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15 Cards in this Set

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1. In which case did the court rule that the sale of insurance from an entity in one state to an entity in another state was interstate commerce?a.Sherman Antitrust Act

b.Paul v. Virginia


c.U.S. v. South-Eastern Underwriters Associationd.McCarran v. Ferguson

1. C: In the case of U.S. v. South-Eastern Underwriters Association, the court ruled that a company based in a particular state is engaging in interstate commerce when it sells insurance to an individual or organization based in another state. The legal acts and/or rulings mentioned in choices “A” and “B” are both related to the issue of interstate commerce, but neither actually involved rulings that classified selling insurance from one state to another as interstate commerce under the law. The Sherman Antitrust Act establishes regulations related to interstate commerce, but it does not actually define interstate commerce in terms of insurance. In the case of Paul v. Virginia, it was ruled that selling insurance from one state to another could not be considered interstate commerce under the law. This decision was eventually overturned, however, in the case of U.S. v. South-Eastern Underwriters Association. Choice “D” is the name of an act that was passed as a result of the ruling in the U.S. v. South-Eastern Underwriters Association case.
2. An insurer must provide information about their privacy practices and have a valid disclosure authorization in all of the following situations EXCEPT:

a.When an insurer gathers information directly from the applicant


b.When an insurer contacts a third party to gather information about the applicantc.When an insured entity has his policy reinstated, renews his policy, or requests a change to his policy


d.When another insurer requests information about the applicant

2. D: An insurer is required to inform an applicant of their privacy practices in any situation in which an insurer collects information directly from the applicant, any situation in which the insurer contacts a third party to collect information about the applicant, any situation in which an insured entity renews his policy or has his policy reinstated, and any situation in which an insured entity requests a change to his policy. The insurer must also have a valid disclosure authorization form signed by the applicant in order to collect information. However, an insurer is not required to have a signed valid disclosure authorization form to provide information to another insurer, as long as the insurer providing the information has informed the applicant or the insured entity that the information may be provided to other insurers.
3. All of the following are considered illegal actions for an insurer or an insurance producer EXCEPT:

a.Selling insurance across state lines


b.Lying about the policy that the insurer is selling or about a policy that another insurer is selling


c.Falsifying documents or taking any other action that makes it difficult or impossible for an applicant or a law enforcement agency to examine the insurance agency’s policies and practices


d.Using money collected for any purpose other than the one for which it was intended

3. A: An insurer and/or an insurance producer based in one state can sell insurance to an individual or an organization based in another state, as long as they are appropriately licensed and follow any and all applicable laws. It is illegal, however, for an insurer and/or an insurance producer to lie about a policy to make it sound better or worse than another policy, to falsify documents that may be used to evaluate the validity of the insurance company and/or the actions of an insurer or producer, and to use the money that the insurer or producer collects for any purpose other than the one intended
4. The Commissioner of Insurance is:

a.An individual that coordinates and/or controls the activities of a single insurer


b.A state official that coordinates and controls the enforcement of insurance laws within a particular state


c.A federal official that coordinates and controls the enforcement of federal insurance laws


d.A local official that coordinates and controls the enforcement of insurance laws within a particular city

4. B: The Commissioner of Insurance is a state official that is responsible for the enforcement of the insurance laws within a particular state. Each state has a state insurance department or a state insurance board, and the Commissioner of Insurance (also known as the Director or Superintendent of Insurance) is the official responsible for coordinating and controlling the enforcement actions of the state board that he leads. Choice “A” may refer to a number of positions, including human resources manager, corporate officer, or even regulatory examiner, but it does not refer to the Commissioner of Insurance. Choice “C” may refer to the Chairman of the Securities and Exchange Commission (SEC), but it does not refer to the Commissioner of Insurance. Finally, choice “D” is incorrect because there is no official at the local or city level in charge of insurance regulation.
5. Which of the following insurance entities must have a license?

a.Insurers


b.Insurance producers


c.Underwriters that do not receive a commissiond.Risk analysts

5. B: Insurance producers are required to have a license in order to sell insurance in most states. However, insurers, risk analysts, underwriters, and individuals in other similar positions are not typically required to have a license. This is because most states have adopted a series of regulations designed by the National Association of Insurance Commissioners, rules that are collectively known as the Producer Licensing Model Act (PLMA). The regulations established by the PMLA are designed to act as a uniform set of guidelines that a state can use to create its own insurance regulations. These guidelines have been implemented in most states, and they list specific positions that should require a license and specific positions for which a license is not required. As a result, the specific positions that require a license will vary somewhat from state to state, but an insurance producer or any other individual that receives part or all of his pay in the form of a commission is required to have a license in most states.
1 : An individual, who wishes to provide a retirement income for himself that will also provide a retirement income for his wife inthe event he dies, should purchase which of the following:

a Life annuity with period certain


b A refundable life annuity


c A joint and survivor life annuity


d An immediate annuity

D


An individual, who wishes to provide a retirement income for himself that will also provide a retirement income for his wife in theevent he dies, should select an annuity with a joint and survivor option.

2 : A contingent beneficiary:

a Is first in line to receive the policy proceeds


b Receives the policy proceeds only if the insured and primary beneficiary dies in the same common disaster


c Receives the policy proceeds if there is no living primary beneficiary


d Can become policy-owner any time he chooses by paying the policy premiums

C

Receives the policy proceeds if there is no living primary beneficiary. A contingent beneficiary receives the policy proceeds if there is no living primary beneficiary. Second beneficiaries are importantespecially if the first beneficiary dies

A pure life annuity offers protection against the risk of:

a Death during the earning year


b Disability during the earning years


c Outliving ones’ income


d Death after the age of retirement

C


Pure life will provide for income for life

The death benefit of a life insurance policy is received by the (best answer):

a Beneficiary


b Life Insurance Company


c Deceased


d Party that paid the premium

A


The death benefit of a life insurance policy is received by the beneficiary.

A (n) __________ is a product used to accumulate funds and later liquidate that amount

a Industrial Life policy


b Term Life policy


c Annuity


d Life paid up at 65

C


Annuities grow income tax deferred and pay out income at a later date

An insurer pays a refund from the surplus of profits to the holder of a participating policy. What is the payment?

a An unlawful rebate


b A policy dividend


c An annuity


d Not legal, as only stock companies pay dividends

B


Any refunds of surplus to policy holders is called a dividend. A mutual insurers pay dividends

The period of time during which a deferred annuity builds its value is referred to as:

a An accumulation period


b An annuity period


c An elimination period


d A waiting period.

A


The period of time during which a deferred annuity builds its value is referred to as the accumulation period

The Non-Forfeiture provision that would give the insured the most amount of coverage would be: a Cash surrender value

b Extended Term insurance


c Reduced paid up insurance


d Automatic Premium Loan

B

The Non-Forfeiture provision that would give the insured the most amount of coverage would be Extended Term insurance.Tricky question. Key phrase is most amount of coverage.

A life annuity with a 10-year period certain:

a Will pay the annuitant only for 120 months




b Is guaranteed to pay for a minimum of 120 months either to the annuitant or beneficiary




c Will pay the annuitant for 10 years and continue to pay the annuitant after 10 years, but the amount will be less




d Will pay the annuitant for life and the beneficiary for 10 years after the death of the annuitant

B


The income on a 10 yr period certain is guaranteed even if the annuitant dies. But if the annuitant lives he/she will receive incomefor life

If you choose the settlement option of receiving fixed monthly installments or fixed amounts, you may receive an amount thatis:

a More than the face amount


b Less than the face amount


c The same as the face amount


d none

A


If you choose the settlement option of receiving fixed monthly installments or fixed amounts, you may receive an amount that isMore than the face amount because of interest the insurer pays.