Nonforfeiture values guarantee what for the policy owner?
That the cash value will not be lost
What rider is often used in changing the insured in business life insurance?
substitute insured rider
what describes the fixed period settlement option?
both principle and interest will be liquidated over a selected period of time
what is necessary about nonforfeiture value?
they are required by the state to be included in the policy
consideration clause of the life insurance policy will state what?
the amount of premium payment
a father owns a life insurance policy on his 15 year old daughter. The policy contains the optional Payor BenefitsRider. If the father becomes disabled, what happened to the life insurance premiums?
they will be waived until daughter becomes 21.
What are insurance transactions?
a. Advising a policyholder regarding a claim.
b.Negotiating coverage.
c. soliciting a policy.
an employee is insured under her employers group life plan. If she terminates her group coverage, what happens?
a. The insured would not need to prove insurableility for a conversion policy.
b. the insured may covert coverage to an individual policy within 31 days.
c. The premium for an individual coverage will be based upon the insured's attained age.
an insured replaces his current policy with one offered by another insurer. If he finds that eh is unsatisfied with the new policy, within what period can he return it?
30 days
the policy owner pays for her life insurance annually. Until now, she has collected a nontaxable 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?
reduction of premium.
when transacting business in this state an insurer formed under the laws of another country is known as:
alien insurer
in life insurance policies, cash value increases
Grow tax deferred
what license is required for a surplus lines producer
Property and Casualty
the policy owner wants to make sure that upon his death, the life insurance 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. What type of settlement is t
interest only option
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
adjusted to the insured's age at the time of renewal
during policy replacement, the replacing insurer must notify existing insurers with in what time period?
5 business days
A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wants to retain all of the rights of ownership. The policy owner should name her husband as:
revocable beneficiary
Policy assignment does what?
A. it is the same as a beneficiary designation.
B. it permits the beneficiary to the designation as the person to receive the benefits.
C. it authorizes an agent to modify the policy.
Suicide clause does what?
it can exclude suicide as long as it the policy is in force. In most states, if the death results from suicide within a certain period, the insurer is not obligated.
An insurer is closing a branch office in this state. Within how many days does the insurer have to notify the department?
30 days
If the beneficiary wants a guarantee that benefits paid from principal and interest
fixed period.
what is a professional who offers advice regarding benefits or advantages of an insurance policy to clients for a fee called?
a consultant
to attain currently insured status under social security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
what term best describes someone who makes false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
defamation
by how amy days does the discontinuation of a group insurance policy reduce the time limit for providing notice of claim or proof of loss?
0 days.
What is reinsurance?
an agreement between a ceding insurer an assuming insurer.
what is a consumer report?
it included information regarding a person's credit, character, reputation and habits. It included written and oral information collected by a reporting agency from employment records, credit and public records.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of:
misrepresentaion
The commissioner may revoke a producers license for all of the following reasons
A. commingling of funds
B. Misrepresenting the terms of a policy
C. Accepting business from an unlicensed person.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Which nonforfeiture option has the highest amount of insurance protection
Extended Term
Variable products
A. Policy owners bear the investment risk.
B.The minimum death benefit is guaranteed
C. The cash value is not guaranteed.
To cancel an insurance producer license, the producer must
send the license to the Department and request Cancellation
If an insurer cancels an agency contract, it must notify the commissioner in writing within how many days?
15 days
What is the purpose of the conditional receipt
it is intended to provided coverage on a date earlier than the date of the insurance of the policy
HIV testing for insurance purposes does what?
it is regulated by the state
it must meet criteria of the U.S department of health and human services.
if a settlement option is not chosen by the beneficiary or policy owner, what is the best option?
a lump sum
credit life insurance
insures the life of the debtor
regarding a non qualified retirement plan?
A. Contributions are not currently tax deductible.
B. It can discriminate in benefits and selecting participants.
C. It can grown tax deferred earnings.
U.S vs. Soth Eastern Underwriters was decided in 1944. What does this S.C decision still apply to insurance today?
It still stands in full. Insurance is considered to be interstate commerce and is therefore to be regulated by the federal government.
For an individual who is not covered by an employer-sponsered plan, IRA contributions are
tax deductible
What significance did U.S. vs. South- Eastern Underwriters have on the insurance industry?
It reversed he decision of Paul vs. Virginia, determining that insurance is interstate commerce and should be regulated federally.
why should the producer personally deliver the policy when the first premium has already been paid
to help the insured understand all aspects of the contract
under which of the following circumstances would an insurer at accelerated benefits
an insured is diagnosed with cancer and needs help paying for her medical treatment
the term illustration in a life insurance policy refers to
a presentation of non guaranteed elements of a policy
the company owes premium money to the insured. The insurer gave the funds to the producer to return to the insured. Within how many days must the producer pay the insured
5
An insured owns a life insurance policy. T be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer changes a fee. What type of policy does the insured most likely have
Universal life
a prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will..
pay the policy proceeds only if it would have issued the policy.
In an Adjustable Life policy all can be changed by the policy owner
A. The premium
B. The amount of the insurance
C. The length of coverage.
All of the benefits are available under Social Security
A. Death Benefits
B. Old-age and retirement benefits
C. disability
all advertisements pertaining to life insurance policies are the responsibility of the
insurer
The department can run a report on a specific producer that lists his or her license information, current license status, and transact. What is the name of this report?
Certification of license status report
The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the
one- year term option
What is true about the premium on the children rider in a life insurance policy?
it remains the same no matter how many children are added to the policy
what is a decreasing term policy?
A. the death benefit is $0 at the end of the policy term.
B. The contract pays only in the event of the death during the term and there is no cash value.
C. The face amount steadily declines throughout the duration of the contract.
how many days does the producer have to remit the collected premiums to the insurer?
5 business days
A certification of License Status must have what information on it?
A.Licensee's date of birth
B.Reference number
C. Types of insurance for which the licensee is authorized.
taxation of dividends in participating policies are not..
taxable
an insured purchase a life insurance policy on his life naming his wife as primary beneficiary. his daughter is the contingent beneficiary. Under what circumstances could the daughter collect the death benefit
the daughter predeceases the insured
An insured buys a 5-year level premium term policy with a face amount of 10,000. The policy also contains renewability and a convertibility options. when the insured renews the policy in 5 years, what happens to the premium?
It will increase because the insured will be 5 years older then when the policy was originally purchased.
if an insurance company wised to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain what?
Prior Insurance, credit history, and habits
when is it okay to limit coverage based on material status?
it is never legal to limit coverage based on marital status
if a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what type of settlement option should the beneficiary select?
fixed period
an organization licensed as a producer business entity based in New York would like to transact in New Jersey. which of the following is true?
The organization will need to obtain a nonresident business entity, and its producers will need to obtain nonresident licenses.
What protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The fair credit reporting act
Upon the death of the insured, the primary beneficiary discovers that the chose the interest only settlement option. What does this mean?
the beneficiary will only receive payments of the interest on the death benefit.
a corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefits, then
the benefit is tax free
an agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
rebating
insurance companies may be classified according to legal form of their ownership. The type of company organized to return any surplus money to their policyholders is
mutual insurer
Universal Life insurance policy is best described as
annually renewable term policy with a cash value account
What organizations regulate variable life policies
The SEC, Insurance department, the federal government
what is the benefit of choosing extended term as a nonforfeiture option
highest amount of insurance protection
what is material misrepresentation
a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
must be informed of the source of the report
what would be considered a non medical insurance application
an application on which the medical information is completed by the applicant and the agent only
a small employer owns a group of health insurance policy. the employer does not pay the premium fuel ate and fails again to pay the end of the grace period. The insurer cancels the policy. What happens ?
the insurer will pay all losses through the grace period.
An insured pay an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called:
Consideration
On a participating insurance policy issued by a mutual insurance company, dividends paid to policy holders are
not taxable since the IRS treats them as a return of a portion of the premium paid.
An employee is insured under her employer's group life plan. If she terminates her group coverage, what happens?
A. The premium for an individual coverage will be based on their age.
B. the insured would not need to prove insurability for a conversion policy.
C. The insured may convert coverage to an individual plan within 31 days.
An insurer devices an intimidation strategy in order to corner a large portion of the insurance market. Which of the following describes the practice?
illegal
A producer was found guilty of a 3rd violation of the insurance Code. What would be the monetary penalty he will have to pay?
$10,000
when a insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a
broker
Variable life insurance is based on what kind of premium
level fixed
an insurer cancelled a contract with a producer on April 1st. By what date must the commissioner be notified of this action?
April 15th.
which two terms are associated directly with the premium
level or flexible
accumulation period of an annuity
it is a period during which the payments into the annuity grow tax deferred.
an insured has had a life insurance policy that he purchased three years ago when he was 30. he is killed in an auto mobile accident . what does the company do?
pay a reduced death benefit
an insured pays 1200 annually for her life insurance premium. The insured applies this year's 300 worth of accumulated dividends to the next years premium reducing it to 900. what option does this describe?
reduction of Premium
if a credit life policy lapses for a nonpayment before the debt is satisfied, within how many days must the creditor either refund the premium paid or apply debt?
60
who is the owner and who is the beneficiary in a key person life insurance policy
the employer is the owner and beneficiary
a couple owns a life insurance policy with a children's term rider. their daughter is reaching the max age. she will have to get a permanent insurance in the near future. what happens
she does not need proof of insurability
if a producer commits a crime how long do they have to notify the commissioner?
30 days
paid up addition option uses the dividend to
purchase a smaller amount of the same insurance as the original policy
qualified plans help...
both the employer and employee for tax benefits
who is a third party owner?
a policyowner who is not the insured