Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Life Producer > Life Insurance > Flashcards

Life Insurance Flashcards

1
Q

Which factor does NOT affect premium determination in individual life insurance?

A

D. Race

Premiums are typically influenced by age, health, and occupation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How often must insurance licensees subject to continuing education meet the educational requirements?

A

B. Every two years

Continuing education is essential for maintaining an active insurance license.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Who normally receives dividends in a stock insurance company?

A

B. Shareholders

Dividends in stock insurance companies are distributed to shareholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

False advertising of an insurance policy is an example of?

A

B. Misrepresentation

Misrepresentation can lead to legal issues and loss of trust in the insurance industry.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does the entire contract provision in a life insurance policy state?

A

B. The application attached to the policy

This provision ensures that all terms are included in the contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

An insurance producer who negotiates viatical settlement contracts is called a?

A

C. Broker

Brokers facilitate the sale of viatical settlements for a fee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What crime is committed if an insurance producer deposits collected premiums into their own checking account?

A

C. Fraud

This action constitutes a breach of fiduciary duty and is illegal.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

During the liquidation phase of an annuity contract, income benefits are payable to?

A

D. The annuitant

The annuitant is the individual entitled to receive benefits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The penalty tax for premature distributions from an IRA is?

A

B. 10%

This penalty applies to distributions taken before age 59½.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When a wage earner dies, surviving family members may NOT have which expense?

A

B. Unemployment liabilities

Family members typically face final expenses, living expenses, and death taxes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Who is the beneficiary of a life insurance policy?

A

B. Person or entity designated in the policy to receive the death proceeds

The beneficiary is specified by the policy owner.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How many days does a former employee have to convert a group term policy to an individual policy after employment termination?

A

C. 30

This conversion period is crucial for maintaining coverage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

To solicit insurance, an individual must achieve all of the following except?

A

B. Be at least 21 years of age

Age requirements may vary by state, but other criteria are generally consistent.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Advertisements in general shall be?

A

D. Truthful

Truthfulness is essential to maintain trust in the insurance industry.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

According to the level premium concept in life insurance?

A

B. The policy owner pays the same premium amount throughout the policy period

This feature makes budgeting for premiums easier.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Splitting the commission with the buyer on a sale of insurance is an unfair trade practice known as?

A

D. Rebating

Rebating is illegal in many jurisdictions due to its potential for unfair competition.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

A transaction in which a new life insurance policy is purchased and an existing policy is surrendered is called?

A

B. Replacement

Replacement must be carefully documented to avoid policyholder confusion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The Maryland Insurance Administration is an agency of the?

A

B. State government

It regulates the insurance industry within Maryland.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What does the annuitant usually receive during the liquidation phase of an annuity?

A

B. Benefit payments at regular intervals

Regular payments are a key feature of annuities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

A valid contract requires all of the following except?

A

D. Written evidence

Contracts can be oral, but written contracts provide clearer evidence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

The process of analyzing exposures that create risk and designing programs to handle them is called risk?

A

B. Management

Effective risk management is crucial in insurance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Which statement about participating life insurance is true?

A

A. Policy owners may be entitled to receive dividends

Participating policies allow policy owners to share in the insurer’s profits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

All of the following statements about family life insurance policy are true except?

A

C. Coverage is available only to heads of household who are 30 years old or younger

Family life insurance is available to a broader demographic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Publishing a derogatory article about the financial condition of an insurer which is false is an example of?

A

A. Defamation

Defamation can severely harm an insurer’s reputation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
A life insurance policy beneficiary’s life expectancy affects?
C. The total amount payable under the policy as a result of insured’s death ## Footnote Life expectancy impacts the insurer's risk assessment.
26
The purpose of the Life and Health Insurance Guaranty Corporation is to guarantee?
C. Benefits if the insurer is unable to pay benefits due to impairment or insolvency ## Footnote This protects policyholders in case of insurer failure.
27
If a producer becomes aware of a material fact after submitting an application, their ethical responsibility requires them to?
D. Report the fact to the insurance company ## Footnote Transparency is essential in maintaining ethical standards.
28
A premium receipt that provides immediate protection only if the applicant is incurable is called?
B. A conditional receipt ## Footnote Conditional receipts are common in life insurance applications.
29
The Maryland Insurance Administration may suspend a license for all the following reasons except?
C. Sharing commissions with agents holding the same license type ## Footnote Sharing commissions is typically allowed under certain conditions.
30
What is the minimum length of time a life insurance company may legally defer paying the cash value of a surrendered policy?
C. 6 months ## Footnote This deferral period allows companies to manage cash flow.
31
Which is normally true about a mortgage protection life insurance policy?
B. The death benefit is intended to decrease with the balance of the insured’s mortgage loan ## Footnote This aligns coverage with the outstanding loan amount.
32
An insurance producer MUST do which of the following to review their license except?
C. Send the application within 30 days of the license expiration date ## Footnote Timely application submission is essential for license renewal.
33
What is the purpose of backdating a life insurance policy?
B. To use premiums based on an earlier age ## Footnote Backdating can reduce premium costs for the policyholder.
34
If an insurer knowingly fails to enforce a policy provision, what principle may prevent enforcement on a subsequent occasion?
B. Waiver ## Footnote Waiver may occur if an insurer does not enforce a right.
35
In surrendering a life insurance contract for its cash value, the total of premiums paid less total dividends received is called?
D. The cost basis ## Footnote The cost basis is important for tax calculations.
36
Which financial institution may issue annuity contracts?
B. Life insurance companies ## Footnote Life insurance companies are the primary issuers of annuities.
37
Which activity is an unfair claims settlement practice?
D. Offering settlements that are less than the fair value to offset insurer expenses ## Footnote This practice is unethical and often illegal.
38
In the event of a death claim under a life insurance policy, what happens to any existing policy loan?
A. It is deducted from the face amount of the policy together with any interest due ## Footnote This ensures the insurer recoups any outstanding loans.
39
If a policy owner uses a Section 1035 exchange to replace an existing life insurance policy, the gain realized on termination is taxed as?
A. Ordinary income ## Footnote Section 1035 exchanges allow for tax deferral under certain conditions.
40
All of the following are common underwriting factors used by life insurance companies except?
A. Ethnic heritage ## Footnote Underwriting focuses on risk factors that are relevant to insurability.
41
A non-smoker who is in good health is usually classified as a?
A. Preferred risk ## Footnote Preferred risks typically receive lower premiums.
42
Which cause of death is typically included under an accident death rider?
D. Automobile accidents resulting from the insured’s negligence ## Footnote Accident riders cover unforeseen and accidental deaths.
43
A group policy may be issued to a labor union. The members eligible for insurance under the policy shall be?
B. All of the members of the union ## Footnote Group policies often cover entire unions or associations.
44
The agreement between an insurance producer and insurer allowing the producer to sell policies is defined as?
A. An appointment ## Footnote Appointments are necessary for producers to legally sell insurance.
45
An insurance producer's license may be suspended or revoked by?
C. The Maryland Insurance Administration ## Footnote Regulatory bodies oversee licensing and compliance.
46
A universal life insurance policy can be described as a combination of?
D. A flexible premium deposit fund and a monthly renewable term insurance policy ## Footnote This combination allows for flexible premiums and coverage.
47
A contract which depends on an unforeseen event and may have unequal exchanges is called?
C. An aleatory contract ## Footnote Aleatory contracts are common in insurance due to their contingent nature.
48
The Medical Information Bureau may release information in the proposed insured’s file to?
B. Member insurance companies ## Footnote The MIB shares information to assist in underwriting.
49
A life insurance policy becomes incontestable after it has been in force for?
C. 2 years ## Footnote This protects policyholders after a certain period.
50
An insurance agent’s license may be revoked for all of the following reasons except?
A. Having no insurer appointment in effect for ten days ## Footnote Appointments must be maintained but not necessarily for longer than ten days.
51
How long will income benefit payments continue under a life annuity with ten years certain?
A. Until the annuitant dies, or for ten years whichever is longer ## Footnote This ensures that payments are made for a minimum period.
52
Which statement about the grace period in life insurance policies is true?
A. It is designed to prevent unintentional lapses ## Footnote Grace periods provide policyholders additional time to make premium payments.
53
The head of the Maryland Insurance Administration is the?
B. Commissioner ## Footnote The Commissioner oversees insurance regulation in Maryland.
54
An existing life insurance policy is sold to help finance the cost of a terminal illness. This is an example of?
C. A viatical settlement ## Footnote Viatical settlements allow policyholders to access funds in critical situations.
55
The purpose of licensing insurance agents is to?
B. Demonstrate that the agents are qualified to act on behalf of insurers in Maryland ## Footnote Licensing ensures that agents meet regulatory standards.
56
It is unlawful for a person to provide an advertisement that?
C. Uses a policy title to misrepresent a coverage ## Footnote Misrepresentation in advertising can lead to penalties.
57
An insurance interest in each other’s lives may exist in the absence of an economic interest when the individuals are?
C. Marriage partners ## Footnote Spousal relationships often create insurable interests without direct financial ties.
58
Which advantage does an employer gain by providing a qualified retirement plan compared to a non-qualified plan?
B. The employer's contributions to the plan are tax deductible ## Footnote Tax deductions make qualified plans more advantageous for employers.
59
Which concept reinforces the rule that ambiguities in insurance contracts should be interpreted in favor of the policyholder?
B. Reasonable expectations ## Footnote This principle helps protect policyholders from unfair interpretations.
60
A licensee must report each of the following to the Maryland Insurance Administration except?
C. Change in financial status ## Footnote While significant changes must be reported, not all financial changes are mandated.
61
The annual addition to an employee’s account in a qualified retirement plan?
C. Cannot exceed maximum limits set by the Internal Revenue Service ## Footnote The IRS sets contribution limits to prevent excessive tax benefits.
62
The free look period provided in a life insurance policy is usually?
A. 10 days ## Footnote This allows policyholders time to review their policy without commitment.
63
In determining the payment of accelerated life insurance benefits, all of the following are considered activities of daily living except?
D. Speaking ## Footnote Activities of daily living typically include physical tasks such as dressing, eating, and bathing.
64
Which one of the following is a decreasing term insurance rider that can be attached to some forms of permanent life insurance?
B. Family ## Footnote Family riders allow for decreasing coverage as dependents age.
65
What does the free lock period in a life insurance policy usually last?
31 days ## Footnote The free lock period allows policyholders to review the policy and cancel if unsatisfied.
66
Which of the following is NOT considered an activity of daily living in determining accelerated life insurance benefits?
Speaking ## Footnote Activities of daily living typically include dressing, eating, and bathing.
67
What is a decreasing term insurance rider that can be attached to some forms of permanent life insurance?
Family income ## Footnote This rider provides decreasing benefits over time based on the insured's needs.
68
All of the following statements about benefit payments under a life annuity with period certain are true except?
The benefits are guaranteed for the lifetime of the annuitant ## Footnote This type of annuity guarantees payments for a specific period, not the lifetime.
69
Which life insurance settlement option pays a predetermined monthly benefit until principal and interest are exhausted?
The fixed amount installment option ## Footnote This option allows the beneficiary to receive a set amount until the funds are depleted.
70
Which statement about cash values in whole life insurance policies is true?
They result from the level premium concept ## Footnote Cash values build up over time as part of the policy's savings component.
71
Fill in the blank: The free lock period provided in a life insurance policy is usually _______.
31 days ## Footnote This is the typical duration for policy review and cancellation.
72
True or False: Cash values in whole life insurance policies typically decrease after age 65.
False ## Footnote Cash values usually increase until age 65 and then remain level.
73
What are the activities of daily living considered for accelerated life insurance benefits?
* Dressing * Eating * Bathing ## Footnote These activities help determine eligibility for benefits.
74
Which life insurance settlement option guarantees benefits for a specified minimum period?
Life annuity with period certain ## Footnote This ensures payments for at least the specified time, regardless of the annuitant's lifespan.
75
What is the purpose of the family maintenance rider in life insurance?
To provide decreasing term insurance benefits ## Footnote This rider helps support beneficiaries over a specified time frame.

Life Producer (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions