Examinicion De Vida Practica B
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Which statement is False concerning insurance company regulations?
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Insurers may not advertise their membership int the Guarantee Association
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An insurer suffering from an impairment of their minimum required paid-in capital is labeled solvent
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The commissioner may begin conservation proceedings against companies who cannot meet solvency regulations.
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An insurer may be liquidated if conservation proves to be futile.
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Examinacion de vida practica B
- 2.
Which of the following transactions would most likely be declined due to lack of insurable interest?
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A parent buys insurance on their adult child.
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An employee insures their employer in the fear of losing their job
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A spouse insures the other spouse.
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A local hospital insures its chief of surgery.
Correct Answer
A. An employee insures their employer in the fear of losing their jobExplanation
Insurable interest refers to the financial or legal interest that a person has in the subject matter of an insurance policy. In this case, an employee insuring their employer in the fear of losing their job would most likely be declined due to lack of insurable interest. The employee does not have a financial or legal interest in the employer, and therefore there is no valid reason for them to insure the employer. Insurable interest requires that the insured would suffer a financial loss if the insured event occurs, which is not the case in this scenario.Rate this question:
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- 3.
All of the following statements about policy provisions are true, Except
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Death during the grace period results in a full death benefit being paid
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Suicide during the policy's first two years results in policy rescession.
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The insuring clause states the insurer's promise to pay a death benefit if premiums are paid, and proof of death is received.
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The automatic premium loan can keep a policy in force when payments are missed and there is sufficient cash value to pay the premium.
Correct Answer
A. Death during the grace period results in a full death benefit being paid -
- 4.
A client has a history of DUIs. To his insurer, they see him as a _________ hazard
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Physical
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Moral
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Morale
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Legal
Correct Answer
A. MoraleExplanation
The correct answer is "Morale". This is because the client's history of DUIs indicates a lack of responsibility and judgment, which can affect their overall attitude and behavior. The insurer would view the client as a morale hazard, as their past actions suggest a potential for future risky behavior that could result in accidents or insurance claims.Rate this question:
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- 5.
Which statement about Reinstatement is False?
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Reinstatement usually requires an application with underwriting questions, but may require any physical exams.
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Reinstatement requires payment of past due premium plus interest.
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A reinstated policy's premium is based upon the insured's original age.
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The reinstated policy is incontestable if the first time it was in force it already passed the two year mark
Correct Answer
A. The reinstated policy is incontestable if the first time it was in force it already passed the two year markExplanation
Reinstatement does not automatically make a policy incontestable. The incontestability clause typically applies to a policy from the original issue date and not from the reinstatement date. Therefore, even if a reinstated policy has been in force for over two years, it can still be contested by the insurer if there are any misrepresentations or fraud involved.Rate this question:
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- 6.
The person who will receive the benefit of an annuity and whose life the payout is based on when the contract is purchased is called the:
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Policyowner
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Annuitant
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Beneficiary
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Insured
Correct Answer
A. AnnuitantExplanation
The person who will receive the benefit of an annuity and whose life the payout is based on when the contract is purchased is called the annuitant. This means that the annuity payments will be made to the annuitant for the duration of their life, and upon their death, the payments may cease or be transferred to a beneficiary. The policyowner is the person who owns the annuity contract, while the insured refers to the person whose life is being insured in a life insurance policy.Rate this question:
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- 7.
The Roth and Traditional IRAs have some similarities. Which of the following in Not true?
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Both have penalties for early withdrawal.
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Both have tax deferred.
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Both are tax deductible to the investor.
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Both allow the investor to invest for themselves and their non-income earning spouse.
Correct Answer
A. Both are tax deductible to the investor.Explanation
Both the Roth and Traditional IRAs have tax advantages, but they differ in terms of tax deductibility. Contributions to a Traditional IRA are tax-deductible, meaning they can be deducted from the investor's taxable income for the year. However, contributions to a Roth IRA are not tax-deductible. Instead, withdrawals from a Roth IRA are tax-free in retirement. Therefore, the statement "Both are tax deductible to the investor" is not true.Rate this question:
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- 8.
A policy that pays the face amount if the insured dies before a specified date, or lives to that specified date. This best describes:
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Term insurance.
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Social Security.
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An endowment policy.
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An annuity.
Correct Answer
A. An endowment policy.Explanation
An endowment policy is a type of insurance policy that pays out the face amount if the insured dies before a specified date or lives to that specified date. This means that regardless of whether the insured dies or survives until the specified date, the policy will pay out the face amount. Term insurance, on the other hand, only pays out if the insured dies within a specified term. Social Security and annuities are not directly related to this description.Rate this question:
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- 9.
. All of the following statements about life insurance policy illustrations and the senior market are correct Except:
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Guaranteed elements must be emphasized in bold print.
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To be understandable, policy illustrations must follow certain formats so the insured can make informed buying decisions.
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Illustrations must note that they are only an illustration.
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D. The illustration will note that both guaranteed and non-guaranteed elements will remain unchanged for the years illustrated.
Correct Answer
A. D. The illustration will note that both guaranteed and non-guaranteed elements will remain unchanged for the years illustrated.Explanation
The correct answer is D. The illustration will note that both guaranteed and non-guaranteed elements will remain unchanged for the years illustrated. This statement is incorrect because illustrations must clearly state that non-guaranteed elements are subject to change based on various factors such as market conditions and company performance.Rate this question:
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- 10.
All of the following statements about agents are true Except:
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Independent agents can be appointed by multiple insurers.
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If an agent submits business to an insurer that the agent is not appointed with, the insurer can submit a notice of appointment within 14 days to validate the relationship.
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Exclusive agents work for themselves.
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Agents need to complete 4 hours of ethics continuing education every license renewal as a part of their regular CE hours.
Correct Answer
A. Exclusive agents work for themselves.Explanation
The given correct answer is "Exclusive agents work for themselves." This statement is false because exclusive agents work exclusively for one insurer and are not self-employed. They have a contractual agreement with a single insurance company and represent only that company's products and services.Rate this question:
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- 11.
Which statement is Not True about insurance sales?
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Mass marketing techniques usually involve selling insurance without the use of an agent.
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Brokers represent insures in negotiating coverage with various insureds.
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Insurance agents are not authorized to sell life insurance.
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A An agent or broker must exercise care when using care when using apparent authority during the sales process.
Correct Answer
A. Brokers represent insures in negotiating coverage with various insureds.Explanation
The statement "Brokers represent insures in negotiating coverage with various insureds" is not true about insurance sales. Brokers actually represent insureds (policyholders) in negotiating coverage with various insurers. They act as intermediaries between the insureds and the insurance companies, helping the insureds find the best coverage and negotiate favorable terms.Rate this question:
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- 12.
In comparing the purchase of individual life insurance to acquiring group life, which statement is Not True?
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Group insurance is automatic and requires less medical information than the individual coverage.
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Group life tends to have a lower premium per person than individual life.
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Both provide a tax free death benefit .
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D. Group insurance has a non-deductible premium while individual insurance has a tax deductible premium to the payor.
Correct Answer
A. D. Group insurance has a non-deductible premium while individual insurance has a tax deductible premium to the payor.Explanation
The statement "Group insurance has a non-deductible premium while individual insurance has a tax deductible premium to the payor" is not true. In reality, it is the opposite. Individual insurance premiums are typically non-deductible, while premiums for group insurance are often tax deductible for the employer.Rate this question:
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- 13.
Which of the following is Not a personal use of Life Insurance?
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A client buys cash value insurance to fun their children's college education.
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A client buys insurance to pay off their mortgage should they pass away prematurely.
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A client buys insurance to fund a buy-sell agreement.
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A client buys insurance to provide future income to a surviving spouse.
Correct Answer
A. A client buys insurance to fund a buy-sell agreement. -
- 14.
All of these statements about life insurance Settlement Options are False, except:
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Fixed amount is the default option when no options is selected.
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Life income payments are income tax free.
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Life income with 10 years certain provides at least 120 months of payments.
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Settlement options like fixed period are good ways to provide an income to a beneficiary who cannot handle large sums of money.
Correct Answer
A. Life income with 10 years certain provides at least 120 months of payments.Explanation
The statement "Life income with 10 years certain provides at least 120 months of payments" is the only true statement among the given options. The other statements are false. Fixed amount is not the default option, life income payments are not income tax free, and settlement options like fixed period may not be suitable for beneficiaries who cannot handle large sums of money.Rate this question:
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- 15.
Under which Life Settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit?
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Interest only option
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Accumulate with the interest option.
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Life income option
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Cash option.
Correct Answer
A. Interest only optionExplanation
Under the interest only option, the insurer retains the death benefit but pays the beneficiary the earnings on the death benefit. This means that the beneficiary will receive the interest earned on the death benefit, while the actual death benefit remains with the insurer. This option allows the beneficiary to receive some financial benefit while still keeping the death benefit intact.Rate this question:
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- 16.
Any person to whom the commissioner has issued a seizure order and who refuses to deliver any books, records, or assets of an insurer faces:
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A felony punishable by a fine of up to $1,000, a year in prison, or both.
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A misdemeanor punishable by a fine up to $1,000, a year in jail, or both.
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A misdeameanor punishable by a $5,000 fine, if unintentional, or 10,000, if intentional.
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Administrative fee only.
Correct Answer
A. A misdemeanor punishable by a fine up to $1,000, a year in jail, or both.Explanation
If a person refuses to deliver any books, records, or assets of an insurer after a seizure order has been issued by the commissioner, they face a misdemeanor. This means they can be punished by a fine of up to $1,000, a year in jail, or both.Rate this question:
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- 17.
7. The insured dies 6 months after the policy issue date. Upon death of the insured, it is determined that the applicant made a Material Misstatement on the application. What is the most likely course of action for the insurer?
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Rescind the policy.
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An administrative hearing by the DOI
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A hearing by a court of law to determine the appropriate actions.
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No course of action allowed since the policy has already been issued.
Correct Answer
A. Rescind the policy.Explanation
The most likely course of action for the insurer is to rescind the policy. This means that the insurer will cancel the policy and treat it as if it never existed. This is because it is determined that the applicant made a material misstatement on the application, which means that the applicant provided false or misleading information that could have affected the insurer's decision to issue the policy. Rescinding the policy allows the insurer to avoid paying out any benefits or claims associated with the policy.Rate this question:
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- 18.
All of the following describe differences between binding receipts and conditional receipts, Except:
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Conditional receipts are commonly used for life insurance applications.
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No claim is paid with either receipt until a policy is issued.
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The binding receipt always provides immediate coverage from the date of the receipt.
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The conditional receipt can provide coverage from the date of application once the application is later approved by underwriting.
Correct Answer
A. No claim is paid with either receipt until a policy is issued.Explanation
The given answer, "No claim is paid with either receipt until a policy is issued", is incorrect. Both binding receipts and conditional receipts can provide coverage before a policy is issued. The main difference between the two is that a binding receipt always provides immediate coverage from the date of the receipt, while a conditional receipt can provide coverage from the date of application once the application is later approved by underwriting. Therefore, this answer is not a difference between binding receipts and conditional receipts.Rate this question:
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- 19.
According to the California DOI (Dept. of Insurance), and insurer whose articles of incorporation are registered in Oslo, Norway is considered:
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A domestic insurer
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A foreign insurer.
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An alien insurer.
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An admitted insurer.
Correct Answer
A. An alien insurer.Explanation
An insurer whose articles of incorporation are registered in Oslo, Norway is considered an alien insurer because it is a foreign insurer that is not incorporated in the United States. Alien insurers are typically subject to different regulations and requirements than domestic insurers or insurers from other states within the United States.Rate this question:
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- 20.
Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?
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Guarantee insurability/future purchase option.
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Waiver of premium.
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Accelerated death benefit.
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Double indemnity rider.
Correct Answer
A. Guarantee insurability/future purchase option.Explanation
The Guarantee insurability/future purchase option rider allows the insured to increase the face amount of their life insurance policy without having to provide proof of insurability. This means that the insured can increase their coverage in the future without having to go through the underwriting process again, regardless of any changes in their health or other risk factors. This rider provides flexibility and ensures that the insured can adjust their coverage as their needs change, without the risk of being denied coverage or facing higher premiums.Rate this question:
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- 21.
What Nonforfeiture Option allows a policy owner to use existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time?
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Reduced paid-up insurance
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Cash surrender value.
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Extended term insurance.
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Extended paid-up insurance.
Correct Answer
A. Extended term insurance.Explanation
Extended term insurance is the correct answer because it allows a policy owner to use the existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time. This means that the policy owner can continue to have coverage, albeit for a shorter period, without having to pay any additional premiums. This option is useful for policy owners who may not be able to afford the premiums for the full term of the policy but still want to maintain some level of coverage.Rate this question:
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- 22.
In which type of policy does the insurer apply Flexible Premium to pay for the cost of insurance and expenses and then uses the remaining balance plus interest to build the cash value account?
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Universal Life
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Adjustable life.
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Renewable term.
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Whole life.
Correct Answer
A. Universal LifeExplanation
Universal Life insurance is a type of policy where the insurer applies a flexible premium to pay for the cost of insurance and expenses. The remaining balance, along with interest, is then used to build the cash value account. This means that the policyholder has the option to adjust their premium payments and the death benefit amount as needed. This flexibility allows for potential growth of the cash value over time, making Universal Life insurance a popular choice for those who want both insurance coverage and a savings component.Rate this question:
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- 23.
Which of the following is Not a qualified 1035 Exchange?
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A whole life policy exchanged for a variable life policy.
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A variable annuity exchanged for a variable universal life policy.
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A variable annuity exchanged for fixed annuity.
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A universal life policy exchanged for a whole life policy.
Correct Answer
A. A variable annuity exchanged for a variable universal life policy.Explanation
A variable annuity exchanged for a variable universal life policy is not a qualified 1035 Exchange because both the variable annuity and the variable universal life policy are considered to be similar types of investment products. In order for a 1035 Exchange to be qualified, the exchange must be made between different types of insurance policies, such as exchanging a whole life policy for a variable life policy or a variable annuity for a fixed annuity.Rate this question:
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- 24.
Which of the following is Not an acceptable underwriting classification?
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Sub-standard.
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Preferred
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Declined.
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Standard.
Correct Answer
A. Declined.Explanation
The correct answer is "Declined" because it refers to a classification where an applicant is denied coverage due to high risk factors. Underwriting classifications typically include sub-standard (high risk), preferred (low risk), and standard (average risk), but declined is not a classification as it signifies a denial of coverage.Rate this question:
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- 25.
The provision that protects the proceeds of a life insurance policy from attachment by the beneficiary’s creditors after the insured’s death is known as the:
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Spendthrift (Trust) clause.
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Common Disaster Caluse
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Incontestability Clause.
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The Beneficiary Protection Clause.
Correct Answer
A. Spendthrift (Trust) clause.Explanation
The provision that protects the proceeds of a life insurance policy from attachment by the beneficiary's creditors after the insured's death is known as the spendthrift (trust) clause. This clause ensures that the beneficiary cannot use the life insurance proceeds as collateral or be forced to use them to pay off their debts. Instead, the proceeds are protected and can only be used for the intended purpose, such as providing financial support to the beneficiary.Rate this question:
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- 26.
Which of the following is an Incorrect statement about a client’s privacy rights?
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Signed consent is required before an Attending Physician's Statement.
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Abuse of information found within medical records could result in a HPAA violation.
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A client does not have access to their MIB report as it belongs to the member life insurers.
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Consent is required before an insurer may access an insured's credit history. Any entry may be disputed if in error.
Correct Answer
A. A client does not have access to their MIB report as it belongs to the member life insurers.Explanation
The MIB report belongs to the member life insurers, so clients do not have access to it. This statement implies that clients have no right to access their own MIB report, which is incorrect. Clients do have the right to access their MIB report and review the information in it.Rate this question:
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- 27.
In a group life policy with a death benefit of more than $50,000:
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Premium cost is taxable to the employer.
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Premium cost for insurance above $50,000 is taxable as income to the employee.
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Premium cost for insurance below 50,000 is taxable as income to the insured.
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Premium cost is tax deferred.
Correct Answer
A. Premium cost for insurance above $50,000 is taxable as income to the employee.Explanation
In a group life policy with a death benefit of more than $50,000, the premium cost for insurance above $50,000 is taxable as income to the employee. This means that the employee will have to report the premium cost as part of their taxable income when filing their taxes. This is because the IRS considers the portion of the premium that covers insurance above $50,000 to be a benefit provided by the employer to the employee, and therefore subject to taxation.Rate this question:
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- 28.
To authorize the release of an attending physician’s report, the applicant must:
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Sign a consent form.
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Send a letter to the physician .
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Furnish the name of the physician.
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Submit to a physical examination.
Correct Answer
A. Sign a consent form.Explanation
The correct answer is to sign a consent form. This is because authorizing the release of a physician's report requires the applicant to give their consent for the release of their medical information. Signing a consent form is a formal way of providing this authorization. Sending a letter to the physician or furnishing the name of the physician may be part of the process, but the essential step is signing the consent form. Submitting to a physical examination is not mentioned in relation to authorizing the release of the report.Rate this question:
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- 29.
The commissioner can deny an applicant for a license after a hearing:
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If the applicant doesn't lack integrity.
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If the applicant has permitted someone in their employment to violate the California Insurance Code.
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For applicants holding other professional licenses.
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For applicants seeking the license for the purpose of aiding the enforcement of the California Insurance code.
Correct Answer
A. If the applicant has permitted someone in their employment to violate the California Insurance Code.Explanation
The correct answer is if the applicant has permitted someone in their employment to violate the California Insurance Code. This means that if the applicant has allowed someone working for them to break the rules and regulations stated in the California Insurance Code, the commissioner has the authority to deny their license application. This shows that the applicant has not demonstrated the necessary integrity and responsibility required for obtaining a license in the insurance industry.Rate this question:
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- 30.
. At age 72, Mrs. Smith is considering applying for Medi-Cal so she can afford her medical bills. Today agent Charles is visiting her home and wanting to sell her an annuity product. Which of the following is true?
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It's permissible for Agent Charles to visit Mrs Smith for the first time.
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Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn’t qualify for Medi-Cal.
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Mrs Smith must agree to meet with Agent Charles alone.
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Agent Charles should recomnend the annuity purchase to assure he receives the greatest commission possible from the visit.
Correct Answer
A. Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn’t qualify for Medi-Cal.Explanation
Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn’t qualify for Medi-Cal. This is because Medi-Cal is a government program that provides medical assistance to individuals with low income and limited resources. If Mrs. Smith purchases an annuity, it could potentially increase her income or assets, which may disqualify her from receiving Medi-Cal benefits. Therefore, it is important for Agent Charles to consider Mrs. Smith's eligibility for Medi-Cal before recommending the annuity purchase.Rate this question:
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- 31.
What is the minimum number of members required for group life insurance?
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15
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10
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25
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100
Correct Answer
A. 10Explanation
The minimum number of members required for group life insurance is 10. Group life insurance is a type of insurance coverage that is offered to a group of people, typically employees of a company or members of an organization. By pooling together a larger number of individuals, the risk is spread out, making it more affordable for each member. Therefore, even with just 10 members, a group can qualify for group life insurance.Rate this question:
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- 32.
Which statement below is Least Correct regarding the type of insurance that fits best with the applicant’s needs?
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Applicants concerned with the increasing cost of living should purchase increasing term.
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Applicants wishing to pay off a mortgage should the suffer a premature death might buy a decreasing term plan.
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Annual renewable term works well for employees looking to provide cost effective group life insurance for their employees.
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Convertible term can be purchased by applicants who may require a larger death benefit in the future.
Correct Answer
A. Convertible term can be purchased by applicants who may require a larger death benefit in the future.Explanation
The statement "Convertible term can be purchased by applicants who may require a larger death benefit in the future" is the least correct because convertible term insurance allows the policyholder to convert their policy into a permanent life insurance policy, not necessarily to increase the death benefit. The purpose of convertible term insurance is to provide flexibility for the policyholder to change their coverage to better suit their needs, not specifically to increase the death benefit.Rate this question:
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- 33.
Which of the following is considered Ordinary insurance?
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Renewable term insurance
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Blanket policies
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Mortgage redemption.
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Whole life insurance.
Correct Answer
A. Mortgage redemption.Explanation
Mortgage redemption is considered ordinary insurance because it is a type of insurance policy that protects the lender in case the borrower is unable to repay the mortgage loan. It is a common type of insurance that is often required by lenders when granting a mortgage loan. This insurance provides financial protection to the lender in the event of default by the borrower, ensuring that the mortgage loan will be repaid. Unlike the other options listed, such as renewable term insurance, blanket policies, and whole life insurance, mortgage redemption insurance specifically deals with protecting the lender's interest in a mortgage loan.Rate this question:
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- 34.
Who submits a request for life insurance to a company?
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The beneficiary
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The underwriter.
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The applicant.
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The agent.
Correct Answer
A. The applicant.Explanation
The applicant is the person who submits a request for life insurance to a company. They are the individual seeking to obtain life insurance coverage and are responsible for providing all the necessary information and completing the application process. The beneficiary is the person who receives the benefits of the life insurance policy upon the death of the insured. The underwriter is the person who assesses the risk and determines the terms and conditions of the insurance policy. The agent is the representative of the insurance company who assists the applicant in the process of obtaining life insurance.Rate this question:
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- 35.
All of the following needs to be included on an application for life insurance Except:
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Life insurance with other insurers.
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The agent's statement, if applicable.
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Signatures of the agent, proposed insured, and the owner.
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Disability income insurance.
Correct Answer
A. Disability income insurance.Explanation
The question asks for the item that should not be included on an application for life insurance. The correct answer is "Disability income insurance." This is because disability income insurance is a separate type of insurance that provides income replacement in the event that the insured becomes disabled and is unable to work. It is not directly related to life insurance, which provides a death benefit to beneficiaries upon the insured's death. Therefore, disability income insurance should not be included on an application for life insurance.Rate this question:
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- 36.
. A partial payment of proceeds to cover final expenses is paid to someone not designated as a beneficiary but acting in a legal or fiduciary capacity. This is provided in which provision?
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Automatic Premium Loan.
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Payor benefit.
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Cost of Living.
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Facility of Payment.
Correct Answer
A. Facility of Payment.Explanation
Facility of Payment is a provision that allows for a partial payment of proceeds to cover final expenses to be paid to someone who is not designated as a beneficiary but is acting in a legal or fiduciary capacity. This provision ensures that the necessary funds are available to cover any outstanding expenses related to the policyholder's death, such as funeral costs or outstanding debts. It provides flexibility in distributing the proceeds and ensures that the policyholder's final expenses are taken care of.Rate this question:
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- 37.
While collecting underwriting information, certain rules must be followed. Which of the following is Incorrect?
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Information contained on the non-medical application may result in the requirement for a physical exam.
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When credit is used to determine insurability, the applicant must be furnished with the same, address, and phone number of the credit agency used by the insurer.
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Post-claims underwriting is a valid and necessary means of determining the insurability of a potential applicant.
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Insurers may test for HIV after getting informed consent from the applicant, and may ask questions concerning the existance of the condition as long as they don't reveal information about sexual orientation.
Correct Answer
A. Post-claims underwriting is a valid and necessary means of determining the insurability of a potential applicant. -
- 38.
At what age does Social Security Medicare program Part B start providing benefits?
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60
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62
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65.
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67
Correct Answer
A. 65.Explanation
The Social Security Medicare program Part B starts providing benefits at the age of 65. This is the age at which individuals become eligible for Medicare coverage, which includes Part B. Part B helps cover medical services and supplies that are necessary to treat or diagnose a medical condition. It is important to note that there may be certain enrollment periods and requirements that individuals need to meet in order to receive these benefits.Rate this question:
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- 39.
Which of the following statements is Not included in the Entire Contract Clause?
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All statments made by the insured in the application will be considered as representatives, not warranties.
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A copy of the application, if used must be attached to the policy.
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The insurer agrees to provide life insurance protection for the named insured which will be paid to a designated beneficiary when proof of death is received by the insurer.
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Only an executive officer can make changes to the contract.
Correct Answer
A. The insurer agrees to provide life insurance protection for the named insured which will be paid to a designated beneficiary when proof of death is received by the insurer. -
- 40.
Which action by an insurer, or its representatives, is Not considered an unfair claims violation?
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A claims adjustor misrepresents pertinents facts or policy provisions to dissuade a client from making a claim.
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An agent does not respond to a claimant's communication concerning a claim where a response is required.
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The claims department fails to affirm or deny coverage within a reasonable period of time after proof of loss has been submitted.
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An agent advises a claimant to obtain the services of an attorney.
Correct Answer
A. An agent advises a claimant to obtain the services of an attorney.Explanation
An agent advising a claimant to obtain the services of an attorney is not considered an unfair claims violation because it is within the claimant's rights to seek legal representation for their claim. This action does not involve any misrepresentation, lack of response, or failure to affirm or deny coverage, which would be considered unfair claims violations.Rate this question:
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- 41.
All of the following statements are True about participating and non-participating policies, Except:
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They are sometimes referred to as par and non-par.
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Participating policies allow a policy owner to share in a mutual company's divisible surplus in the form of dividends.
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Non-participating policies issue dividends to shareholders.
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Non-participating policies issue dividends to policy owners.
Correct Answer
A. Non-participating policies issue dividends to policy owners.Explanation
Participating policies allow policy owners to share in a mutual company's divisible surplus through dividends. Non-participating policies, on the other hand, do not issue dividends to policy owners. Instead, they may issue dividends to shareholders or may not issue any dividends at all. Therefore, the statement "Non-participating policies issue dividends to policy owners" is not true.Rate this question:
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- 42.
All of the following statements about assignments are Not False, Except:
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Absolute assignments can be used for life settlement agreements.
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A lender may be repaid through the use of a collateral assignment.
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Absolute assingnment involve the complete transfer of all policyowner rights in the insurance policy.
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Assignments need not be filed with the insurer if notarized and filed in county records.
Correct Answer
A. Assignments need not be filed with the insurer if notarized and filed in county records.Explanation
Assignments need to be filed with the insurer if notarized and filed in county records.Rate this question:
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- 43.
How many hours of continuing education are required per renewal for a life-only agent?
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20 hours, 4 of the hours must be in ethics.
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20 hours, 2 of the hours must be in ethics
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24 hours, 4 of the hours must be in ethics.
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24 hours, 2 of the hours must be in ethics.
Correct Answer
A. 24 hours, 4 of the hours must be in ethics.Explanation
Life-only agents are required to complete 24 hours of continuing education per renewal. Out of these 24 hours, 4 hours must be specifically focused on ethics. This ensures that life-only agents stay updated with the latest industry standards and ethical practices, enabling them to provide the best service to their clients.Rate this question:
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- 44.
All of the following statements about a policy grace period are False, Except:
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Death during the grace period results in the denial of the claim.
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Grace periods are typically 31 days.
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Returning the policy during the grace period result in a full refund of premiums.
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Not every insurer is required to provide a grace period.
Correct Answer
A. Grace periods are typically 31 days.Explanation
The correct answer is "Grace periods are typically 31 days." This statement is the only one that is true. A policy grace period refers to the period of time after the premium due date during which an insurance policy remains in force even if the premium has not been paid. During this period, the policyholder has the opportunity to make the premium payment without any penalty or loss of coverage. The length of the grace period may vary depending on the insurance company and the type of policy, but it is commonly 31 days.Rate this question:
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- 45.
A client missed her premium payment on her cash value policy, and the grace period has also lapsed. The policy is still in force because her insurer has been deducting the cost of the premium from her cash value. What provision allows this?
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Automatic premium loan.
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Incontestability Clause.
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Reinstatement Provision.
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Over-draft Protection.
Correct Answer
A. Automatic premium loan.Explanation
The correct answer is Automatic premium loan. This provision allows the insurer to deduct the premium amount from the cash value of the policy to keep it in force when the client misses a payment and the grace period has lapsed. It acts as a loan against the policy's cash value to cover the premium amount, ensuring that the policy remains active even if the client fails to make the payment on time.Rate this question:
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- 46.
Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?
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Adjustable life
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Whole Life.
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Variable Universal
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Universal life.
Correct Answer
A. Whole Life.Explanation
Whole life insurance is known for having a level premium, which means that the premium remains the same throughout the policy's duration. It also offers a fixed rate of return, ensuring that the cash value of the policy grows at a guaranteed rate. This makes whole life insurance a popular choice for individuals who want a stable and predictable investment option with guaranteed cash value. Adjustable life, variable universal life, and universal life insurance policies do not necessarily offer these features, making whole life insurance the correct answer.Rate this question:
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- 47.
A forty-five year old investor has been laid off from his job. In order to pay bills he takes a premature distribution from his Traditional IRA account. What tax penalties, if any, will he face?
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None. Distribution during times of unemployement are not penalized,
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None. Distributions before the age of 59 1/2 are penalty-free.
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He will be required to pay a 10% tax penalty on the amount withdrawn.
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Since traditional IRA's are often tax deductible, the client owes the normal taxes they avoided when they made their contribution.
Correct Answer
A. He will be required to pay a 10% tax penalty on the amount withdrawn.Explanation
The answer states that the investor will be required to pay a 10% tax penalty on the amount withdrawn. This is because premature distributions from a Traditional IRA account before the age of 59 1/2 are subject to a 10% penalty unless certain exceptions apply. In this case, being laid off from his job does not qualify as an exception, so the investor will face the penalty.Rate this question:
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- 48.
For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin is known as the:
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Activity period.
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Annuity period.
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Accumulation period.
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Annuitization period.
Correct Answer
A. Accumulation period.Explanation
The correct answer is the accumulation period. In a flexible premium deferred annuity, the accumulation period refers to the time when the owner makes premium payments and the funds accumulate within the annuity account. During this period, the funds grow on a tax-deferred basis until the annuitization period begins, at which point the owner can start receiving benefit payments.Rate this question:
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- 49.
An agent who knowingly misrepresents Material information for the purpose of inducing a client to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as:
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Concealment.
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Misrepresentation.
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Twisting.
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Fraud.
Correct Answer
A. Twisting.Explanation
Twisting refers to the illegal practice of an insurance agent intentionally misrepresenting material information to a client in order to convince them to surrender, lapse, forfeit, or change their life insurance policy or annuity. This practice is considered fraudulent as it deceives the client and can lead to financial loss or inadequate coverage.Rate this question:
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Jul 22, 2024Quiz Edited by
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Mar 23, 2012Quiz Created by
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