Life Insurance Policy Provisions and Regulations, Exams of Insurance law

Download Life Insurance Policy Provisions and Regulations and more Exams Insurance law in PDF only on Docsity! 1 / 44 Life Insurance Exam Questions with Verified Answers 1.J has a life policy with the Guaranteed Insurability rider. J has just celebrat- ed 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.: C: The insurer will deny J's request to add more insurance. 2.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.: C: After the first six months of disability 3.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: A: Insuring Agreement 4.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 1 / 44 Life Insurance Exam Questions with Verified Answers 1.J has a life policy with the Guaranteed Insurability rider. J has just celebrat- ed 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.: C: The insurer will deny J's request to add more insurance. 2.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.: C: After the first six months of disability 3.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: A: Insuring Agreement 4.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 2 / 44 B: an annuity C: a Viatical settlement D: STOLI: A: a life settlement 5.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: B: Two or More lives under one contract 6.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: B: The dividend is paid tax free 7.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.: D: A policy can be renewed, however, the insured must convert to a different policy. 8.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: C: Copy of the Application 9.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: 5 / 44 : A: A producer places a one million dollar life policy on the life of his employer 17.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.: B: $180 every two years 18.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.: A: A producer license suspension is for a period of time deemed appropriate by the Director. 19.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.: C: An applicant being denied for being a sky dive instructor 20.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: C: March 1st 21.Each of the following is a requirement for a Life, Health, Property and Casualty 6 / 44 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.: C: An exam proctored by a course provider must be successfully passed before a prelicensing course is 22.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 require- ment. D: Nothing there is an automatic 12 month grace period since F has been licensed for such a long time.: B: The producer license will lapse automatically. 23.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: D: All of the Above 24.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.: D: If the insured uses the LTC rider benefit, it will be deducted 7 / 44 from the proceeds when the insured dies. 25.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: B: Unilateral Contract 26.Variable Whole Life requires a: A: Flexible Premium B: Fixed and Level Premium C: A guaranteed interest rate D: All of the Above: B: Fixed and Level Premium 27.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.: D: If the insured dies during the grace period the proceeds are still paid but the unpaid premium is deducted from the face value. 28.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: D: Survivorship Life 10 / 44 person who works in a bank. C: a limited lines producer. D: any person who is entrusted temporarily with the property of others.: A: any licensed person who collects money in the course of their employment. 38.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: A: Negotiation 39.What is the largest dollar civil penalty that will be assessed for a single act of defamation? A: $1,000 B: $2,500 C: $5,000 D: $10,000: D: $10,000 40.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.: C: A person who has their producer license terminated would still be able to work for an insurance company in a non-sales position. 41.Which entity listed below has the authority to issue a limited lines producer license? 11 / 44 A: The Illinois Insurance Board B: The Director C: Fire D: An insurance company: B: The Director 42.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: B: 15 days 43.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.: 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. 44.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. 12 / 44 D: The premiums are adjusted.: C: The insurer has the option what action to take. 45.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: B: Paid-Up Addition 46.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.: D: Only one insured must be healthy for the policy to be issued. 47.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.: D: At the time of replacement appli- cation. 48.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: D: Paid-Up Option 49.IRA's are: 15 / 44 D: 1 week apart: C: 6 months apart 58.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.: B: A participant in such a hearing is immune from perjury charges even if perjury is committed in the hearing. 59.Renewal commissions are also called A: Residual income B: Referral income C: Deferred compensation D: Repeat revenue: C: Deferred compensation 60.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.: C: The current and past two years. 61.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: B: 14 days 62.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 16 / 44 Company A A: 3 days B: 5 days C: 20 days D: 30 days: A: 3 days 63.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: D: 90 days 64.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: C: 24 hours 65.The annual license fee for a certified provider is A: $500 per year plus $50 for each course certified B: $2,000 C: $1,000 D: $1,000 plus $20 for each certified course renewal: D: $1,000 plus $20 for each certified course renewal 66.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.: B: the payment of rent for the insurance agency. 17 / 44 67.What is the smallest dollar civil penalty that will be assessed for a single act of misrepresentation? A: $200 B: $500 C: $1,000 D: $10,000: A: $200 68.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.: A: 30 days 69.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.: C: The producer. 70.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: $1,000 B: $5,000 C: $10,000 D: $100,000: D: $100,000 71.The civil fine amount that may be imposed for not complying with a lawful subpoena of the Director is A: 500 B: 1000 20 / 44 B: 2008 C: 2007 D: 2006: D: 2006 79.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.: C: from $200 to $10,000. 80.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: $20 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.: B: 1.5% per month on the balance due. 81.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: A: Class A misdemeanor 82.What percentage of interest may an insurer charge during a grace period? A: 3% B: 6% C: 9% D: 10%: B: 6% 83.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 21 / 44 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: C: Before the initial premium or premium deposit 84.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: A: Life Insurance Net Payment Cost Index 85.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: C: March 1st 86.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: D: Universal Life insurance 87.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: C: Universal Life 22 / 44 88.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: A: Equity Index 89.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: D: Limited Pay 90.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: D: The policy will expire 91.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: C: taken a partial surrender 92.If a group is non-contributory, what percentage of members must be in- sured by the policy? A: 75% B: 50% 25 / 44 D: None of the Above: B: Because the insurance component in the policy is base off Annual Renewable Term Insurance. 100. 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: $1,000 B: $2,500 C: $5,000 D: $50,000: C: $5,000 101. 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.: 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. 102. 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. 26 / 44 D: The carrier must double the claim payment if it is erroneously denied originally.: A: The carrier is required to search their records for other possible policies that may be in force and payable on the same life 103. 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: D: The Insurer 104. 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: A: A Variable Annuity 105. 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 follow- ing 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.: A: B's proceeds are paid in full to the named beneficiary. 106. 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: 27 / 44 A: Blackout Period B: Elimination Period C: Probationary Period D: Loss of Income Period: A: Blackout Period 107. 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: A: Life Settlements 108. K let her whole life policy lapse 6 years ago and is applying for reinstate- ment. 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: D: The Insurer will deny reinstatement 109. 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 maxi- mum age. C: Additional purchases of insurance are guaranteed without proof of insura- bility. D: The cost of the rider is in addition to the cost of the policy to which it is attached.: A: Additional insurance is purchased at the rate charged when the contract was originally issued. 110. M is on active duty in the military and dies of heart attack. The death benefit will not be paid because of the 30 / 44 the Director? A: K is required to do nothing as this information will be automatically for- warded 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.: D: No later than August 31. 120. 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: D: 30 days 121. 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: B: Life Insurance Surrender Cost Index 122. The Guaranty Association limits up to of life insurance death benefit. A: $100,000 B: $200,000 C: $300,000 D: $500,000: C: $300,000 123. How long must insurers keep copies of all advertising materials? A: 4 years B: 3 years 31 / 44 C: 2 years D: 1 year: A: 4 years 124. 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.: A: It could result in the revocation or denial of the producer's license. 125. If the Director must hire additional independent auditors to add to exam- ination 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.: C: The person or company being examined. 126. 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: C: $360 127. 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: D: All of the Above 128. Low Rate Life Insurance Company has just received a notice regarding 32 / 44 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.: C: Legally notify the existing insurer before issuing a replacement policy. 129. 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.: C: taxed as ordinary income up to current cash value amounts 130. 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: B: when an insured applies for coverage 131. When a non-financial conduct examination is held and the party exam- ined 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: A: 10 days 132. The plan of life insurance whose death benefit can be based on the investment of cash values in the stock market is known as: A: Variable Life B: 35 / 44 ritten notice of an Investigative Report must be given within advance notice before the report beings. A: 5 days B: 3 days C: 30 days D: 0 days: B: 3 days 142. In life insurance policies, the Long Term Care rider is also known as: A: A Health Policy B: Waiver of Premium Rider C: Accelerated Benefit Rider D: Waiver of Premium with Disability Insurance: C: Accelerated Benefit Rider 143. Under Illustration Regulation, an illustration must be provided at: A: application B: delivery C: premium payment D: None of the Above: A: application 144. Q has just finished the first year as an insurance producer in which Q placed $50,000 of premium on the life of Q's spouse and another $40,000 of premium of the life of several doctors with whom Q is unrelated. Based on these numbers, Q A: will receive a performance citation from the companies represented. B: will have his producer license denied upon a renewal request when the Director learns Q violated the controlled business law. C: has done an excellent job. D: has violated no insurance rules or regulations: B: will have his producer license denied upon a renewal request when the Director learns Q violated the controlled business law. 145. Which of the following components are guaranteed in a fixed annuity? A: Interest Rate B: Income 36 / 44 C: Settlement Option D: All of the Above: D: All of the Above 146. Another name of a policy that Endows at Age 100 is A: Whole Life B: Universal Life C: Renewable Term D: Variable Life: A: Whole Life 147. N is applying for a life policy. N is in the best shape that an individual can be in and does not smoke cigarettes. Although N has been healthy her entire life, she had a sister die of cancer at age 46. N's policy will be: A: Standard Risk B: Substandard Risk C: Preferred Risk D: Uninsurable Risk: A: Standard Risk 148. S has a policy that excludes suicide within the first two years of policy issuance. Sadly after 1 year of issuance, S takes his own life. The insurer will pay: A: Full Death Benefit B: Nothing C: Premiums back D: Premiums back plus interest: C: Premiums back 149. B has a Waiver of Premium rider on his life policy and is disabled at age 66. Which of the following will occur? A: B's premiums are fully waived until he is healthy again. B: B's premiums are not waived because the rider has expired. C: B's premiums are reduced by half. D: B will never have to pay premium again.: B: B's premiums are not waived because the rider has expired. 150. K is a single mother and is considering buying a life insurance policy on her 37 / 44 10 year old son to protect his insurability as he grows up. K is concerned that if she were to die, no one would be able to pay for her son's policy. K should consider: A: Buying more Death Benefit B: Establishing a Trust as owner of the policy. C: Purchase a Payor Benefit Rider D: Purchase an Accidental Death Benefit Rider: C: Purchase a Payor Benefit Rider 151. Warranties are: A: Statements made that are guaranteed to be true B: Are not commonly used in modern insurance law C: Are considered to be a strict standard in which to answer a question D: All of the Above: D: All of the Above 152. M is on active duty in the military and dies of heart attack. The death benefit will be paid because of the war exclusion. A: Results B: Status C: War Exclusion D: Active Duty Exclusion: A: Results 153. Which of the following is an exemption under advertising regulations? A: A television commercial that explains why an insurer's policy is beneficial B: An agent explaining a policy summary to the client C: An agent explaining whole life as a savings plan D: An agent using a sales kit to solicit an annuity: B: An agent explaining a policy summary to the client 154. At age 40, J purchased a whole life policy which had a face amount of $95,000 and an annual premium of $1,000. In addition, J decided to add a Return of Premium Rider when she purchased the policy. Sadly, at age 45 J died of heart attack. 40 / 44 163. A Replacing Insurer must forward the Notice Regarding Replacement form to the Existing Insurer within: A: 3 working days B: 3 calendar days C: 3 years D: 7 days: A: 3 working days 164. The part of an insurance contract limiting the scope of coverage is called A: Limitation B: Exclusion C: Eclipse D: Reduction: B: Exclusion 165. Which of the following scenarios would allow someone to receive early retirement benefits through Social Security? A: A retired worker must be 70 years old. B: A individual can only receive retirement if they have earned the required credits. C: A individual does not need to have credits, just be older than 59 1/2. D: A individual who is fully insured and is age 62.: D: A individual who is fully insured and is age 62. 166. B is applying for a life policy. During the application, B disclosed that he had several heart issues a few years ago, but that the doctor said he was in good health. If the insurer wants to look more deeply into B's heart issues, which of the following reports will the company most likely use? A: Paramedical B: APS C: MIB D: Consumer Report: B: APS 167. Which of the following is CORRECT about policy provisions? A: insurer must pay a claim within 60 days of death with interest due from the date of 41 / 44 death at 10% per year B: A grace period must be either 30 days or one month C: A contract must contain a three year reinstatement clause at 6% D: All of the Above: D: All of the Above 168. J has an FSA through her employer. Towards the end of the year, J has $1,000 that she has not used for reimbursement. When the new policy year goes into effect, which of the following will happen with J's unused $1,000 balance? A: J will be allowed to roll over the $1,000. B: J will only be allowed to roll over half of the unused money. C: J will lose the unused $1,000 but be allowed to fully fund the account for the next policy year. D: J will be allowed to roll over the $1,000 but will have to pay taxes.: C: J will lose the unused $1,000 but be allowed to fully fund the account for the next policy year. 169. An insurance company may not alter a contract with an insured by citing documents or other items not contained in the policy because of the: A: Insuring Clause B: Incontestable Clause C: Entire Contract Provision D: Legal Action Provision: C: Entire Contract Provision 170. The National Association of Insurance Commissioners developed mandatory clauses to be found in which type of health insurance policies? A: Individual Coverage B: Group Coverage C: COBRA D: Group Long Term Care: A: Individual Coverage 171. Who establishes the regulations, eligibility, and benefit coverage for Med- icaid? A: Federal Government B: State Government 42 / 44 C: Both Answers A and B D: None of the Above: A: Federal Government 172. Which of the following statements are true regarding a Disability Income policy? A: Benefits are paid immediately upon loss. B: The policy will not cover any immediate losses once a policy is issued. C: There is a waiting period before accidents are covered under the policy, however, illness is covered immediately from issue. D: There is a waiting period before illness is covered under the policy but accidents are covered immediately from issue.: D: There is a waiting period before illness is covered under the policy but accidents are covered immediately from issue. 173. All of the following statements are CORRECT about a Business Disability Buyout policy EXCEPT: A: Premiums are Not Tax Deductible. B: Benefits are Tax Free, Lump sum amount. C: The policy has a very short elimination period usually up to 30 days maximum. D: None of the Above: C: The policy has a very short elimination period usually up to 30 days maximum. 174. The main purpose of relation to the earning to insurance clause is to: A: prevent the insured from receiving more benefits than earnings B: make the insured financially whole again C: reinforce indemnity D: all of the above: D: all of the above 175. Medigap Supplements must meet one of forms approved by the National Association of Insurance Commissioners. A: 5 B: 10