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Life Insurance Exam > Readiness Exam > Flashcards

Readiness Exam Flashcards

1
Q

When is the earliest a policy may go into effect?

A

When the application is signed, and a check is given to the agent.

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2
Q

All of the following are true about variable products, except…

A
  1. Policyowners bear the investment risk.
  2. The premiums are invested in the insurers gen. acct.***
  3. The cash value is not guaranteed.
  4. The minimum death benefit is guaranteed.
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3
Q

A prospective insured receives a conditional receipt, but dies before the policy is issued the insurer will?

A

Pay the policy proceeds only if it would have issued the policy.

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4
Q

If a producer allows his or her license to lapse, what is the maximum time period during which the producer can reinstate the license without having to retake the exam?

A

12 months

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5
Q

The type of term insurance that provides an increasing death benefits as the insured ages is called?

A

Increasing term

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6
Q

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium and no conditional receipt is issued. When will coverage begin?

A

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable statement of good health.

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7
Q

What is a foreign ensure?

A

An insurer with a home office in another state.

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8
Q

What is a statement that is guaranteed to be true and if untrue may breach an insurance contract?

A

Warranty

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9
Q

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to the beneficiary, the premiums must be paid?

A

For 20 years, or until death, which ever occurs first.

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10
Q

Which of the following is not fundable by annuities?

A
  1. Death benefits*****
  2. A person’s retirement
  3. Estate liquidation
  4. Cash accumulation for any reason
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11
Q

An individual purchased a $100,000 joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

A

$100,000

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12
Q

Which universal life option has a gradually increasing cash value and a level death benefit

A

Option A

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13
Q

All of the following violations may result in an agents inprisonment except?

A
  1. Knowingly obtaining info about a consumer under false pretenses.
  2. Failing to report to the dept a criminal prosecution taken against the agent in another jurisdiction.*****
  3. Embezzling finds from the insurer.
  4. Engaging in the business of insurance after being convicted of breach of trust.
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14
Q

What protects the insured from an unintentional policy lapse due to a nonpayment of premium?

A

Automatic premium loan

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15
Q

Briefly describe annually, renewable term

A

It requires proof of insurability at each renewal

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16
Q

Is a settlement option is not chosen by the policy owner of or the beneficiary which option will be used?

A

Lump sum

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17
Q

To sell variable life insurance policies, an agent must receive all of the following, except…

A
  1. FINRA registration
  2. Life Insurance License
  3. Securities License
  4. SEC registration**
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18
Q

What is the appropriate action by the insured if a prospective insured submitted an incomplete application?

A

Return the application to the applicant for completion

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19
Q

What is the MIB?

A

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

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20
Q

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a…

A

Guaranteed insurability rider

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21
Q

What is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision making process?

A

Buyers guide

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22
Q

If licensees have administrative action taken against them, they must report that to the commissioner within…

A

30 days

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23
Q

An insured purchased a life insurance policy on his life, naming his wife as primary beneficiary and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

A

If the primary beneficiary preceded the insured

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24
Q

Which of the following statements about a suicide clause in a life insurance policy is true?

A
  1. Suicide is excluded for a specific period of years & covered thereafter.***
  2. Suicide is covered for a specific period of years & excluded thereafter.
  3. Suicide is covered as long as the policy is in force.
  4. Suicide is excluded as long as the policy is in force.
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25
Q

Under which of the following circumstances, would an insurer pay accelerated benefits?

A
  1. Nearing retirement & needing steady income.
  2. Putting child through college
  3. Couple wants to build a house & put down larger down payment.
  4. Diagnosed with CA & needs help paying for treatment.**
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26
Q

Which of the following is not a required separate account of the Oklahoma Life and Health Insurance Guaranty Association?

A
  1. Life
  2. Annuities
  3. Variable products**
  4. Health
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27
Q

Which of the following is true regarding variable annuities?

A
  1. The funds are invested in the companies general account.
  2. The company guarantee guarantees a minimum interest rate.
  3. The annuitant assumes the risks on investment.**
  4. A person selling variable annuities is required to have only a life agents license.
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28
Q

The initial amount of credit life insurance may not exceed

A

The amount to be repaid under the contract

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29
Q

Renewal fees for all licenses are the same as the initial license. However, late application for renewal of a license requires a fee of…

A

Double the original license fee

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30
Q

Which of the following is not correct regarding false statements by a person engaged in the business of insurance?

A
  1. Statements made with the intent to deceive are unlawful.
  2. Omissions of material fact, on insurance application are fraud.
  3. only written statements can be considered fraud.**
  4. False statements about financial condition of an insurer are unlawful.
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31
Q

The policyowner pays for her life insurance annually. Until now she has collected a non-taxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

A

Reduction of premium

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32
Q

The policyowner of a universal life policy may skip paying the premium and the policy will not last as long as…

A

The policy contains sufficient cash value to cover the cost of insurance.

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33
Q

What is the other term for the cash payment settlement option?

A

Lump sum

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34
Q

What determines the length of time that benefits will be received under the Fixed- Amount settlement option?

A

Size of each installment

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35
Q

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insure?

A

Foreign

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36
Q

What is also known as a second-to-die policy?

A

Survivorship life

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37
Q

An applicant for insurance misstates her age at the time of her life insurance application is taken. This misstatement may result in…

A

Adjustment in the death benefit

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38
Q

Who is a person, other than a viator, that enters into a viatical settlement contract?

A

Provider

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39
Q

Which of the following would not constitute doing the business of insurance in this state?

A
  1. Examining insurer records**
  2. Investigating claims.
  3. Holding an insurance license.
  4. Delivering insurance
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40
Q

Which two terms are associated directly with the way and annuity is funded?

A

Single payment or periodic payments

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41
Q

According to the entire contract provision, what document must be made part of the insurance policy

A

Copy of the original application

42
Q

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insurance death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following, except

A
  1. Projected interest rates
  2. The beneficiary’s life expectancy.
  3. Face amount of the policy.
  4. The insured’s age at death.**
43
Q

All of the following statements about equity indexed annuities are correct except…

A
  1. They have a guaranteed minimum interest rate.
  2. The interest rate is tied to an index such as the standard and Poors 500.
  3. They invest on a more aggressive basis aiming for hire returns.
  4. The annuitant receives a fixed amount of return.**
44
Q

What allows the insurer to relieve a minor insured from premium payments if the minor’s parents have died or become disabled?

A

Payor Benefit

45
Q

All of the following entities, regulate variable life policy except…

A
  1. Federal Government
  2. The Insurance Department
  3. The SEC
  4. The Guaranty Association.**
    
46
Q

The commissioner is placed in the office by

A

Election

47
Q

Which of the following information about the applicant is not included in the general information section of the application for insurance?

A
  1. Gender.
  2. Medical background.**
  3. Marital status.
  4. Occupation
48
Q

According to the rights of renewability rider for cancellation policies, all of the following are correct about the cancellation of an individual insurance policy except…

A
  1. Claims incurred before cancellation must be honored.
  2. The insurer must provide the insured a written notice of the cancellation.
  3. An insurance company may cancel the policy at any time.
  4. Unearned premiums are retained by the insurance company.**
49
Q

What type of policy will provide permanent protection

A

Whole life

50
Q

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

A

$100,000

51
Q

What is a risk classification used by underwriters for life insurance?

A

Standard

52
Q

What type of settlement option pays throughout the lifetimes of two or more beneficiaries?

A

Joint life

53
Q

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

A

Limited pay whole life

54
Q

Under what circumstances may a licensed agent hold a consultant’s license?

A

Agents may not hold a consultant’s license

55
Q

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?

A

Inspection report

56
Q

An applicant who receives a preferred risk classification qualifies for…

A

Lower premiums than a person who receives a standard risk.

57
Q

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the…

A

Incontestability clause

58
Q

Which of the following statements is true concerning irrevocable beneficiaries?

A
  1. They can never be changed.
  2. They can be changed only with the written consent of that beneficiary.**
  3. They may be changed only on the anniversary date of the policy.
  4. They may be changed at any time.
59
Q

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application?

A

Return to the applicant for completion

60
Q

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

A

$2,500

61
Q

What part of an insurance application would contain information regarding the cause of death of the applicant deceased relatives?

A

Medical information

62
Q

All of the following are true regarding the guaranteed insurability rider except…

A
  1. It allows the insurer to purchase additional amount of insurance without proving insurability only at specified dates or events.
  2. The writer is available to all insurance with no additional premium.**
  3. The insured may purchase additional coverage at the attained age.
  4. The insured may purchase additional insurance up to the amount specified in the base policy.
63
Q

A domestic insurer issuing variable contracts must establish one or more…

A

Separate accounts

64
Q

Twin brothers are starting a new business. They know it will take several years to build a business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit shit one of them die?

A

Joint life

65
Q

If an agent fails to obtain an applicant signature on the application, the agent must…

A

Return the application to the applicant for a signature

66
Q

What is the purpose of a suicide provision within a life insurance policy?

A

To protect the insurer from persons who purchase life insurance with the intention of committing suicide.

67
Q

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insurance age 100 is called…

A

Single premium whole life

68
Q

All of the following are unfair claims settlement practices except…

A
  1. Refusing to pay claims without conducting a reasonable investigation.
  2. Suggesting negotiations in settling the claim.**
  3. Failing to acknowledge, pertinent communication pertaining to a claim.
  4. Failing to adopt and implement reasonable standards for setting claims.
69
Q

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

A

The producer must provide the applicant with a Notice Regarding Replacement.

70
Q

For variable products, underlying assets must be kept in…

A

A separate account

71
Q

Under an extended term, nonforfeiture option, the policy cash value is converted to…

A

The same face amount as in the whole life policy

72
Q

Who’s responsibility is it to make certain that an application for insurance is filled out completely and correctly?

A

The producer

73
Q

A producer must do all of the following when delivering a new policy to the insured except…

A
  1. Explain the policy provisions, riders, and exclusions.
  2. Disclose commissions earned from the sale of policy.**
  3. Collect any premium due.
  4. Explain the rating procedures if the policy is rated differently than applied for.
74
Q

In an annuity, the accumulated money is converted into a stream of income during which time period?

A

Annuitization period.

75
Q

According to the entire contract provision, a policy must contain…

A

A copy of the original application for insurance

76
Q

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…

A

10 years

77
Q

What best describes the underwriting process for life insurance?

A

Selection, classification, and rating of risks

78
Q

What term is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract?

A

Viatical settlement provider

79
Q

If the commissioner has reason to believe that a person or insurer has violated the insurance Code, the commissioner may set a hearing. The notice of the hearing must be given how many days in advance?

A

10 days

80
Q

What is it called when an agent offers compensation to an applicant in exchange for business?

A

Rebating

81
Q

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

A

As of the application date

82
Q

Which of the following types of risk will result in the highest premium?

A
  1. Substandard risk.**
  2. All risks pay equal premiums.
  3. Preferred risk.
  4. Standard risk.
83
Q

What rider can be added to a life insurance policy that pays part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?

A

Long-term care

84
Q

If an insurance company makes a statement that it’s policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

A

An unfair trade practice

85
Q

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report…

A

Must be informed of the source of the report

86
Q

If an applicant for a life insurance policy & person to be insured by the policy are two different people, the underwriter would be concerned about…

A

Weather in insurable interest exists between the individuals

87
Q

What component of the policy contains the companies promise to pay?

A

Insuring clause

88
Q

Who is responsible for paying producer appointment fees?

A

The appointing insurer

89
Q

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

A

Common disaster clause

90
Q

All of the following are characteristics of a group life insurance plan except…

A
  1. The cost of the plan is determined by the average age of the group.
  2. A minimum number of participants is required in order to underwrite the plan.
  3. The participants receive a certificate of insurance as their proof of insurance.
  4. There is a requirement to prove insurability on the part of the participants.**
91
Q

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?

A
  1. Mutual company.
  2. Fraternal benefit society.**
  3. Reciprocal association.
  4. Stock company.
92
Q

And insured committed suicide one year after his life insurance policy was issued. The insurer will….

A

Pay nothing

93
Q

B just bought a new car, which he anticipates will be paid for four years from now. He also wants to buy a life insurance policy, but it’s financially limited until the car is paid off. Which of the following types of policies would be best for B?

A
  1. Modified life.**
  2. Limited term.
  3. Limited pay.
  4. Interest sensitive whole life.
94
Q

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?

A
  1. If the daughter is disabled for any length of time.
  2. If the daughter is disabled for more than 3 months.
  3. If the father is disabled for more than 6 months.**
  4. If the father is disabled for at least a year.
95
Q

What does the Federal Fair Credit Reporting Act do?

A

Regulate consumer reports

96
Q

In group life policies, a certificate of insurance is given to…

A

Each insured person

97
Q

What would be an advantage to naming a contingent beneficiary in a life insurance policy?

A

It determines who receives policy benefits if the primary beneficiary is deceased

98
Q

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is this?

A

Deferred

99
Q

Within how many months must a person be expected to die from a sickness in order to be classified as terminally ill for the purposes of a viatical settlement?

A

24

100
Q

An individual or legal entity appointed by insurer to exercise supervision over the business of that insurer in Oklahoma is known as a/an

A

Managing general agent

Life Insurance Exam (2 decks)

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