Exam 7 Flashcards
E7Q1. The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, except:
To protect the interests of life insurers and their agents
E7Q2. All of the following would fall under the category of an “adverse underwriting decision,” except:
Failure of the agent to submit the application to an insurance company
E7Q3. In order to obtain group insurance without providing evidence of insurability, what do eligible individuals generally have to do?
Enroll within a specified eligibility period
E7Q4. An agent who acts as an insurance agent, broker, solicitor, life-only agent, or bail agent, acts in which capacity when handling premiums or return premiums for an insured?
Fiduciary
E7Q5. In order to determine the amount of premium an insured will pay, the insurer multiplies the rate by:
The number of exposure units
E7Q6. Viatical settlements are accomplished through the use of:
Absolute assignment
E7Q7. The conversion privilege allows a person to change coverage from:
A group policy to an individual policy
E7Q8. All of the following statements about qualified pension plans are true, except:
Employer contributions are taxable to employees in the year they are contributed
E7Q9. What is the written instrument called in which the insurance contract is set forth?
The policy
E7Q10. Which non-forfeiture option uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy?
Extended term insurance
E7Q11. What is the difference between a defined contribution plan and a defined benefit plan?
The penalties for early distribution
E7Q12. A life-only agent’s records must include all of the following, except:
Printed material in general use which has been distributed by the insurer
E7Q13. A worker dies while he is credited with six quarters of the last 13 quarter period. What status does the worker have under social security?
Currently insured
E7Q14. A return of premium rider is a rider that:
Provides for the periodic return of the percentage of the premiums that have been paid if the insured becomes and remains disabled
E7Q15. An agent’s appointment with an insurer will be discontinued if all of the following circumstances exist, except:
Another insurer submits an employment application
E7Q16. Social Security provides protection against the financial consequences of all of the following, except:
Poor investment
E7Q17. Which retirement plan utilizes non-deductible contribution?
Roth IRAs
E7Q18. All of the occurrences listed below are examples of an insurable event as defined by the CA Insurance Code, except:
An insured suffers a financial loss in the state of lottery
E7Q19. The social security normal retirement age depends upon:
The worker’s year of birth
E7Q20. The complete transfer by the existing owner of all rights in an insurance policy to another person is:
Absolute assignment
E7Q21. Which retirement plan was designed for employees of public school systems?
TSA
E7Q22. Which settlement options allows only the death benefit earnings to be paid to the beneficiary?
Interest option
E7Q23. All of the following apply to the life insurance cost-of-living rider, except:
The face value of the policy raises or lowers as the cost of living index increases or decreases
E7Q24. The social security blackout period ends when the surviving spouse reaches the age of:
60
E7Q25. Retirement benefits under social security are available only for workers who are:
Fully insured
E7Q26. In which plans do employers make specific contributions to an employee’s retirement account?
Defined contribution plans
E7Q27. In a seven year vesting schedule, what percentage of employer contributions must be vested after seven years of service?
100%
E7Q28. A representation in an insurance contract qualifies as which of the following?
An implied warranty
E7Q29. A policy holder stops making payments on a 20-pay life policy and converts the cash surrender value to extended term insurance. All of the following statements are true, except:
The term policy will have the same loan value as the original policy
E7Q30. Which non-forfeiture option uses an existing policy’s cash value to purchase a paid-up policy with a lower face value than the original policy?
Reduced paid-up insurance option
E7Q31. What is required when an applicant reveals conditions that require more information?
Physical examination
E7Q32. Which risk classification carries the lowest premium?
Preferred
E7Q33. Which statement best describes a life insurance policy dividend?
It is the distribution of excess of funds accumulated by he insurer on participating policies
E7Q34. If a person was in violation of Section 770 of the CA Insurance Code, what action would the Insurance Commissioner most likely take if the violation dealt with loans on the security of real or personal property?
Issue a cease and desist order for a violation of more than one transaction
E7Q35. If no other method of payment is selected, which of the following is the automatic mode of settlement for life insurance policy proceeds?
Lump-sum settlement in cash.
E7Q36. The process whereby a mutual insurer becomes a stock company is called:
Demutualization
E7Q37. Any situation that presents the possibility of a loss is known as:
A loss exposure
E7Q38. Which settlement option allows only the death benefit earnings to be paid to the beneficiary?
Interest option
E7Q39. An agent acting as an insurance agent, broker, solicitor, life-only agent, or bail agent acts in which capacity when handling premiums or return premiums for an insured?
Fiduciary
E7Q40. According to the state law, what size print must be used for the licensee’s license number on all price quotes, business cards, and printed material?
The same size print as the licensee’s phone number, fax number or address
E7Q41. Which non-forfeiture option uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy?
Extended term insurance
E7Q42. According to Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards, benefit plans are operated for:
Plan participants and beneficiaries
E7Q43. Life insurance settlement options include all of the following, except:
Extended term option
E7Q44. A life insurance application is important for all of the following reasons, except:
The beneficiary must sign the application before the insurer will issue the policy
E7Q45. The price of insurance for each exposure unit is called the:
Rate
E7Q46. To authorize the release of an attending physician’s report, the applicant must:
Sign a consent form
E7Q47. Yearly probabilities of death are shown in:
Mortality tables
E7Q48. Members of the Medical Information Bureau are required to report:
Medical impairments found during the underwriting process
E7Q49. When referring to an insurance contract, when must a representation be made?
Either at the time of or before policy issuance
E7Q50. Frank and Ernest are 25 year old identical twins. They are both in excellent health. Both buy life policies that have $500 annual premiums. Frank buys a 5-year renewable term policy. Ernest buys a whole life policy. Which statement is not true?
Ernest’s whole life policy will have a larger death benefit if he dies during the first five years
E7Q51. The request for an attending physician’s report must be accompanied by a copy of the:
Signed authorization
E7Q52. Which life insurance classification carries the highest premium?
Substandard
E7Q53. A group insurance plan is contributory when the:
Employee pays part of the premium
E7Q54. Whose benefits are affected by the blackout period?
The surviving spouse
E7Q55. Which of the following is not an option for the use of policy dividends?
Fund the addition of monthly income payments
E7Q56. Who are owners/members of the Medical Information Bureau?
Life insurance companies
E7Q57. After the deductible, what portion does a patient pay for covered expenses under Medicare Part B?
20%
E7Q58. Which of the following functions is best defined as an insurance company’s identifying and selling to potential customers?
Marketing
E7Q59. What is it called when an insurer uses higher rates based solely on religion, race, or ethnic group?
Unfair discrimination
E7Q60. A policy owner has the right to change all of the following, except:
The dividend schedule
E7Q61. When must insurance records for insurance agents and insurance brokers be made available to the Insurance Commissioner?
At all times
E7Q62. In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called:
Primary insurer
E7Q63. Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual’s home?
Mortgage protection
E7Q64. What do we call the process whereby insurers decide which customers to insure, and what coverage to offer?
Underwriting
E7Q65. Which of the following is the best definition of premium?
Money the insured pays the insurer to obtain the benefits in the policy
E7Q66. If an insurer pays an insured $25,000 in lost wages, $45,000 for physicians visits and hospital costs, and $15,000 for physical therapy treatments, and later discovers that the claim was fraudulent, the insured may be fined as much as:
$170,000
E7Q67. What rule is used to determine the importance of a representation?
The materiality of concealment
E7Q68. An agent must submit all of the following to the insurer, except:
A copy of all printed communications used for the presentation
E7Q69. What is the difference between a conditional premium receipt and a binding premium receipt?
Only a binding receipt always provides insurance that is effective from the date the receipt is given
E7Q70. After a life insurance policy has been in effect for two years, what prevents it from being rescinded by the insurer?
The incontestability clause
