Account800 exam stimulator1 questions with answers tested and verified solutions with A+ 2, Exams of Accounting

Download Account800 exam stimulator1 questions with answers tested and verified solutions with A+ 2 and more Exams Accounting in PDF only on Docsity! 1 Account800 exam stimulator1 questions with answers tested and verified solutions with A+ 2023/2024 updates Question 1 Which of these describe a participating life insurance policy? Policyowners are entitled to receive dividends Policyowners pay assessments for company losses Stock companies allow their policyowners to share in any company earnings Policyowners are not entitled to vote for members of the board of directors Submit Reset Correct. A participating life policy is one in which the policyowner receives dividends deriving from the company's divisible surplus. Question 2 What type of reinsurance contract involves two companies automatically sharing their risk exposure? Treaty The correct answer is "Treaty". Under treaty reinsurance, each party automatically accepts specific percentages of the insurer's business. Question 3 Which of these must be disclosed in a universal life policy? The surrender charges Correct. The surrender charges of a universal life policy must be disclosed. Question 4 What kind of life policy typically offers mortgage protection? Decreasing term The correct answer is "Decreasing term". A mortgage protection life insurance policy uses a decreasing term policy. As the outstanding loan decreases so does the amount of term coverage. Question 5 At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? 2 Upon completion of the application Correct. An applicant for life insurance must be informed of their rights upon completion of the application. Question 6 Who elects the governing body of a mutual insurance company? policyholders Correct. The governing body of a mutual insurance company is elected by the policyholder. Question 7 Which statement regarding an adjustable life insurance policy is NOT true? Policy loans are not permitted Correct. If the adjustable life policy has cash value, the policyowner is permitted to take out a policy loan. Question 8 An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the Fair Credit Reporting Act Correct. The Fair Credit Reporting Act is a Federal law requiring an individual to be informed if that individual is being investigated by an inspection company. Question 9 These are all accurate statements regarding universal life insurance EXCEPT Policy loans are not permitted Correct. Policy loans are allowed in universal life insurance policies. Question 10 The State Guaranty Association guarantees that a claim will be paid if an admitted insurer becomes insolvent Correct. If an insurance company is unable to pay its claims, the State Guaranty Association will step in and pay the outstanding claims. Question 11 Mutual insurers pay dividends to participating policyowners if the insurer has which of the 5 Question 22 Select the appropriate response What type of risk involves the potential for loss with no possibility for gain? Pure Correct. Pure risk involves the potential for loss with no possibility for gain. Question 23 Which of these statements accurately portrays an adjustable life insurance policy? Policyowners are given the option of changing between forms of term and whole life insurance Correct. Adjustable life insurance allows the policyowner to adjust the policy's face amount, premium, and type of protection without having to complete a new application or exchange policies. Example: converting a term policy to whole life or vice versa. Question 24 Select the appropriate response According to the law of large numbers, how would losses be affected if the number of similar insured units increases? Losses would be better predicted The correct answer is "Losses would be better predicted". Based on the law of large numbers, if the number of similar insured units increases, predictability of losses improves. Question 25 The potential for loss" is also known as a risk Correct. A risk can be described as "the potential for loss" Question 26 Select the appropriate response All of these statements concerning group credit life insurance are false EXCEPT The face amount is determined by the outstanding loan balance The correct answer is "The face amount is determined by the outstanding loan balance". The amount of credit life insurance applied for is based on the outstanding loan balance amount. Question 27 6 Which one of these is NOT considered to be an element of an insurable risk? Speculative risk Correct. Speculative risks (chance of both a loss and gain) are not insurable. Question 28 Which statement concerning adjustable life insurance is accurate? The face amount and premiums can be changed simultaneously by the policyowner The correct answer is "The face amount and premiums can be changed simultaneously by the policyowner". Adjustable life insurance combines features of both term and whole life coverage. Length of coverage, accumulated cash value, and the premiums can be adjusted to fit specific needs. Question 29 Select the appropriate response All of these statements concerning universal life insurance are false EXCEPT Policy indicates how much of the premium is used toward company expenses Correct. Premium payments are separated and paid toward the insurance protection. The loading cost and the remaining balance is used to build the cash value. Question 30 What is a juvenile life insurance policy? A life policy that covers the life of a minor Correct. A juvenile life insurance policy is a life insurance policy that insures the life of a minor. Question 31 An arrangement where an individual is authorized to act on behalf of another person or company is sanctioned through the law of agency Correct. An agency is a situation where an agent has the power to represent and act for another person or company. Question 32 The policy provision that permits an employee to change from a group plan to an individual plan is called the conversion provision Correct. The conversion provision allows an employee to change from group coverage to an individual life insurance policy. 7 Question 33 Which statement concerning an adjustable life insurance policy is FALSE? Evidence of insurability is necessary when there is a change in premium The correct answer is "Evidence of insurability is necessary when there is a change in premium". All of these statements about an adjustable life insurance policy are true EXCEPT "Evidence of insurability is necessary when there is a change in premium". Question 34 When must insurable interest exist for a life insurance contract to be valid? Throughout the entire length of the contract The correct answer is "At the time of application". Insurable interest must only exist at the inception of the contract. Question 35 Straight whole life insurance can be accurately described in all of these statements EXCEPT Policy protection normally expires at age 65 Correct. All of the following statements about straight whole life insurance policies are true EXCEPT "Policy protection normally expires at age 65". Question 36 An employer has a group life insurance plan in place for his employees. How would an employee with health problems be treated in this situation? Eligible for standard coverage on this plan Correct. Group insurance policies are not written on an individual basis so an employee in poor health is eligible for the same coverage as the other employees in the group. Question 37 The undocumented authority given to a producer to carry out necessary incidental acts of the agency agreement is called implied authority Correct. Implied authority is authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal. Exam Simulator - 1 10 Question 48 Which settlement option makes minimum guaranteed dollar payments over a stated number of years? Fixed-Period The correct answer is the "Fixed-Period". The Fixed-Period option pays proceeds (including interest and principal) in minimum guaranteed dollar payments over a specified number of years. Question 49 Which of these is NOT an advantage of term life insurance? The greatest amount of coverage can be provided for the initial premium paid It can be provided as a rider to another policy A cash value can be surrendered at the end of the contract's policy period Temporary insurance needs can be met The correct answer is "A cash value can be surrendered at the end of the policy period". Term life insurance does NOT provide a cash benefit at the end of the policy period. Question 50 Select the appropriate response All of these are considered features of whole life insurance EXCEPT Cash value accumulation Permanent coverage Initial premium is lower than for an equivalent amount of term insurance Policy loans are allowed Correct. The initial cost of whole life insurance is actually HIGHER than an equivalent amount of term insurance. Question 51 Which of these is NOT considered a type of limited payment whole life insurance? Endowment paid-up at 70 Incorrect. The correct answer is "Endowment paid-up at 70". All of the following are forms of limited payment whole life insurance policies EXCEPT an Endowment paid-up at 70.. Exam Simulator - 1 11 Question 52 Which of these occurrences could justify an insurer to reduce premiums? Interest factor increase The correct answer is "Interest factor increase". An increase in an insurance company's rate of earnings on investments would be one way to reduce premiums. Question 53 What qualifies as acceptance of an insurance contract offer? An issued policy The correct answer is "An issued policy". An issued policy signifies acceptance of an offer of an insurance contract. Question 54 Which of these is NOT a reason to buy a term life policy? To accumulate savings Correct. All of these are valid reasons for purchasing term insurance EXCEPT to accumulate savings. Question 55 Which tax is normally associated with death? Federal estate tax Correct. The Federal estate tax is a tax typically associated with death. Question 56 Select the appropriate response Death benefits from a life insurance policy are normally considered to be exempt from federal income tax The correct answer is "exempt from federal income tax". Life insurance death proceeds that are paid to a named beneficiary are generally exempt from federal income tax. Question 57 Select the appropriate response What is the cash value of a straight whole life insurance policy when the insured turns 65 years old? Less than the policy's face amount Exam Simulator - 1 12 Correct. When an insured reaches the age of 65, the guaranteed cash value of a whole life policy will be less than the face amount of the policy. Question 58 What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured? Joint life Correct. A joint life insurance policy covers two or more individuals with the face amount payable upon the death of the first insured. Question 59 Which statement regarding the cash value of a whole life insurance policy is correct? Payable to the policyowner when policy has been surrendered Correct. Cash value is available to policyowners when policies are surrendered. Question 60 Which statement regarding a single premium life insurance policy is NOT correct? No further premiums are necessary Policy loans are permitted Cash value is immediately created Additional premiums may be required under certain conditions Correct. Only one premium payment is required with a single premium life insurance policy. Question 61 Which report contains information regarding an individual's general reputation and credit standing? Consumer report The correct answer is "A consumer report". A consumer report contains information regarding a consumer's credit, reputation, or habits. Question 62 – CH 7 Which of these is NOT considered the responsibility of a producer in the underwriting process? Collecting additional medical information if needed Promptly sending the completed application to the insurance company Exam Simulator - 1 15 Question 71 The reason for backdating a policy is to avoid being considered a substandard risk due to a recent cancer diagnosis to obtain a premium rate based on an earlier age to decrease the face amount to decrease the Contestable period Correct. The purpose of backdating a life insurance policy is to use premiums based on an earlier age. Question 72 Which life insurance clause disallows an insurance company from challenging the validity of the contract after a stated period of time has passed? Entire contract Grace period Incontestable Insuring Correct. The incontestable clause prohibits the insurer from questioning the validity of the contract after a stated period of time has passed... Question 73 Select the appropriate response The Medical Information Bureau consists of members from which group? Doctors Hospitals Insurance companies Underwriters Correct. Insurance companies make up the membership of the Medical Information Bureau. Question 74 Which would be described as a beneficiary designation by class? Children of the insured The correct answer is "Children of the insured". With a beneficiary designation by class, the Exam Simulator - 1 16 policyowner designates a class or group of beneficiaries instead of specifying one or more beneficiaries by name. Question 75 Which of these statements regarding the life insurance premium for a children's term rider is correct? Level premium no matter how many children Correct. The cost for a child rider remains the same regardless of the number of children. Question 76 – CH 7 Select the appropriate response When does the producer give a premium receipt for a life insurance application? When the initial premium has been collected with the application Correct. A premium receipt is given to an applicant when the initial premium is paid with the application. Question 77 Which life insurance policy provision permits a policyowner to cancel the policy within a stated time period and be given a full refund? Free-look period Correct. The free look period provision in a life insurance policy permits a policyowner to cancel the policy within a stated time period and be given a full refund. Question 78 Select the appropriate response A contingent beneficiary is described as the person who receives the death benefits if the primary beneficiary dies before the insured Correct. The contingent beneficiary is the person who receives the policy proceeds if the primary beneficiary dies before the insured. Question 79 Select the appropriate response Mike applied for life insurance and was issued a conditional receipt. He is later found to be an acceptable risk and is issued a policy. What is considered to be the effective date of this insurance contract? Exam Simulator - 1 17 Date the conditional receipt was issued Correct. An applicant who is given a conditional receipt and is later found to be insurable will have the coverage effective at the time the conditional receipt is issued. Question 80 What happens to a life insurance policy when the policy loan balance exceeds the cash value? Policy will no longer be in force Correct. In the event a policy loan balance exceeds a life insurance policy's cash value, the policy is no longer in force. Question 81 Select the appropriate response All of these are duties of a producer when delivering an insurance policy EXCEPT Acquire a statement of good health signature Gather the initial premium Review policy with applicant Leave a conditional receipt with client The correct answer is "Leave a conditional receipt with client". A conditional receipt is normally given prior to a policy being issued. Question 82 Select the appropriate response A source of retirement income for a life insurance policyowner can be derived from the cash value Correct. Cash value may be used as a source to supplement a policyowner's income. Question 83 Select the appropriate response The premiums paid by an employer for his employee's group life insurance are usually considered to be tax-deductible to the employer Correct. The amount an employer pays for his employee's life insurance is typically deductible to the business. Exam Simulator - 1 20 Question 93 What is considered a valid reason for an insurer's refusal to pay death benefits directly to a minor? Minors are normally not capable of handling money in a reasonable manner Correct. A life insurance company usually will NOT pay policy proceeds directly to a minor beneficiary because a minor may not use sound judgement in handling money. Question 94 Select the appropriate response A life insurance policy that includes a return of premium rider will pay how much upon the insured's death? Face amount plus total premiums paid The correct answer is "Face amount plus total premiums paid". A life insurance policy that includes a return of premium rider will pay the face amount plus total premiums paid upon the insured's death. Question 95 Select the appropriate response What could be the potential result of taking out a cash value loan on a life insurance policy? Cash surrender value will be reduced if policy is forfeited Correct Taking out a policy loan reduces Question 96 Select the appropriate response When the extended term life nonforfeiture option is chosen, the coverage will be level term for a stated period of time The correct answer is "level term for a stated period of time". Under the extended term life insurance nonforfeiture option, the available insurance is level term for a stated period of time.. Question 97 – CH 4 Which statement most accurately describes a single premium whole life policy? Paid-up policy that offers lifetime protection Correct. A single premium whole life policy provides protection for life as a paid-up policy. Question 98 Select the appropriate response Exam Simulator - 1 21 In life insurance, the needs approach is used mostly to establish how much life insurance a client should apply for The correct answer is "how much life insurance a client should apply for". The "needs approach" in life insurance is most useful in determining the amount of life insurance to be recommended to a client. Question 99 Which nonforfeiture option allows the policyowner to have coverage equal to the face amount of the lapsed policy? Extended term option Incorrect. The correct answer is "Extended term option". The extended term nonforfeiture option provides coverage equal to the death benefit of the lapsed policy. Question 100 Select the appropriate response According to the needs approach, an emergency reserve fund's primary purpose is to pay for unexpected expenses Correct. An emergency reserve fund is designed primarily to cover the cost of unexpected expenses. Question 101 Which of these is NOT a reason for purchasing life insurance on the life of a minor? If both parents were to die, it would provide death benefits to the child The correct answer is "If both parents were to die, it would provide death benefits to the child". An insurance policy on a child would not pay any benefits if one or both of the parents died. All of the other answers are valid reasons for buying life insurance on a child. Question 102 Select the appropriate response What benefit is normally available to a life insurance policyowner who has contracted a terminal illness? Accelerated (living) benefit Correct. An accelerated (living) benefit is often payable to a policyowner who is terminally ill. Exam Simulator - 1 22 Question 103 Which statement regarding the joint and survivor life insurance settlement option is INCORRECT? Age of the beneficiaries plays a factor when determining the payment amounts Income continues until the last beneficiary dies Two or more beneficiaries can be paid The income payments are larger as compared to a single-life income option Correct. The amount of each installment would actually be larger with a single life income option as opposed to a joint and survivor option. Question 104 What is considered a valid reason for small businesses to insure the lives of its major shareholders? To provide an income for the surviving dependents Reduce the company's tax liability To pay for final expenses Fund a buy-sell agreement The correct answer is "Fund a buy-sell agreement". Life insurance is purchased to fund a buy- sell agreement in the event of the death of a major shareholder in a business. Question 105 Employers will frequently purchase life insurance on a key employee in order to help offset the cost of finding and training a replacement Correct. Employers will frequently purchase life insurance on a key employee to help offset the cost of finding and training a replacement in the event of the key employee's premature death. Question 106 A terminally ill policyowner decides to sell his life insurance policy to help support his family. This sale is called a(n) viatical settlement Correct. A terminally ill policyowner selling an existing life insurance policy to help support his family is an example of a viatical settlement. Exam Simulator - 1 25 What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual? Management of proceeds would be provided The correct answer is "Management of proceeds would be provided". One reason for naming a trust rather than an individual as the beneficiary of a life insurance policy is to provide management of the proceeds. Question 117 When does interest income in a deferred annuity get reported for federal income taxes? When the distributions are received The correct answer is "When the distributions are received". The portion of the annuity payment that represents interest-earned is taxable. The portion that represents the return of principal is not taxed. Question 118 What happens to the cash value of a market value adjusted annuity if it's surrendered early? Market value adjustment is applied Correct. The market value adjustment comes into play only if the annuity owner decides to surrender the annuity contract early. Question 119 What is the effect of the market value adjustment in a market value adjustment annuity? Transfers some of the investment risk to the owner Correct. Market value adjustments found in some annuity products are meant to shift some of the investment risk to the policyowner. Question 120 Which life insurance policy would be eligible to have an automatic premium loan provision? Whole life The correct answer is "Whole life". It would be possible to include an automatic premium loan provision in whole life due to the fact whole life builds cash value and premium loans are possible. Exam Simulator - 1 26 Question 121 – AILC 2 exam What is considered the collateral on a policy loan? The policy's cash value Correct. When a life insurance policyowner obtains a policy loan, the collateral for the loan is the cash value of the policy. Question 122 The highest mortality rate belongs to which group? Age 70 males Correct. The group on this list that has the highest mortality rate is age 70 males. Question 123 In the event of premium default, which life insurance provision will utilize the cash value to keep the policy in force? Waiver of premium Automatic premium loan Reinstatement Policy loan Correct. The automatic premium loan provision uses the cash value to keep the original policy in force in case of premium default. Question 124 – Ch 9 The owner of a single premium deferred annuity is entitled to do all of these EXCEPT make multiple premium payments choose the length of the payout period choose who will be the recipient of the annuity payments cash surrender the contract Correct. Single premium deferred annuities involve a single, lump-sum deposit. Question 125 Which of these is an accurate statement regarding a fixed period settlement option on a life insurance policy? A portion of the payments paid to the beneficiary stems from interest generated from the proceeds Payment can be adjusted monthly by the beneficiary Exam Simulator - 1 27 A portion of the payments paid to the beneficiary stems from interest generated from policy loans Payments are normally guaranteed for 10 years or more Incorrect. The correct answer is "A portion of the payments paid to the beneficiary stems from interest generated from the proceeds". Question 126 The interest earned on the cash value of an individually-owned annuity is considered to be tax-deferred Incorrect. The correct answer is "tax-deferred". Interest credited to the cash values of annuities are deferred until distribution. Question 127 Which statement regarding a fixed period settlement option is correct? The installment payment amount is determined by the total number of installments Correct. In a fixed period settlement option, the dollar amount of each installment depends upon the total number of installments. Question 128 Which benefit can be found in an equity indexed annuity, but not found in a fixed annuity? Protection against living too long Equity loans A fixed rate of return Protection against inflation Correct. An equity indexed annuity is tied to an equity index such as the S&P 500 but also provides a guaranteed minimum interest rate. It gives the annuitant the opportunity to beat the rate of inflation. Question 129 When compared to a fixed annuity, a variable annuity has what distinguishing feature? Investment risk is assumed by the policyowner Correct. The purchaser assumes the investment risk with a variable annuity. Exam Simulator - 1 30 Question 140 – Ch 9 The power to change the beneficiary in an individual annuity lies with the owner Correct. The power to change the beneficiary in an individual annuity lies with the owner. Question 141 Select the appropriate response Traditional individual retirement annuity (IRA) distributions must start by April 1st of the year following the year the participant attains age 70 1/2 Correct. Distributions from a traditional IRA must be made by April 1 following the year the participant turns age 70 1/2 or an excise tax will be assessed. Question 142 When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? None Correct. There is no tax withheld on an IRA transfer. Question 143 –CH 9 The contractual rights that allow the owner of a deferred annuity to surrender the cash value are called nonforfeiture options Correct. The contractual rights that allow the owner of a deferred annuity to surrender the cash value are called nonforfeiture options. Question 144 When dealing with single-life annuities, there is only one annuitant Correct. Single-life annuities are distinguished by having only one annuitant. Exam Simulator - 1 31 Question 145 – CH 9 An annuity's accumulation period can usually continue after the purchase payments stop Correct. The accumulation period of an annuity usually may continue after the purchase payments stop. Question 146 Select the appropriate response In a qualified retirement plan, the yearly contributions to an employee's account are restricted to maximum levels set by the IRS The correct answer is "are restricted to maximum levels set by the IRS". Annual limits to an employee's qualified retirement plan are based on maximum limits set by the IRS. Question 147 Select the appropriate response When an annuity contract has been surrendered, how will the surrender charges affect the final contract settlement? Settlement will be reduced The correct answer is "Settlement will be reduced". If the contract owner fully surrenders an annuity contract, any applicable surrender charges will reduce the final contract settlement. Question 148 An owner's cost basis for a deferred annuity is typically the same as the premiums paid into the annuity Correct. An owner's cost basis for a deferred annuity is typically the same amount as the premiums paid into the annuity. Question 149 Premature IRA distributions are assessed a penalty tax of 10% Correct. Premature distributions from an IRA are subject to a 10% penalty tax. Exam Simulator - 1 32 Question 150 All of the following statements about traditional individual retirement accounts are false EXCEPT 10% penalty is applied to withdrawals after age 59 1/2 Withdrawals are normally tax-free to the recipient 10% penalty is applied to withdrawals before age 59 1/2 Contributions are not tax deductible The correct answer is "10% penalty is applied to withdrawals before age 59 1/2". Because an IRA is a qualified plan, it has the same rules for early withdrawal. Question 151 The back-end charge typically associated with an annuity that has been surrendered too early is called a surrender charge The correct answer is "surrender charge". The back-end charge typically associated with an annuity that has been surrendered too early is called a surrender charge. Question 152 – CH 10 A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a profit-sharing plan Correct. Profit-sharing plans set aside a portion of a company's net income for distributions to qualified employees. Question 153 A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid mandatory income tax withholding on the transfer amount Correct. There is no federal tax withholding involved in a transfer of funds from one qualified plan into another. Rollovers, however, involve a 20% withholding. Once the rollover takes place to the new custodian, the remainder of the distribution is made. Exam Simulator - 1 35 Correct. An annuitant normally receives benefit payments at regular intervals during the liquidation phase of an annuity. Question 164 Which of these would NOT be considered a Federal punishment for unfair and deceptive insurance practices? Prison sentence Revocation of license Monetary fine Community service Correct. Under federal law, punishment for unfair and deceptive insurance practices may include a fine, imprisonment, and/or license revocation but not community service. Question 165 If a producer misleads or fails to adequately disclose the title and true nature of a policy offered to a potential insured, it may be considered Misrepresentation Correct. If a producer misleads or fails to adequately disclose the title and true nature of a policy offered to a potential insured, it may be considered misrepresentation. Question 166 – CH 11 False advertising of an insurance policy is considered Misrepresentation The correct answer is "Misrepresentation". False advertising of an insurance policy is considered misrepresentation. Question 168 – Ch 11 The Commissioner may suspend a producer's license when the producer Rebates a portion of the commission to the insured Correct. Rebating a portion of the commission to the insured may result in the Commissioner suspending a producer's license. Exam Simulator - 1 36 Question 169 – Ch 11 Making a statement that is false or maliciously critical of the financial condition of an insurer is known as defamation Correct. Making a statement that is false or maliciously critical of the financial condition of an insurer is known as defamation. Question 170 – Ch 11 A producer who attempts to intimidate is engaging in coercion Correct. Coercion is the use of force or intimidation. Question 171 – Ch 11 All of the following are unfair claims settlement practices EXCEPT Misrepresentation of policy provisions to an insured An unreasonable delay in the payment of a claim An attempt to settle a claim by arbitration Failure to give a reasonable explanation for denying a claim The correct answer is "An attempt to settle a claim by arbitration". All of these are unfair claim settlements EXCEPT for "An attempt to settle a claim by arbitration". Question 172 What is considered interstate travel under the Federal Fraud and False Statements Act? Canada Jamaica Mexico Puerto Rico Correct. Because Puerto Rico is a US Territory, it is included as interstate commerce under the Federal Fraud and False Statements Act. Question 173 – CH 11 An attempt to defraud an insurance company is considered Exam Simulator - 1 37 A felony Correct. A person who attempts to defraud an insurance company is guilty of a Class 6 felony and could be fined up to $5,000 per violation. Question 174 EXCEPT for fraud, the time after issuance of a policy during which an insurance company may contest a health insurance claim due to the statements on an application is 2 years Correct. EXCEPT for fraud, the time after issuance of a policy during which an insurance company may contest a health insurance claim due to the statements on an application is 2 year Question 175 All of the following claims settlement practices could initiate a cease and desist order EXCEPT Misrepresenting insurance policy provisions relating to coverages at issue Refusing to pay a claim which was NOT reported to the insurer or its agent in the required time Refusing to pay a claim without conducting a reasonable investigation of all available information where material facts are in dispute Compelling insureds to implement suits to recover amounts due by offering substantially less than the amounts ultimately recovered in those suits All of these are considered unfair claims settlement practices except for "Refusing to pay a claim without conducting a reasonable investigation of all available information where material facts are in dispute". Question 176 Misrepresentation on the application is Intentional Concealed Material Twisting The correct answer is "Material". Misrepresentation on an application is considered material. Exam Simulator - 1 40 Question 187 Who reports an agent's termination of appointment to the Commisioner? The insurer The correct answer is "The insurer". The insurer is responsible for reporting an producer's termination of appointment. Question 188 A licensee whose name or address changes must notify the Commissioner within 10 days The correct answer is "10 days". A licensee who changes their address must notify the Commissioner within 10 days. Question 189 For policyholders in the same risk classification, it is unlawful to Charge different premiums Correct. It is considered unfair discrimination to charge different premiums to policyholders in the same risk classification. Question 190 – CH 11 Under the Fair Credit Reporting Act, which statement is true? The consumer who was investigated must be advised that credit, insurance, or employment was denied because of an unfavorable report. Correct. A consumer being investigated must be advised of any denial based on an unfavorable report. Question 192 A life insurance policy in Massachusetts becomes incontestable after it has been in force for 2 years Correct. The contestable period for life insurance policies is 2 years. Question 193 Agreements made by terminally ill persons to sell their life insurance policies at a discount in order to pay medical expenses are called Viatical settlements Exam Simulator - 1 41 Correct. Viatical settlements allow policy holders to sell their policies for a percentage of the face amount for a cash payment. Question 194 An insurable interest in each other's lives may exist in absence of an economic interest when the individuals are Marriage partners Correct. Insurable interest may exist in marriage partners while absent of an economic interest. Question 195 During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT Misstatement of age in the application Material misrepresentation in the application Fraud in the purchase of the policy Material concealment in the purchase of a policy The correct answer is "Misstatement of age in the application". During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT misstatement of age in the application. Question 196 Which of the following statements about the contestability of a life insurance policy is true? The policy cannot be contested by the insurer once it is paid for and issued The policy can be contested by the insurer only during the first two years of the contract The policy can never be contested by the insurer The policy can always be contested by the insurer Correct. The incontestable clause in a life insurance policy stipulates that after a stated amount of time (typically 2 years) the legitimacy of the policy cannot be contested by the policyholder, unless fraud was involved. Question 197 A producer found to have engaged in an unfair method of competition may be Subject to license suspension or revocation Exam Simulator - 1 42 Correct. A producer found to have engaged in an unfair method of competition may be subject to license suspension or revocation. Question 198 When an insured under a group life insurance plan in Massachusetts elects the conversion option, the new policy is issued Without requiring evidence of insurability Correct. When an insured under a group life insurance plan in Massachusetts elects the conversion option, the new policy is issued without requiring evidence of insurability. Question 199 In accordance with federal fraud and false statements regulation, a prohibited person cannot transact insurance business in Massachusetts without The written consent of the Commissioner Correct. In accordance with federal fraud and false statements regulation, a prohibited person cannot transact insurance business in Massachusetts without the written consent of the Commissioner. Question 200 In order to act as an insurance agent, a producer must hold a valid insurance license and Be appointment by an authorized insurance company The correct answer is "Be appointment by an authorized insurance company". In order to act as an insurance agent, a producer must hold a valid insurance license and be appointment by an authorized insurance company. Question 191 A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that The policyowner may need to resume premium payments depending on actual results The correct answer is "The policyowner may need to resume premium payments depending on actual results". A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that the policyowner may need to resume premium payments, depending on actual results. Question 167 Select the appropriate response