Test - Flashcards
Which of the following best describes an insurance company an insurance company that has been formed under the laws of the state?
Domestic
A company is domestic when doing business within the state in which it is incorporated
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
The insured will need a written consent on the insurer.
A personal insurance contract is written between an insurance company and an individual, and the company has a right to decide with whom it will and will not do business. An insured can transfer an insurance contract to another person, but he or she must first obtain the written consent of the insurer.
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, equity Indexed Annuities have a guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Indexed annuities are less risky than variable annuities and earn higher interest rates than fixed annuities
The Federal Fair Credit Reporting Act
Regulates consumer reports
Which of the following does NOT apply to Errors and Omissions liability contracts?
They are written for the clients of the producer covered by the policy.
Errors and Omissions contracts are written for insurance producers to provide protection resulting from actions charging that the professional failed to render reasonable duties or services. All the other features apply to E&O contracts
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
Life expectancy is an important concept in settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors.
During the free look period, the premium for a variable annuity may be invested in all of the following EXCEPT:
Value funds
During the 30 day cancellation (free-look) period, the premium for a variable annuity may only be invested in fixed income investments and money market funds, unless the investor specifically request that the premiums be invested in the mutual funds.
What is a foreign insurer?
An insurer with a home office in another state
A domestic insurers home office is in this state, a foreign insurers is in another state, and an alien insurer is in another country.
Which statement regarding insurable risk is NOT correct?
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.
When an insured receives a written binder,
The insureds coverage will be effective immediately
Written binders are rarely used in insurance. When agents give written binders to insureds, coverage
During the accumulation period in a non qualified annuity, what are the tax consequences of a withdrawal?
Taxable interest will be withdrawn first and the 10% penalty will be imposed if under the age of 59 1/2
When money is withdrawn from the annuity during the accumulation phase, the amounts are taxed on a last in first out basis (LIFO). Therefore, all withdrawals will be taxable until the owners cost basis is reached
Which of the following is NOT a type of Temporary insuring Agreement?
Bridge Coverage Insurance
The three types of temporary Insuring Agreements are conditional receipt, 20-day interim Term Receipt and Acceptance form receipt.
A young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he most likely buy?
Family (protection) Policy
This type of insurance combines protection for all members of a family into one policy. It usually provides a permanent plan of insurance on the “base insured” and term riders on other members of the family. Because they are all covered under a single policy, there is only one policy fee.
All of the following are true regarding the guaranteed insurability rider EXCEPT:
This rider is available to all insureds with no additional premium.
The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insureds attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insureds age 40.
An insured received a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Variable
Variable life policies vary in value, as the name suggest, because the value is based on the stocks that support the policy. If a policyholder wants more stable, reliable
Value, he/she should invest in a fixed policy.
