Which statement is true in regards to a policy loan?
Past-due interest on a policy loan is added to the total cost
An individual who purchases a life annuity is given protection against
the risk of living longer than expected
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
J chooses a monthly premium payment mode on his whole life insurance policy. Which of these statements is correct?
The gross premium is higher on a monthly payment mode as compared to being paid annually
Which of these is a valid Tennessee regulation for referral fees?
The commissioner may establish by rule a maximum amount for each referral
an engineering firm that would suffer financially from the death of a project manager should purchase a
key person life policy
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
Return of premium rider
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
the initial premium
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
inability of the insured to perform more than 2 activities of daily living (ADL's)
J applies for an insurance policy. What BEST describes the particular terms of this policy?
Policy summary
All are true statements regarding the underwriting process, except
AIDS and HIV virus exams can be conducted in a discriminatory fashion
On a life insurance policy, who is qualified to change the beneficiary designation?
policy owner
N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities?
Flexible installment deferred
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
policy owner
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
conversion
In Tennessee, an insurer that is incorporated in NJ and conducts business in TN is called a
foreign insurer
Which of these is NOT a fair marketing practice when an existing insurance policy is being replace?
Reduce the cost by lowering the commission
S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?
Automatic Policy Loan
Additional coverage can be added to a Whole Life policy by adding a(n)
decreasing term rider
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be paid the death benefit
B is an insurance producer who occasionally engages in financial planning. If B sells an insurance policy during the course of a financial planning seminar, B must disclose to the client
that a commission will be earned in addition to any fee charged for financial planning
Which of the following is an example of defamation?
Circulating brochures that falsely denounce the financial condition of an insurer
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
exclusion for the medical condition
Term insurance has which of the following characteristics?
expires at the end of the policy period
the consideration clause in a life insurance contract contain what pertinent information?
amount of premium payments and when they are due
what is the suicide provision designed to do?
safeguard the insurer from an applicant who is contemplating suicide
When must insurable interest be present in order for a life insurance policy to be valid?
when the application is made
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
signed HIPAA disclosure
A life insurance policy would be considered a wagering contract WITHOUT
insurable interest
which of these statements concerning an individual straight life annuity is accurate?
payments are made to an annuitant for life
what kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
family maintenance policy
a policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. which type of designation would fulfill this need?
irrevocable
a policy loan is made possible by which of these life insurance policy features?
cash value provision
what action will an insurer take if an interest payment on a policy loan is not made on time?
automatically add the amount of interest due to the loan balance
what type of life insurance gives the greatest amount of coverage for a limited period of time?
term life
a policy owner is allowed to pay premiums more than once a year under which provision?
mode of premium
which of these statements describe a modified endowment contract (MEC)
exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
what benefit does the payor clause on juvenile life policy provide?
premiums are waived if payor becomes disabled
to be eligible for social security disability benefits, an employee must be unable to perform
any occupation
the common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
This clause provides the payment of proceeds to the insured's estate.
which of these would be considered a limited-pay life policy?
life paid up at age 70
what kind of life insurance product covers children under their parents policy?
term rider
a BLANK insurance company is formed under the laws of a state outside of TN
foreign
if a producer commits an act of coercion or intimidation, how would the producers insurance company be held responsible for this act?
if the insurer approves of the act
when a life insurance application is completed, a policy summary must be given to the applicant. the policy summary must include
the premium cost for basic coverage applied for
under the USA patriot act, insurers are required to report receipt of cash payments in excess of
10,000
which of these is not a legitimate insurance marketing practice for obtaining business from a competitor?
reducing commissions in order to make a sale
If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?
insured contingent beneficiary
a provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the
policy loan provision
the Tennessee insurance guaranty association
protects TN insurance policy owners in the event an insurance company becomes insolvent
which of the following statements about noncontributory employee group life insurance is false?
a minimum number of employees is required to participate
a producer may apply for one or more of the following licenses
life, personal, health
when engaged in an insurance transaction in Tennessee, the producer represents the
insurer
a whole life insurance policy endows when the
Cash value equals the death benefit
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?
portion of the premiums paid for by the employer may be a tax deduction
an insurance producer could be found guilty of rebating by
sharing commissions with a client who has purchased insurance
a business entity can be defined as a
association or a limited liability company
all of these are considered a producers breach of fiduciary duty except
allowing premiums to be submitted electronically
stranger originated life insurance has been found to be in violation of which of the following contractual elements?
legal purpose (insurable interest)
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
equity index insurance
which of the following policies combines investment choices with a form of term coverage
variable universal life
an employer that offers a qualified retirement plan to its employees is eligible to
make tax deductible contributions to the plan
consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
probability of making timely premium payments
what is considered a valid reason for small businesses to insure the lives of its major shareholders?
fund a buy sell agreement
the Tennessee Guaranty Association is subject to review and regulations by the commissioner. a financial statement must be submitted no later than when of each year
march 30th
the accelerated death benefit provision in a life insurance policy is also known as
living benefit
Which of these arrangements allows one to bypass insurable interest laws?
investor originated life insurance
all of these are powers of the commissioner except
incarcerate a producer
a producer must leave a buyers guide for which policy
universal life
which of these factors does not influence an applicants need for life insurance
self maintenance expenses
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?
single premium
how often must the commissioner examine each domestic company?
every 5 years
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
aleatory
which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policy owner?
irrevocable beneficiary
what authority does the commissioner have over Tennessee producers?
may establish guidelines for continuing education as a part of the producer license renewal procedure.
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
straight life annuity
which settlement option pays a stated amount to an annuitant, but no residual value to an beneficiary?
life income
which type of policy is considered to be overfunded, as stated by IRS guidelines
modified endowment contract
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
ordinary income tax and a 10% tax penalty for early withdrawal
Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options?
variable life
Which of these actions should a producer take when submitting an insurance application to an insurer?
inform insurer of relevant information not included on the application
which of the following combination plans is deigned to protect an insured from an unpaid mortgage balance upon premature death
joint life
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the Contestable period and proven to be material
an agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. when will the policy become effective?
when the conditions of the recipient are met
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
claim will be denied
which of these terms accurately defines an underwriters assessment of information on a life insurance application
risk classification
All of these are considered sources of underwriting information about an applicant EXCEPT
rating services
which of the following factors affects the amount of monthly disability benefits payable under social security?
the amount of benefits available from other sources
credit life insurance is typically issued with which of the following types of coverage?
decreasing term
all of the following statements are true regarding a policy grace period, except
past due premiums are waived
in Tennessee, the definition of individual may include which of the following
the individuals legal rep
how does an indexed annuity differ from a fixed annuity?
indexed annuity owners received credited interest tied to the fluctuations of the linked index
a life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
waiver of premium
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
pay the face amount minus the past due premium
when must insurable interest exist for a life insurance contract to be valid
inception of the contract
which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company.
all of these insurance subjects qualify for continuing education credits in Tennessee except
motivating producers
On delivery of a policy, a signed statement of good health is typically requested if
the applicant was submitted without the initial premium
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
request of change will be refused
what is the maximum fine that can be imposed by the commissioner to a producer who violates an insurance law
1000 per violation