Simulate Missed Questions Flashcards
43.
Which of the following statements is TRUE concerning the Accidental Death Rider?
It is onlv available in group insurance
It will pay double or triple the face amount.
c) It is also known as a triple indemnity rider.
This rider is only available to insureds over the age of 65.
It will pay double or triple the face amount.
The Accidental Death Rider pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident.
S
#12.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy
premium will be
a) Determined by the health of the insured.
Based on the issue age of the insured.
c Discounted
Adjusted to the insured’s age at the time of renewal.
Adjusted to the insured’s age at the time of renewal.
If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured
#13.
An agent selling variable annuities must be registered with
a) The Guarantv Association.
b) SEC.
c) FINRA.
d) Department of Insurance.
FINRA
Because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a lif
agent’s license in order to sell variable annuities.
#14. 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) Insuring clause. b) Misstatement of Age clause. c) Incontestability clause. Reinstatement(ause.
Incontestability clause.
If an insurer wishes to contest any statements on an application, they must do so within the first two years. #15.
#15. An insured receives an annual life insurance dividend check. What term best describes this arrangement? Reduction of Premium Annual Dividend Provision Accumulation at Interest • cash optior
• cash optior The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check. San in to vour ac.... C Phonemic Chart. * 6 Imo incuranco 1 #16.
All of the following could own group life insurance ExCEp
a anaumnigroud
b)
A debtor group.
c) A group needing low-cost life insurance.
A group sponsored by an employer.
c) A group needing low-cost life insurance.
Groups purchasing group life insurance must be formed for a reason other than purchasing insurance
17.
A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?
a) The amount of the distribution is reduced by the amount of a 20% withholding tax.
b) No taxes are due since the plan participant is over age 59 1/2.
There is a 10% early withdrawal penalty.
a The amount distributed is subject to ordinary income tax
a) The amount of the distribution is reduced by the amount of a 20% withholding tax.
Distributions from 401(k) plans are taxable as ordinary income in the year of the distribution. However, if the distribution is rolled over to a Traditional IRA, taxes are
deferred until the required minimum IRA distributions begin. Since this client actually took a distribution (instead of making a trustee-to-trustee roll over), the
distribution is subject to 20% withholding tax.
23. Which of the following best describes what the annuity period is?
a) The period of time from the accumulation period to the annuitization period
b) The period of time during which money is accumulated in an annuity
c) The period of time from the effective date of the contract to the date of its termination
c. The period of tigge during which accumulated money is converted into income payments
The period of tigge during which accumulated money is converted into income payments
The annuity period is the time during which accumulated money is converted into an income stream.
Which of the following is true of a children’s rider added to an insured’s permanent life insurance policy!
a Each child covered must show evidence of insurability.
b It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum
coverag
c tis permanent insurance
d) The policv covers onlv the natural children of the insured
b It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum
coverag
Children’s rider is term insurance covering all of the children in the family, including newly born children, and is convertible to permanent insurance upon a child reaching
the maximum age without evidence of insurability.
life insuranc
#26. All of the following are business uses of life insurance EXCEPT
a Funding business continuation agreements
Funding against company s general financial loss.
© Compensating executives.
d) Funding against financial loss
caused by the death of a key employee.
Funding against company s general financial loss.
Both life and health insurance can be used for a variety of purposes in a business setting, including the tunding or business continuation agreements, compensating executives, and protectine the firm against financial loss resulting from the death or disability or key employees. #28.
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to
$10,000. If the insured dies, how much will be paid out?
a) $10,000
b) $40,000
c) $50,000
d) $60,000
50,000
The cash value of a variable life insurance policy is not guaranteed. However, even if investments devalue significantly, they cannot be lower than the initial guaranteed
benefit amount.
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? a) Payments for 20 years b) Payments for liA c) Nothing Payments for 15 years
Payments for 15 years
With an period certain, death of the annuitant within the stated period will provide payments to the beneficiary only for the remainder of the period certain.
R I C life insuranco lifo #36. Which of the following is NOT part of the consent form to an HIV-related test given in New York? a The description or the test b) Applicant's sexual history c The purpose of the test A person to whom test results may be disclosed
b) Applicant’s sexual history
New York's written informed consent to an HIV-related test does not need to include information about the applicant's sexual history. #37.
#37. In term policies, what happens to the premium throughout the term of the policy? a Premium fluctuates b) Premium always remains level. c) Premium gradually increases. d) Premium gradually decreases.
Premium always remains level.
There are three basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: Level, Increasing, and Decreasing. Regardless of the type of term insurance purchased, the premium is often level throughout the term of the policy. #40.
#40. Peril is most easily defined as a) The cause of loss insured against. b) An unhealthy attitude about safety. c) The chance of a loss occurring. d) Something that increases the chance of loss.
The cause of loss insured against.
Perils are the catises of loss insured against in an insurance policy,
#42. What is the waiting period on a Waiver of Premium rider in life insurance policies? 30 davs 3 months months 6 months
6 months Most insurers impose a 6-month waiting period from the time of disabilitv until the tirst premium is waived. Sign in to your ac. Phonemic Chart: C life insurance lif #46.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
a
It is reduced to the amount of what the cash value would buv as a single premium.
It is increased when extra premums are pale
It decreases over the term of the policy
It remains the same as the original policy, regardless of any differences in value.
a
It is reduced to the amount of what the cash value would buv as a single premium.
In a reduced paid-up policy, the original policy’s cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence
the name. The new policv accumulates in cash value until its maturity or the insured’s death.
#52.
#52. The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? The owner's estate will receive the money paid into the annuity. b) The insurance company will retain the cash value and pay back the premiums to the owner's estate. c) The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. d) The beneficiary will receive the greater of the money paid into the annuity or the cash value.
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever
is greater.
Who bears all of the investment risk in a fixed annuity?
a) The beneficiary
b) The annuitant
c) The insurance company
d) The owner
The insurance company
Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. Income payments do not vary from one payment to the next. The
insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its
?
investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.
What type of insurance would be used for a Return of Premium rider? a) Level Term b) Decreasing Term © Annualv Renewable Term de increasing lerm
de increasing lerm
The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is
the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
#59.
59. Which of the following is NOT true regarding the needs approach method of determining the value of an individual’s life?
a) It must be assumed that the death of the insured will occur immediately.
b
Need is predicted using the number of years until the insured’s retirement.
c) Coverage is based on the predicted needs of that family.
The death of an insured must be premature.
Need is predicted using the number of years until the insured’s retirement.
In the needs approach method, need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen
immediately. The policy allows for benefits to be collected upon the insured’s death.
71. Can the Superintendent investigate fraudulent claims if they occurred outside of the resident’s state according to the Insurance Fraud Prevention Act?
a) Yes, but only if it is a violation of another state’s insurance law.
b) No. Because insurance is regulated by the state, all claims must occur within state boundaries.
c) No. If fraudulent acts are believed to have been committed, the Superintendent must notify the state’s Superintendent or Commissioner. It will then become a federal
matter.
d) Yes. The Superintendent has the power to make an investigation within this state or outside of the state.
Yes. The Superintendent has the power to make an investigation within this state or outside of the state.
If the insurance frauds bureau has reason to believe that a person is engaged or is about to engage in a fraudulent act, the Superintendent has the power to make an
investigation within tilis state or outside of the state.
73. If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information
practices?
a) At the time of policy delivery
b) Never, since the information was obtained from the applicant
c) At the time of application
d)
At the time the insurer first collects the information
At the time of policy delivery
The notice is usually required at the time an insurer or producer first collects personal information from a source other than the applicant or public records, or at policy delivery if the information is collected from the applicant or from public records. #75.
75.
If an association is applying for a life settlement broker’s license, which of the following requirements must the association meet
a)
Emplov a minimum of 10 individual brokers
b Maintain an active life license for at least 1 vear
Establish a board of directors
d) Authorize a natural person to act individually as a broker
d) Authorize a natural person to act individually as a broker
If a firm or association is applying for a broker’s license, they must name and authorize natural persons to act individually as life settlement brokers for the tirm.
#78.
#78. Which of the following types of agent authority is also called "perceived authority"? a) Fiduciary D Apparent ~ Express d) Implied
Apparent
Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
82. An insurance compant sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?
a) Insurance telemarketing
b) Direct response marketing
c) Independent agency marketing
d) Illegal
b) Direct response marketing
A direct response marketing system effectively bypasses the insurance agent. Business is conducted over the phone, through the mail, or online. This is a perfectly legal
approach to selling insurance. It is not mandatory in all situations for the insured to physically sign any documents in order for coverage to go into effect.
What is the purpose of a conditional receipt?
a tis intended to provide coverase on a date prior to the policv issue
b It guarantees that a policy will be issued in the amount applied for.
c It serves as proof that the applicant has been determined insurable
d) It is given only to applicants who fully prepay the premium
tis intended to provide coverase on a date prior to the policv issue
Coverage commences on the date of the application or the date of a medical examination. whichever is later. on the condition that the applicant is determined to be
insurable at the rate applied for.
91. What is the tax consequence of amounts received from a Traditional IA after the money was left in the tax-deferred account by the beneficiary?
a) Income tax on distributions plus 10% penalty.
b) Capital gains tax on distributions and no penalty.
c) Capital gains tax on distributions plus 10% penalty.
d) Income tax on distributions and no penalty.
Income tax on distributions and no penalty.
If the beneficiary chooses to leave the money in the tax-deferred account until the calendar year in which the owner would have attained age 72, the distributions would
be subject to income taxation at the rate at the time of withdrawal.
#100.
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? A a) Revocation of license b) $2.500 C $1,000 d) $100 per violation
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.
Who represents the insured in the investigating of a claim? D) Independent adiuster Agent d) Public adjuster
d) Public adjuster
A public adjuster is any person, firm, association or corporation, who for a commission, acts on behalf of the insured in negotiating a settlement of a claim for loss or damage to property
Who is included in the definition of an agent?
A producer who owns his own field office
A salaried emplovee of the insurer who does not solicit insurance or receive a commission
An agent who devotes only 25% of his time
to the solicitation of insurance contracts and does not receive commission
Agents of title insurance companies.
A producer who owns his own field office
All of the above are not included under the definition of an agent except for a producer who owns his own field office. Ownership of an insurance field office does not
exclude a producer from the definition of an agent.
Whatlicense or licenses are required to sell variable annuities?
Onlv
a securities license
No license is required
Both a life insurance license and a securities license
Onlv a life insurance license
Both a life insurance license and a securities license
Agents are required to have both a life insurance license and a securities license to sell variable annuities #26.
During replacement of life insurance, a replacing insurer must do which of the following?
Guarantee a replacement for each existing policy
b
Designate a new producer for a replaced policy
Send a copy of the Notice Regarding Replacement to the Department of Insurance
Obtain a list of all life insurance policies that will be replaced
Obtain a list of all life insurance policies that will be replaced
The replacing insurance company must require from the producer a list of the applicant’s life insurance policies to be replaced and a copy of the replacement notice
provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.
31. An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy’s cash value, which
is currently $20.000. What would be the face amount of the new term policy?
$20,000
$25.000
$50,000
The face amount will be determined by the insurer.
50,000
The face of the term policy would be the same as the face amount provided under the whole life policy.
life insurance 429 The New York Superintendent has the responsibility to make sure each entity transacting insurance in this state remains solvent. Insurers are required to file a statement with the Superintendent Semiannuallv on or before January and June 1st b) Every 2 years by the renewal date Annually on or before March 1st. d) Biannually on or before April 1st
Annually on or before March 1st.
Each entity must file a statement with the superintendent annually on or before March ist.
Before an agent can transact business in New York, every insurer, fraternal benefit society or HMO must file with the Superintendent which of the following? Temporary license o Nonresidenuicense c Completion of appointment Certificate of appointment
Certificate of appointment Every insurer, fraternal, or HMO must file a certificate of appointment to ensure the agent is trustworthy and competent #41.
41.
An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do?
a Join durine the open enrollment derid
Provide medical records to the insurer
Sign a statement of continued good health
d) Nothing: proof of insurability is never required in group policies
A join durine the open enrollment derid
If one applies for coverage after the open enrollment period, proof of insurability may be required in order to avoid adverse selection.
#42. All of the following statements about equity index annuities are correct EXCEPT a Thev invest on a more aggressive basis aiming for higher returns. The annuitant receives a fixed amount of return. Thev have a guaranteed minimum interest rate d) The interest rate is tied to an index such as the Standard & Poor's 500.
The annuitant receives a fixed amount of return.
Equitv indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature
the annuitant will not have to worry about receiving less than
what the minimum interest rate would vield
O © life insurance life. #48. Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a Option B Corridor oon variable option Option A
Option B
Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases
each vear ov the amount that the cash value
increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value
#50.
Which of the following terms best describe the coverage provided ov term policies, as compared to anv other form of protection? a Most comprehensive b) Longest Greates Least
Greatest
erm policies provide for the greatest amount of coverage for the lowest premium, as compared to any other form of protection.
51. An employee quits his job on May 15 and doesn’t convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the
following statements best describes what will happen?
The insurer will pay a reduced death benefit to the beneficiary.
The insurer will Dav the death benefit minus one month’s premium
© The insurer will pav nothing because the employee has terminated his group insurance and hasn’t started the individual one
The insurer will pay the full death benefit from the group policy to the beneficiary.
The insurer will pay the full death benefit from the group policy to the beneficiary.
The employee usually has a period of 31 days after terminating from the group in order to exercise the conversion option. During this time, the employee is still covered
under the original group policy.
55
Which is generally
true regarding insureds who have been classified as preferred risks?
They can decide when to pay their monthly premiums.
b Thev keep a higher percentage of any interest earned on their policies.
c) Their premiums are lower.
They can borrow higher amounts off of their policies
c) Their premiums are lower.
The preferred risk classification indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify for lower
premiume
than those in the other categories.
#57. How long does a licensee have to notify the Superintendent of a change of address? 90 days b) Immediatelv 30 days d 60 davs
30 days
The Superintendent must be notified within 30 days upon any change of primary residence or business address #59.
59. Which is INCORRECT concerning a Section 457 Deferred Compensation plan?
a It has a vesting requirement.
b) The deferred amount is paid upon death, disability, or retirement.
c) It is a nonqualified plan.
d It is a means of deferring current income until later when the employee is in a lower tax bracket
It has a vesting requirement.
Since the employee forfeits the amount deferred it he/she leaves the employment, it has no vesting requirement. #62.
62. According
to New York law, hearings ordered by the superintendent must be
a Held at least once a month.
b Attended by at least 2 insurance company representatives.
c) Held before a quorum consisting of 10 people.
d) Open to the public.
d) Open to the public. Hearings must be open to the public unless the Superintendent feels a private hearing is in the best interest of the public #66.
#66. In a group life insurance policy, the employer may select all of the following EXCEPT The amountoninsurance I he premium payor. c) lhe beneficiary. The type or insurance.
The beneficiary
Employees must be allowed to select a beneficiary.
