Life Insurance

Front 1

The National Association of Insurance Commissioners (NAIC):

Back 1

Has no legal authority over insurance regulation

Front 2

When the initial premium is not paid with the application, some insurers require that the producer or agent:

Back 2

Send a transmittal notice verifying the date he/she received the premium. Correct

Front 3

Those insurers that are incorporated in another state, but doing business in this state, are considered:

Back 3

Foreign

Front 4

Interest earned on premiums paid to an insurer help to ________ the premiums charged.

Back 4

Lower

Front 5

What are the two types of risk?

Back 5

Pure and Speculative

Front 6

Contract law pertains to the __________ and enforcement of contracts.

Back 6

Formation

Front 7

The transfer of part of a risk from one insurer to another insurer or insurers is best described as:

Back 7

Reinsurance

Front 8

Sylvia was the insured and policyowner of a policy that named her husband as the beneficiary. Upon her husband's death, she decided to change the beneficiary designation to her best friend since she has no close living relatives. The insurance company will:

Back 8

Effect the beneficiary change.

Front 9

Which statement is false?

Back 9

Only the applicant must sign the application unless a guardian is signing for a minor
(agent also must sign)

Front 10

An Attorney-In-Fact manages this type of insurer

Back 10

Assessment (Recripocal)

Front 11

The process of analyzing exposures that create risk, and designing programs to handle them, is known as:

Back 11

Risk Management

Front 12

When an insurer protects itself from a catastrophic loss, it might do so by transferring the amount of risk assumed under the original contract. This is known as:

Back 12

Reinsurance

Front 13

Concerning insurance policies, acceptance is when:

Back 13

A company issues a policy

Front 14

You carry more accident and health insurance than you have the potential to lose. What is this called?

Back 14

Over insurance

Front 15

A false statement in the application that can render the contract void, if material to the acceptance of the risk, is known as a:

Back 15

Misrepresentation

Front 16

Which of the following is not a factor in premium determination?

Back 16

Reserves

Front 17

The intentional misrepresentation, deceit, or withholding of a material fact known to a person with the intention of causing injury to another party is:

Back 17

Fraud

Front 18

rated policy is issued on an individual that is not acceptable at standard rates due to health, habits, or occupation, and is calculated by any of the following methods, except

Back 18

Conversion Plan ... Conversion Plan is not a method of calculating substandard rates. In addition to Flat Rate, Lien Plan, and Tabular Rate, Rated-Up Age is another method of calculating substandard rates.

Front 19

Risk reduction is:

Back 19

Minimizing a risk. ... Risk Reduction is minimizing but not preventing risk.

Front 20

With any new application, a producer or agent should attempt to collect the ____ ____.

Back 20

Initial Premium

Front 21

The ability of an individual to meet an insurance company's underwriting requirements is:

Back 21

Insurability

Front 22

All are elements of a legal contract, except:

Back 22

Representations ... Representations are not one of the four essential elements of a legal contract. Offer and Acceptance is the essential element missing in the responses.

Front 23

An insurer authorized to do business within this state is considered what type of insurer?

Back 23

Admitted...An insurer authorized to do business in this state is referred to as admitted, and could be either domestic, foreign, or alien domiciled.

Front 24

The authority of a producer or agent that is written in his/her contract is called:

Back 24

Express authortiy -- Express Authority is the authority stated or written in the producer or agent's contract. Some have on occasion referred to this as specified authority, but it should properly be called express authority.

Front 25

Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge are:

Back 25

representations...Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge, but are not warranted to be exact in every detail, are known as representations.

Front 26

Wagering on a horse race or at the casino tables is known as what type of risk?

Back 26

Speculative.. This type of wagering would be speculative as there is a chance of loss or gain.

Front 27

When an individual qualifies for a lower premium or rate than standard risks, the insured is considered a:

Back 27

Preferred risk

Front 28

If a life insurance applicant's answers on the application indicates that he/she is in good health, when in fact the applicant has a disease that he/she is not aware of, the statement on the application is considered to be:

Back 28

A representation

Front 29

When producer or agent Pete delivers a policy, he must assure himself there has been no adverse change in the health condition of the applicant, and he should also:

Back 29

Explain the policy fully... It is the producer or agent's responsibility to deliver the policy, verify the insured has remained in good health, and explain the policy to be sure the insured understands the benefits, including endorsements and riders.

Front 30

Consideration, an element of an insurance contract, includes all of the following, except:

Back 30

Payment of renewals

Front 31

All of the following are Settlement Options, except:

Back 31

Reduced Paid-Up .. Reduced paid up is a nonforfeiture option, not a settlement option

Front 32

What are the Nonforfeiture Options in a Decreasing Term Policy?

Back 32

There are none.. there are no nonforfeiture options in a term policy

Front 33

What is the definition of unfair discrimination?

Back 33

charging different life insurance rates for individuals of the same class and having the same life expectancies

Front 34

What is rebating?

Back 34

Permitting or offering a favor such as a reduction of premium to induce the purchase of insurance.

Front 35

Boycott, Coercion or Intimidation definition

Back 35

Entering into an agreement with the purpose of committing an act of boycott, corecion or intimidation that would result in restraint of trade or a monolopy in the life insurance business.

Front 36

What is twisting?

Back 36

Attemting to induce the lapse, forfeiture, exchange, conversion or surrender of a policy or annuity through misrepresentation.

Front 37

How long does a producer have to deliver a policy to a client once it is received?

Back 37

10 days unless the insured agrees in writing

Front 38

How long does a producer have to respond to an inquiry from the insurance commissioner?

Back 38

15 calendar days

Front 39

The following are exempt from state replacement regulations:

Back 39

Credit life, group life, Variable life, annuities

Front 40

What is the grace period in NJ?

Back 40

30 days

Front 41

What is the reinstatement perios in a lapsed insurance policy?

Back 41

3 years

Front 42

What is time frame on the incontestability period?

Back 42

2 years

Front 43

What is the free look period in NJ?

Back 43

10 days

Front 44

A producer has __ number of days to report a felony

Back 44

30 days

Front 45

What is a guaranteed insurability rider?

Back 45

This rider allows a policy owner to purchase more coverage in the future without proving insurability

Front 46

A Child Rider is attached to a parent's life insurance policy. When the oldest child reaches the maximum age, what will be required if that child wants to convert to his own policy?

Back 46

Notify insurer, proof of insurability is not required

Front 47

An insured selecting the annuity benefit option that provides the highest amount of period benefit for life assuming the balance at annuitization and the age of the annuitant to be equal would be.

Back 47

straight life option - life income...Among the three single life options, Life Income, Life Income Period Certain and Life Income with Refund, assuming the annuity balance and age of the annuitant are the same; the periodic payout is greatest under the Straight Life Option because the annuitant stands to lose the most if he dies early, as the insurer keeps the outstanding balance.

Front 48

A smoker, who states on a Life Insurance Application that they do not smoke, will, if discovered, cause the policy to be:

Back 48

Voided because of a breached warranty.. Warranties are statements made in the application for insurance or material stipulations that are guaranteed as true in all respects. If untrue or breached, the contract may be voided.

Front 49

If an insured exercises the Guaranteed Insurability Rider, what will the premium be based upon?

Back 49

Attained age - when exercised, the guarnateed insurability rider allows additional insurance to be be purchased without proof of insurability. Premiums are based upon attained age.

Front 50

When an insured decides to change her mode of premium payment from monthly to annually, what impact does this have on the total premium due?

Back 50

It would decrease -- Additional charges are included in modes other than annual to offset the lost interest earnings and increased administration costs. For this reason, the annual mode is the least amount of total premium outlay.

Front 51

Because a Universal Life Policy does not have a maturity date stated in the contract, it would continue until:

Back 51

The insured's death, or until cash values cannot pay the mortality charge... Universal life is essentially an annually renewable term policy married to a cash value account, all under one contract. The money comes from the cash values to pay the mortality charge (i.e. cost of insurance). If there is not enough money, the policy will lapse.

Front 52

At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health declines, she needs the distribution to be increased. How is this accomplished?

Back 52

She cannot change the distribution once it has started... Once a contract has been annuitized the distribution remains constant. That is the trade off for the insurer guaranteeing payments for life. Annuitization options do not come with riders.

Front 53

Concerning the Paid-Up Additions Dividend Option, all of the following are true, except?

Back 53

These single premium additions do not impact the face value of the original policy. .. The Paid-Up Additions Dividend Option impacts the face amount because each additional segment of insurance contains both death benefit and cash surrender value, and by purchasing paid-up additions, greater dividends are paid much as compound interest works.

Front 54

A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a/an:

Back 54

Contract of Adhesion .. contract of adhesion is submitted on a take it or leave it basis

Front 55

Traditional individual retirement accounts require distributions to start upon reaching the age of 70 1/2. Which one does not?

Back 55

Roth IRA ...Keogh's, 403(b), and 501(c)(3) are employer sponsored plans. The Roth IRA has many outstanding features, one of which is the provision that there are no mandatory distributions at any age.

Front 56

the essential elements of a contract are:

Back 56

offer and acceptance, consideration, competent parties, and legal purpose.

Front 57

Under an annuity with a joint life payment option, what will the survivor receive upon the death of the first annuitant?

Back 57

Nothing -- this payment option ceases distributions at the death of the first annitant hence the survivor will receive nothing. Note this would not have been the case had it been joint life with survivor option

Front 58

403b covers:

Back 58

public school employees