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Worksheetslife exam part 1
Total questions: 81
Worksheet time: 41mins
All of the following are risk categories used by agents and insurers EXCEPT:
Standard risk
Healthy
Non or Substandard risk
Preferred risk
Florida replacement rules apply to WHICH of the following?
Industrial insurance
Group life insurance
Franchise life insurance
Annuities
Administrative fines for twisting, churning, or submitting fraudulent signatures are not allowed to exceed an aggregate amount of how much for non-willful violations?
$25{,}000
$100{,}000
$75{,}000
$50{,}000
Which of the following would best describe the illegal practice of Twisting?
Twisting is the replacement of an existing policy with a different policy issued by the same insurance company
Twisting, also called External Replacement, involves a person illegally convincing another to drop their existing coverage to purchase similar coverage with another agent or insurance company
Twisting is the unfair trade practice of selling a person an additional life policy when it is not needed
It is the agent convincing the applicant that another agent lied in order to obtain the insurance business
The Medical Information Bureau is:
A federal government database used by insurers to determine medical fraud and taxes owed by consumers
A medical database that is shared by life and health insurers
A nationally recognized database that holds credit information on prospective insureds
A listing of all medical procedures the insured has undergone during the last ten years
Which of these statements is most accurate regarding deductibility and taxation of business life insurance plans?
The death benefit is taxable and the premiums paid are not tax deductible to the business
The premium is not tax deductible and the death benefit is received tax free
The premiums are deductible on the company's taxes and the death benefit is tax free
None of these statements are correct
The waiting period before an employee can join the employer's group plans is called:
The consideration period
Employment probation
Employment status
An elimination period
Permanent life insurance policies may be reinstated:
Within one year of lapse
At any point in time
Only term insurance policies may be reinstated
Within three years of lapse
The policyowner permanently assigned ownership of a life policy to another person. This is an example of:
A collateral assignment
A whole life assignment
A loan assignment
An absolute assignment
What annuity payout will guarantee income to the annuitant for the rest of their life?
Interest only
Straight life or Life income
20 year period certain
30 year fixed amount
If a policy is "rated up," this means:
The insured qualifies for a rate discount based on their healthy lifestyle
The policy will be issued at lower premiums than applied for
The amount of coverage issued will be at a larger face amount than applied for
The premiums charged will be higher than standard rates
What type of insurer is owned by its policyholders?
A reinsurer
A fraternal benefit society
A mutual insurer
A stock insurer
The failure of an account holder to take the Minimum Required Distribution results in what penalty?
A 100% penalty on the unrealized distribution
All Required Minimum Distribution penalties have been suspended for the immediate future
There are no penalties if the account holder is at least 75 years old
50% of the amount that should have been taken but was not
The eligible group for life insurance, "employer-employee" group, is for full-time employee groups for up to how many employers?
1
2
There is no limit
3
The policyowner has all of these policy rights except
To choose the premium payment option
The right to designate the beneficiaries of the policy
The right to assign or transfer ownership of the policy to another person
The right to audit the insurance company's books
An annuity contract issued to a senior consumer age 65 or older may not contain a surrender or deferred sales charge for a withdrawal of money from an annuity exceeding what percent of the amount withdrawn
0.08
0.15
0.05
0.1
Universal Life insurance combines
Interest sensitive whole life with a cash value account
Ten year term insurance with a conversion feature
Term insurance and whole life insurance
One year term insurance with a cash value account
Which of the following best describes the beneficiary order of succession
First, second, third, and final
Initial, Secondary, Tertiary, and Last beneficiary
Primary, contingent, tertiary, with the estate of insured as the ultimate, or final beneficiary
Preferred, Standard, Nonstandard, and Ultimate
Which of the following is not something that must be included in the Policy Earning Disclosure
Any premium expense charges
Any administrative charges
The full surrender charge, year by year
The death benefit amount
A Right to Return, also called Free-Look, is best explained by which of the following
The Right to Return is only available on term insurance policies
Free look periods are illegal in this state
It is a period of time where coverage is in force but no premium is charged
It gives the owner a period of time to review the policy once it has been delivered to determine whether to keep it or return it for a full premium refund
The insured must only perform if there is a loss and the insurer must only perform if the loss is covered. This is what governs
Personal contracts
Aleatory contracts
Adhesive contracts
Conditional contracts
If the insured dies, what provision states that the beneficiary must live for a certain period of time to be paid the death benefit
The Uniform Simultaneous Death Act
The Contemplation of Death Rule
The Life Insurance Trust provision
The Common Disaster clause
Insurance contracts are
Multilateral
Unilateral
Bilateral
Semilateral
In order to advance part of the death benefit via the Accelerated Death benefit rider, the insured
The insured needs an organ transplant
The insured has been diagnosed with a terminal illness and has two years or less of life remaining
There has been a medical diagnosis that the insured's life span is drastically reduced due to a disease
All of these qualify for an Accelerated Death benefit advance
In life insurance, the insurable interest must exist
At the time of the insured's death
At the time of application
There is no insurable interest requirement in life insurance
At both the time of application and the time of the insured's death
Contracts that are offered on a take it or leave it basis and not subject to negotiation are what kind of contracts
Aleatory contracts
Contracts of adhesion
Unilateral contracts
Personal contracts
An Option One, or Option A Universal Life policy provides
An endowment policy benefit
An increasing death benefit
A level death benefit
A term insurance death benefit
Constructive delivery of a policy is best described as
When the policyowner initially applies for the insurance
Acceptance of the policy by the policyowner
When the policyowner decides to keep the policy after the free look period has expired
When the insurer delegates delivery of the policy to another, for example, the agent, and the agent delivers the policy
WHAT is the difference between unfair trade practices and unfair claims practices?
Unfair trade practices have to do with unethical behavior in the processing of insurance claims, while unfair claims practices have to do with unethical behavior used to entice persons to purchase or not purchase an insurance product
Unfair trade practices have to do with unethical behavior used to entice persons to purchase or not purchase an insurance product; there is no such term as "unfair claims practices"
There is no difference; they are different terms for the same concept
Unfair trade practices have to do with unethical behavior used to entice persons to purchase or not purchase an insurance product, while unfair claims practices have to do with unethical behavior in the processing of insurance claims
In an incontestability provision, a group life insurance policy must provide that the validity of the policy shall not be contested, except for nonpayment of premium, after it has been in force for HOW many years from its date of issue?
There is no such requirement
2 years
5 years
4 years
WHEN may a life agent place or modify individual contract life insurance coverage with a life insurer covering the life of a person who is NOT a family member?
Any of these
When the modification names the life agent as the named beneficiary
When the life agent is the named beneficiary under the life insurance policy
When the life agent has an insurable interest in the life of the person
A Whole Life policy has a face amount of $500,000 and an Double Indemnity Accidental Death Benefit rider. What amount would be paid in the event of the insured's accidental death?
1000000
500000
1500000
2000000
WHEN can a full benefit policy use the term "no medical examination required"?
A full benefit policy is prohibited from ever including the phrase, "no medical examination required"
When the Office of Insurance Regulation approves the usage
When it is the first time the client purchases a full benefit policy
When it is accompanied with the proper disclosure
Agents who initiate any life insurance transaction must submit WHICH of the following statements signed by the agent and the applicant?
A replacement notice listing any in force life insurance policies that must be signed by the agent and the applicant
A disclosure statement describing the insurer's percentage of policies that have been applied for and issued
A notice that states that the insurance company is backed by the Federal Deposit Insurance Corporation
A notice that guarantees the growth of the policy's cash value at specific times during the life of the policy
WHICH of the following is the term for the practice whereby policy values in an existing life insurance policy are directly or indirectly used to purchase another insurance policy with the same insurer in a deceptive fashion, for the purpose of earning additional commission?
Twisting
Sliding
Rebating
Churning
WHICH of these receipts provides coverage effective the date of application or the medical examination if the insured is a standard or better risk?
An unconditional receipt
An approval receipt
An insurability receipt
A non-binding receipt
The IRS considers life insurance policy dividends as:
A return of premium from the insurer's divisible surplus and therefore not taxable
Taxable as ordinary income
Only taxable if the policy is third party owned
Taxable as capital gains income
If a person submits fraudulent signatures on an application, they may be subject to an administrative fine up to what amount for each willful violation?
45000
25000
75000
5000
A whole life insurance policy has a face amount of 500,000,andhas 200,000 of pure insurance. HOW much cash value is in the account?
500000
300000
200000
700000
When the life insurance agent is giving a sales presentation, WHEN are they required to inform any prospective purchasers that they are acting as a life insurance agent?
At any point during the presentation
Before starting the presentation
There is no such requirement
At the end of the presentation
Cash value in life insurance policies and annuities grows on a:
It is taxed only if the policy endows before age 95 of the insured
Taxed as earned, and will be taxed annually
Tax-deferred basis
Tax-free basis
WHAT must be provided before an insurer can accept an applicant's initial premium or premium deposit?
The Policy Summary
There is no such requirement
The Buyer's Guide
Both the Buyer's Guide and Policy Summary
Under the IRS Contemplation of Death rule, the value of an item given away or sold for less than its value will be added back into the estate of the decedent if the item was given away or sold within:
Ten years of the death
Six months of the death
Three years of the death
The five years prior to the insured turning 65
Florida individual contract life insurance policies delivered are required to contain certain nonforfeiture options. WHICH of the following is NOT one of these options?
Cash surrender value
Increased paid-up life insurance
Reduced paid-up life insurance
Extended term life insurance
The period of time in which premiums are paid into an annuity is called the:
Annuitization period
Cash value period
Growth period
Accumulation period
In WHICH of the following situations would it most likely NOT be appropriate to recommend a client replace their policy?
A middle-aged client was induced by their previous agent to replace their whole life coverage with term life coverage
A female client's original policy was issued with unisex rates, and she recently moved into another state that allows for sex-based rates
A policy was issued to a client when they were young that includes a small death benefit with a large premium
The client's health has degraded, after having recently been diagnosed with leukemia
Money laundering is best described as:
The practice of transferring funds from one account to another to ensure that written checks will be honored
Making sure that all cash value accounts are kept clean and not associated with other accounts held by the insurer
Exchanging old, worn-out currency for new currency at the bank
The illegal practice of hiding the origins of money that has been obtained unlawfully
What provision states that once the policy has been in force for two years, payment under the policy cannot be contested for fraud or misrepresentation in the application?
The incontestability provision
The free look provision
The nonforfeiture options provision
The grace period provision
In WHAT type of group plan does the employee pay some or all of their group premium?
Contributory
Noncontributory
Employee shared group plans
No group plan provides for employee contributions to the premium
WHICH of the following is the term for knowingly making any misleading representations or incomplete or fraudulent comparisons for the purpose of inducing any person to lapse their insurance policy in favor of a new one?
Sliding
Churning
Twisting
Rebating
How long does information remain on a person's credit report?
Ten years for bankruptcies and seven years for other entries
Seven years for bankruptcies and ten years for other entries
Ten years for all entities on a credit report
Ten years for personal bankruptcies, 20 years for business bankruptcies, and ten years for all other entries
The definition for the term "suitability information" means information that is related to the consumer which is reasonably appropriate to determine the suitability of a recommendation. WHICH of the following is information that would meet this definition?
Financial objectives
Liquidity needs
Tax status
All of these
The life insurance settlement option that is completely tax-free is the:
Fixed amount installments
Interest only
Lump sum option
Fixed period installments
WHAT are the required elements of a legal and enforceable contract?
Coverage, Loss provisions, Occurrences, and Legal Benefit: CLOC
Contract, Legal Protection, Offer, and Consideration: CLOC
Contract terms, Lender approval, Office of the Commissioner acceptance, and Loyalty: CLOC
Consideration, Legal Purpose, Offer and Acceptance, and Competent Parties: CLOC
The Omnibus AIDS Act stipulates that HIV testing must be:
Reported to the federal government once testing has been completed
Approved by the Office of Medicare and Medicaid Services
Done under the supervision of the underwriting manager at the insurance company
Informed, voluntary, and confidential
What is a "material misrepresentation?"
They are considered statements of fact and can cause fraud charges to be brought against the applicant
A material misrepresentation is one that if the insurer had known the correct information, it would have altered their issuance decision
They are representations made by the applicant that can cause a policy to be canceled after it has been in force for at least two years
They are representations that have no bearing on the issuance of the policy
WHAT kind of term insurance policy starts out with a higher amount of coverage and then will lessen over time and end up at zero coverage?
Increasing term insurance
A decreasing term policy
Level term insurance
A Universal Life insurance Option A policy
In a standard grace period provision for group insurance, every insurance contract must provide that the insured is entitled to a grace period of not less than HOW many days?
31
14
30
21
WHO bears the cash value risk in a variable insurance policy?
The policyowner
The risk is evenly divided between the policyowner and the insurer
The insurance company
The Securities and Exchange Commission
If a term policy renews, the premium will increase. This is called:
Face amount increase
Original age basis
Cost of insurance increase
Step rate increase to the premium
If a policy is owned by one person and there is a different person insured under the contract, it is a:
Third-party ownership
Second-party ownership
Fourth-party ownership
First-party ownership
Dan's agent looked at his current assets, present debts and other obligations, and other costs that Dan wanted covered if he died. Dan's agent used WHAT kind of approach when suggesting an amount of coverage?
The Needs Analysis
A cost replacement analysis
A full coverage method
The Human Life Value method
Regarding the Florida rules for replacement, the insurer is required to do certain things when replacement is involved. WHICH of the following is NOT one of those requirements?
Send a copy of the Notice to Applicant Regarding Replacement of Life Insurance to the existing insurer immediately when the Notice is received
Require a completed copy of the Notice to Applicant Regarding Replacement of Life Insurance from the agent with the application for life insurance
Provide a Buyer's Guide and a Policy Summary to each prospective buyer after receiving the applicant's initial premium
Maintain copies of the Notice to Applicant Regarding Replacement of Life Insurance for at least three years
A policyowner is concerned about potential disability and their ability to pay premiums on their life policy. WHAT rider would take care of this concern?
Disability assurance rider
Waiver of premium
Premium Payor benefit
Future purchase option
An employee resigns and is no longer covered under their group life plan. Does the employee have the right to continue insurance coverage?
Yes, the conversion privilege allows the individual to convert his group term coverage to an individual term insurance policy at attained age pricing and no proof of health
No, the former employee will have to go and purchase an individual policy of their choosing and have to prove health
No, there is no allowance for conversion from a group plan in this state
Yes, the employee will be offered a permanent insurance policy with no health proof at original age pricing
Under Florida rules for replacement, each agent must submit to the insurer with, or as part of the application for life insurance, WHICH of the following?
A statement signed by the applicant that states they acknowledge replacement may or may not be involved in the transactions
A statement signed by the insurance company that states that they take responsibility for an agent's recommendation for replacement
A signed statement that discloses that the agent does not know whether or not replacement will be involved in the transactions
A signed statement as to whether or not the agent knows replacement is or may be involved in the transactions
Statements that are made by the applicant are considered true to the best of knowledge. These statements are:
Representations
Statement of fact
Considered fraudulent statements at all times
Warranties
A free look period provision in an individual contract must have an unconditional refund period for premiums paid for a fixed annuity contract, including any contact fees or charges, available for HOW many days?
15
14
30
21
A long-term care rider added to a life insurance policy can:
Help cover the cost of long-term care if the insured needs help with two or more activities of daily living
Replace a long-term care insurance policy, as they are the same thing
Only be added if the insured is under age 40
Will be paid in addition to the entire face amount of coverage in the event of the insured's death
WHAT is a vesting schedule in a retirement plan?
It is a schedule that shows employee ownership of employer contributions in a retirement plan
Vesting schedules have been outlawed, and all retirement plans now require immediate vesting by IRS rule
It lists how quickly the employee earns ownership of their own contributions to a retirement plan
It states how long the employee must be employed before benefits are offered
Term insurance premiums are based on the insured's
Attained age
Original age
Life expectancy
Average age
Insurable Interest must be present for life insurance:
Insurable interest is not required for life insurance, only health insurance
At the time of application
At both the time of application and the time of death
At the time of the insured's death
WHICH of the following is NOT one of the elements described in the Policy Summary?
The generic name of each rider, if applicable
A statement that dividends are based on the current dividend scale and are guaranteed
The date the Summary was prepared
The generic name of the policy
If an agent sends the insurer an incomplete application, WHAT would be the result?
The application will immediately be rejected by the insurer
The insurer will return the application to the agent for completion
The insurer will reject the application and place the agent under disciplinary action
The insurer will issue the policy based on the information it has received
In addition to a life insurance license, to sell any variable life insurance policy, the licensee must also obtain:
A securities license
A variable insurance license
A casualty license
A health insurance license
An aleatory contract is best described as:
A contract that is guaranteed to have losses
A contract that is subject to chance events
A contract that is issued to an individual
A contract that requires the policyowner to adhere to the terms of the contract
The application, policy and any attached papers define the policy under WHAT provision?
The Consideration clause
The Entire Contract provision
The Owner's Rights provision
The insuring clause
WHICH of these statements accurately describes the taxation on distributions from employer sponsored retirement plans?
They are partially taxable
They are tax free
If the retiree is at least age 65, there are no taxes
They are fully taxable upon receipt
In WHAT type of group plan does the sponsor pay the entire premium?
Noncontributory
Contributory
No premium plan
Employer paid plan
In terms of Personally Identifiable Health Information, HIPAA requires WHICH of the following?
That insurers file copies of medical information with state agencies to ensure accuracy
That this information only be available to the agent and the primary insurer
That all medical information on clients and applicants be locked up when not in use
Reasonable safeguards to protect confidentiality of medical information
WHICH of the following terms cannot be used in a way that implies the life insurance agent is generally engaged in an advisory business where compensation is unrelated to sales, unless this is actually the case?
Investment advisor
Financial counseling
Financial planner
All of these
