? Void the policy if found during the Contestable period Void the policy, no matter when it is discovered • Void the policy at any time only if it is found to be material • Void the policy only if it is discovered during the Contestable period and proven to be material
• Void the policy only if it is discovered during the Contestable period and proven to be material
93
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? • P cannot borrow against the policy's cash value while disabled • P will have to pay income taxes on the amount of premiums waived P will still receive declared dividends • P cannot assign ownership of the policy while premiums are being waived
P will still receive declared dividends
94
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? Nonforfeiture Entire Contract Insuring Clause Owner's Rights
"Owner's Rights" states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy.

Insurance License (15 decks)

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