Quiz Flashcards
Which is true about a spouse term rider?
The rider is usually level term insurance. The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.
If a policyowner returns the life insurance policy to the insurer within 10 days of policy delivery, the policyowner is entitled to
A Full refund. Every individual life insurance policy issued in this state must contain a notice stating that the policyowner has the right to return the policy within 10 days after delivery, and to have the premium refunded in full.
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association. Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.
A producer has established a separate account for premiums collected on life insurance policies sold by the producer. Who is entitled to the interest earned on the deposits in the separate account?
Producer. The separate account may be interest-bearing, and interest earned on the deposits held in the separate account may be retained by the producer.
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments. Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payment annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment varies.
All of the following are examples of risk retention EXCEPT
Premiums. Retention is a planned assumption of risk, or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments, or self-insurance.
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
The act of trying to discourage a policyholder from dropping his/her existing policy is called
Conservation effort
Who can request changes in premium payments, face value, loans, and policy plans?
Policy owner
Life insurance death proceeds are
Generally not taxed as income
All of the following are requirements for life insurance illustrations EXCEPT
They must be part of the contract
When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would
Lower the insured’s premium
Which of the following is true of a children’s rider added to an insured’s permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy’s cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life. Universal Life policies allow for policyholders to withdraw a limited portion of the policy’s cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity. The “accumulation period” is the period of time over which the annuity owner makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred (which would be the case in a deferred annuity).
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
Juvenile Life is classified as any life insurance purchased by a minor
Which of the following entities established the Do-Not-Call Registry?
The Federal Trade Commission
Under a group plan for an Association, the term “employee” may include
Retired employees of the association
The type of term insurance that provides increasing death benefits as the insured ages is called
Increasing term
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?
A debtor has an insurable interest in the life of a lender
Which of the following statements is TRUE concerning irrevocable beneficiaries?
They can be changed only with the written consent of that beneficiary
Which authority is NOT stated in an agent’s contract but is required for the agent to conduct business?
Implied
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
At least once every 5 years, the Commissioner must fully examine each of the following organizations or persons EXCEPT
National Association of Insurance Commissioners
Which of the following types of agent authority is also called “perceived authority”?
Apparent
A producer has established a separate account for premiums collected on life insurance policies sold by the producer. Who is entitled to the interest earned on the deposits in the separate account?
Producer. The separate account may be interest-bearing, and interest earned on the deposits held in the separate account may be retained by the producer.
Who is required to pay the fee for an insurance producer’s appointment
The appointing insurer
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
A producer just completed a continuing education (CE) course. How soon would the producer be allowed to repeat the same course as part of his CE requirement?
During the next licensing renewal period
The accelerated benefits provision will provide for an early payment of the death benefit when the insured
Becomes terminally ill.
According to the state regulations pertaining to claims settlements, after receiving a notification of claim from an individual policyowner, the insurer must acknowledge that notice within
10 working days. 15 working days for claims under group contracts), unless payment is made within such period of time.
Which of the following settlement options in life insurance is known as straight life?
Life income. The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary’s death.
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
What are the five characteristics of an ideally insurable risk?
Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) Coverage cannot be mandatory.
What are the strategies used by underwriters to prevent adverse selection?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
What document is required for an insurance company to transact insurance?
Certificate of Authority
