Everything About Insurance In This Quiz!

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  • 1/105 Questions

    For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

    • More active
    • Larger
    • Smaller 
    • Older
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About This Quiz

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.
If you wanna know more in detail or test your knowledge about insurance, take this quiz!

Everything About Insurance In This Quiz! - Quiz

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  • 2. 

    Insurance is the transfer of

    • Peril

    • Risk

    • Loss

    • Hazard

    Correct Answer
    A. Risk
    Explanation
    Insurance is the transfer of risk from an individual or entity to an insurance company. By purchasing insurance, individuals or entities transfer the potential financial burden of a loss or peril to the insurance company. Therefore, risk is the correct answer as it accurately represents the concept of transferring the potential for loss or peril to an insurance company.

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  • 3. 

    Which of the following is an example of a limited-pay life policy

    • Life paid up at 65

    • Renewable term to age 70

    • Level term life 

    • Straight life

    Correct Answer
    A. Life paid up at 65
    Explanation
    A limited-pay life policy refers to a life insurance policy where the policyholder pays premiums for a limited period of time, after which the policy remains in force without any further premium payments. "Life paid up at 65" is an example of a limited-pay life policy because the policyholder pays premiums until the age of 65, and after that, no additional premiums are required to keep the policy active.

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  • 4. 

    The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years

    • 1 year

    • 2 year

    • 5 years

    • 7 years

    Correct Answer
    A. 2 year
    Explanation
    After a life insurance policy has been in force for at least 2 years, the validity of coverage cannot be contested, except for nonpayment of premium. This means that the insurance company cannot deny a claim or cancel the policy based on any other reason, such as the insured's health condition or any misrepresentation in the application. However, if the premium has not been paid, the insurance company can contest the validity of coverage.

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  • 5. 

    A couple near retirement is planning for their golden years. they want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. should one of them die the other would still life to continue receiving benefits. which settlement option should they choose?

    • Joint and survivor

    • Joint life

    • Life with period certain

    • Straight life

    Correct Answer
    A. Joint and survivor
    Explanation
    The couple near retirement wants to ensure that their retirement annuity continues to provide monthly benefits for the rest of their lives, even if one of them dies. The joint and survivor settlement option is the most suitable choice for them because it guarantees that the surviving spouse will continue to receive benefits after the death of the other spouse. This option provides financial security and ensures that both spouses are taken care of throughout their retirement years.

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  • 6. 

    An agent is suspected of committing an illegal business practice. what can be issued that would legally ban the agent from committing this act again?

    • Restraint of trade order

    • Stop -action decree

    • Cease and desist order

    • Writ of noncompliance

    Correct Answer
    A. Cease and desist order
    Explanation
    A cease and desist order can be issued to legally ban the agent from committing the illegal business practice again. This order is typically issued by a government agency or a court and instructs the agent to immediately stop engaging in the specific illegal activity. Failure to comply with the order can result in legal consequences such as fines or penalties.

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  • 7. 

    What is the minimum age for obtaining an insurance agent license in this state?

    • 16

    • 18

    • 19

    • 21

    Correct Answer
    A. 18
    Explanation
    The minimum age for obtaining an insurance agent license in this state is 18. This means that individuals must be at least 18 years old in order to be eligible to become an insurance agent in this state.

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  • 8. 

    If an insurer has fewer assets than liabilities and is unable to pay it financial obligations for at least 3 years, the insurer is considered

    • Nonadmitted

    • Insolvent

    • Suspended

    • Brankrupt

    Correct Answer
    A. Insolvent
    Explanation
    If an insurer has fewer assets than liabilities and is unable to pay its financial obligations for at least 3 years, the insurer is considered insolvent. This means that the insurer is unable to meet its financial obligations and is in a state of financial distress. Insolvency indicates that the insurer's financial situation is unsustainable and it may not be able to continue operating.

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  • 9. 

    Who is an insurance agent?

    • Any person appointed by an insurance company

    • Any person who represents the insured in the sale of insurance

    • Any person licensed to sell, solicit or negotiate insurance

    • Any person licensed under the laws of another state

    Correct Answer
    A. Any person licensed to sell, solicit or negotiate insurance
    Explanation
    The correct answer is "any person licensed to sell, solicit or negotiate insurance." This answer encompasses the broadest definition of an insurance agent. Being licensed to sell, solicit, or negotiate insurance indicates that the person has met the necessary qualifications and requirements to engage in these activities. It does not limit the definition to being appointed by a specific insurance company or representing the insured in the sale of insurance. Additionally, it does not restrict the definition to individuals licensed in a particular state, allowing for a more inclusive interpretation.

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  • 10. 

    The maximum duration of a temporary license in this state is 

    • 30

    • 90

    • 180 

    • 1 year

    Correct Answer
    A. 180 
    Explanation
    The maximum duration of a temporary license in this state is 180. This means that individuals who obtain a temporary license in this state can use it for a maximum period of 180 days. This duration allows individuals to have a temporary license while they complete the necessary requirements or paperwork to obtain a permanent license.

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  • 11. 

    If a cybersercurity event has occurred, licensees must maintain records of the incident for no less than

    • 2 years

    • 5 year

    • 8 year

    • 10 year

    Correct Answer
    A. 5 year
    Explanation
    Licensees must maintain records of a cybersecurity event for a period of 5 years. This is important for several reasons. Firstly, it allows for a thorough investigation and analysis of the incident, which can help in identifying the cause and preventing future occurrences. Secondly, it ensures compliance with legal and regulatory requirements, as many jurisdictions mandate the retention of such records for a specified period. Lastly, it provides a historical record that can be used for reference or evidence in case of any legal disputes or audits related to the cybersecurity event.

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  • 12. 

    Which services are associated with standard & poors and AM best?

    • Investigating violation of the fair credit reporting act

    • Providing employmetn histories for investigative consumer reports

    • Storing medical information collected by insurance companies

    • Rating the financial strength of the insurance companies

    Correct Answer
    A. Rating the financial strength of the insurance companies
    Explanation
    Standard & Poor's and AM Best are both well-known rating agencies in the insurance industry. They specialize in evaluating and rating the financial strength of insurance companies. This involves assessing various factors such as the company's ability to meet its financial obligations, its profitability, and its overall stability. By providing these ratings, Standard & Poor's and AM Best help consumers and investors make informed decisions about which insurance companies to trust and invest in.

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  • 13. 

    The requirement that agents not commingle insurance monies with their own funds is known as 

    • Premium accountability

    • Express authority

    • Accepted accounting principal

    • Fiduciary responsiblity

    Correct Answer
    A. Fiduciary responsiblity
    Explanation
    Fiduciary responsibility refers to the legal and ethical obligation of an agent or trustee to act in the best interests of their clients or beneficiaries. In the context of insurance, this means that agents must handle insurance monies separately from their own funds and ensure that the funds are used solely for the benefit of the policyholders. This requirement helps to protect the interests of policyholders and maintain the integrity of the insurance industry.

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  • 14. 

    Which of the following would qualify as a competent party in an insurance contract

    • The applicant is under the influence of a mind-impairing medication at the time of application 

    • The applicant has a prior felony conviction 

    • The applicant is intoxicated at the time of application 

    • The applicant is 12 year old student

    Correct Answer
    A. The applicant has a prior felony conviction 
    Explanation
    A competent party in an insurance contract is someone who has the legal capacity to enter into a contract. A person with a prior felony conviction would still be considered a competent party in an insurance contract as long as they meet other requirements such as being of legal age and having the mental capacity to understand the terms and conditions of the contract. The prior felony conviction does not automatically disqualify them from being a competent party in this context.

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  • 15. 

    Courts will interpret any ambiguity in an insurance contract

    • Based on the prudent person rule

    • In favor of the insured

    • In favor of the insurer

    • Through arbitration

    Correct Answer
    A. In favor of the insured
    Explanation
    When there is ambiguity in an insurance contract, courts will interpret it based on the prudent person rule. This means that they will consider what a reasonable person would have understood from the contract. In such cases, the courts tend to interpret the ambiguity in favor of the insured. This means that any doubts or uncertainties will be resolved in a way that benefits the policyholder rather than the insurance company. This interpretation is done to ensure that the insured party is protected and receives the intended benefits from the insurance contract.

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  • 16. 

    Which of the following applicants could the insurer charge a higher rate of premium and not violate reugulations regarding unfair discrimination

    • An applicant who is a smoker

    • An applicant who was born in another country

    • An applicant who is legally blind

    • An applicant who has been a victim of domestic abuse

    Correct Answer
    A. An applicant who is a smoker
    Explanation
    The insurer could charge a higher rate of premium for an applicant who is a smoker because smoking is a known risk factor for various health conditions. Insurers are allowed to differentiate premiums based on risk factors as long as it does not violate regulations regarding unfair discrimination.

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  • 17. 

    If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy

    • The death benefit will be forfeited

    • The death benefit will be same as the original face amount

    • The death benefit will be larger

    • The death benefit will be smaller

    Correct Answer
    A. The death benefit will be smaller
    Explanation
    If an insured withdraws a portion of the face amount in the form of accelerated benefits due to a terminal illness, it will affect the payable death benefit from the policy by making it smaller. This means that the amount paid out to the beneficiaries upon the insured's death will be reduced because the insured has already received a portion of the face amount while still alive.

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  • 18. 

    When may an insurance company use suicide as a defense against paying a death claim?

    • At any time suicide can be proven

    • At no time

    • When death occurs within a specified period of time after the policy was issued

    • Only when there was a witness to the event

    Correct Answer
    A. When death occurs within a specified period of time after the policy was issued
    Explanation
    An insurance company may use suicide as a defense against paying a death claim when the death occurs within a specified period of time after the policy was issued. This is because many insurance policies have a suicide clause, which states that if the policyholder dies by suicide within a certain period, typically within the first two years of the policy, the insurance company may deny the death claim. This clause is put in place to prevent individuals from taking out a policy with the intention of committing suicide shortly after.

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  • 19. 

    According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization the owner is entitled of which of the following?

    • Guaranteed surrender value

    • No payments 

    • Annuity dividends

    • Full premium refund without any charges

    Correct Answer
    A. Guaranteed surrender value
    Explanation
    According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, they are entitled to the guaranteed surrender value. This means that they will receive a specific amount of money, determined by the terms of the annuity contract, when they surrender the annuity. This value is guaranteed and does not depend on any other factors such as annuity dividends or premium refunds.

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  • 20. 

    By what date in each licensing period are agents required to renew their license?

    • By december 31st

    • By the date Ce courses are completed

    • By the license issue anniversary date

    • By the last dat of their birth month

    Correct Answer
    A. By the last dat of their birth month
    Explanation
    Agents are required to renew their license by the last day of their birth month. This means that each agent has a specific deadline based on their birth month to complete the license renewal process.

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  • 21. 

    Which of the following types of agent authority is also called "perceived authority"

    • Fiduciary

    • Apparent

    • Express 

    • Implied

    Correct Answer
    A. Apparent
    Explanation
    Apparent authority is also known as "perceived authority" because it refers to a situation where a person is perceived to have authority to act on behalf of another, even if they do not actually possess such authority. This perception may arise from the actions, words, or conduct of the person in question, leading others to believe that they have the power to act on behalf of someone else. In other words, apparent authority is based on the appearance or perception of authority rather than actual legal authority.

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  • 22. 

    What do individuals use to transfer their risk of loss to larger group?

    • Insurable interest

    • Exposure

    • Indemnity

    • Insurance

    Correct Answer
    A. Insurance
    Explanation
    Individuals use insurance to transfer their risk of loss to a larger group. Insurance allows individuals to pay a premium in exchange for coverage against potential losses or damages. By pooling together the resources of many individuals, insurance companies are able to provide financial protection and compensation in the event of an unforeseen event or loss. This helps individuals mitigate the financial impact of unexpected events and provides them with peace of mind.

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  • 23. 

    Which of the following is true regarding a risk retention group?

    • It is a benefit society formed to provied insurance for members of an affiliated lodge

    • It is a company owned by the stockholders that provides nonparticipating policies

    • It is a liability insurance company owned by it members

    • It provides support for underwriters and is not an insurance company

    Correct Answer
    A. It is a liability insurance company owned by it members
    Explanation
    A risk retention group is a liability insurance company owned by its members. This means that the members of the group are also the owners of the company. The purpose of a risk retention group is to provide liability insurance coverage to its members, who are typically businesses or professionals in the same industry. By pooling their resources and sharing the risk, the members can obtain insurance coverage at potentially lower costs compared to purchasing individual policies from traditional insurance companies.

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  • 24. 

    Which of the following terms is used to describe a person, other than a viator, that enters into or effectuates a viatical settlemet contract?

    • Viatical settlement broker

    • Viatical settlement effectuator

    • Viatical settlement provider

    • Viatical settlement purchaser

    Correct Answer
    A. Viatical settlement provider
    Explanation
    A viatical settlement provider is the correct term used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract. They are responsible for facilitating the transaction between the viator (the person selling their life insurance policy) and the purchaser (the person buying the policy). The provider typically assesses the policy's value, negotiates the terms of the settlement, and handles the necessary paperwork and legalities involved in the process.

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  • 25. 

    If an agent fails to obtain an applicant signature on the application, the agent must

    • Sign the application for the applicant

    • Sign the application, stating it was by agent

    • Send the application to the insurer with a note explaining the absence of signature

    • Return the application to the applicant for a signature

    Correct Answer
    A. Return the application to the applicant for a signature
    Explanation
    If an agent fails to obtain an applicant signature on the application, it is necessary to return the application to the applicant for a signature. This ensures that the applicant has the opportunity to review and provide their consent by signing the application themselves. By returning the application to the applicant, it allows for the proper completion of the application process and ensures that all necessary signatures are obtained.

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  • 26. 

    Which of the following best describes gross annual premium

    • Basic insurance rate plus commissions

    • Expense premium

    • Net premium

    • Annual loading

    • Option 5

    Correct Answer
    A. Net premium
    Explanation
    The gross annual premium refers to the total amount of money paid by the policyholder for an insurance policy before any deductions or expenses are taken into account. It represents the full cost of the insurance coverage without any additional fees or commissions. The net premium, on the other hand, is the amount that remains after deducting any expenses or commissions from the gross premium. Therefore, the correct answer is net premium.

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  • 27. 

    Which of the following may not be included in an insurance company advertisement

    • That it policies are covered by a state guaranty association

    • The policies limitation or exclusion

    • The name of a specific agent 

    • An identification of a limited policy as limit policy

    Correct Answer
    A. That it policies are covered by a state guaranty association
    Explanation
    An insurance company advertisement may not include the information that its policies are covered by a state guaranty association. This is because the inclusion of this information may mislead potential customers into thinking that their policies are fully protected by the state guaranty association, which may not always be the case. The purpose of an advertisement is to attract customers and promote the benefits of the insurance policies, so including information about limitations or exclusions, the name of a specific agent, or identifying a limited policy as such would be more relevant and informative for potential customers.

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  • 28. 

    What does "liquidty" refer to in a life insurance policy

    • The policyowner recieves dividend check each year

    • The insured recieves payment each month in retirement

    • Cash values can be borrowed at any time

    • The death benefit replaces the assets that would have accumulated if the insured had not died

    Correct Answer
    A. Cash values can be borrowed at any time
    Explanation
    "Liquidity" refers to the ability to access cash values from a life insurance policy at any time. This means that the policyholder can borrow money against the cash value of the policy whenever needed. This provides a level of flexibility and financial security, as it allows the policyholder to tap into the policy's value for various purposes such as emergencies, investments, or other financial needs.

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  • 29. 

    Which of the following types of insurance policies would perform the function of cash accumulation

    • Credit life

    • Increasing term

    • Whole life

    • Term life

    Correct Answer
    A. Whole life
    Explanation
    Whole life insurance policies have a cash accumulation feature. A portion of the premium paid into the policy is set aside in a cash value account, which grows over time. This cash value can be accessed by the policyholder through policy loans or withdrawals. The cash accumulation feature allows the policy to build up a savings component, providing a source of funds that can be used for various purposes such as supplementing retirement income or paying for unexpected expenses. Unlike term life insurance, which only provides coverage for a specific period, whole life insurance offers both a death benefit and a cash value component.

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  • 30. 

    Which is the primary source of information used for insurance underwriting 

    • Applicant interviews

    • Medical record

    • Private investigation

    • Application

    Correct Answer
    A. Application
    Explanation
    The application is the primary source of information used for insurance underwriting. This is because it contains all the necessary details about the applicant, including their personal information, medical history, and lifestyle habits. Insurance underwriters rely on this information to assess the risk associated with insuring the individual and determine the appropriate coverage and premium rates. While applicant interviews, medical records, and private investigations may provide additional information, the application is the initial and most comprehensive source used in the underwriting process.

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  • 31. 

    An individual purchased a 100,000 joint life policy on himself and his wife. Eight year later, he died in an automobile accident. how much will his wife receive from the  policy?

    • Nothing 

    • 50,000

    • 100,000

    • 200,000

    Correct Answer
    A. 100,000
    Explanation
    The wife will receive 100,000 from the policy because it is a joint life policy, meaning that the coverage continues even after the death of one of the insured individuals.

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  • 32. 

    Which of the following is not allowed in credit life insurance

    • Creditor requiring that a debtor buys insurance from a certain insurer

    • Creditor having collateral assignement on the policy

    • Creditor requiring that a debtor has a life insurance

    • Creditor becoming a policy beneficiary

    Correct Answer
    A. Creditor requiring that a debtor buys insurance from a certain insurer
    Explanation
    In credit life insurance, it is not allowed for the creditor to require that a debtor buys insurance from a certain insurer. This would limit the debtor's choice and may lead to higher premiums or unfavorable policy terms. The debtor should have the freedom to choose the insurance provider that best suits their needs and offers the most favorable terms.

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  • 33. 

    Your client wants both protection and saving from the insurance, and is willing to pay premiums until retirement at age 65. what would be the right policy for this client?

    • Interest-sensitive whole life

    • Life annuity with period certain 

    • Increasing term

    • Limited pay whole life

    Correct Answer
    A. Limited pay whole life
    Explanation
    The limited pay whole life policy would be the right choice for this client because it offers both protection and savings. With this policy, the client will pay premiums only until retirement at age 65, after which the coverage will continue for the rest of their life. This allows the client to have the security of insurance coverage while also building up cash value over time. The policy provides a combination of lifelong protection and the ability to accumulate savings, making it a suitable option for the client's needs.

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  • 34. 

    A straight life policy has what type of premium

    • A decreasing annual premium for the life of the insured

    • A variable annual premium for the life of the insured

    • A level annual premium for the life of the insured

    • An increasing annual premium for the life of the insured

    Correct Answer
    A. A level annual premium for the life of the insured
    Explanation
    A straight life policy has a level annual premium for the life of the insured. This means that the premium amount remains the same throughout the entire duration of the policy, regardless of any changes in the insured's age or health. This type of premium structure provides stability and predictability for the policyholder, as they can budget for the same premium amount each year.

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  • 35. 

    In group life insurance policy, the employer may select all of the following except

    • The type of insurance

    • The amount of insurance

    • The premium payor

    • The beneficiary

    Correct Answer
    A. The beneficiary
    Explanation
    In a group life insurance policy, the employer has the authority to select various aspects of the policy, such as the type of insurance, the amount of insurance, and the premium payor. However, the employer does not have the power to choose the beneficiary. The beneficiary is typically chosen by the insured individual and is the person who will receive the insurance proceeds upon the insured's death.

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  • 36. 

    A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. which policy rider caused this change?

    • Cost of living rider

    • Value adjustment rider

    • Return of premium rider

    • Inflation rider

    Correct Answer
    A. Cost of living rider
    Explanation
    The cost of living rider is a policy rider that is designed to adjust the face value of a life insurance policy in response to changes in the cost of living. In this case, the long stretch of national economic hardship caused a 7% rate of inflation, which led to the increase in the face value of the policy by the same percentage. Therefore, it can be inferred that the cost of living rider caused this change.

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  • 37. 

    A life insurance policy does not have a war clause. if the insured is killed during a time of war, what will the beneficiary receive from the policy

    • Nothing, since the insured was killed as a result of a war

    • The full death benefit

    • The policys cash value

    • A refund of premiums

    Correct Answer
    A. The full death benefit
    Explanation
    If a life insurance policy does not have a war clause, it means that the policy covers death caused by war as well. Therefore, if the insured is killed during a time of war, the beneficiary will receive the full death benefit from the policy.

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  • 38. 

    Agents who change their state of residence must notify the superintendent with how many days of any change in address?

    • 10 

    • 15 

    • 20

    • 30

    Correct Answer
    A. 30
    Explanation
    According to the given question, agents who change their state of residence must notify the superintendent with how many days of any change in address. The correct answer is 30, which means that agents are required to notify the superintendent within 30 days of any change in their address. This notification is important for maintaining accurate records and ensuring that the superintendent has up-to-date information about the agents' residences.

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  • 39. 

    An insured has a life insurance policy with a face amount of 500. he pay a premium each week to the agent who sold him policy. what kind of policy does insured have?

    • Industrial life

    • Credit life 

    • Ordinary life 

    • Franchise life

    Correct Answer
    A. Industrial life
    Explanation
    The insured has an industrial life insurance policy. This type of policy is typically characterized by small face amounts and frequent premium payments, often collected by an agent on a weekly basis. It is designed to provide coverage for individuals with lower incomes or those who may have difficulty obtaining other types of life insurance policies.

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  • 40. 

    Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

    • Standard risk requires extra rating

    • Standard risk is also known as high exposure risk

    • Standard risk is representative of the majority of people 

    • Standard risk pay a higher premium than a substandard risk

    Correct Answer
    A. Standard risk is representative of the majority of people 
    Explanation
    The correct answer is "standard risk is representative of the majority of people". This means that a standard risk classification is the typical or average risk level for people in the same age group and with similar lifestyles. It does not require extra rating, it is not the same as high exposure risk, and it does not necessarily pay a higher premium than a substandard risk.

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  • 41. 

    The premium of a survivorship life policy compared with that of a joint policy would be 

    • Half the amount

    • Lower

    • Higher

    • As high

    Correct Answer
    A. Lower
    Explanation
    The premium of a survivorship life policy is lower compared to that of a joint policy because in a survivorship policy, the death benefit is paid out only after both insured individuals pass away. This reduces the risk for the insurance company, resulting in a lower premium. In contrast, a joint policy pays out the death benefit when the first insured individual passes away, which increases the risk for the insurance company and leads to a higher premium.

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  • 42. 

    When the policyowner specifies a dollar amount in which installment are to be paid, he/she has chosen which settlement option

    • Extended term

    • Fixed  amount 

    • Fixed period

    • Life income period certain

    Correct Answer
    A. Fixed  amount 
    Explanation
    When the policyowner specifies a dollar amount in which installments are to be paid, they have chosen the fixed amount settlement option. This means that the policyowner has decided on a specific amount of money that will be paid out in installments rather than choosing a different option such as extended term, fixed period, or life income period certain.

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  • 43. 

    A couple owns a life insurance policy with a children term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. which of the following will she need to provide for proof of insurability?

    • Medical exam and parents medical history

    • Proof of insurability is not required

    • Medical exam

    • Her parents federal income tax receipts

    Correct Answer
    A. Proof of insurability is not required
    Explanation
    The daughter will not need to provide proof of insurability because she is already covered under the children term rider of her parents' life insurance policy. This means that she does not need to go through a medical exam or provide any additional documentation to continue her coverage.

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  • 44. 

    Which of the following is true regarding a wavier of a surrender change on an annuity contract

    • The surrender charge will be applied to all premature surrender

    • The surrender charge waiver only applies to all premature surrender

    • The charge may be waived if the annuitant is confined to a long term care facillity for at least 30 days

    • The charge can only waived if the annuitant needs the funds for medical expenses

    Correct Answer
    A. The charge may be waived if the annuitant is confined to a long term care facillity for at least 30 days
    Explanation
    The surrender charge on an annuity contract may be waived if the annuitant is confined to a long-term care facility for at least 30 days. This means that if the annuitant requires long-term care and is unable to access their funds due to their confinement, they may be eligible for a waiver of the surrender charge. This provision is designed to provide flexibility and support for individuals who require long-term care and need access to their annuity funds for their medical expenses.

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  • 45. 

    An insurance company company forwards fixed annuity premiums to their general account, where the money invested. the guaranteed minimum interest is set at 2.5%. during an economic downswing, the inestment only drew 2%. what interest rate will the insurer pay to its policyholders?

    • 2%

    • 2.5%

    • 3%

    • Whatever interest rate the company deems appropriate

    Correct Answer
    A. 2.5%
    Explanation
    The insurer will pay its policyholders an interest rate of 2.5%. This is because the guaranteed minimum interest rate for the fixed annuity premiums is set at 2.5%. Even though the investment only drew 2% during an economic downswing, the insurer is still obligated to pay the guaranteed minimum interest rate of 2.5% to its policyholders.

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  • 46. 

    What happens if a deferred annuity is surrendered before the annuitization period

    • The insurer can only apply the surrender value toward another annuity

    • Deferred annuities cannot be surrendered prior to annuitization period

    • The owner will receive the surrenders value of the annuity 

    • The owner will only receive a refund of premium

    Correct Answer
    A. The owner will receive the surrenders value of the annuity 
    Explanation
    If a deferred annuity is surrendered before the annuitization period, the owner will receive the surrender value of the annuity. This means that the owner will receive the current cash value of the annuity, which may be less than the total amount invested due to fees and charges. The surrender value can be taken as a lump sum or used to purchase another annuity, depending on the owner's preference.

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  • 47. 

    The minimum interest rate on an equity indexed annuity is often based on 

    • An index like standard & poor 500

    • The return from the insurance company separate account

    • The annuitants individual stock poftfolio

    • The insurance company general account investments

    • Option 5

    Correct Answer
    A. An index like standard & poor 500
    Explanation
    The correct answer is "an index like standard & poor 500." This means that the minimum interest rate on an equity indexed annuity is typically determined by the performance of an index such as the Standard & Poor 500. This index tracks the performance of 500 large companies listed on stock exchanges in the United States. The annuity's interest rate will be influenced by the performance of this index, providing the annuitant with the potential for higher returns.

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  • 48. 

    Pertaining to insurance, what is the definition of a fiduciary responsibility?

    • Helping insured to file claims

    • Performing reviews of insured coverage

    • Offering additional coverage to clients

    • Promptly forwarding premiums to the insurance company

    Correct Answer
    A. Promptly forwarding premiums to the insurance company
    Explanation
    A fiduciary responsibility in insurance refers to the obligation of promptly forwarding premiums to the insurance company. This means that the person or entity responsible for collecting insurance premiums must ensure that they are promptly and accurately forwarded to the insurance company. This is important because it ensures that the insurance policy remains in effect and that the insured individual or entity is properly covered. By promptly forwarding premiums, the insurance company can continue to provide coverage and fulfill its obligations to the insured.

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  • 49. 

    What term best describes the act of withholding material information that would be crucial to an underwriting decision?

    • Concealment

    • Withholding 

    • Leading 

    • Breach of warranty

    Correct Answer
    A. Concealment
    Explanation
    Concealment is the term that best describes the act of withholding material information that would be crucial to an underwriting decision. Concealment refers to intentionally hiding or not disclosing important information that could impact the outcome of an underwriting decision. This can be considered a form of fraud or misrepresentation as it prevents the underwriter from making an informed decision. Withholding, leading, and breach of warranty do not accurately capture the concept of intentionally withholding crucial information.

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Quiz Review Timeline (Updated): Mar 22, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 29, 2021
    Quiz Created by
    Themes
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