Primerica Flashcards ionicons-v5-c

Adjusted to the insured's age at the time of renewal.If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will bea) Based on the issue age of the insured.b) Discounted.c) Adjusted to the insured's age at the time of renewal.d) Determined by the health of the insured.

Respond to the consumer's complaint.The consumer has the right to request the information on the report, the reasons for turn down and any adverse underwriting decisions. The reporting agency is required to respond to the consumer's complaint, and if necessary to reinvestigate the report.

Under the Fair Credit Reporting Act, if the consumer challenges the correctness of the information contained in his/her report, the reporting agency musta) Defend the report if the agency feels it is accurate.b) Change the report.c) Send an actual certified copy of the entire report to the consumer.d) Respond to the consumer's complaint.

A life insurance policy has a legal purpose if both of which of the following elements exist?a) Underwriting and reciprocityb) Offer and counterofferc) Policyowners and named beneficiariesd) Insurable interest and consent

To purchase a smaller amount of the same type of insurance as the original policy.The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy.

The paid-up addition option uses the dividenda) To reduce the next year's premium.b) To accumulate additional savings for retirement.c) To purchase a smaller amount of the same type of insurance as the original policy.d) To purchase a one-year term insurance in the amount of the cash value.

ConditionsConditions are part of the policy structure. Consideration is an essential part of a contract.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPTa) Conditions.b) Consideration.c) Legal purpose.d) Offer and acceptance.

Signed waiver of premium.The policy does not go into effect until the premium has been collected. If the premium was not collected at the time of the application, the producer may also be required to get a Statement of Good Health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy, and not something to be obtained from the applicant.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPTa) Signed waiver of premium.b) Statement of good health.c) Payment of premium.d) Delivery receipt.

Guaranteed insurability optionThe guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?a) Nonforfeiture optionsb) Guaranteed insurability optionc) Dividend optionsd) Guaranteed renewable option

Required a premium increase each renewal.Annually Renewable Term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policya) Required a premium increase each renewal.b) Built cash values.c) Required proof of insurability every year.d) Decreased death benefit at each renewal.

At the time of applicationIn life insurance, insurable interest must exist at the time of application.

When must insurable interest exist in a life insurance policy?a) At the time of lossb) At the time of applicationc) At the time of policy deliveryd) When there is a change of the beneficiary

Which of the following best defines the "owner" as it pertains to life settlement contracts?a) A financial entity that sponsors the transactionb) A fiduciary for the contractc) The insurance providerd) The policyowner of the life insurance policy

Which of the following would help prevent a universal life policy from lapsing?a) Corridor of insuranceb) Target premiumc) Face amountd) Adjustable premium

Cash values can be borrowed at any time.Liquidity in life insurance refers to availability of cash to the insured through cash values.

What does "liquidity" refer to in a life insurance policy?a) The policyowner receives dividend checks each year.b) The insured is receiving payments each month in retirement.c) Cash values can be borrowed at any time.d) The death benefit replaces the assets that would have accumulated if the insured had not died.

BeneficiaryOnly the policyowner has the ownership rights under the policy, and not the insured or the beneficiary.

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?a) Insuredb) Policyownerc) The insured and the policyownerd) Beneficiary

Fixed-period installments.Fixed-period installments is a settlement option, and not one of the dividend options.

All of the following are dividend options EXCEPTa) Paid-up additions.b) Fixed-period installments.c) Accumulated at interestd) Reduction of premium.

This rider is available to all insureds with no additional premium.The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.

All of the following are true regarding the guaranteed insurability rider EXCEPTa) The insured may purchase additional coverage at the attained age.b) The insured may purchase additional insurance up to the amount specified in the base policy.c) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events.d) This rider is available to all insureds with no additional premium.

Generally not taxed as income.Life insurance death benefits are generally not taxed as income.

Life insurance death proceeds area) Taxed as ordinary income.b) Generally not taxed as income.c) Taxable to the extent that they exceed 7.5% of the beneficiaries adjusted gross income.d) Taxed as a capital gain.

Cash optionThe cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.

An insured receives an annual life insurance dividend check. What term best describes this arrangement?a) Cash optionb) Reduction of Premiumc) Annual Dividend Provisiond) Accumulation at Interest

The conditional receipt provides that when the applicant pays the initial premium, coverage is effective on the condition that the applicant proves to be insurable either on the date the application was signed or the date of the medical examination, if one is required.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,a) The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for.b) The premium would be returned to the insured's estate because the policy was not issued.c) The company could reject the death claim because the underwriting process was never completed.d) The company could reject the application on the basis that the insured's death was not caused by an ongoing medical problem.

Rated.Substandard risk classification is also referred to as "rated" since these policies could be issued with the premium rated-up, resulting in a higher premium.

Another name for a substandard risk classification isa) Elevated.b) Rated.c) Controlled.d) Declined.

The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary.If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?a) The insurance company will retain the cash value and pay back the premiums to the owner's estate.b) The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary.c) The beneficiary will receive the greater of the money paid into the annuity or the cash value.d) Because the annuitization period has not started, the owner's estate will receive the money paid into the annuity.

Loss.Insurance will protect a person, business or entity from loss.

Insurance is a contract by which one seeks to protect another froma) Hazards.b) Loss.c) Exposure.d) Uncertainty.

The seller must be terminally ill.With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-person" coverage, corporate owned policies, or policies representing excess coverage that is no longer needed, and could be sold for an amount greater than the current cash value.

Which of the following is NOT true of life settlements?a) They could be used for a key person coverage.b) They could be sold for an amount greater than the current cash value.c) They involve insurance policies with large face amounts.d) The seller must be terminally ill.

They are required by state law to be included in the policy.Nonforfeiture values are required by state law to be included in the policy, and cannot be altered by the policyowner. A table showing the nonforfeiture values for the next 20 years must be included in the policy.

Which of the following is TRUE about nonforfeiture values?a) Policyowners do not have the authority to decide how to exercise nonforfeiture values.b) They are required by state law to be included in the policy.c) They are optional provisions.d) A table showing nonforfeiture values for the next 10 years must be included in the policy.

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amountIf an annuitant dies before annuitization, the beneficiary will receive either the amount paid into the plan or the cash value of the plan, whichever is greater.

If an annuitant dies before annuitization occurs, what will the beneficiary receive?a) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amountb) Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amountc) Amount paid into the pland) Cash value of the plan

It is approved by the IRS.A qualified retirement plan is approved by the IRS, which then gives both the employer and employee benefits such as deductible contributions and tax-deferred growth.

If a retirement plan or annuity is "qualified," this meansa) It has a penalty for early withdrawal.b) It accepts after-tax contributions.c) It is noncancellable.d) It is approved by the IRS.

Both a life insurance license and a securities licenseAgents are required to have both a life insurance license and a securities license to sell variable annuities.

What license or licenses are required to sell variable annuities?a) Only a securities licenseb) No license is requiredc) Both a life insurance license and a securities licensed) Only a life insurance license

Coverage ends and the policy cannot be reinstated.Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.

When a policy is surrendered for its cash value,a) Coverage ends but the policy can be reinstated at any time.b) It can be reinstated by paying back all policy loans and premiums.c) It can only be reinstated as a term policy.d) Coverage ends and the policy cannot be reinstated.

Settlement options.Settlement options are methods used to pay death benefits to a beneficiary upon the insured's death.

Methods used to pay the death benefits to a beneficiary upon the insured's death are calleda) Settlement options.b) Designation options.c) Beneficiary provisions.d) Death benefit options.

Limited-pay LifeIn limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?a) Limited-pay Lifeb) Variable Lifec) Adjustable Lifed) Graded Premium Life

Life income with period certainThe life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?a) Joint and survivorb) Single lifec) Fixed-amountd) Life income with period certain

Which of the following best defines target premium in a universal life policy?a) The maximum amount the policyowner may pay on a policyb) The minimum amount to make sure the policy is annually renewablec) The corridor of insuranced) The recommended amount to keep the policy in force throughout its lifetime

They are not included as income for the employee, but are taxable upon distribution.Funds contributed are excluded from the employee's current taxable income, but are taxable upon withdrawal.

How are contributions to a tax-sheltered annuity treated with regards to taxation?a) They are never taxed.b) They are taxed as income for the employee.c) They are taxed as income for the employee, but are tax free upon withdrawal.d) They are not included as income for the employee, but are taxable upon distribution.

What is the purpose of establishing the target premium for a universal life policy?a) To accumulate cash value fasterb) To pay up the policy fasterc) To cover all policy expensesd) To keep the policy in force

Death due to plane crash for a fare-paying passengerGenerally, policies do not exclude conditions in which an insured is a fare-paying passenger on a commercial airline.

Which of the following is NOT typically excluded from life policies?a) Death due to plane crash for a fare-paying passengerb) Self-inflicted deathc) Death that occurs while involved in a felonyd) Death due to war or military service

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good HealthIf the initial premium is not paid with the application, the agent will be required to collect the premium at the time of policy delivery. In this case, the applicant will most likely need to fill out a Statement of Good Health.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?a) When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Healthb) On the designated effective datec) On the application dated) When the agent submits the application to the company and the company issues a conditional receipt

Policy summaryA policy summary describes the features and elements of the specific policy for which a person is applying.

What describes the specific information about a policy?a) Producer's reportb) Policy summaryc) Illustrationsd) Buyer's guide

Automatic premium loanThis provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?a) Waiver of premiumb) Incontestability periodc) Assignmentd) Automatic premium loan

FINRABecause variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities.

An agent selling variable annuities must be registered witha) DOIb) MGAc) SECd) FINRA

Income for 2 or more recipients until they die.The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

Life income joint and survivor settlement option guaranteesa) Payout of the entire death benefit.b) Equal payments to all recipients.c) Income for 2 or more recipients until they die.d) Payment of interest on death proceeds.

To allow the consumer to compare the costs of different policiesThe buyer's guide provides generic information about life insurance policies and allows the consumer to compare the costs of different policies. The policy summary provides specific information about the issued policy, as well as the insurer's information.

What is the purpose of the buyer's guide?a) To list all policy ridersb) To provide information about the issued policyc) To allow the consumer to compare the costs of different policiesd) To provide the name and address of the agent/producer issuing the policy

Buy-sell agreements are normally funded with a life insurance policy.A buy-sell agreement is simply a contract that establishes what will be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy.

Which of the following statements concerning buy-sell agreements is true?a) Benefits received are considered income taxable.b) Buy-sell agreements pay in the event of a medical emergency.c) Buy-sell agreements are normally funded with a life insurance policy.d) Premiums paid are deductible as a business expense.

If the primary beneficiary predeceases the insuredThe daughter, as contingent beneficiary, would need to outlive the insured and primary beneficiary.

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?a) If the insured died from accidental meansb) If the primary beneficiary predeceases the insuredc) The primary and contingent beneficiaries share death benefits equallyd) With the primary beneficiary's written consent

The rider is usually level term insurance.The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.

Which is true about a spouse term rider?a) The rider is usually level term insurance.b) Coverage is allowed for an unlimited time.c) The rider is decreasing term insurance.d) Coverage is allowed up to age 75.

The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan isa) An executive annuity plan.b) Subject to government standards.c) Illegal.d) A nonqualified annuity plan.

It determines who receives policy benefits if the primary beneficiary is deceased.Naming a secondary beneficiary (also referred to as contingent beneficiary) ensures that there is a beneficiary to receive policy proceeds if the primary beneficiary dies before the insured. If there is no secondary beneficiary, the policy benefits will go to the insured's estate.

What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?a) It ensures the policy proceeds will be split between the primary and contingent beneficiaries.b) It requires that someone who is not the primary beneficiary handles the estate.c) It determines who receives policy benefits if the primary beneficiary is deceased.d) It allows creditors to receive payment out of the proceeds.

Fair Credit Reporting ActThe Fair Credit Reporting Act governs what information can be collected and how the information can be used.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?a) Disclosure Ruleb) Fair Credit Reporting Actc) Consumer Privacy Actd) Conditional Receipt

DividendThe return of unused premiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums.

Which of the following terms is used to name the nontaxed return of unused premiums?a) Interestb) Surrenderc) Dividendd) Premium return

Return to the applicant for completionAny unanswered questions need to be answered before the policy is issued. If the insurer receives incomplete applications, they need to be returned to the applicants for completion.

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What should the insurer do with the application?a) Acknowledge the missed questions with a signature and continue the policy issue processb) Proceed with issuing a policyc) Return to the applicant for completiond) Answer the missed questions for the applicant

All of the following are requirements for life insurance illustrations EXCEPTa) They must differentiate between guaranteed and projected amounts.b) They must be part of the contract.c) They may only be used as approved.d) They must identify nonguaranteed values.

Common DisasterUnder the Uniform Simultaneous Death Law, Common Disaster provision, the law will assume that the primary beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of the insured (usually 30 days). This provides that the proceeds will be paid to either the contingent beneficiary or the insured's estate, if no contingent beneficiary is designated.

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?a) Second-to-Dieb) Common Disasterc) Accidental Deathd) Survivor Life

Life expectancyLife Expectancy is an important concept in life settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors (an arithmetic mean).

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?a) Risk exposureb) Morbidityc) Life expectancy d) Mortality rate

The insured may renew the policy for another 10 years, but at a higher premium rate. Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?a) The insured may renew the policy for another 10 years, but at a higher premium rate. b) The insured must provide evidence of insurability to renew the policy.c) The insured may only convert the policy to another term policy.d) The insured may renew the policy for another 10 years at the same premium rate.

$200,000The beneficiary would most likely receive twice the face value of the policy, since his fatal injuries were caused by an accident and he died within the 90-day benefit limit stipulated in most policies.

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?a) $200,000b) $100,000 plus the total of paid premiumsc) $0d) $100,000

The policy will be interpreted as if the insurer waived its right to have an answer on the application.Any unanswered questions need to be answered before the policy is issued. If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer waived its right to have an answer for the question, and will not be able to deny coverage later because of unanswered questions.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?a) The policy will be void.b) The insurer may deny coverage later, because of the information missing on the application.c) The policy will be interpreted as if the insurer waived its right to have an answer on the application.d) The policy will be interpreted as if the insured did not have an answer to the question.

The insured's age at death.The insured's age at death will not be considered, but the longer the life expectancy of the recipient, the lower the payments will be.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPTa) Projected interest rates.b) Face amount of the policy.c) The insured's age at death.d) The beneficiary's life expectancy.

Option AUnder Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

Which Universal Life option has a gradually increasing cash value and a level death benefit?a) Juvenile lifeb) Term insurancec) Option Bd) Option A

Premium amounts and surrender valuesA policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

Which of the following will be included in a policy summary?a) Comparisons with similar policiesb) Primary and secondary beneficiary designationsc) Premium amounts and surrender valuesd) Copies of illustrations and application

The planned premium pays for mortality charges and expenses and any excess is returned to the policy owner.Any premium amounts not required to pay for mortality and expenses, create the cash account.

All of the following are characteristics of a Universal Life policy EXCEPTa) The cash account accumulates on a tax-deferred basis.b) Universal Life is a combination of term insurance and a separate savings account joined in a single contract.c) The planned premium pays for mortality charges and expenses and any excess is returned to the policyowner.d) The insurance company reserves the right to adjust the mortality charges and/or interest rate.

Coverage until death or age 100Whole Life policies are referred to as permanent protection, since as long as the premium is paid coverage will continue for the life of the insured or till the insured's age 100.

What characteristic makes whole life permanent protection?a) Living benefitsb) Coverage until death or age 100c) Guaranteed death benefitd) Guaranteed level premium

An Annually Renewable Term policy with a cash value account.A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

A Universal Life Insurance policy is best described asa) Variable Life with a cash value account.b) Whole Life policy with two premiums: target and minimum.c) Flexible Premium Variable Life policy.d) An Annually Renewable Term policy with a cash value account.

The earnings in the plan accumulate tax deferred.Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis.

Which of the following describes the tax advantage of a qualified retirement plan?a) The earnings in the plan accumulate tax deferred.b) Distributions prior to age 59½ are tax deductible.c) Employer contributions are deductible as a business expense when the employee receives benefits.d) Employer contributions are not taxed when paid out to the employee.

$100,000The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. Since M contributed to his death, the triple indemnity rider is void, but the beneficiary will still receive the policy's face amount.

M is the owner of a $100,000 life policy with a triple indemnity rider for accidental death. When M is killed in a car accident, it is determined that the accident was his fault. The triple indemnity rider in M's policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?a) $0b) $50,000 (50% of the policy value)c) $100,000d) $300,000 (triple the amount of policy value)

It is a period during which the payments into the annuity grow tax deferred.The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.

Which of the following is TRUE regarding the accumulation period of an annuity?a) It is a period of time during which the beneficiary receives incomeb) It is limited to 10 years.c) It is a period during which the payments into the annuity grow tax deferred.d) It is also referred to as the annuity period.

f an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?a) 10%b) 0%c) 50%d) 25%

When the application is signed and a check is given to the agentThe policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.

When is the earliest a policy may go into effect?a) When the insurer approves the applicationb) After the underwriter reviews the policyc) When the application is signed and a check is given to the agentd) When the first premium is paid and the policy has been delivered

From trustee to trusteeIn a direct rollover, the distribution is made directly from the trustee of the first plan to the trustee or administrator/custodian of the new IRA plan.

In a direct rollover, how is the money transferred from one plan to the new one?a) From the participant to the new planb) From the original plan to the original custodianc) From trustee to trusteed) From trustee to the participant

Refund the premiums paid.If the insured commits suicide within 2 years following the policy effective date, the insurer's liability is limited to a refund of premium.

An insured committed suicide one year after his life insurance policy was issued. The insurer willa) Refund the premiums paid.b) Pay the policy's cash value.c) Pay the full death benefit to the beneficiary.d) Pay nothing.

In terms of parties to a contract, which of the following does NOT describe a competent party?a) The person must have at least completed secondary education.b) The person must not be under the influence of drugs or alcohol.c) The person must be of legal age.d) The person must be mentally competent to understand the contract.

Change any incorrect statement on the application by personally initialing next to the corrected statement.Any changes to information on an application must be initialed by the applicant.

All of the following are duties and responsibilities of producers at the time of application EXCEPTa) Change any incorrect statement on the application by personally initialing next to the corrected statement.b) Explain the nature and type of any receipt the producer is giving to the applicant.c) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information.d) Check to make sure that there are no unanswered questions on the application.

The president and employee of a family corporation.Keogh plans are for self-employed individuals and their employees.

All of the following would be eligible to establish a Keogh retirement plan EXCEPTa) A hair dresser who operates her business at her house.b) The president and employee of a family corporation.c) A sole proprietor of a service station who employs four employees.d) A sole proprietor of film development store with no employees.

The employees receive individual policies.The employer receives a master policy, and employees receive a certificate of insurance.

Which of the following is INCORRECT concerning a noncontributory group plan?a) The employees receive individual policies.b) They help to reduce adverse selection against the insurer.c) They require 100% employee participation.d) The employer pays 100% of the premiums.

Buy-sell agreements are normally funded with a life insurance policy.A buy-sell agreement is simply a contract that establishes what will be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy.

Which of the following statements concerning buy-sell agreements is true?a) Benefits received are considered income taxable.b) Buy-sell agreements pay in the event of a medical emergency.c) Buy-sell agreements are normally funded with a life insurance policy.d) Premiums paid are deductible as a business expense.

Selection, classification, and rating of risksThe underwriting process is accomplished by reviewing and evaluating information about an applicant and applying what is known of the individual against the insurer's standards and guidelines for insurability and premium rates.

Which of the following best details the underwriting process for life insurance?a) Reporting and rejection of risksb) Selection, classification, and rating of risksc) Solicitation, negotiation and sale of policiesd) Issuance of policies

Fees, charges, and any other considerationThe premium stated in the policy must include all fees, charges, premiums and other consideration charged for the insurance coverage.

What would be included in the premium amount stated in the insurance policy?a) Taxes and interestb) Only the application fees and policy chargesc) Fees, charges, and any other considerationd) Charges and policy dividends

An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him.Using misrepresentation to convince a person to cancel an existing policy and buy a new one is called "twisting."

Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPTa) An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him.b) An agent offers the use of his lake house to person as an inducement to buy.c) An agent offers to share his commission with a policyholder.d) An agent offers tickets to a baseball game as an inducement to buy insurance.

Benefits are paid to the borrower's beneficiary. In Credit Life Insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.

All of the following statements are correct regarding Credit Life Insurance EXCEPTa) Benefits are paid to the borrower's beneficiary. b) The amount of insurance permissible is limited per borrower.c) Premiums are usually paid by the borrower.d) Benefits are paid to the creditor.

Premiums must be paid in full by the covered employee.Premiums for dependents can be paid by the employer or employee, or both. All the other statements are true.

Under Spouses and Dependent Coverage legislation in Hawaii, all of the following statements are true EXCEPTa) The spouse may need to provide evidence of individual insurability in order to receive coverage.b) Dependent children may be covered up to the age of 23.c) The spouse and dependent children may be covered for the same amount as the covered employee.d) Premiums must be paid in full by the covered employee.

Notice Regarding ReplacementDuring policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.

Which of the following documents must be provided to the policyowner or applicant during policy replacement?a) Policy illustrationsb) Notice Regarding Replacementc) Disclosure Authorization Formd) Buyer's Guide and Policy Summary

24 hours for one line of authority.Continuing education requirements are 24 hours per 2 years per line of authority.

To qualify for a license renewal in Hawaii, a licensee must complete continuing education requirements ofa) 34 total hours.b) 20 total hours.c) 24 hours for one line of authority.d) 44 hours for two lines of authority.

Obtain a list of all life insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

During replacement of life insurance, a replacing insurer must do which of the following?a) Designate a new producer for a replaced policyb) Send a copy of the Notice Regarding Replacement to the Department of Insurancec) Obtain a list of all life insurance policies that will be replaced*d) Guarantee a replacement for each existing policy

Replacement ruleAnytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?a) Replacement ruleb) Reinstatement rulec) Conversion ruled) Disclosure rule

Participating.A policy that stipulates that the company will return any unneeded premiums to policyowners, is called a "participating policy." This return of premium is the surplus after the company has deducted for claims and expenses.

A policy which stipulates that the company will return any unused premiums to policyowners, is calleda) Return of surplus.b) Cost-based.c) Participating.d) Equalized.

Backdating policies to secure a lower premium for the insuredIt is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, or the payment of dividends. Demonstrating conservative returns in the illustrations would not be a violation.

Which of the following would NOT be considered a misrepresentation on the part of the insurer?a) Implying that term insurance has cash valueb) Embellishing the benefits provided in the policyc) Overstating returns on policy dividendsd) Backdating policies to secure a lower premium for the insured

After receiving an application for a hearing, the Commissioner must hold a hearing withina) 30 days.b) 45 days.c) 10 days.d) 20 days.

Both are properly licensed for the line of insurance.For a producer to receive commissions from the sale of insurance, they must be properly licensed for that line of insurance.

In life insurance, producers are permitted to share or split commissions providinga) There is a written agreement between the producers.b) Both are properly licensed for the line of insurance.c) The insured knows and agrees to the arrangement.d) The insurance department knows of the arrangement.

30 daysThe licensee must remit the premiums (minus commissions) to the insurer within 30 days.

How many days does the producer have to remit all the premiums to the insurer?a) 15 daysb) 20 daysc) 30 daysd) 60 days

IllegalIt is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?a) Unfair Discriminationb) Defamationc) Illegald) A legal advertising strategy

A salaried employee who advertises and solicits insuranceA person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.

Which of the following would be required to be licensed as an insurance producer?a) A salaried full-time employee who furnishes information for group insuranceb) An insurance company director who performs executive, administrative and managerial dutiesc) A salaried employee who advertises and solicits insuranced) A person whose activities are limited to producing insurance advertisements

An insurance producer just sold an insurance policy to his sister. What kind of business is this?a) Controlledb) Illegalc) Internald) Personal

4 yearsAll licensees must keep records for continuing education for 4 years after completion.

For how long are licensees required to keep records of continuing education completion?a) 2 yearsb) 3 yearsc) 4 yearsd) 5 years

StockOnly stock insurance companies are owned and controlled by stockholders.

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?a) Fraternalb) Stockc) Mutuald) Reciprocal