Exam Questions Flashcards
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2,500
An individual who willfully violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500.
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
When the reduced option is written as “joint and 2/3 survivor,” the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy. The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy.
When an annuity is written, whose life expectancy is taken into account?
Annuitant
The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.
The Washington Insurance Code regulation regarding policy replacement applies to which of the following types of transactions?
Immediate annuity contract
Credit life insurance, group contracts, and policies issued and replaced by the same insurer are exempt from replacement regulations.
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?
Attending Physician Statement
The general powers and duties of the Insurance Department include all of the following EXCEPT
Enacting statutes to regulate the insurance industry.
The following are features of the Indexed Universal Life EXCEPT
Sale of this product requires a securities license.
Which of the following would provide an underwriter with information concerning an applicant’s health history?
The Medical Information Bureau
An Adjustable Life policyowner can change which of the following policy features?
The coverage period
Typically, the owner of an adjustable life policy has the following privileges; increasing or decreasing the premium; changing the premium-paying period; increasing or decreasing the face amount of coverage; or changing the period of protection.
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection.
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years
When would a 20-pay whole life policy endow?
When the insured reaches age 100
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
Guaranteed surrender value
Life income joint and survivor settlement option guarantees
Income for 2 or more recipients until they die.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life – Option A. Universal Life Option A (Level Death Benefit option) policy must maintain a specified “corridor” or gap between the cash value and the death benefit, as required by the IRS. If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and consequently loses most of the tax advantages that have been associated with life insurance.
An insurer receives a report regarding a potential insured that includes the insured’s financial status, hobbies and habits. What type of a report is that?
Inspection Report. Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies.
How many eligible employees must elect coverage before a policy can be placed for a Public Employee Association?
At least 75%
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
All of the following information about a customer must be used in determining annuity suitability EXCEPT
Beneficiary’s age.
A business entity that wants to transact insurance business in this state must have at least how many affiliated individual licensees?
1
Which of the following is NOT true regarding the annuitant
The annuitant cannot be the same person as the annuity owner.
Any life insurance policy that accumulates cash values must include a provision for policy loans after a certain period of time. In the state of Washington, that period of time is
After 3 full years of premium payments.
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
Guaranteed surrender value
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment.
How often are producers in this state required to pay license renewal fees?
Every 2 years
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
Must be informed of the source of the report.
Upon reinstatement or renewal of a policy, after a written request by the insured, how soon must an insurer provide a copy of the policy application?
15 days
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?
Automatic premium loan
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
All of the following are examples of risk retention EXCEPT
Premiums
When an annuity is written, whose life expectancy is taken into account?
Annuitant
The causes of loss insured against in an insurance policy are known as
Perils
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
How long does any person receiving written notification of the Commissioner’s order have to respond and request a hearing?
90 days
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
Using a class designation for beneficiaries means
Naming beneficiaries as a group.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
How long does any person receiving written notification of the Commissioner’s order have to respond and request a hearing?
90 days
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5
In group life insurance, if an insurer was unable to pay out the proceeds until the 45th day after receiving proof of death, what will be the interest on the proceeds?
Either 8% or insurer’s current rate, whichever is greater
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is a MEC. Modified Endowment Contract
