Insurance Exam Questions and Answers, Exams of Nursing

Download Insurance Exam Questions and Answers and more Exams Nursing in PDF only on Docsity!

Life Insurance Exam Questions and

Answers 2024

J has a life policy with the Guaranteed Insurability rider. J has just celebrated their 42nd birthday and realizes that she wants to use her rider and buy more death benefit. Which of the following will apply to J's request? A: The insurer will allow J to add more insurance without proving insurability. B: The insurer will allow J to add more insurance pending a paramedical exam. C: The insurer will deny J's request to add more insurance. D: The insurer will allow J to add more coverage pending proof of insurability and extra premium. Correct Answer is C: The insurer will deny J's request to add more insurance. An insured has a policy with a Waiver of Premium rider. The insured has suffered an illness that will prevent them for working for two years. When will their premiums be waived? A: Immediately B: After the first nine months of disability C: After the first six months of disability D: Never, premiums cannot be waived because illness is not a disability. Correct Answer is C: After the first six months of disability The clause that defines and describes the scope of coverage and the limits of indemnification is known as the: A: Insuring Agreement B: Incontestable Clause C: Payor Clause D: Entire Contract Clause Correct Answer is A: Insuring Agreement D has just paid off his mortgage and has decided that he no longer needs his life insurance policy which he originally purchased to cover the house payments should he die. If D explores the possibly of selling his policy while he is still alive, it is known as: A: a life settlement B: an annuity C: a Viatical settlement D: STOLI Correct Answer is A: a life settlement Combination/Variation Plans insure: A: Groups B: Two or More lives under one contract C: Two or more people under separate contracts D: are a form of variable life insurance

Correct Answer is B: Two or More lives under one contract What is the tax consideration for taking a cash dividend option? A: The dividend is fully taxable as income B: The dividend is paid tax free C: Depending on income bracket of the insured, the dividend may be taxable D: If the company gets to keep half of the dividend it is take free Correct Answer is B: The dividend is paid tax free Which of the following is not true regarding a renewable option on a term policy? A: The policy must be renewed regardless of insurability. B: The rates cannot be more than standard rates at renewal. C: Premiums are based off of attained age rates. D: A policy can be renewed, however, the insured must convert to a different policy. Correct Answer is D: A policy can be renewed, however, the insured must convert to a different policy. Which of the following is considered to be part of the Entire Contract? A: Declarations Page B: Buyers Guide C: Copy of the Application D: All of the Above Correct Answer is C: Copy of the Application Company A has a partnership with Company Z. There is an agreement in place that if the CEO of either company were to die, the other company would receive money to buy out the partnership. This is an example of: A: Buy/Sell Agreement B: Crosse Purchase plan C: Business Entity Plan D: Key Person Correct Answer is C: Business Entity Plan All of the following are true regarding the Guaranty Association EXCEPT: A: A claimant may receive less benefits than what they had from a policy. B: The Association is comprised of All member insurers C: The Association is comprised of All member insurers and have a right to end membership while still transacting business in IL D: There is a $250,000 limit on the present value of annuity benefits. Correct Answer is C: The Association is comprised of All member insurers and have a right to end membership while still transacting business in IL G has a credit life policy and is replacing that with a whole life policy. The agent must: A: formally replace coverage and include all forms to the insured B: notify the existing insurer with a notice regarding replacement form

C: sign the application and forward all signed documents to the replacing insurer to send to the existing insurer D: None of the Above Correct Answer is D: None of the Above Each of the following is an unfair claims practice by an insurance company, EXCEPT: A: Failing to acknowledging important communications regarding claims filed in a timely manner. B: Supplying brochures to claimants that indicate a competitor is in a precarious financial position. C: Purposefully misrepresenting important policy coverage and provisions to all claimants. D: Not supplying claims forms with proper instructions regarding their completion. Correct Answer is B: Supplying brochures to claimants that indicate a competitor is in a precarious financial position. All of the following statements pertaining to a temporary license are true, EXCEPT: A: they survive the transfer of ownership of an insurance company who sponsored the licensee. B: the fee is $50. C: the Director may limit them in any manner in order to protect the public. D: a licensed sponsor may be required. Correct Answer is A: they survive the transfer of ownership of an insurance company who sponsored the licensee. A Temporary License (180 days) allows the holder to engage in all of the following activities, EXCEPT: A: a surviving spouse of a producer can use the authority to help effect the sale of the insurance business. B: make certain that insureds are paying renewal premiums in a timely manner. C: ask the Director to extend the authority if an anticipated agency sale is taking longer than 180 days. D: sell a new policy to an existing client. Correct Answer is D: sell a new policy to an existing client. The subject of a market conduct examination for non-financial matters may request a hearing within how many days after receiving the examination report? A: 10 days B: 15 days C: 20 days D: 30 days Correct Answer is A: 10 days Which of the following sales is classified as controlled business? A: A producer places a one million dollar life policy on the life of his employer B: A producer places a one million dollar life policy on the life of his son

C: A producer places a one million dollar life policy on the life of his niece D: A producer places a one million dollar life policy on the life of his neighbor Correct Answer is A: A producer places a one million dollar life policy on the life of his employer The resident licensing fee for a Limited Lines Car Rental license is A: $50 every year B: $180 every two years C: $50 every two years D: $250 every year. Correct Answer is B: $180 every two years What is the maximum length of time a producer license can be suspended by the Director? A: A producer license suspension is for a period of time deemed appropriate by the Director. B: 6 months C: 12 months D: 3 years. Correct Answer is A: A producer license suspension is for a period of time deemed appropriate by the Director. All of the following is an example of an unfair practice EXCEPT: A: An applicant being denied based on military experience B: An applicant being denied based off partial blindness C: An applicant being denied for being a sky dive instructor D: An applicant being denied solely for being disabled. Correct Answer is C: An applicant being denied for being a sky dive instructor All Viatical Settlement Providers must report on or before _______ of every year. A: January 1st B: Depends on License Issuance C: March 1st D: Birth month of the Licensee Correct Answer is C: March 1st Each of the following is a requirement for a Life, Health, Property and Casualty prelicensing course, EXCEPT: A: The licensing candidate must spend 7.5 hours in class per line. B: The licensing candidate must complete a 20 hour course per line. C: An exam proctored by a course provider must be successfully passed before a prelicensing course is successfully completed. D: An exam that is graded by a course provider must be passed before a prelicensing course is successfully completed. Correct Answer is C: An exam proctored by a course provider must be successfully passed before a prelicensing course is

F, a producer in Illinois for twenty years failed to finish his entire continuing education requirement by his license renewal date. Which of the following will likely happen to F's producer license. A: Nothing, there is an automatic 30 day grace period. B: The producer license will lapse automatically. C: A producer holding a license in Illinois for 20 years or longer automatically is licensed for the remainder of his or her lifetime without a renewal requirement. D: Nothing there is an automatic 12 month grace period since F has been licensed for such a long time. Correct Answer is B: The producer license will lapse automatically. Which of the following is required to be listed in an illustration? A: Age and sex of proposed insured B: Initial death benefit C: Dividend option of non-guaranteed elements D: All of the Above Correct Answer is D: All of the Above Which of the following is true about a long term care rider? A: It will decrease premiums B: It will pay nursing benefits in addition to the death benefit. C: The agent must write the Long Term Care Rider as a separate policy. D: If the insured uses the LTC rider benefit, it will be deducted from the proceeds when the insured dies. Correct Answer is D: If the insured uses the LTC rider benefit, it will be deducted from the proceeds when the insured dies. J has a policy that requires that he meet certain conditions in order for the contract to be enforceable. J has a(an): A: Conditional Contract B: Unilateral Contract C: Contract of Adhesion D: Aleatory Contract Correct Answer is B: Unilateral Contract Variable Whole Life requires a: A: Flexible Premium B: Fixed and Level Premium C: A guaranteed interest rate D: All of the Above Correct Answer is B: Fixed and Level Premium Which of the following statements are CORRECT regarding a grace period in a life policy. A: The grace period depends on the mode of premium.

B: The grace period is unlimited and the insured can pay back a policy whenever they are ready. C: The grace period is a rider and must be added to a policy for extra cost. D: If the insured dies during the grace period the proceeds are still paid but the unpaid premium is deducted from the face value. Correct Answer is D: If the insured dies during the grace period the proceeds are still paid but the unpaid premium is deducted from the face value. R and D are a wealthy married couple and are planning for how their estate will be handled once they die. A concern for R and D is estate tax. Which policy would be a great option to help pay estate taxes when the last spouse dies? A: Joint Life B: Whole Life C: Annuity D: Survivorship Life Correct Answer is D: Survivorship Life C has a life insurance policy with an Accidental Death and Dismemberment rider. C dies of an accident. What type of benefit is paid to the named beneficiary? A: Principal Sum B: Capital Sum C: Double Indemnity D: Triple Indemnity Correct Answer is A: Principal Sum If an insured leaves a group they are allowed to convert their group coverage to an individual policy within ______ days. A: 30 B: 15 C: 40 D: 31 Correct Answer is D: 31 J has just purchased a whole life policy on her 5 year old daughter to protect her insurability and to start building cash value while she is young. Unfortunately, J has become permanently disabled but the policy's premiums are waived until her daughter attains age 21. Which rider would allow this to happen? A: Waiver of Premium with Disability Income Rider B: Guaranteed Insurability Rider C: Waiver of Premium D: Payor Benefit Rider Correct Answer is D: Payor Benefit Rider In a life insurance policy, which of the following parts of the policy indicates that the insurance company promises to pay the Death Benefit as long as the insured pays their premiums on time?

A: Beneficiary provision B: Incontestability provision C: Insuring Clause D: Premium Payment clause Correct Answer is C: Insuring Clause An annuitant has funded a annuity with a single premium payment but wants to wait a number of years before they annuitize. Which of the following best describes this scenario? A: SPIA B: SPDA C: FPDA D: Lump Sum Correct Answer is B: SPDA Which of the following Settlement Options in a life insurance policy gives a beneficiary the most flexibility? A: Interest Only B: Fixed Period C: Fixed Amount D: Life Income Correct Answer is A: Interest Only If a producer is charged with breach of fiduciary duty, in which of the following actions did the producer most likely engage? A: The producer misappropriated premium funds. B: The producer offered to share commission with the insured. C: The producer deliberately misled the insured about the difference in coverage between policies. D: The producer said things to injure the reputation of another producer. Correct Answer is A: The producer misappropriated premium funds. Which of the following is a violation Under Life Solicitation Rule? A: An agent uses a coffee shop gift card as inducement to buy a policy. B: An agent gives an applicant a buyer's guide before initial premium payment. C: A financial advisor writes a life policy for an applicant without disclosing their role as the agent in the process. D: An agent guarantees a dividend payment. Correct Answer is C: A financial advisor writes a life policy for an applicant without disclosing their role as the agent in the process. The best definition of a "fiduciary" is A: any licensed person who collects money in the course of their employment. B: a person who works in a bank. C: a limited lines producer. D: any person who is entrusted temporarily with the property of others.

Correct Answer is A: any licensed person who collects money in the course of their employment. If a man or woman explains the difference of one type of life insurance compared with another to a person interested in purchasing insurance, this activity is known as A: Negotiation B: Selling C: Procuring D: Soliciting Correct Answer is A: Negotiation What is the largest dollar civil penalty that will be assessed for a single act of defamation? A: $1, B: $2, C: $5, D: $10, Correct Answer is D: $10, Which of the following statements about producer license termination is NOT accurate? A: Revocation can also lead to imposing a civil penalty of up to $10,000 per cause. B: A denial of license precludes the producer from reapplying for a producer license for a minimum of three years. C: A person who has their producer license terminated would still be able to work for an insurance company in a non-sales position. D: Upon license termination, the producer is entitled to a hearing, upon written request, on the matter before the order of the Director is final. Correct Answer is C: A person who has their producer license terminated would still be able to work for an insurance company in a non-sales position. Which entity listed below has the authority to issue a limited lines producer license? A: The Illinois Insurance Board B: The Director C: Fire D: An insurance company Correct Answer is B: The Director A Viator has decided to rescind a deal after payment has been made. How many days does a Viator in this situation have? A: 30 days B: 15 days C: 10 days D: It is too late Correct Answer is B: 15 days

If a producer charges a service fee in addition to being paid a commission for a sale of insurance, what is required of the producer in such an instance? A: If the total compensation will exceed 10% of the annual premium amount there must be a written disclosure document signed by the producer and the applicant for insurance. B: If the total compensation will exceed 10% of the monthly premium amount there must be a written disclosure document signed by the producer and the applicant for insurance. C: The producer must provide written disclosure to the insurance applicant. D: To report the producer's illegal activity to the Director because such a fee is illegal to collect from a prospective insured. Correct Answer is A: If the total compensation will exceed 10% of the annual premium amount there must be a written disclosure document signed by the producer and the applicant for insurance. When K applied for a policy, he misstated his age. A few years after the policy has been issued, K is still alive and the company has found the misrepresentation. Which of the following is most likely to occur? A: The insurer will cancel the policy and refund all premiums. B: The death benefit will be adjusted. C: The insurer has the option what action to take. D: The premiums are adjusted. Correct Answer is C: The insurer has the option what action to take. D has a policy from a participating insurer and receives a dividend. D would really like to increase her coverage without adding premium to the policy. The dividend option D should select is: A: Cash B: Paid-Up Addition C: One-Year Term Option D: Accumulation at Interest Correct Answer is B: Paid-Up Addition Each of the following is true regarding a Joint Life policy EXCEPT: A: It insures two or more lives at the same time. B: It insures two or more lives under one policy. C: It pays the death benefit when the first insured dies. D: Only one insured must be healthy for the policy to be issued. Correct Answer is D: Only one insured must be healthy for the policy to be issued. If a policy is being replaced, when must the agent forward the notice regarding replacement form to the replacing insurer? A: Once the replacement policy is approved. B: The agent only sends the notice in if initial consideration takes place. C: The agent only has to send it in if the insured asks the agent. D: At the time of replacement application.

Correct Answer is D: At the time of replacement application. Which of the following dividend options can a policy holder select to completely pay their policy off before endowment? A: Acceleration of Endowment B: Reduce Premiums C: Accumulation at Interest D: Paid-Up Option Correct Answer is D: Paid-Up Option IRA's are: A: Available to anyone B: Available to anyone that has a 401K C: Available to anyone with earned income D: Available to anyone with earned income who has not attained age 70 1/ Correct Answer is D: Available to anyone with earned income who has not attained age 70 1/ A Survivorship life policy insures two or more lives and the same time and pays death benefit: A: When the first insured dies B: When the last insured dies C: When the owner of the policy dies D: When the beneficiary dies Correct Answer is B: When the last insured dies The Waiver of Premium with Disability Income rider can be added at extra cost to a policy. What will determine how much disability income is paid with a qualifying loss? A: The amount of premium B: The total amount of death benefit C: A percentage of the Face Value D: A predetermined amount in the rider. Correct Answer is C: A percentage of the Face Value The purpose of the MEC 7 pay test is to: A: Prevent insureds from buying life policies. B: Prevent insureds from building cash values quickly to gain tax deferred interest while limiting taxes on withdrawals. C: Kill the Single Premium life market because it was too expensive for policyholder. D: Prevent insurance companies to write policies as they see fit. Correct Answer is B: Prevent insureds from building cash values quickly to gain tax deferred interest while limiting taxes on withdrawals. All of the following statements are true regarding Accelerated Benefits EXCEPT: A: The department of insurance must review all policy forms. B: The insurer can require medical evidence proof of a qualifying condition.

C: Accelerated Benefits can be paid in lump sum. D: The remaining death benefit can be reduced by 75% after the accelerated benefits are deducted. Correct Answer is D: The remaining death benefit can be reduced by 75% after the accelerated benefits are deducted. A policy is purchased by direct response when must the policy summary be supplied? A: Before paying a premium B: At policy delivery C: At policy delivery if payment was not made with application D: At the policy's first anniversary Correct Answer is B: At policy delivery How many different forms of temporary producer licensing authority exist in Illinois? A: 4 B: 3 C: 2 D: 1 Correct Answer is C: 2 The regulation that requires a producer to reveal their name and the name of the insurer or firm that they are representing when soliciting the sale of an insurance policy is called A: The Replacement Rule B: The Unfair Trade Practice Act C: The Disclosure Rule D: The Insurance Fraud Prevention Act Correct Answer is C: The Disclosure Rule Under advertising regulations, ads regarding successive enrollment must be at least: A: 2 months apart B: 12 months apart C: 6 months apart D: 1 week apart Correct Answer is C: 6 months apart Of the following statements regarding a producer hearing to determine whether or not rebating was occurring, which is FALSE? A: Self-incrimination CAN NOT be used as a defense. B: A participant in such a hearing is immune from perjury charges even if perjury is committed in the hearing. C: A participant in such a hearing is immune from prosecution. D: A producer found guilty of rebating can be fined. Correct Answer is B: A participant in such a hearing is immune from perjury charges even if perjury is committed in the hearing. Renewal commissions are also called

A: Residual income B: Referral income C: Deferred compensation D: Repeat revenue Correct Answer is C: Deferred compensation Under Regulation 919, what is the length of time an insurance company is required to keep detailed claims records? A: The current and previous year. B: The past 12 month period C: The current and past two years. D: The previous five years. Correct Answer is C: The current and past two years. When a producer is examined for non-financial market conduct, how many days from the filing of a duplicate copy of a written examination report does the producer have in which to request, in writing, a hearing on the matter? A: 10 days B: 14 days C: 20 days D: 30 days Correct Answer is B: 14 days Company A has just filed for bankruptcy and notified the Director. When must the Director notify the board of directors for the Guaranty Association of insolvency of Company A A: 3 days B: 5 days C: 20 days D: 30 days Correct Answer is A: 3 days How many days does the Director have to issue a final written order once a hearing has been held pertaining to a market conduct examination? A: Within 20 to 30 days B: 30 days C: 60 days D: 90 days Correct Answer is D: 90 days The total number of continuing education hours a producer must complete within the two year license renewal period is which of the following? A: 12 hours B: 20 hours C: 24 hours D: 30 hours

Correct Answer is C: 24 hours The annual license fee for a certified provider is A: $500 per year plus $50 for each course certified B: $2, C: $1, D: $1,000 plus $20 for each certified course renewal Correct Answer is D: $1,000 plus $20 for each certified course renewal All of the following disbursements from a Premium Fund Trust Account are legally allowed, EXCEPT: A: returned premiums due to an insured. B: the payment of rent for the insurance agency. C: commissions to producers. D: bank fees. Correct Answer is B: the payment of rent for the insurance agency. What is the smallest dollar civil penalty that will be assessed for a single act of misrepresentation? A: $ B: $ C: $1, D: $10, Correct Answer is A: $ How long does an insurance agency with a business entity license have to notify the Director pertaining to a change of business address? A: 30 days B: 15 day C: 90 days D: There is no requirement in this regard that applies to a business entity. Correct Answer is A: 30 days The party who is responsible for assuring that a producer surety bond is effect as required and for the correct amount is A: The agency the producer works for. B: The producer's insurance company. C: The producer. D: The Director of Insurance. Correct Answer is C: The producer. At his license revocation hearing, producer Q is found to have violated fifteen separate causes of conduct each of each is sufficient cause for license revocation. What is the maximum civil penalty that could be imposed on Q for these actions? A: $1, B: $5,

C: $10,

D: $100,

Correct Answer is D: $100, The civil fine amount that may be imposed for not complying with a lawful subpoena of the Director is A: 500 B: 1000 C: 2000 D: 5000 Correct Answer is C: 2000 The Slez E insurance agency has their Premium Fund Trust Account audited by the Department of Insurance and $3,000 is missing and unaccounted for. Which of the following is the legal presumption in this scenario? A: It is deemed an accounting error which is allowed to be corrected within 3 business days of the audit. B: Restitution within 7 business days is required. C: It is presumed the licensee responsible for the money has misappropriated it. D: The account holder has 30 days to replace the money without penalty. Correct Answer is C: It is presumed the licensee responsible for the money has misappropriated it. What action must the Director take toward the subject of a completed market conduct examination? A: Allow the subject at least 30 days to request a hearing. B: Notify the person examined of the contents of a verified report before it is made public. C: Issue a final written order immediately if any code violation is found during the examination. D: Any violation will result in a civil fine ranging from $1,000 to $50,000. Correct Answer is B: Notify the person examined of the contents of a verified report before it is made public. All of the following statements pertaining to a surety bond and an association are true, EXCEPT: A: Producers can meet the bond requirement with a bond in the name of an association. B: The association must be in existence for at least 7 years C: The association must have common membership. D: The association must have been formed for a purpose other than obtaining a bond. Correct Answer is B: The association must be in existence for at least 7 years An insured has recently joined the Marine Corp and their insurance company has indicated to the insured that an increase in premium will result from this action. The insurance company

A: is well within their rights to raise premium based on induction to military service as this represents a greater risk to the insurer. B: is allowed to increase rates based on military service in certain policy types. C: may face action by the Director because this is an example of an unfair claims practice. D: may face action by the Director because this is an example of unfair discrimination. Correct Answer is D: may face action by the Director because this is an example of unfair discrimination. Under Regulation 919, what is the length of time an insurance company is required to keep detailed claims records? A: The current and previous year. B: The past 12 month period C: The current and past two years. D: The previous five years. Correct Answer is C: The current and past two years. If a producer receives a hearing notice from the director relating to a license revocation and the notice is mailed by the Director on July 1, when will the hearing actually take place? A: Between July 21 and July 31 B: Anytime after July 11 C: On July 21 D: On July 31 Correct Answer is A: Between July 21 and July 31 An employee of an insurance company is instructed by her superior to enter false information in the official company records pertaining to financial matters of the firm. Which of the following statements is true concerning this action? A: This is the unfair trade practice of falsifying records and it is a felony action. B: This is an example of restraint of trade between two insurance companies punishable by loss of certificate of authority. C: This is an example of twisting which is a felony. D: This is the unfair trade practice of falsifying records and it is a misdemeanor action. Correct Answer is A: This is the unfair trade practice of falsifying records and it is a felony action. In 2013 a producer is notified that the calendar year records of their Premium Fund Trust Account will be audited. The producer may have to supply records for each calendar year going back to what year? A: 2009 B: 2008 C: 2007 D: 2006 Correct Answer is D: 2006

If a producer is found guilty of defamation, their producer license may be suspended, revoked or denied and additionally they may be assessed a civil penalty of A: up to $5,000 for a business offense. B: up to $1,000 for violating a cease and desist order of the Director. C: from $200 to $10,000. D: a minimum of $1,000 to a maximum of $10,000. Correct Answer is C: from $200 to $10,000. For open accounts receivable upon which a balance is due to the insurer, what is the maximum service charge a producer may assess to encourage timely payment within specified periods of 90 days of less? A: $ B: 1.5% per month on the balance due. C: 1% per month on the balance due. D: 1.5% per year on he balance due. Correct Answer is B: 1.5% per month on the balance due. Selling insurance without a license without misappropriating premium funds is a A: Class A misdemeanor B: Class C misdemeanor C: Class 4 felony D: not a crime Correct Answer is A: Class A misdemeanor What percentage of interest may an insurer charge during a grace period? A: 3% B: 6% C: 9% D: 10% Correct Answer is B: 6% Except for direct response insurance, an insurance company MUST give all prospective insureds a Buyer's Guide at which of the following times? A: When the policy application is signed B: At the time of the medical examination C: Before the initial premium or premium deposit D: On delivery of the policy Correct Answer is C: Before the initial premium or premium deposit Under Life Solicitation Rule, the definition that applies to a consumer that is most concerned about death benefit proceeds to be paid upon death is referred to as: A: Life Insurance Net Payment Cost Index B: Life Insurance Surrender Cost Index C: Policy Summary D: Cash Dividends Correct Answer is A: Life Insurance Net Payment Cost Index

All Viatical Settlement Providers must report on or before _______ of every year. A: January 1st B: Depends on License Issuance C: March 1st D: Birth month of the Licensee Correct Answer is C: March 1st Which of the following is subject to the Individual and Group Life Insurance Policy Illustrations Rule? A: Variable life insurance B: Group life and Individual Annuities. C: Credit life insurance D: Universal Life insurance Correct Answer is D: Universal Life insurance K has a life insurance policy that allows him to skip premium payments but still keeps the policy in force. What type of policy does K have? A: Term Life B: Straight Whole Life C: Universal Life D: All of the Above Correct Answer is C: Universal Life A producer must be licensed in securities to sell any of the following policies EXCEPT: A: Equity Index B: Variable Life C: Variable Whole Life D: Variable Universal Life Correct Answer is A: Equity Index Whole Life insurance where premiums are due for a specified number of years that is shorter than one's entire life is called A: Single Premium Whole Life B: Straight Whole Life C: Ordinary Pay D: Limited Pay Correct Answer is D: Limited Pay All of the following are guaranteed components of a whole life policy EXCEPT: A: Premium B: Cash Value C: Death Benefit D: The policy will expire Correct Answer is D: The policy will expire

K has a universal life policy and has a $200,000 death benefit. K has fallen on hard economic times and decided to take out $50,000 of the policy while still keeping $150,000 of death benefit. K has no intention of paying it back and therefore has: A: taken a loan B: surrendered the policy C: taken a partial surrender D: taken their long term care rider Correct Answer is C: taken a partial surrender If a group is non-contributory, what percentage of members must be insured by the policy? A: 75% B: 50% C: 100% D: 0% Correct Answer is C: 100% If a client is turned down for a life policy and one of the factors for being declined was credit, who must send the insured a copy of their credit report? A: The insurer B: The FTC C: The original credit reporting agency D: The Department of Insurance Correct Answer is C: The original credit reporting agency Under Social Security, when do dependent parent survivor benefits begin? A: age 59 1/ B: whenever the insured dies, regardless of age C: Age 62 or older D: age 25 Correct Answer is C: Age 62 or older Each of the following is true regarding a Joint Life policy EXCEPT: A: It insures two or more lives at the same time. B: It insures two or more lives under one policy. C: It pays the death benefit when the first insured dies. D: Only one insured must be healthy for the policy to be issued. Correct Answer is D: Only one insured must be healthy for the policy to be issued. An insured has a term policy that allows them to renew coverage before it expires. The insured purchased the policy when they were healthy but since have developed many serious health conditions. Which of the following will take place? A: The insured will be able to renew regardless of insurability. B: The insured will be denied renewal. C: The insured will renew however, the policy will then be rated. D: The policy will have to be converted to a permanent policy.

Correct Answer is A: The insured will be able to renew regardless of insurability. If an insurer has a right to renew a contract along with the insured this is known as a: A: contract of adhesion B: unilateral contract C: bilateral contract D: voluntary contract Correct Answer is C: bilateral contract In a 3-year-old policy that is being reinstated, the Incontestable clause pertains to statements made on which of the following documents? A: The application for the original policy B: The application for reinstatement C: The original policy's riders and endorsements D: The original policy's insuring agreement Correct Answer is B: The application for reinstatement Which of the following parties have the right to select death benefit Settlement Options? A: Policy owner B: Beneficiary C: The insurer D: None of the Above Correct Answer is A: Policy owner Why does the Cost of Insurance component increase every year in a Universal Life Policy? A: Because the policyholder missed a premium payment. B: Because the insurance component in the policy is base off Annual Renewable Term Insurance. C: Because the policy's beneficiary has been changed. D: None of the Above Correct Answer is B: Because the insurance component in the policy is base off Annual Renewable Term Insurance. Producer G brokered $100,000 in insurance premiums last year. Based on this premium amount, what is the penalty (face) amount of the surety bond G is required to maintain in favor of the people of Illinois? A: $1, B: $2, C: $5, D: $50, Correct Answer is C: $5, Defamation occurs when A: a producer demonstrates that the premium rates for an insurance plan he is promoting is less expensive than the plan a competitor is promoting.

B: an insurance company advertises that their industry rating is better than 99% of all other carriers in the country. C: an agency prints and distributes flyers claiming that a competitor will soon be filing bankruptcy and they are a better choice therefore with whom to do business. D: The President of a life insurance company signs off on a plan to advertise for prospects in a state his company is not licensed in. Correct Answer is C: an agency prints and distributes flyers claiming that a competitor will soon be filing bankruptcy and they are a better choice therefore with whom to do business. What action is required of a life insurance company when a death claim is submitted? A: The carrier is required to search their records for other possible policies that may be in force and payable on the same life B: To pay all valid claims within 5 business days. C: To notify a claimant in writing with reasons if a claim has not been resolved within 60 days for the delay. D: The carrier must double the claim payment if it is erroneously denied originally. Correct Answer is A: The carrier is required to search their records for other possible policies that may be in force and payable on the same life H owns his only policy with a revocable beneficiary and wants to make a change to his policy. Who would have to sign off on H's change? A: H is the only party needed to sign for a change B: H's Beneficiary C: The Insured D: The Insurer Correct Answer is D: The Insurer D is 45 years old and wants to start receiving annuity payments when they reach retirement at 65 years old. Because D will be building an annuity over the next 20 years, they are concerned about inflation. D should select: A: A Variable Annuity B: A Fixed Annuity C: An Equity Indexed Annuity D: A Term Life Policy Correct Answer is A: A Variable Annuity B had a life policy issued three years ago and has recently died. Before paying proceeds, the insurer investigated B's policy and realizes that at the time of application B made a material misrepresentation. Which of the following actions will occur? A: B's proceeds are paid in full to the named beneficiary. B: B's proceeds are denied because of the material misrepresentation. C: Half of the proceeds are paid in a settlement with the beneficiary. D: The beneficiary will have to go to court and sue the insurer to collect proceeds. Correct Answer is A: B's proceeds are paid in full to the named beneficiary.

G lost her husband a few years ago. G has been receiving benefits through social security, but she has just been informed she will not receive any more money until retirement because her youngest child has attained age 16. This is known as the: A: Blackout Period B: Elimination Period C: Probationary Period D: Loss of Income Period Correct Answer is A: Blackout Period An emerging marketplace in which an insured can sell their policy for more than their cash value, but less than the policy face value while they are still alive is known as: A: Life Settlements B: Viatical Settlements C: Annuity D: Cash Refund Options Correct Answer is A: Life Settlements K let her whole life policy lapse 6 years ago and is applying for reinstatement. Which of the following will most likely occur? A: The insurer will grant reinstatement no matter what. B: The insurer will grant reinstatement pending K is still healthy C: The insurer will grant reinstatement pending K is still healthy and pays all back premiums and interest D: The Insurer will deny reinstatement Correct Answer is D: The Insurer will deny reinstatement All of the following statements about a Guaranteed Insurability Rider are true EXCEPT: A: Additional insurance is purchased at the rate charged when the contract was originally issued. B: It is available for purchase by insureds who are below some stated maximum age. C: Additional purchases of insurance are guaranteed without proof of insurability. D: The cost of the rider is in addition to the cost of the policy to which it is attached. Correct Answer is A: Additional insurance is purchased at the rate charged when the contract was originally issued. M is on active duty in the military and dies of heart attack. The death benefit will not be paid because of the _______ war exclusion. A: Results B: Status C: War Exclusion D: Active Duty Exclusion Correct Answer is B: Status All of the following statements pertaining to a person who has had their producer license revoked are true, EXCEPT: A: Such person may not be employed in any insurance capacity for at least 3 years.

B: Such person may not be contracted in any insurance capacity for at least 3 years. C: Such person is banned from the insurance for life. D: Such person may not engage in any insurance capacity for at least 3 years. Correct Answer is C: Such person is banned from the insurance for life. Is it allowable for an insurance producer with a PFTA to co-mingle producer personal funds into a PFTA? A: Never B: Only with good cause C: Only if a shortfall would result otherwise D: Only with the written consent of the insurer on whose behalf the premium funds are being held. Correct Answer is D: Only with the written consent of the insurer on whose behalf the premium funds are being held. An emerging marketplace in which an insured can sell their policy for more than their cash value, but less than the policy face value while they are still alive is known as: A: Life Settlements B: Viatical Settlements C: Annuity D: Cash Refund Options Correct Answer is A: Life Settlements All of the following policies have non-forfeiture options EXCEPT: A: Whole Life B: Universal Life C: Life Paid @ Age 65 D: Level Term Correct Answer is D: Level Term The fine for willful violation of the Fair Credit Reporting Act is? A: $1,500 B: $5,000 C: $2,500 D: The amount of loss caused to the customer Correct Answer is C: $2,500 Joint Life premiums are: A: paid by each individual insured separately B: based off a joint average age C: are more expensive than if individuals had separate policies D: are inexpensive no matter what insurability of the insureds would be Correct Answer is B: based off a joint average age What is the advantage of a Variable Annuity? A: The interest rate is never guaranteed.

B: The accumulation units will fluctuate depending on the market. C: Income may be able to keep pace or even exceed inflation. D: All of the Above Correct Answer is C: Income may be able to keep pace or even exceed inflation. Which of the following is true regarding insuring a spouse as an other insured rider? A: Coverage for the spouse is permanent. B: There will be separate premiums for each insured. C: Only the primary insured has to prove insurability. D: There is one policy insuring two different insured with two separate death benefits. Correct Answer is D: There is one policy insuring two different insured with two separate death benefits. Lump Sum Settlement Options: A: Are allowed but are income taxable. B: Are allowed and are paid tax free C: Is not allowed over $100,000 of proceeds. D: Is usually the least common Settlement Option selected Correct Answer is B: Are allowed and are paid tax free Producer K is convicted of a felony on March 1 and the conviction judgment is entered officially on August 1. By which date must K report this felony conviction to the Director? A: K is required to do nothing as this information will be automatically forwarded to the Director by a uniform criminal computer database. B: K is not required to report anything until all of K's appeals rights have been exhausted through all state and/or federal courts. C: No later than March 31. D: No later than August 31. Correct Answer is D: No later than August 31. Which of the following is subject to the Individual and Group Life Insurance Policy Illustrations Rule? A: Variable life insurance B: Group life and Individual Annuities. C: Credit life insurance D: Universal Life insurance Correct Answer is D: Universal Life insurance Once a producer has been notified that her license has been suspended by the Director, how many days does she have in which to request a hearing, in writing, from the date the Director mailed the termination notice? A: 10 days B: 15 days C: 20 days D: 30 days Correct Answer is D: 30 days

Under Life Solicitation Rule, the definition that applies to a consumer that is most concerned about cash value buildup is referred to as: A: Life Insurance Net Payment Cost Index B: Life Insurance Surrender Cost Index C: Policy Summary D: Cash Dividends Correct Answer is B: Life Insurance Surrender Cost Index The Guaranty Association limits up to _____ of life insurance death benefit. A: $100,000 B: $200,000 C: $300,000 D: $500,000 Correct Answer is C: $300,000 How long must insurers keep copies of all advertising materials? A: 4 years B: 3 years C: 2 years D: 1 year Correct Answer is A: 4 years If a producer is found to have failed to maintain the proper surety bond due to the brokering of business, would could be the result of this failure? A: It could result in the revocation or denial of the producer's license. B: It could result in the suspension only of the producer's license. C: There is only the possibility of a fine levied in the amount of from $1,000 to $2,500. D: There is no penalty possibility in this situation. Correct Answer is A: It could result in the revocation or denial of the producer's license. If the Director must hire additional independent auditors to add to examination procedures, who bears this expense? A: The Department of Insurance through their budget. B: The State of Illinois. C: The person or company being examined. D: The United States Government. Correct Answer is C: The person or company being examined. What is the total fee a producer must pay to reinstate a lapsed license within the allowed statutory period? A: $180 B: $250 C: $360 D: $500 Correct Answer is C: $360

Which of the following policy situations are defined as replacement? A: A lapsed, forfeited or surrendered policy B: A policy re-issued with a reduction of cash value C: A policy that is converted to any non-forfeiture benefit D: All of the Above Correct Answer is D: All of the Above Low Rate Life Insurance Company has just received a notice regarding replacement form. Which of the following statements is CORRECT about what Low Rate Life must do next? A: Deny replacement because insured must always keep what they purchase. B: Sue the existing insurance company for rights to the contract. C: Legally notify the existing insurer before issuing a replacement policy. D: Nothing, the existing company doesn't need to be notified. Correct Answer is C: Legally notify the existing insurer before issuing a replacement policy. Life Settlement Benefits are: A: always taxed as ordinary income B: received completely tax free C: taxed as ordinary income up to current cash value amounts D: fully taxed as capital gains. Correct Answer is C: taxed as ordinary income up to current cash value amounts In a life insurance transaction, an offer is made when: A: the insured pays the initial premium B: when an insured applies for coverage C: when an insurer has approved the policy D: when the insured provides payment in exchange for coverage Correct Answer is B: when an insured applies for coverage When a non-financial conduct examination is held and the party examined makes a written request for a hearing, at least how many days notice must the Director provide of time and place of a hearing as designated in the notice? A: 10 days B: 15 days C: 20 days D: 30 days Correct Answer is A: 10 days The regulation that requires a producer to reveal their name and the name of the insurer or firm that they are representing when soliciting the sale of an insurance policy is called A: The Replacement Rule B: The Unfair Trade Practice Act C: The Disclosure Rule