Insurance Exam Part 3 – Flashcards
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Which of these is an element of a Variable Life policy? A fixed, level premium Insurer assumes the investment risk No investment risk to the policyowner Rate of returns are guarantee
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A fixed, level premium- Variable Whole Life policies have a fixed, level premium.
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Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? beneficiary insured policyowner insurer
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policyowner- The policyowner (investor) benefits upon the death of the insured.
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When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans? Joint Noncontributory Contributory Participating
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Contributory- Group plans where employees pay a portion of the premiums are called contributory plans.
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Which of the following statements is correct regarding an employer/employee group health plan? each employee receives a duplicate policy from the insurer the employer receives a master policy and the employees receive certificates the employer and the employees both receive actual policies the employer receives the master policy and the employees receive a summary of benefits
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The employer receives a master policy and the employees receive certificates- Under an employer/employee group health plan the employer receives a master policy and the employees receive certificates.
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The federal income tax treatment of employer-provided group health insurance can be accurately described as Employee's coverage paid for by the employer is considered taxable income to the employee Employee's coverage paid for by the employer is tax-deductible to the employer as a business expenditure Employer is given tax credits for contributions made to an employer-provided group health plan Benefits are taxable to the employee
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Employee's coverage paid for by the employer is tax-deductible to the employer as a business expenditure- Premiums paid by an employer for an employee's coverage are deductible by the employer as a business expense.
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Which of these life products is NOT considered interest-sensitive? Modified Whole Life Variable Universal Life Interest Sensitive Whole Life Variable Life
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Modified Whole Life- All of these have an interest sensitive investment aspect EXCEPT Modified Whole Life.
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Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health? Modification Conversion Exchange Adjustable
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Conversion- The conversion provision allows the policysowner to change the policy to a permanent life policy without providing evidence of insurability.
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When is the face amount paid under a Joint Life and Survivor policy? when policy reaches maturation upon death of the first insured upon death of the last insured when one of the insureds becomes disabled and no longer able to make premium payments
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upon death of the last insured- A Joint Life and Survivor policy pays benefits after the death of the last insured.
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What kind of life insurance product covers children under their parent's policy? Family Maintenance rider Term rider Family Income rider Payor benefit
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Term rider- Family plan policies usually cover the family head with permanent insurance and the coverage on the spouse and children is term insurance in the form of a rider.
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What type of policy would offer a 40-year old the quickest accumulation of cash value? Paid-up at 65 20-pay life 30-pay life Straight whole life
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20-pay life- In this situation, a 20-pay Life policy offers the quickest accumulation of cash value.
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A life insurance policy that provides a policyowner with cash value along with a level face amount is called Whole life Level term Credit life Ordinary life
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Whole life- Whole life provides the insured with a cash value as well as a level face amount.
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Which statement is true concerning a Variable Universal Life policy? Policyowner controls where the investment will go and selects the amount of the premium payment Policyowner has no say where the investment will go but can choose the premium mode The investment vehicle for this type of policy is held in the insurer's general portfolio The death benefit can vary but the policyowner has no say in the premium amount paid
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Policyowner controls where the investment will go and selects the amount of the premium payment- With Variable Universal Life, the policyowner controls the investment of cash values and selects the timing and amount of premium payments.
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T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? Renewable Increasing Level Decreasing
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Renewable- Renewable Term policies guarantee the insured the right to continue term coverage after expiration of the initial policy period.
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What is the consideration given by an insurer in the Consideration clause of a life policy? Promise to never cancel coverage Promise to pay a death benefit Promise to not raise premiums Promise to pay a policy dividend
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Promise to pay a death benefit- Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary.
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When must insurable interest be present in order for a life insurance policy to be valid? When the insured dies Within the incontestability period At the time of application Before the insured dies
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At the time of application- Insurable interest must exist at the time of application for it to be valid.
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A Limited-Pay Life policy has graded death benefits no cash value premium payments limited to a specified number of years premium payments that are paid to age 100
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premium payments limited to a specified number of years- In a Limited-Pay Life policy, premium payments are limited to a specified number of years.
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A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as Adjustable Life Graded-Premium Life Variable Life Modified Whole Life
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Variable Life- The cash value and death benefits of a Variable Life policy can fluctuate according to the performance of its underlying investment portfolio.
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What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Family Maintenance Policy Family Income Policy Survivor Policy Family Survivor Policy
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Family Maintenance Policy- A policy that provides an income for a specific period starting at the death of the insured is a Family Maintenance Policy.
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What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? Family Lump Sum Policy Family Maintenance Policy Family Survivor Policy Family Income Policy
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Family Maintenance Policy- A Family Maintenance Policy pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period.
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S is covered by a whole life policy. Which insurance product can cover his children? Assignment provision Payor benefit Accelerated benefit rider Child term rider
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Child term rider- The means of providing life insurance on the children of a person who is covered by a life insurance policy is by a child term rider.
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What kind of premium does a Whole Life policy have? decreasing adjustable level deferred
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level- A Whole Life insurance policy has a level premium.
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How does an indexed annuity differ from a fixed annuity? Fixed annuity owners receive credited interest tied to the fluctuations of the linked index Indexed annuity owners receive credited interest tied to the fluctuations of the linked index Fixed annuity owners have a separate investment account Indexed annuity owners receive annual dividends
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Indexed annuity owners receive credited interest tied to the fluctuations of the linked index- An indexed annuity differs from a fixed annuity in that indexed annuity owners receive credited interest tied to the fluctuations of the linked index.
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Which of these Nonforfeiture Options continue a build-up of cash value? Waiver of Premium Extended Term Reduced Paid-Up Cash Surrender
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Reduced Paid-Up- A Reduced Paid-Up option would provide continuing cash value build-up.
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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? Straight life accumulates faster than Limited-pay Life 20-Pay Life accumulates cash value faster than Straight Life Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating 20-Pay Life and Straight Life accumulate cash value at the same rate
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20-Pay Life accumulates cash value faster than Straight Life- In this situation, the statement "20-Pay Life accumulates cash value faster than Straight Life" would be correct.
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A policy loan is made possible by which of these life insurance policy features? Policy loan clause Cash value provision Owner's rights provision Consideration clause
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Cash value provision- The Cash value provision makes a policy loan possible.
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Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? Geographical location Source of income Risk classification Marital status
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Risk classification- To determine the premium rate on a Whole Life policy, an insurance company will consider the risk classification of the applicant.
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Variable Whole Life Insurance can be described as both an insurance and securities product an insurance product only a securities product only the insurance company assumes the investment risk
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both an insurance and securities product- Variable Whole Life Insurance is both an insurance and securities product.
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Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? Portion of the premiums paid for by the employer may be a tax deduction Portion of the premiums paid for by the employee may be a tax deduction Portion of the death proceeds are taxable to the beneficiary Portion of the death proceeds are taxable to the estate
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Portion of the premiums paid for by the employer may be a tax deduction- In a contributory plan, the employer may file a tax deduction for its share of the premium costs.
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All of these statements concerning Settlement Options are true EXCEPT Increased proceeds can be provided through accumulation of interest Rapid depletion of proceeds can be avoided Proceeds can be administered by the insurance company Only the beneficiary may select
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Only the beneficiary may select- This is inaccurate. Settlement options may be selected by the policyowner.
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When is the face amount of a Whole Life policy paid? When is the face amount of a Whole Life policy paid? When the insured dies or at the policy's maturity date, whichever happens first Only when the insured dies When the policy is surrendered
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When the insured dies or at the policy's maturity date, whichever happens first- The face amount of a Whole Life policy will be paid when the insured dies or on maturity of the policy, whichever occurs first.
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Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? Modified Whole Life Variable Life Universal Life Adjustable Life
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Variable Life- A life insurance policy that has a level premium but allows the policyowner to choose from a selection of investment options is known as Variable Life.
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The type of annuity that can be purchased with one monetary deposit is called a(n) Single Deposit annuity Single Premium annuity Fixed annuity Immediate annuity
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Immediate annuity- An immediate annuity is purchased with one monetary deposit.
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B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary? $100,000 $200,000 $300,000 $400,000
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$300,000- In this situation, the policy will pay $300,000.
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Which of these statements concerning an individual Disability Income policy is TRUE? Premiums are normally tax-deductible Age of the insured determines the amount of the benefits Normally includes an Elimination period Benefits are normally taxable
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Normally includes an Elimination period- Disability Income policies typically contain an Elimination period.
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Which health policy clause specifies the amount of benefits to be paid? Insuring Consideration Free-look Payment mode
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Insuring- In an Accident ; Health policy, the insuring clause states the amount of benefits to be paid.
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Periodic health claim payments MUST be made at least monthly weekly daily annually
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monthly- Under an individual health policy, periodic claim payments must be made at least monthly.
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K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective? The date the sales appointment was made The date the application was submitted to the insurance company The date of application The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
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The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured- In this situation, coverage will go into effect the date the agent delivers the policy, collects the initial premium, and obtains a good health statement from the insured.
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What is the maximum Social Security Disability benefit amount an insured can receive? 50% of the insured's Primary Insurance Amount (PIA) 75% of the insured's Primary Insurance Amount (PIA) 100% of the insured's Primary Insurance Amount (PIA) 100% of the insured's Primary Insurance Amount (PIA) minus any monies received from a retirement plan
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100% of the insured's Primary Insurance Amount (PIA)- The MAXIMUM Social Security Disability benefit an insured may receive is equal to 100% of the insured's Primary Insurance Amount (PIA).
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Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy? Limited Special risk Reimbursement Blanket
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Reimbursement- When benefits are paid to a policyowner covered under a Hospital Expense policy, the policy is known as reimbursement.
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As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of? Coercion Defamation Rebating Misrepresentation
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Coercion- A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of coercion.
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An agent selling Medicare Supplement policies must provide every applicant with a(n) MIB form COBRA form Suitability form Signed consent form
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Suitability form- Every agent soliciting Medicare Supplements must provide a suitability form.
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What do Dread Disease policies cover? A specific disease or illness All diseases or illnesses Only terminal illnesses Only heart-related diseases
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A specific disease or illness- Dread Disease policies cover only a single disease or illness.
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A life policy loan in Florida cannot charge a fixed rate of interest higher than 7% 8% 9% 10%
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10%- The maximum fixed interest rate permitted on a life policy loan is 10%.
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What type of insurance company is domiciled in England, but conducts business in Florida? Foreign Domestic Alien Transatlantic
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Alien- An insurance company that is domiciled in any country other than the United States is known as an alien insurance company.
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A Multiple Employer Welfare Arrangement (MEWA) provides what type of benefits? Unemployment Banking Retirement Insurance
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Insurance- A Multiple Employer Welfare Arrangement (MEWA) provides insurance benefits.
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According to Florida law, which of the following statements accurately describes an admitted mail order insurance company? It may solicit insurance business by mail without the assistance of a licensed agent It may solicit insurance business by mail only with the assistance of a licensed Florida agent Admitted mail order insurance companies are illegal in Florida Admitted mail order insurance companies cannot solicit insurance business outside the state of Florida
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It may solicit insurance business by mail without the assistance of a licensed agent- The correct answer is "It may solicit insurance business by mail without the assistance of a licensed agent". An admitted mail order insurance company may solicit and accept business by mail without the aid of a licensed agent.
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The waiting period for a pre-existing condition under a Medicare Supplement policy may NOT go beyond 1 month 3 months 6 months 12 months
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6 months- Under a Medicare Supplement policy, the waiting period for pre-existing conditions may not exceed 6 months.
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In Florida, most life insurance policies have a contestability period of 1 year 2 years 3 years 4 years
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2 years- The maximum contestability period for most life insurance policies is 2 years.
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A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time? 12 months 24 months 36 months 48 months
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48 months- An agent's license will terminate if the agent allows 48 months to elapse without being appointed for the class or classes of insurance listed on the license.
