Life Insurance Policy Provisions and Regulations, Exams of Project Management

Download Life Insurance Policy Provisions and Regulations and more Exams Project Management in PDF only on Docsity! Final Exam FEMA Diverse Questions with Correct Solutions Top-Tier Questions with Detailed Solutions Questions from World-Leading Universities Compiled by Global Authorities A level premium indicates - -correct ans- -the premium is fixed for the entire duration of the contract A noncontributory group term life plan is characterized by - -correct ans- -the entire cost of the plan is paid for by the employer Which provision is NOT a requirement in a group life policy? - -correct ans- -Accidental". An AD&D provision is not required in a group life policy. Which of these statements concerning an Individual Straight Life annuity is accurate? - - correct ans- -Payments are made to an annuitant for life The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and - -correct ans- -the first initial premium What action will an insurer take if an interest payment on a policy loan is not made on time? - -correct ans- -automatically add the amount of interest due to the loan balance What action can a policyowner take if an application for a bank loan requires collateral? - - correct ans- -Assign policy ownership to the bank M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take? - -correct ans- - Pay face amount minus the past due premium N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot? - -correct ans- -Exclusions are specified hazards listed in a policy for which benefits will not be paid Which of these life insurance riders allows the applicant to have excess coverage? - - correct ans- -Term riders allow an applicant to have excess life insurance coverage Whose life is covered on a life insurance policy that contains a payor benefit clause? - - correct ans- -Child In a Life insurance contract, an insurance company's promise to pay stated benefits is called the - -correct ans- -Insuring clause An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - -correct ans- -Full face amount minus any past due premiums P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability? - -correct ans- -P will still receive declared dividends What kind of special need would a policyowner require with an Adjustable Life insurance policy? - -correct ans- -flexible premiums What type of life insurance are credit policies issued as? - -correct ans- -Term An applicant for a resident insurance producer's license MUST meet which of the following requirements? - -correct ans- -Complete a prelicensing examination A temporary license issued to an applicant for an insurance license is valid for a MAXIMUM of how many days? - -correct ans- -180 Continuing education is required of individuals licensed to sell which of the following types of insurance? - -correct ans- -Life insurance If a producer knowingly violates the Unfair Trade Practices laws of Colorado, the Office of the Insurance Commissioner may fine the producer a MAXIMUM of which of the following amounts per violation? - -correct ans- -$5,000 Making an unfair comparison of two policies is defined as - -correct ans- - misrepresentation Producers must report a change in address to the Commissioner within - -correct ans- -30 days The conversion period for a terminated employee to convert group life coverage to an individual plan is - -correct ans- -31 days The free-look period for a life insurance policy in Colorado is - -correct ans- -15 days The Replacement of Life Insurance and Annuities regulation is designed to protect the interest of the - -correct ans- -policyowner What is the grace period for Group Life insurance premium payments? - -correct ans- -31 days When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT - -correct ans- -obtain the beneficiary's signature on a summary of all policies to be replaced Which of the following parties must provide an insured with proper disclosure concerning the replacement of an insurance company? - -correct ans- -The producer who sells the new insurance policy Which of the following statements is CORRECT if an insured converts his Life policy to Paid- Up Insurance and buys new insurance? - -correct ans- -The transaction is considered replacement Which of the following statements must be CORRECT for a nonresident to be eligible for a producer license in this state? - -correct ans- -The producer's state of residence must have reciprocity with this state According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud EXCEPT - -correct ans- -certificates of authority If an annuity application was not taken in person, an insurer must provide the applicant a Buyer's Guide - -correct ans- -within 5 business days of the insurer receiving the application Interest on life insurance proceeds is - -correct ans- -required if the claim was not paid within 30 days of the date insurer received the claim If a producer completes an insurance application, collects the initial premium, and issues the appropriate receipt, - -correct ans- -coverage will be contingent upon the insurer's underwriting policies When replacing an existing life insurance policy, the replacing insurer must notify the existing insurer within - -correct ans- -5 days Colorado's replacement rules apply to all of the following types of insurance EXCEPT - - correct ans- -single premium whole life Insurance policies are considered aleatory contracts because - -correct ans- -performance is conditioned upon a future occurrence Which rider provides coverage for a child under a parent's life insurance policy? - -correct ans- -Child term rider Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death? - -correct ans- -Joint Life S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits? - -correct ans- -Full benefits are payable under the Master contract The Common Disaster clause provides that if both the insured and the named beneficiary were to die in a common accident, which of the following is true? - -correct ans- -The estate taxes in the beneficiary's estate may be reduced Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? - -correct ans- -A STOLI arrangement is used to circumvent state insurable interest statutes Which of the following Dividend options results in taxable income to the policyowner? - - correct ans- -Accumulation at Interest Term insurance has which of the following characteristics? - -correct ans- -Expires at the end of the policy period T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? - -correct ans- -Ten-Year Endowment A 15-year mortgage is best protected by what kind of life policy? - -correct ans- -15-year decreasing term What type of policy would offer a 40-year old the quickest accumulation of cash value? - - correct ans- -20-pay life F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? - - correct ans- -Decreasing term policy P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? - -correct ans- -Family Maintenance policy Which statement is TRUE regarding a Variable Whole Life policy? - -correct ans- -A minimum guaranteed Death benefit is provided Variable Whole Life Insurance can be described as - -correct ans- -both an insurance and securities product When is the face amount of a Whole Life policy paid? - -correct ans- -When the insured dies or at the policy's maturity date, whichever happens first Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? - -correct ans- -Variable Life Which of these provisions require proof of insurability after a policy has lapsed? - -correct ans- -Reinstatement The incontestable clause allows an insurer to - -correct ans- -contest a claim during the contestable period Which statement regarding the Misstatement of Age provision is considered to be true? - - correct ans- -Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? - - correct ans- -Owner's Rights The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n) - -correct ans- -An Accidental Death and Dismemberment (AD&D) rider Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? - -correct ans- -Variable Universal Life A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? - -correct ans- -20-Pay Life accumulates cash value faster than Straight Life A Return of Premium life insurance policy is - -correct ans- -"Whole life and Increasing term". A Return of Premium life insurance policy is whole life insurance with a death benefit rider of increasing term insurance equal to the amount of premiums paid. If the insured dies within the period of term, the beneficiary will receive face amount plus the value of all paid premiums A long-term care rider in a life insurance policy may trigger a benefit in the event of which of the following? - -correct ans- -Inability of the insured to perform more than 2 Activities of Daily Living (ADL's) What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made? - -correct ans- -Irrevocable beneficiary J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used? - -correct ans- -Revocable K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed? - -correct ans- -Daughter K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? - -correct ans- -Proceeds will be paid to P's estate How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - -correct ans- -If the primary beneficiary dies before the insured What is the underlying concept regarding level premiums? - -correct ans- -The early years are charged more than what is needed The type of annuity that can be purchased with one monetary deposit is called a(n) - - correct ans- -Immediate annuity Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits? - -correct ans- -5 Which plan is intended to be used by a sole proprietor and the employees of that business? - -correct ans- -Keogh Plan Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company? - -correct ans- -Annuity An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? - -correct ans- -59 1/2 Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the - -correct ans- -marital deduction An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? - -correct ans- -20% is withheld for income taxes Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? - - correct ans- -Each partner must own a policy on the other partners When may the Commissioner issue an emergency cease and desist order? - -correct ans- - If there is suspicion of an unauthorized person engaging in insurance business without being licensed If an insurer is authorized to conduct business in another state and wishes to conduct business in Colorado, it must - -correct ans- -receive a certificate of authority from Colorado What is the maximum amount the Commissioner can fine an insurer for each violation of a cease and desist order? - -correct ans- -$10,000 A company that has not been authorized to operate in Colorado is known as - -correct ans- -a nonadmitted insurer An insurer that terminates a producer's appointment must inform the Commissioner within how many days? - -correct ans- -30 To be licensed to sell life, accident, and health insurance in Colorado, an applicant must complete - -correct ans- -100 hours of prelicensing education Which of the following statements is true regarding the replacement of a life insurance policy in Colorado? - -correct ans- -The replacing insurer must maintain copies of all records regarding the replacement for at least 5 years A group life insurance policyholder must be given a grace period for premium payment of how many days? - -correct ans- -31 Which of the following potential insurance sales would be subject to replacement regulations? - -correct ans- -A new policy that causes an existing life insurance policy to be surrendered Which of the following is required for a life insurance Lapse Notice? - -correct ans- -Reason stated why the policy will lapse From what point must the insurer pay interest on the proceeds of a death claim? - -correct ans- -Date of death Which of the following words may be used in the advertisement of life insurance or annuities? - -correct ans- -Guaranteed T calls to file a claim on his health insurance policy. Within how many days must the insurer provide T's proof of loss forms? - -correct ans- -15 days As a condition to be approved for a loan, a creditor may require the borrower to - -correct ans- -obtain an insurance policy through an insurer of the borrower's preference A producer must remit premiums to the insurer within ___ days after receipt. - -correct ans- -45 days Renewing a producer's license requires __ hours of continued education every 2 years. - - correct ans- -24 In Colorado, a life insurance applicant has __ days after policy delivery for a full refund of premium if not satisfied for any reason. - -correct ans- -15 An producer who violates a cease and desist order may, after a hearing, be fined up to - - correct ans- -$500