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Questions and Answers
What is life insurance replacement?
What is life insurance replacement?
Exchanging an existing policy for a new policy.
All of the following actions are considered rebating EXCEPT:
All of the following actions are considered rebating EXCEPT:
- Sharing commissions with other producers (correct)
- Offering a country club membership as an inducement to purchase insurance
- Giving back commissions to a client
- Offering employment as an incentive to purchase insurance
All of these are valid policy dividend options for a life insurance policyowner EXCEPT:
All of these are valid policy dividend options for a life insurance policyowner EXCEPT:
- Buy additional insurance coverage
- Cash outlay to the policyowner
- Accumulate without interest (correct)
- Reduction in policy premium
An insurer MUST pay a life insurance death benefit claim promptly upon receipt of proof of loss.
An insurer MUST pay a life insurance death benefit claim promptly upon receipt of proof of loss.
What is an insurance policy's grace period?
What is an insurance policy's grace period?
Within how many days must a licensee submit a change in address?
Within how many days must a licensee submit a change in address?
What must be included in an advertisement for an annuity product by Maria the producer?
What must be included in an advertisement for an annuity product by Maria the producer?
Which policy feature makes a universal life policy different from a whole life policy?
Which policy feature makes a universal life policy different from a whole life policy?
Ambiguities in an insurance policy are always resolved in favor of the?
Ambiguities in an insurance policy are always resolved in favor of the?
Which of these is considered to be a Living Benefit option in a life insurance policy?
Which of these is considered to be a Living Benefit option in a life insurance policy?
Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?
Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?
A limited payment whole life policy provides?
A limited payment whole life policy provides?
All of these are characteristics of a universal life insurance policy EXCEPT?
All of these are characteristics of a universal life insurance policy EXCEPT?
Loans obtained by a policy owner against the cash value of a life insurance policy?
Loans obtained by a policy owner against the cash value of a life insurance policy?
Which of these is NOT an Unfair Claims Settlement Practice?
Which of these is NOT an Unfair Claims Settlement Practice?
James is the insured on a life insurance policy where his age was misstated on the application. What is CORRECT regarding the death benefit amount?
James is the insured on a life insurance policy where his age was misstated on the application. What is CORRECT regarding the death benefit amount?
A business will typically use which type of life insurance to cover their employees?
A business will typically use which type of life insurance to cover their employees?
How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability?
How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability?
An annuitant is guaranteed to NOT outlive their benefits with a(n)?
An annuitant is guaranteed to NOT outlive their benefits with a(n)?
How is the cost of a policy affected when a policy owner pays premiums more frequently?
How is the cost of a policy affected when a policy owner pays premiums more frequently?
An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)?
An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)?
An underwriter's primary responsibility to an insurer is to protect against?
An underwriter's primary responsibility to an insurer is to protect against?
An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?
An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?
How do insurers predict the increase of individual risks?
How do insurers predict the increase of individual risks?
A life insurance policy written on one contract for two people in which it is payable upon the first death is called?
A life insurance policy written on one contract for two people in which it is payable upon the first death is called?
A rollover from a Traditional IRA to another IRA MUST be done within _______ days to avoid tax consequences.
A rollover from a Traditional IRA to another IRA MUST be done within _______ days to avoid tax consequences.
A licensed producer MUST be _____ be an insurer to be eligible for soliciting insurance contracts.
A licensed producer MUST be _____ be an insurer to be eligible for soliciting insurance contracts.
A nonresident producer from a state outside of Louisiana may become licensed in Louisiana IF a(n)?
A nonresident producer from a state outside of Louisiana may become licensed in Louisiana IF a(n)?
An example of an Unfair Claims Settlement Practice is?
An example of an Unfair Claims Settlement Practice is?
A producer who sells most of his/her insurance policies to family members is said to be engaging in?
A producer who sells most of his/her insurance policies to family members is said to be engaging in?
Which of the following is NOT a requirement to obtaining a Louisiana insurance producer license?
Which of the following is NOT a requirement to obtaining a Louisiana insurance producer license?
All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT?
All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT?
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called?
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called?
A change in an insurance application requires?
A change in an insurance application requires?
The taxable portion of each annuity payment is calculated using which method?
The taxable portion of each annuity payment is calculated using which method?
A whole life insurance policy accumulates cash value that becomes?
A whole life insurance policy accumulates cash value that becomes?
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?
Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?
A life insurance policyowner was injured in an automobile accident with results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?
A life insurance policyowner was injured in an automobile accident with results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?
What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death?
What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death?
A producer must notify the Commissioner within _____ days of a felony conviction.
A producer must notify the Commissioner within _____ days of a felony conviction.
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
A renewable Term Life Insurance policy allows the policyowner the right to renew the policy?
A renewable Term Life Insurance policy allows the policyowner the right to renew the policy?
Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?
Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?
Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds?
Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds?
What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as?
What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as?
Which of the following is NOT part of an insurance contract?
Which of the following is NOT part of an insurance contract?
An insurance producer decides to conduct business under an assumed name. The Commissioner MUST be notified of this change?
An insurance producer decides to conduct business under an assumed name. The Commissioner MUST be notified of this change?
A life insurance policy sold in Louisiana can be contested by the insurer only during the first ____ years of the contract.
A life insurance policy sold in Louisiana can be contested by the insurer only during the first ____ years of the contract.
The free-look provision gives the policyowner?
The free-look provision gives the policyowner?
Why are dividends from a mutual insurer not subject to taxation?
Why are dividends from a mutual insurer not subject to taxation?
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the?
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the?
Life insurance policies will normally pay for losses arising from?
Life insurance policies will normally pay for losses arising from?
Which of these annuities require premium payments that vary from year to year?
Which of these annuities require premium payments that vary from year to year?
Which of the following is NOT information found in a life insurance buyer's guide?
Which of the following is NOT information found in a life insurance buyer's guide?
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?
All of these are valid options for an Adjustable Life Policy EXCEPT?
All of these are valid options for an Adjustable Life Policy EXCEPT?
In what part of an insurance policy are policy benefits found?
In what part of an insurance policy are policy benefits found?
Which of these would be the best example of a limited pay life insurance policy?
Which of these would be the best example of a limited pay life insurance policy?
All of the following riders can increase the death benefit amount EXCEPT?
All of the following riders can increase the death benefit amount EXCEPT?
What type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
What type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
Before a producer may sell, solicit, or negotiate insurance for an insurer, the producer must have a(n)?
Before a producer may sell, solicit, or negotiate insurance for an insurer, the producer must have a(n)?
Replacement can be defined as?
Replacement can be defined as?
Which of these is NOT considered to be a common life insurance nonforfeiture option?
Which of these is NOT considered to be a common life insurance nonforfeiture option?
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of?
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of?
A tax-free Section 1036 Exchange of a life insurance policy to a different policy is permitted if it occurs?
A tax-free Section 1036 Exchange of a life insurance policy to a different policy is permitted if it occurs?
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's?
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's?
How does one qualify as a fully-insured individual under Social Security disability coverage?
How does one qualify as a fully-insured individual under Social Security disability coverage?
When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach?
When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach?
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST?
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST?
When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT?
When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT?
A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due?
A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due?
Which of these is considered to be a document that describes the critical segments of a life insurance policy?
Which of these is considered to be a document that describes the critical segments of a life insurance policy?
An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest-free. The provision that allows this is called?
An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest-free. The provision that allows this is called?
The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid?
The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid?
An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if?
An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if?
What does the word 'level' in Level Term describe?
What does the word 'level' in Level Term describe?
Fixed period settlement options are considered to be a form of a(n)?
Fixed period settlement options are considered to be a form of a(n)?
Advertising regulations exist in order to?
Advertising regulations exist in order to?
A cease and desist order?
A cease and desist order?
How are annuities given favorable tax treatment?
How are annuities given favorable tax treatment?
All of these statements concerning whole life insurance are false EXCEPT?
All of these statements concerning whole life insurance are false EXCEPT?
An individual most likely will have an insurable interest in insuring a person's life if?
An individual most likely will have an insurable interest in insuring a person's life if?
Which of the following is an annuity that is linked to a market-related index?
Which of the following is an annuity that is linked to a market-related index?
______ life is designed to pay the balance of a loan if the insured dies before repayment of the loan.
______ life is designed to pay the balance of a loan if the insured dies before repayment of the loan.
When does a life insurance policy typically become effective?
When does a life insurance policy typically become effective?
The least expensive option to pay off a 30-year mortgage balance would be?
The least expensive option to pay off a 30-year mortgage balance would be?
The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n)?
The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n)?
Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity?
Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity?
If the annuitant dies before the annuity start date?
If the annuitant dies before the annuity start date?
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)?
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)?
Underwriters can acquire information from all of the following sources EXCEPT?
Underwriters can acquire information from all of the following sources EXCEPT?
Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
What is the purpose of the Louisiana Life and Health Insurance Guaranty Association?
What is the purpose of the Louisiana Life and Health Insurance Guaranty Association?
Which of the following would be considered an underwriting duty of an agent?
Which of the following would be considered an underwriting duty of an agent?
According to Louisiana law, group life insurance conversion privileges must NOT?
According to Louisiana law, group life insurance conversion privileges must NOT?
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
How often must an insurance producer's license in Louisiana be renewed?
How often must an insurance producer's license in Louisiana be renewed?
Which of the following actions by a producer would NOT result in a license suspension or revocation?
Which of the following actions by a producer would NOT result in a license suspension or revocation?
A spouse and child can be added to the primary insured's coverage as what kind of rider?
A spouse and child can be added to the primary insured's coverage as what kind of rider?
Study Notes
Insurance and Policy Definitions
- Ambiguities in insurance policies favor the insured.
- Living Benefit options in life insurance include an accelerated death benefit.
- Death benefits under a Modified Endowment Contract (MEC) are not taxable, while policy loans and withdrawals are subject to taxation.
- Limited payment whole life policies provide lifetime protection.
- Universal life policies feature flexible death benefits, flexible premiums, and build cash value, but do not have fixed surrender values.
Loans and Claims
- Loans against the cash value of a life policy are not treated as taxable income.
- Unfair claims settlement practices include refusing to pay claims without investigation and failing to acknowledge claims promptly. Settling a claim by arbitration is NOT considered unfair.
- If an insured's age is misstated, the death benefit is adjusted based on what the correct age premiums would have provided.
Policy Types and Annuities
- Group policies are commonly used by businesses to cover employees.
- Social Security Total Disability requires an individual to be unable to work for 12 months.
- Guaranteed lifetime withdrawal benefits ensure an annuitant won’t outlive their benefits.
- A fixed immediate annuity begins payments typically within one month.
- The cost of a policy increases when premiums are paid frequently.
Insurance Transactions and Procedures
- An endorsement modifying policy provisions is known as a rider.
- Underwriters primarily protect insurers against adverse selection.
- Replacement in insurance involves buying a new policy while surrendering an existing one.
- Nonresident producers can be licensed in Louisiana through reciprocal arrangements.
- Producers must notify the Commissioner of any assumed name usage before it takes effect.
Disability and Benefits
- The disability income rider provides monthly payments if the insured becomes totally and permanently disabled.
- Common disaster provisions manage payouts when both the insured and beneficiary die in the same accident.
- There are multiple riders available for life insurance policies, like payor benefits that waive premiums if the policyholder dies.
Tax and Financial Considerations
- Tax-free rollovers from a Traditional IRA to another IRA must occur within 60 days.
- Dividends from mutual insurers are not taxable as they are considered returns of premium.
- A life insurance policy remains contestable by the insurer for two years from the contract date.
Market Regulations
- Louisiana mandates that insurance producers notify the Commissioner of felony convictions within 30 days.
- Advertising regulations ensure truthful disclosures to the public, and cease and desist orders forbid certain practices.
Policy Loans and Cash Value
- Cash value in whole life policies can be borrowed against, with loans reducing the net death benefit if unpaid.
- Flexible premium deferred annuities require variable premium payments and are different from fixed annuities.
Miscellaneous
- Association provides financial assurance for claims of insolvent insurers.
- All life insurance statements regarding health and occupation are considered representations.
- Fixed period settlement options function as annuities, distributing benefits over a specified period.
Compliance and License Information
- Insurance producers must renew their licenses every two years in Louisiana.
- Insurance institutions can contest claims based on misrepresentation or lack of evidence of insurability.
- A producer's actions like sharing commissions with other licensed producers would NOT result in license suspension.
Understanding Policy Features
- Level Term life insurance refers to a fixed face amount during the term.
- Features such as guaranteed interest with opportunities for higher rates characterize universal life policies.
- The automatic premium loan provision allows insurers to use cash value to cover unpaid premiums after the grace period ends.
Studying That Suits You
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Description
Test your knowledge on insurance policies with these flashcards. This quiz covers key concepts such as ambiguities, living benefits, and taxation under Modified Endowment Contracts. Perfect for students preparing for exams in insurance principles.
