Simulation Questions Flashcards
The following are features of a ___________ option:
- The policyholder has the right to withdraw the accumulations at any time
- The annual dividend is retained by they company
- The interest is credited at a rate specified by the policy
- The interest credited under this option is taxable
Accumulation at interest
The _____________ in a modified guaranteed annuity is usually the % of the difference between the contracted rate of interest in the annuity and the current rate at surrender
Market value adjustment
The _________ stipulates that if an employee receives property or other benefits in lieu of income, such property or benefits would have been taxable income had they received in cash; therefore, an economic benefit has been received and will be taxed accordingly.
Doctrine of economic benefit
How many years of experience does an agent have to have before becoming a consultant?
5 years
The __________ option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.
The guaranteed insurability option
Suspension or revocation of the license of a solicitor ( does / does not ) automatically suspend the license of the agent who employs the solicitor.
Does not
The ___________ approach to determining the value of an individual’s life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicted needs of the family after the insured’s death are used in the _______ approach.
Human Lie Value approach….Needs approach
With the ________ receipt (aka a temporary insurance agreement), coverage begins immediately and continues for a specific length of time or until the policy is issued or declined.
Binding receipt
Automatic premium loan riders ( do / do not ) require a minimum payment as they ( do / do not ) increase the risk for an insurer,
Do not / do not
Which reason is NOT a legitimate use of insurance in a business:
A) funding against financial loss due to death of a key employee
B) funding business continuation agreements
C) funding against general company financial loss
D) compensating executives
C) funding against general company financial loss
Can a life policy been reinstated after the cash value has been surrendered?
No
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly. The company will discriminate in favor of good risks and against poor risks; however, it cannot discriminate unfairly by using factors such as race or national origin in their underwriting.
What is the authority granted to an agent through the agent’s contract referred to as?
Express authority - these are written into the contract between the insurer and the agent
A _______ in insurance is a statement guaranteed to be true. When an applicant is applying for the insurance Contract, the statements he or she makes are generally not __________, but representations.
Warranty / warranty
A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after the death, plus a lump sum at death, and combines level term and whole life is known as which policy?
Family maintenance
All of the following are characteristics of social insurance except:
A) social insurance is not equitable
B) govt is the only insurance provider
C) benefits are provided under contract
D) involuntary participation in social insurance is required of all eligible taxpayers
C) benefits are provided under a contract
Licensees must complete at least _____ hours of CE related to ethics every ______ years,
Three hours / 2 years
The ________ Period is the period when, should the insured die prematurely, the surviving spouse will have dependent children to support. The family’s income will be greatest during this period.
Family income dependency period
The primary difference between an SEP and an IRA is the much larger amount can be contributed each year to an ______.
SEP
If an annuitant contract holder dies before the effective starting date, the contract’s interest continues to be taxable, unless the beneficiary is a _________. In that case, this tax can be deferred.
Spouse
An insurer may delay or defer a request for a policy loan for up to ______ months, unless the loan is made for the purpose of paying a premium that is due. In this case, the loan is made ___________.
Six months / immediately
The ________ clause states that the insurer agrees to provide life insurance for the named insured which will be paid to a designated beneficiary when proof of loss is received by the insurer. It states the party is to be covered by the policy and names of the beneficiary who will receive the policy proceeds in the event of the insured’s death.
The insuring clause
What is considered a non-medical insurance application?
A) an app on which the medical info is completed buy the applicant & agent only
B) an app hat doesn’t ask questions about the applicant’s medical history
C) an agent’s report
D) an application for life insurance w
A) an application on which the medical info is completed by the applicant and the agent only
Which statement regarding insurable risks is NOT correct?
A) insurance cannot be mandatory
B) the insurable risk needs to be statistically predictable
C) an insurable risk must involve a loss that is definite as to cause, time, place, and amount
D) insured’s cannot be randomly selected
D) insured’s cannot be randomly selected
What does the commissioner do if he or she believes a. Person has violated the code or other law?
Report the findings to the attorney general
The waiver of cost rider is found in what type of insurance?
Universal life
If the irrevocable Bene dies before the insured, any assignment made by the bene is no longer valid unless the policy owner agrees (in writing) that the assignment will remain valid if the bene should die first. In the absence of such an agreement signed by the policy owners the proceeds of the policy are paid as if the assignment ( had / had not ) been made.
Had not
Policies must contain a statement as to the interest rate that will be charged on policy loans. Once set, can this interest rate be changed?
No
How will a policy be interpreted if answers are left blank?
The contract will be interpreted as if the insurer waived its right to have an answer for the question. They would later be barred from any right if denying coverage based on any information that the unanswered question might have developed.
The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?
Loss
The type if insurance company organized to return any surplus money to its policyholders is known as what?
Mutual company
What are the four elements of an insurance contract?
Agreement (offer and acceptance)
Consideration
Competent parties
Legal purpose
For the purpose of insurance, what is risk?
Uncertainty of loss
If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?
Provide the applicant a Disclosure Authorization Notice
If an applicant does not receive his or her insurance policy, who would be held responsible?
The agent
A state-issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of Authority
What is the term for the causes of loss insured against in an insurance policy?
Peril
In orders to transact insurance within a given state, an alien insurer must first obtain what?
Certificate of Authority
When a change needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application
Who owns stock companies?
Stockholders
An insurance company that is formed under the laws of another state is known as what type if insurer?
Foreign
An insurance policy paid a no taxable dividend to the insured one year and nothing the next. From what type of insurer did the insured purchase the policy?
Mutual
What are the three types of agent authority?
Express
Implied
Apparent
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
What two elements are necessary for life insurance contract to have a legal purpose?
Insurable Interest
Consent
