Simulate Questions Flashcards
In order for
a nonresident licensee to become
a resident producer in New York. thelicensee must
a) Apply within 90 days of becoming a resident.
Wait b months and close out all existing business.
c) Fulfil New Yorks prelicensine requirements
Pass a written exam
Apply within 90 days of becoming a resident.
If a licensed individual becomes a resident of New York. he or she must apply for a license within 90 days of becoming a legal resident, but does not have to fulfill
prelicensing or examination requirements for lines of authority held in the previous state, unless the Superintendent determines otherwise
Which statement regarding insurable risks is NOT correct?
a An insurable risk must involve a loss that is definite as to cause, time, place and amount.
b) Insureds cannot be randomly selected.
© Insurance cannot be mandator
The insurable risk needs to be statistically predictable.
b) Insureds cannot be randomly selected.
Granting insurance must not be.mandatory, selecting insureds randomly will help the insurer to have a fair proportion of good risks to poor risks. All other statements are
true
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is
actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
b)Pav the ful death benefit
Pay nothing: there was a misrepresentation on the application
a Pavthe fu death benefit and rerund excess premium
Pay a reduced death benefit
The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not
apply to statements relating to age, sex and identitv.
In order to be a licensed life settlement broker, a person must complete which of the following requirements?
a Post a suretv bond
DA
Submitto a drug test
Submit fingerprints
Have been a licensed life producer for at least 6 months
Submit fingerprints
Fingerprinting is required and will be used for a criminal history record check so the Superintendent may assess the character and trustworthiness of the applicant prior
tolIcensing
All of the following are duties and responsibilities of producers at the time of application EXCEPT
Explain the nature and type of any receipt the producer is giving to the applicant.
b Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information.
c) Check to make sure that there are no unanswered questions on the application.
Change any incorrect stal
tement on the application o personallv initialing next to the corrected statement.
Change any incorrect stal
tement on the application o personallv initialing next to the corrected statement.
Any changes to information on an application must be initialed by the applicant
#20. Which of the following riders would NOT cause the Death Benefit to increase? a Accidental Death Rider b) Pavor Benefit Rider Guaranteed Insurability Rider Cost of Living Rider
Pavor Benefit Rider
Payor Benefit Rider does not increase the Death Benefit: it only das the premium if the pavor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can
increase Db at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation: in Accidental Death Rider. if the
insured dies from an accident. DB is a multiple of the Face Amount.
#21 Under a straight life annu if the annuitant dies before the principal amount is paid out, the beneficiary will receive Guaranteed minimum henpfit b) The amount paid into the annuity. The remainder of the princinal. Nothin; the payments wilcease,
Nothin; the payments wilcease,
Straight or pure life annuity will pay a specific amount of income for the remainder of the annuitant’s life. This payment will cease at death, regardless of the amount of
principal that hasn’t been paid out. There is no refund
or payments to survivors
How long must insurers keep records of claims? a) 3 years b 4 years 5 years d) 6 years
d) 6 years
Insurers must keep records for at least 6 years or until the filing of a review of the record, whichever is longer.
#6. Which of the following is NOT a goal of risk retention?
To minimize the insured’s level of liability in the event of loss
b To reduce expenses and improve cash flow
c) To increase control of claim reserving and claims settlements
d To fund losses that cannot be insured
To minimize the insured’s level of liability in the event of loss
Retention usuallv results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims
settlements, and to fund losses that cannot be insured.
22. A Universal Life Insurance policy is best described as a/an
Variable Life with a cash value account.
b) Whole Life policy with two premiums: target and minimum
c) Flexible Premium Variable Life policv
d) Annuallv Renewable Term policy with a cash value account.
Annuallv Renewable Term policy with a cash value account.
A universal policy has two components: an insurance component and a cash
account. The insurance component (or the death protection) of a universal life policy is
awavs annual renewable term insurance
lite insurance
#29.
During replacement of life insurance, a replacing insurer must do which of the following?
Send a copy of the Notice Regarding Replacement to the Department or Insurance
Obtain a list of all life insurance policies that will be replacec
Guarantee a replacement for each existing policy
d) Designate a new producer for a replaced policy
Obtain a list of all life insurance policies that will be replacec
The replacing insurance company must require from the producer a list of the applicant’s life insurance policies to be replaced and a copy or the replacement notice
provided to the applicant, and send each existing insurance companv a written communication advising or the proposed replacement
33.
The minimum interest rate on an equitv indexed annuitv is often based on
She returns from the insurance companvs separate account.
b) The annuitant’s individual stock portfolio
The insurance company s general account investments.
An index like Standard & Poors 500
An index like Standard & Poors 500
Equity indexed annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity, the equity indexed annuity has a
guaranteed minimum interest rate. Interest rates on equity indexed annuities are often tied to a familiar index, such as the Standard and Poor’s 500.
39. Which of the following statements about group life is correct?
a) The group sponsor receives a Certificate of Insurance.
D) he policy can be converted to an individual term insurance policv.
c. The cost of coverage is based on the ratio of men and women in the group
d) The premiums 7e higher than in an individual policy because there is no medical exam
The cost of coverage is based on the ratio of men and women in the group
Group life insurance can be converted to an individual whole life, not a term, policy; the group life insurance premiums are usually lower than those of an individual policy:
the group sponsor receives a master contract, while the participants receive certificates of insurance. The cost of the coverage is based on the average age of the gro
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and the ratio of men to women
Which of the following is TRUE about credit life insurance? a) Debtor is the annuitant. b Creditor is the insured. c Debtor is the policy beneficiary. Creditor is the policvowner.
Creditor is the policvowner.
In creditlife insurance, the creditor is the policyowner and the beneficiary; the debtor is the insured
#47. If the Superintendent finds a licensee in violation of an unfair method or unfair practice he or she will issue a a) Cease and desist order. D hebate. Revocation of license. Comp ant record.
Cease and desist order.
A cease and desist order means the licensee must stop the violation he or she is suspected of doing.
Which or te rollowin8 is the DasIc source onrmatn used the coman in the risk seection rocess? Consumer report b) Application Agents repor d) Warranty
b) Application
The application is the basic source of information an insurer uses in the risk selection process.
51. When the insured selects the extended term nonforfeiture option, the cash value wIll be used to purchase term insurance with what face amount?
In lesser amounts for the remaining policy term of age 100.
b Equal to the cash value surrendered from the policv
The same as the original policy minus the casn value
Equal to the original policy for as long as the cash values will purchase
Equal to the original policy for as long as the cash values will purchase
With this option. the cash value is used as a single premium to purchase the same face amount as the original policy for as long a period of time as the cash will buy at the
insured’s currelilage.
52. An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA. how much will
be transferred from one plan administrator to another and what is the tax consequence of a direct transfer/
a $8.000. tax on growth only
$10.000, tax on growth only
$10.000, no tax consequence
0 s8.000. no tax consequence
$10.000, no tax consequence
During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.
#60. 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 Medical Information Bureaus report C Agents Report d Underwriter's Report
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
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a
result. Which policy rider caused this change?
a) Value Adiustment Rider
Return or rmum
cination rider
d) Cost of Living Rider
Cost of Living Rider
The Cost of Living rider annually adjusts the policys face value in accordance with the national rate of inflation or deflation. This rider adjusts the face amount of the
policy to correspond with the rate of inflation, in order to keep the initial value of the policy constant over time.
All of the following are true about variable products EXCEPT
The cash value is not guaranteed
Policyowners bear the investment risk
The premiums Ye invested in the insurer’s general account.
The minimum death benefit is guaranteec
The premiums Ye invested in the insurer’s general account.
Insurers selling variable products invest their customers monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of retu
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customers must bear the investment risk
Which of the following is NOT true regarding policy loans
An insurer can charge interest on outstanding policy loans.
D A polICy loan may be repaid arter the policy is surrendered.
Money borrowed from the cash value is taxable.
Policv loans can be repaid at death
Money borrowed from the cash value is taxable.
Money borrowed from the cash value is not taxable. Policy loans can be repaid at any time, including surrender and death. An insurer can charge interest on outstanding
policy loans.
When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information? Medical records AppIication interviews State records
Application
The application contains most of the information used for underwriting purposes. This is why its completeness and accuracy are so crucial.
84. If an association is applying for a life settlement broker’s license. which of the following requirements must the association meet?
Establish a board or directors
so Authorize a natural person to act individually as a broker
c Emplov a minimum of 10 individual brokers
Maintain an active life license for at least I vear
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 firm.
#85. All of the following would be different between qualified and nonqualified retirement plans EXCEPT Taxation on accumulation D) Taxation or withdra wals IRS approval requirements
Taxation on accumulation
Taxation on acgum
ulation is deferred in both types of plans. The rest of the characteristics would differ.
The paid•
up addition option uses the dividend
1o accumulate additional savings for retirement
Ilo purchase a smaller amount of the same
type of insurance as the original policv
~ Tr
purchase a one-year term insurance in the amount of the casn value
To reduce the next years premium
Ilo purchase a smaller amount of the same
type of insurance as the original policv
The dividends
are used to purchase a single premium policy in addition to the face amount of the permanent policy.
+92
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?
Statement of Continued Good Health
Attending Physician Statement
A complete medical record
Sworn health aftidavit from the applicant
Attending Physician Statement
The APS is used to obtain medical DETAILS about a specific condition which has shown up in the application; the insurance company orders the intormation directly from
the physician, using a signed authorization which was part of the application
To sell variable life insurance policies, an agent must receive all of the following EXCEPT a Alite insurance license b) SEC registration. - FINRA registration. 0 A securities lIcense
SEC registration.
Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration
is for securities, not agents
#97. The policvowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? Interest only option b) Life income will period certain C) Joint and survivor Fixed amount option
Interest only option
With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals
98.
Which of the following is a key distinction between variable whole life and variable universal life products?
Variable whole life allows policv loans from the cash value.
b Variable universal life has a fixed oremium.
Variable whole life has a guaranteed death benefit.
Variable universal life is regulated solely through FINRA.
Variable whole life has a guaranteed death benefit.
Variable univefl life insurance may or may not have a minimum death benefit,
unlike variable whole life insurance which guarantees a minimum death benefit.
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a (Choose from the following options) 01. Whole Life Policy. R2. Convertible Term Policy. 03. Renewable Term Policy. 04. Decreasing Term Policy.
R2. Convertible Term Policy.
3. What required provision protects against unintentional lapse of the policy? (Choose from the following options) 01. Reinstatement ©2. Grace period 03. Assignment © 4. Payment of premiums
Grace period
4. In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? (Choose from the following options) O1 Unidirectional © 2. Aleatory 03. Conditional ©4. Unilateral
Unilateral
7. Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT (Choose from the following options) O1. Family health history. O 2. Alcohol and tobacco consumption. 03. Recent surgeries. © 4. Other insurance coverages.
Other insurance coverages
- Which of the following is true about the premium on the children’s rider in a life insurance policy?
(Choose from the following options)
O1. It decreases when the oldest child reaches the age of 21.
O 2. It increases when a newborn baby is added to the policy.
O 3. It decreases when an adopted child is added to the policy.
Q4. It remains the same no matter how many children are added to the policy.
Q4. It remains the same no matter how many children are added to the policy.
10.A couple receives a set amount of income from their annuity. When the wife dies, the husband
no longer receives annuity payments. What type of annuity did the couple buy?
(Choose from the following options)
01. Joint limited annuity
© 2. Joint life
O 3. Joint and survivor
O 4. Life with period certain
Joint life
How often must an insurance agent licensed in the state of New York renew the license? (Choose from the following options) O1. Every birthday © 2. Every 2 years O 3. Every even-numbered year O 4. Every odd-numbered year
Every two years
14. If an insured changes his payment plan from monthly to annually, what happens to the total premium? (Choose from the following options) O1. Doubles © 2. Increases 0 3. Decreases 0 4. Stays the same
Decreases
- In classifying a risk, the Home Office underwriting department will look at all of the following
EXCEPT
(Choose from the following options) - Applicant’s past income.
O 2. Applicant’s past medical history.
©3. Applicant’s present physical condition.
0 4. Applicant’s present occupation.
Applicant past income
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? (Choose from the following options) O1.1 year 02.2 years © 3. 5 years O4.7 years <<
2 years
