Questions and Answers
What can an individual do with a $200,000 convertible term life insurance policy?
Convert to a whole life policy for the same face amount without proof of insurability.
Which of the following would be an example of policy replacement?
What are cash value guarantees in a whole life policy called?
Nonforfeiture values.
Which settlement option should a policyowner select to guarantee income for both beneficiaries for life?
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Which act stated that the federal government would not regulate insurance as long as the states did an adequate job of regulating the industry?
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Which information needs to be included on an application for life insurance?
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An applicant for surplus lines authority must do all of the following EXCEPT?
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Which of the following policies would NOT offer a policy loan option?
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Which dividend option will increase the death benefit?
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When must the policy summary be given to the policyowner if not provided during application?
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Who could most likely be issued a resident producer license?
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Which policy rider should be recommended for a couple purchasing a life insurance policy on their newborn baby to cover premium payments due to death or disability?
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All of the following are true of credit life EXCEPT?
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All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT?
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Is it possible for a whole life policy to include a Waiver of Cost of Insurance rider if the insured becomes severely disabled?
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If a licensee wants to transact insurance under a different name, what must occur?
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What does the family term rider incorporate?
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Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?
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What happens to the cash value in a reduced-paid up policy after surrendering a whole life policy?
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When an insured terminates membership in the insured group, what can they convert to?
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All of the following are true of a nonqualified deferred compensation plan EXCEPT?
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What does the state Life and Health Insurance Guaranty Association guard against?
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What happens to the face amount of a whole life policy if the insured reaches the age of 100?
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What term describes the action of an agent guaranteeing higher dividends than possible?
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What does the renewable provision allow the policyowner to do?
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Study Notes
Life Insurance Concepts
- Convertible term life insurance allows policyholders to switch to a whole life policy for the same amount without proving insurability.
- Policy replacement occurs when a new policy is issued with a lower cash value.
- Cash value guarantees in whole life policies are termed nonforfeiture values.
Policy Options and Benefits
- The Joint and Survivor settlement option ensures income for both beneficiaries for life.
- Paid-up additions are dividend options that increase the death benefit.
- Payor benefit rider protects policy payments in case of the policyholder’s death or disability.
Regulatory Framework
- The McCarran-Ferguson Act states that insurance will be regulated by states as long as they maintain adequate regulations.
- The Fair Credit Reporting Act limits who can receive consumer reports; reports are not accessible to everyone who requests them.
Application and Eligibility
- Life insurance applications should not require current health insurance policies in force.
- Surplus lines authority applicants do not need a certificate of authority in the state.
- For resident producer licenses, a person must be a state resident or have a registered office in the state.
Policy Limitations and Provisions
- Term life policies do not offer the option for policy loans.
- Whole life policies cannot include a Waiver of Cost of Insurance rider.
- If a group insured member terminates, they can convert to a whole life policy without proving insurability.
Financial Insights
- Nonqualified deferred compensation plan contributions are not tax-deductible.
- The face amount of a whole life policy is paid when the insured reaches age 100.
Ethical Practices
- Discrimination in insurance includes charging different premiums based on race.
- Misrepresentation occurs when an agent exaggerates policy benefits, such as guaranteeing unrealistic dividends.
Other Relevant Information
- A surrendered whole life policy for a reduced-paid up policy retains cash value that continues to increase.
- The Life and Health Insurance Guaranty Association protects against insurance company insolvency.
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Test your knowledge of life insurance terms with these flashcards. Each card presents a definition and a corresponding word related to various insurance policies. Perfect for anyone studying insurance concepts or preparing for a certification exam.