Life Insurance deck 2 Flashcards by Unknown Unknown

Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting At, what is the maximum penalty that may be imposed on Ken.
1000
3000
5000
7000

5000

How well did you know this?

Not at all

Perfectly

Fraternal Benefit Society has each of the following characteristics EXCEPT:
Incorporated
Without capital stock
Exist for profit
Exist for the benefit of its
members

Exist for profit

How well did you know this?

Not at all

Perfectly

An insurers claim settlement practices are regulated by the:
Securities and Exchange Commission (SEC)
National Association of Claims Adjusters (NACA)
National Association of Insurance Commissioners (NAIC)
State Insurance Departments

State Insurance Departments

How well did you know this?

Not at all

Perfectly

A plan in which an employer pays insurance benefits from a fund derived from the employer’s current revenues are called?
A self-derived plan
A multiple employer plan
A blanket plan
A self funded plan

A self-funded plan

How well did you know this?

Not at all

Perfectly

Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?
0
5000
10000
15000

10000

How well did you know this?

Not at all

Perfectly

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
Nonparticipating life insurance policy
Participating life insurance policy
Divisible surplus life insurance policy
Straight life insurance policy

Participating life insurance policy

How well did you know this?

Not at all

Perfectly

A nonparticipating company is sometimes called an:
Alien insurer
Mutual insurer
Reinsurer
Stock insurer

Stock Insurer

How well did you know this?

Not at all

Perfectly

Why are dividends from a mutual insurer not subject to taxation?
Because insurance premiums are tax deductible
Because dividends are already subject to capital gains
Because dividends are payable directly to the policy holder
Because dividends are considered to be a return of premium

Because dividends are considered to be a return or premium

How well did you know this?

Not at all

Perfectly

Which of the following is considered to be an event or condition that increases the probability of an insured’s loss?
Risk
Hazard
Indemnity
Peril

Hazard

How well did you know this?

Not at all

Perfectly

In an insurance contract, the applicant’s consideration is:
Offer and acceptance
Premium only
Statements made in the application and the premium
Statements made in the application only

Statements made in the application and the premium

How well did you know this?

Not at all

Perfectly

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called:
Fiduciary bond
Errors and omissions
Fiduciary trust
Errors and oversights

Errors and omissions

How well did you know this?

Not at all

Perfectly

Who is responsible for assembling the policy forms for insureds?
State Insurance Departments
NAIC
Insurance carriers
Insurance producers

Insurance carriers

How well did you know this?

Not at all

Perfectly

Which of the following BEST describes a conditional insurance contract?
A contract that requires certain conditions or acts by the insured individual
A contract that has the potential for the unequal exchange of consideration for both parties
A contract where one party adheres to the terms of the contract
A contract where only one party makes any kind of enforceable contract

A contract that requires certain conditions or acts by the insured individual

How well did you know this?

Not at all

Perfectly

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as:
Apparent
Estoppel
Aleatory
Unilateral

Aleatory

How well did you know this?

Not at all

Perfectly

The authority granted to a licensed producer is provided via the:

 Producer’s apparent authority
 Written contract
 Law of agency
 Principal capacity

Law of agency

How well did you know this?

Not at all

Perfectly

All of the following are elements of an insurance policy EXCEPT:
Definitions
Other insurance
Claim forms
Conditions

Claim forms

How well did you know this?

Not at all

Perfectly

Which of these describes the result of a modified endowment contract that failed to meet with the seven-pay test?
Policy loans are disallowed
The premium payments will be tax deductible
Pre-death distributions are typically taxable
Withdrawals will be prohibited

Pre-death distributions are typically taxable

How well did you know this?

Not at all

Perfectly

Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?
Policyowner may increase or decrease the premium payments
Policyowner may increase or decrease the face amount
Policyowner can contribute large sums of money
Policyowner has the right to select the investment which will provide the greatest return

Policyowner has the right to select the investment which will provide the greatest return

How well did you know this?

Not at all

Perfectly

A modified endowment contract (MEC) is best described as:
A life insurance contract which accumulates cash values higher than the IRS will allow
An annuity contract which was converted from a life insurance contract
A modified life contract which enjoys all the tax advantages of whole life insurance
A life insurance contract where all withdrawals prior to age 65 are subject to a 10% penalty

A life insurance contract which accumulates cash values higher than the IRS will allow

How well did you know this?

Not at all

Perfectly

Jonas is a whole life insurance policy owner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
Child term rider
Payor rider
Family maintenance rider
Family income rider

Child term rider

How well did you know this?

Not at all

Perfectly

Shawn, Mike, and Dave are brothers who have a 100000 first to die joint life policy covering all 3 of their lives. If Mike dies first, the policy proceeds:
Will no longer provide insurance protection
Will go to mike’s estate
Will be divided by probate
Will not be paid until the last brother dies

Will no longer provide insurance protection

How well did you know this?

Not at all

Perfectly

Which type of life insurance is normally associated with a Payor benefit rider?
Juvenile insurance
Family income insurance
Spouse insurance
Term rider

Juvenile insurance

How well did you know this?

Not at all

Perfectly

The premium for a modified whole life policy is:
Higher than the typical whole life policy during the first 5 years and then lower than typical for the remainder
Lower than the typical whole life policy during the first few years and then higher than typical for the remainder
Normally graded over a period of 20 years
Level for the first 5 years then the decreasing for the remainder of the policy

Lower than the typical whole life policy during the first few years and then higher than typical for the remainder

How well did you know this?

Not at all

Perfectly

Rob purchased a standard whole life policy with a 500000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals 250000. Rob recently died at age 60. The death benefit would be:
250000
750000
375000
500000

500000

How well did you know this?

Not at all

Perfectly

Which of the following are the premium payments for a universal life policy NOT used for? Death benefits Cash value Loading costs Separate account investments

Separate account investments

A renewable term life insurance policy can be renewed: At a predetermined date or age, regardless of the insured’s health Only if the insured provides evidence of insurability Anytime at the policy owner’s request Typically with no change in premium

At a predetermined date or age, regardless of the insured’s health

Which is a corridor in relation to a universal life insurance policy? The gap between the total death benefit and the policy’s cash value The gap between when a claim is filed and when the death benefit is received The amount of interest that has accumulated in the policy’s cash value The point in time when the policy’s cash value reaches 0

The gap between the total death benefit and the policy’s cash value

All of these statements concerning whole life insurance are false EXCEPT: Policyowner can take out a policy loan up to the face amount When a whole life policy is surrendered, income taxes may be owed Coverage is normally temporary The death benefit is not affected by outstanding loans

When a whole life policy is surrendered, income taxes may be owed

An interest-sensitive life insurance policyowner may be able to withdraw the policy’s cash value interest free. The provision that allows this is called: Partial surrender Subrogation Automatic premium loan Accelerated death benefit

Partial surrender

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive? Adjustable life policy Modified life policy Endowment policy Universal life policy

Endowment policy

Which policy feature makes a universal life policy different from a whole life policy? A fixed cash value A flexible premium schedule A fixed death benefit The ability to take out a policy loan

A flexible premium schedule

When a decreasing term policy is purchased, it contains a decreasing death benefit and: Increasing premiums Level premiums Decreasing premiums Variable premiums

Level premiums

How are survivorship life insurance policies helpful in estate planning? Provide funds to help fund retirement Provide funds to help pay taxes Provide funds for funeral expenses Provide tax deductions for premium payments

Provide funds to help pay taxes

What does the word level in level term describe? The period of coverage The face amount The premium payments The cash value

The face amount

A life insurance policy written on one contract for two people in which it is payable upon the first death is called: Split Shared Joint Survivorship

Joint

Which of these describe the result of a modified endowment contract that failed to meet the 7 pay test? Policy loans are disallowed The premium payments will be tax deductible Pre-death distributions are typically taxable Withdrawals will be prohibited

Pre-death distributions are typically taxable

Which dividend option would an insurer invest the policy owner’s money and add any interest earnings as the dividends accrue? Accumulation at interest option Cash dividend option Paid-up additions option One-year term dividend option

Accumulation at interest option

All of the following riders can increase the death benefit amount EXCEPT: Cost of living Waiver of premium Accidental death rider Guaranteed insurability

Waiver of premium

A whole life insurance policy accumulates cash value that becomes: The policy loan value which the insured may borrow against The death benefit The source of funding for administration fees A source of funding a term rider to the policy

The policy loan value which the insured may borrow against

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy’s inception, the insurer will only be liable for a return of premiums paid: Minus indebtedness and with interest During the last 12 months Minus indebtedness and without interest During the last 6 months

Minus indebtedness and without interest

What is the purpose for having an accelerated death benefit on a life insurance policy? It allows for a spouse to be added as a rider to a life insurance policy It allows for policy loans to be advanced to the insured in the event of unemployment It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill It allows for a third party to purchase a life insurance policy at a discounted rate and immediately advance a portion of the death benefit

It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

The automatic premium loan provision authorizes an insurer to withdraw from a policy’s cash value the amount of: Any interest payable from an outstanding policy loan balance Past due premiums that have not been paid by the end of the grace period The outstanding policy loan balance Any surrender charges owed by the policyowner

Past due premiums that have not been paid by the end of the grace period

Which of these is NOT a characteristic of the Accelerated Death Benefit option? The face amount and policy premium are not affected by the payment Before payment of the benefit is made, specific conditions must exist, such as suffering from terminal illness There may be a dollar limit on the maximum benefit The benefit can be offered as a rider at a specific extra cost or may be at no cost

The benefit can be offered as a rider at a specific extra cost or may be at no cost

Which type of rider will waive the premium on a child’s life insurance policy if the parent paying the premium dies? Waiver of premium Juvenile waiver Guaranteed insurability Payor benefit

Payor benefit

A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? Reduction of premium dividend option Extended term option Paid up option Cash dividend option

Reduction of premium dividend option

Which situation accurately describes a reduced paid-up nonforfeiture option? Policy has a decreased face amount Face amount of the new policy equals that of the original policy Cash value is surrendered to policyowner Premiums must continue to be paid

Policy has a decreased face amount

Which of these is NOT considered to be a common life insurance nonforfeiture option? Cash surrender Extended term insurance Reduced paid-up insurance Life income annuity

Life income annuity

A guaranteed issue insurance policy has no: Initial premium requirement Incontestable period Waiting period Medical underwriting

Medical underwriting

What would be an expense factor in an insurance program? Premiums collected Mortality costs Opportunity costs Investment interest

Mortality costs

A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the Estate of the insured only Estate of the deceased beneficiaries only Named contingent beneficiaries only Named living primary beneficiaries

Named living primary beneficiaries

Proceeds from a life insurance policy are protected from the beneficiary’s creditors by which clause? Protection clause Creditor clause Spendthrift trust clause Beneficiary trust clause

Spendthrift trust clause

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid? Individual Group Class Estate

Individual

Insurance premium is determined by each of the following factors EXCEPT: Mortality Interest Expenses Liquidity

Liquidity

What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured? Policy dividend Specified amount of money Policy’s cash value Funeral expense fund

Specified amount of money

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? A waiver of premium A replacement form A good health statement An exclusion

A good health statement

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT: The producer The insured The policy owner The beneficiary

The beneficiary

What guarantees that the statements supplied by an insurance applicant are true? Assurance Promise Representation Warranty

Warranty

A field underwriter’s main task is: Assign a risk classification to the insured Report medical information to the Medical Information Bureau (MIB) To ensure an applicant’s medical information is accurate and complete To approve or decline an applicant

To ensure an applicant’s medical information is accurate and complete

Which of the following does a life insurance policy summary normally include? The policy’s cash value Agent’s report Policy owner’s MIB report Stated Beneficiary

The policy’s cash value

In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest? Individuals are assumed to have insurable interest in themselves Insurable interest is established by a court of law Insurable interest can be established sufficiently by sentimental attatchment alone Insurable interest must exist at the time of the application

Insurable interest can be established sufficiently by sentimental attachment alone

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies? Life only Life with period certain Cash refund Installment refund

Life only

Which of these statements regarding the annuitant is CORRECT? The contract can only be assigned by the annuitant The annuitant is the only individual who can surrender the contract The annuitant must also be the beneficiary The annuitant’s life expectancy determines the annuity payments

The annuitant’s life expectancy determines the annuity payments.

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? Fixed period Interest only Installment refund Life income

Life income

Who assumes the investment risk with a fixed annuity contract? The owner The annuitant The insurer The beneficiary

The insurer

An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made. Variable annuity Refund annuity Rebate annuity Return annuity

Refund annuity

An insured’s status under Social Security can be describes as: Partially insured Actively insured Fully insured Completely insured

Fully Insured

Which of the following employers is required to follow ERISA REGULATIONS? A local government with 150 employees A church with 30 employees A locals electrical supply company with 12 employees A Canadian company with 300 employees working in the United States

Local electrical supply company with just 12 employees.

The acceptance of a credit life application requires the submission of a certificate of insurance to the insured within __________ days 10 20 30 40

A foreign insurance company doing business in Idaho: Is a company domiciled under the laws of another state Is not subject to Idaho insurance laws Is a company that was formed under the laws of another country Is only authorized to write business outside the United States

Is a company domiciled under the laws of another state

Which of the following is required for an insurer to conduct business in this state? Certificate of admission Certificate of domestication Certificate of authenticity Certificate of authority

Certificate of authority

In Idaho, a producer may have his/her license revoked for which of the following acts? Loss of insurer appointment Producing an inadequate amount of new premium Sharing commission with another licensed agent Failure to pay state income tax

Failure to pay state income tax

An example of misrepresentation is: Making a public statement that contains false or malicious information about an insurance company Charging a different rate for someone in the same actuarial class Offering premium rebate or a special advantage of any kind to a consumer as an inducement to purchase a contract of insurance Providing incorrect, misleading, incomplete or materially untrue information in the license application

Providing incorrect, misleading, incomplete, or materially untrue information in the license application

A temporary license is valid for a maximum of _____ days: 30 60 90 180

180

Which of the following is NOT a circumstance to which a temporary producer’s license can be issued? Representation of a producer called to active military duty Prospective producer who is waiting to take the state licensing examination A widow of a deceased producer Any circumstance deemed by the Commissioner to be in the public’s best interest

Prospective producer who is waiting to take the state licensing exam

Terminally ill life insurance policy owners may sell their policy at a discount to a third party. This type of agreement is called an? Annuitized settlement Life settlement Accelerated benefit Nonforfeiture value

Life settlement

A false written oral statement made by a producer for the purpose of replacing an existing policy to the detriment of the insured is: Twisting Illegal inducement Discrimination Defamation

Twisting

Violations of US Code title 18 section 1033, may result in Fine and/or imprisonment Cease and desist order Suspension of producer’s license Loss of company appointment

Fine and/or imprisonment

When credit life is written, evidence of coverage (a policy or certificate of insurance) must be delivered to the debtor when the debt is incurred or within how many days? 10 20 30 60

When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer? 1 month 2 months 3 months 4 months

2 months

Twisting is Sharing commissions with other producers Offering employment as an incentive to purchase insurance Replacing an insurance policy from one insurer to another based on misrepresentation Making malicious public statements regarding an insurer’s financial condition

Replacing an insurance policy from one insurer to another based on misrepresentation

The Idaho Life and Health Insurance Guaranty Association protects life insurance death benefit claims up to: 500000 400000 300000 200000

300000

A producer has allowed his/her license to lapse by failing to complete the required continuing education credits. The license may be reinstated by completing the requirement within____ months of the renewal date. 6 8 12 18

A producer is required to maintain insurance transaction records for ______ years? 3 7 5 9

Replacement can be BEST described as Exchanging a new policy for one already in force Converting term insurance to a permanent policy An illegal transaction performed by a producer An existing policy being renewed by the application on the renewal date

Exchanging a new policy for one already in force

A producer may be disciplined by the director for which of the following actions? Being accused of a felony Misappropriation of premium funds Sharing commissions with other licensed producers Failing to meet insurer production requirements

Misappropriation of premium funds

What is a nonprofit entity, operating under a lodge system? Fraternal Paternal Maternal Reciprocal

Fraternal

A life settlement broker may NOT: Advertise their services Recommend a settlement provider to a viator Charge fees Make any transactions before being approved for a license

May any transactions before being approved for a license

Within ________days after policy delivery, an individual life insurance policy can be returned for a 100% premium fund. 10 20 30 40

Idaho requires a licensee to complete _____ hours of continuing education hours each licensing period. 12 24 36 48

___________ is the authority given to a producer to sell solicit, or negotiate policies on behalf of the insurer. Admission Appointment Adjustment Authorization

Appointment

The Director is appointed by which of the following? Legislature Senate Secretary of State Governor

Governor

A producer is hired to sell insurance for an insurer. Upon submission of the agency contract application, the producer MUST be appointed by the insurer within _________ days. 7 15 21 30

If the director determines that in individual has engaged in an act violating state insurance laws, the Commissioner may issue an order requiring the violator to: Report to prison Stop engaging in those acts Appear before a jury of his/her peers Perform community service

Stop engaging in those acts

An example of life insurance replacement is Canceling disability policy to buy a term life policy Canceling a term life policy to buy a whole life policy Canceling a long term care policy to buy a whole life policy Canceling a whole life policy to buy a major medical policy

Canceling a term life policy to buy a whole life policy

Tim’s individual life insurance policy has recently lapsed. His policy may be reinstated at any time within __________ years? 1 2 3 4

An example of misrepresentation is: Offering a premium rebate or special advantage of any kind to a consumer as an inducement to purchase a contract of insurance Making a public statement that contains false or malicious information about an insurance company Charging a different rate for someone in the same actuarial class Convincing a prospective insured to purchase a policy by exaggerating the benefits of the policy

Convincing a prospective insured to purchase a policy by exaggerating the benefits of the policy

Every producer licensed in Idaho must notify the Director within _______ days of any change of address. 15 20 25 30

A valid contract: Does not include consideration Must be bonded Is not binding Must include offer and acceptance

Must include offer and acceptance

If a producer is found to have violated an Idaho insurance statute, a fine can be given up to_____________ for each violation. 500 1000 1500 2000

1000

A fraternal benefit society has each of the following characteristics EXCEPT: Incorporated Without capital stock Exists for profit Exists for the benefit of its members

Exists for profit

The Director serves a term of _______ years 2 3 4 5

Which of the following unfair trade practices involves a producer who makes public, malicious statements about an insurer’s financial condition? Boycotting Defamation Unfair discrimination Misrepresentation

Defamation

Producer appointments are filed with the Director by the: Producer Insurer Director Governor

Insurer

All of the following activities require an insurance producer’s license EXCEPT: Underwriting Negotiating Selling Soliciting

Underwriting

An insurance company that has qualified and received a Certificate of Authority from the Director to sell insurance in this state is called an: Fraternal organization Nonadmitted insurer Unauthorized insurer Authorized insurer

Authorized insurer

An insurer would be committing Unfair Discrimination if coverage was denied based upon: HIV positive result Marital status Diabetes A mental disorder

Marital status

A non-authorized (nonadmitted) insurance company: Is protected by the Guaranty Fund Is not protected by the Guaranty Fund May only appoint non-admitted producers May be granted a temporary certificate of authority until they are admitted

Is not protected by the Guaranty Fund

A producer must report to the Director any administration action or criminal charges taken against the producer within ____________days of the final disposition of the matter. 5 10 20 30

A producer who is licensed in Idaho but resident in another state is called a: Nonresident producer Foreign producer Reciprocal producer Limited lines producer

Nonresident producer

If an insurer terminates a producer’s appointment, it must notify the Director within________ days of the termination. 20 25 30 35

Idaho requires that a licensee completes ________ hours of continuing education on the subject of ethics every reporting period. 1 2 3 4

Life Insurance deck 2 Flashcards

Pass (112 cards)