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Questions and Answers
Which of the following best describes annually renewable term insurance?
Which of the following best describes annually renewable term insurance?
- It is a term policy that cannot be renewed
- It is level term insurance (correct)
- It is a universal life policy
- It is a whole life policy
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the
Other-insured rider
Which option for Universal life allows the beneficiary to collect both death benefit and cash value when he dies?
Which option for Universal life allows the beneficiary to collect both death benefit and cash value when he dies?
Option B
Example of apparent authority?
Example of apparent authority?
Corporations are never legal annuitants.
Corporations are never legal annuitants.
How many days does a licensee have to inform the commissioner of a change of address?
How many days does a licensee have to inform the commissioner of a change of address?
When a man decides to purchase a $100,000 annually renewable term insurance life policy for additional protection until his children finish college, this policy
When a man decides to purchase a $100,000 annually renewable term insurance life policy for additional protection until his children finish college, this policy
What is true about the cash surrender nonforfeiture option?
What is true about the cash surrender nonforfeiture option?
A projection of insurance needs based on the capitalization of an applicant's future earnings is called?
A projection of insurance needs based on the capitalization of an applicant's future earnings is called?
Which of the following would be considered illegal inducements in insurance marketing?
Which of the following would be considered illegal inducements in insurance marketing?
Cameron is purchasing a permanent life insurance policy with a face value of $25,000. He should include a
Cameron is purchasing a permanent life insurance policy with a face value of $25,000. He should include a
What does the nonforfeiture option guarantee if a prospective deferred annuity owner surrenders the annuity?
What does the nonforfeiture option guarantee if a prospective deferred annuity owner surrenders the annuity?
What dividend option allows an insured to use the policy dividends to pay off her policy sooner?
What dividend option allows an insured to use the policy dividends to pay off her policy sooner?
Benefits are paid to the borrowers beneficiary except:
Benefits are paid to the borrowers beneficiary except:
If Randy transfers his life insurance policy to his son Andy two years before his death, which of the following is true?
If Randy transfers his life insurance policy to his son Andy two years before his death, which of the following is true?
What life insurance policy provision states that both the policy and a copy of the application form the contract?
What life insurance policy provision states that both the policy and a copy of the application form the contract?
Which is the best reason to purchase life insurance rather than annuities?
Which is the best reason to purchase life insurance rather than annuities?
The death benefit under the Universal Life Option B
The death benefit under the Universal Life Option B
The commissioner may waive pre-licensing requirements for examinations for someone who has been a licensed insurance producer in the preceding 12 months.
The commissioner may waive pre-licensing requirements for examinations for someone who has been a licensed insurance producer in the preceding 12 months.
What rider provides Abigail's father a refund of all premiums upon his death in addition to the face amount?
What rider provides Abigail's father a refund of all premiums upon his death in addition to the face amount?
What will happen if an employee quits and doesn't convert his Group Life policy to an individual policy?
What will happen if an employee quits and doesn't convert his Group Life policy to an individual policy?
What element of an insurance contract is described by an insured paying a small premium while the insurer promises to pay a high percentage of all medical costs?
What element of an insurance contract is described by an insured paying a small premium while the insurer promises to pay a high percentage of all medical costs?
Which type of life insurance policy has a cash value element?
Which type of life insurance policy has a cash value element?
What is true regarding a modified guaranteed annuity?
What is true regarding a modified guaranteed annuity?
Taking defensive driving courses or installing deadbolt locks are examples of?
Taking defensive driving courses or installing deadbolt locks are examples of?
Which policies would be considered illegal inducements to purchase insurance?
Which policies would be considered illegal inducements to purchase insurance?
If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days?
If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days?
Which of the following policies would have an IRS required corridor between the cash value and the death benefit?
Which of the following policies would have an IRS required corridor between the cash value and the death benefit?
An insured stated on her application that she had never had a heart attack but actually had. What will explain the reason a death benefit claim is denied?
An insured stated on her application that she had never had a heart attack but actually had. What will explain the reason a death benefit claim is denied?
Under a 20-pay whole life policy, for the policy to pay the death benefit, premiums must be paid for?
Under a 20-pay whole life policy, for the policy to pay the death benefit, premiums must be paid for?
What company produces evaluations of insurer financial status often used by the Insurance Department?
What company produces evaluations of insurer financial status often used by the Insurance Department?
What qualifications must an agent hold to sell variable life insurance policies?
What qualifications must an agent hold to sell variable life insurance policies?
Which concept is associated with 'exclusion ratio'?
Which concept is associated with 'exclusion ratio'?
All of the following statements about Credit Life insurance are true except benefits are paid to the borrower's beneficiary.
All of the following statements about Credit Life insurance are true except benefits are paid to the borrower's beneficiary.
Rebating is not an unfair trade practice.
Rebating is not an unfair trade practice.
What is the agent's appointment fee?
What is the agent's appointment fee?
An insured decides to surrender his Whole Life policy. At policy surrender, how much of the cash surrender value would be taxable?
An insured decides to surrender his Whole Life policy. At policy surrender, how much of the cash surrender value would be taxable?
Adverse selection is best described as?
Adverse selection is best described as?
If an employee wants to enter the group outside of the open enrollment period, the insurer may require?
If an employee wants to enter the group outside of the open enrollment period, the insurer may require?
Which of the following is not a government insurance program?
Which of the following is not a government insurance program?
An advertisement emphasizing a company's financial stability while being financially unstable is best described as?
An advertisement emphasizing a company's financial stability while being financially unstable is best described as?
What rider allows an insurer to forgo collecting premiums if the insured is disabled?
What rider allows an insurer to forgo collecting premiums if the insured is disabled?
What kind of insurance policy requires the insured to pay premiums for a specified number of years?
What kind of insurance policy requires the insured to pay premiums for a specified number of years?
If an insured conceals information during the application process and dies, what can the insurer do?
If an insured conceals information during the application process and dies, what can the insurer do?
How many policies are necessary for a cross purchase agreement between 3 people?
How many policies are necessary for a cross purchase agreement between 3 people?
Which best describes fixed period settlement option?
Which best describes fixed period settlement option?
Cost of Group Life coverage is based on the ratio of men and women.
Cost of Group Life coverage is based on the ratio of men and women.
If an applicant paid a premium and received a conditional receipt, when is the policy's effective date?
If an applicant paid a premium and received a conditional receipt, when is the policy's effective date?
Which of the following are examples of risk retention?
Which of the following are examples of risk retention?
Which of the following is NOT consideration on the part of an insured?
Which of the following is NOT consideration on the part of an insured?
Which individual could qualify for a temporary insurance license?
Which individual could qualify for a temporary insurance license?
M, who is not licensed as an insurance agent, works part-time in her father's insurance agency. What may she NOT do?
M, who is not licensed as an insurance agent, works part-time in her father's insurance agency. What may she NOT do?
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Study Notes
Life Insurance Overview
- Annually renewable term insurance is a type of level term insurance.
- An "other-insured rider" provides coverage for family members under a life insurance policy.
- Universal life option B enables beneficiaries to receive both the death benefit and cash value upon death.
Policy Provisions and Riders
- Apparent authority examples include accepting late premiums after a grace period.
- Corporations cannot act as legal annuitants in a life insurance policy.
- Policy dividends can be used to expedite paid-up options in a whole life policy.
Insurance Needs and Licensing
- Human life value approach calculates future earnings impact due to the death of the insured.
- Licensees must report address changes to the commissioner within 30 days.
Policy Costs and Taxation
- Cash surrender value exceeding premiums paid is taxable as ordinary income.
- Full death benefits are paid on group life policies even if conversion to individual policies is delayed post-employment.
- Income taxable upon policy surrender is the excess cash value over premiums paid.
Insurance Concepts
- Misrepresentation may result in death benefit claims being denied, particularly if it is material.
- Adverse selection occurs when higher-risk individuals seek insurance more frequently.
- Annuity contracts may feature practices like "exclusion ratios" which pertain to payment calculations.
Policy Types and Features
- Permanent life insurance features a cash value element which is ideal for applicant needs.
- Modified guaranteed annuities offer fixed interest rates for specific periods.
- A limited-pay life policy allows for premium payments only for a designated period.
Special Conditions and Options
- Riders like "return of premium" provide beneficiaries with refunds of premiums paid upon the insured's death.
- The "waiver of premium" rider suspends premium payments if the insured becomes disabled.
- The life income joint and survivor option guarantees income for multiple recipients for their lifetimes.
Compliance and Regulations
- Insurers must file notice of appointment for producers within 15 days.
- Nonresident producers must obtain specific licenses to operate outside their appointed state.
- Agents may face a $5 appointment fee to initiate conduct in the insurance space.
Understanding Annuities and Group Life
- Annuity accumulation periods dictate the growth of the investment before annuitization.
- Group life insurance contributions adjust based on demographic ratios within the group.
Ethics and Fair Practices
- Practices like confirming future dividends or providing false financial statements can lead to unfair trade practices.
- Rebating is prohibited and can involve undue advantages being given to clients for policy purchases.
Miscellaneous Provisions
- Policy stipulations like the entire contract clause affirm that all documents, including applications, form the binding agreement.
- The entirety of an inherited life insurance policy can be included in the taxable estate of the deceased.
Education and Training
- Agents are required to complete 24 credit hours for continuing education; failure to comply results in license suspension.
- Temporary insurance licenses can be granted to individuals in situations such as military deployment.
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