Practice Exam 5 - Life Insurance

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  • 1/75 Questions

    Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as:

    • Replacement
    • Reinsurance
    • Reinstatement
    • Assignment
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Life Insurance Quizzes & Trivia
About This Quiz

Practice Exam 5 - Life Insurance assesses knowledge on policy replacements, the issuance of binders, organizational licensing, agent activities, and legal compliance. It is crucial for professionals in the insurance sector aiming to ensure adherence to legal and operational standards.

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  • 2. 

    According to the CA Insurance Code, in which of the following classes of insurance can a binder NOT be issued:

    • Marine insurance

    • Auto insurance

    • Fire insurance

    • Life insurance

    Correct Answer
    A. Life insurance
    Explanation
    A binder is a temporary agreement that provides immediate coverage until a formal insurance policy is issued. In the case of life insurance, a binder cannot be issued because life insurance policies require extensive underwriting and evaluation of the applicant's health and risk factors. Unlike other classes of insurance like marine, auto, and fire insurance, life insurance involves a longer process and cannot be quickly bound without proper assessment. Therefore, a binder cannot be issued for life insurance according to the CA Insurance Code.

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  • 3. 

    An organization will cease to exsit as an entity eligible to hold a license for all of the following reasons, expept:

    • Termination of an association

    • Termination of a key employee

    • Dissolution of a corporation

    • Dissolution of a co-partnership

    Correct Answer
    A. Termination of a key employee
    Explanation
    An organization will cease to exist as an entity eligible to hold a license if there is a termination of a key employee. This is because a key employee plays a crucial role in the functioning and operations of the organization. Their termination can lead to a disruption in the organization's ability to meet its obligations and maintain compliance with licensing requirements. On the other hand, termination of an association, dissolution of a corporation, or dissolution of a co-partnership may have other legal and financial implications, but they may not necessarily result in the organization losing its eligibility to hold a license.

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  • 4. 

    What does it mean if an agent's license is inactive?

    • The agent can still transact insurance business in CA, but not in any other states unti the license is reactived.

    • The agent can transact any insurance business with another agent's approval

    • The agent can transact any insurance business for which the agent is licensed.

    • The agent cannot transact any insurance business for which a license is required.

    Correct Answer
    A. The agent cannot transact any insurance business for which a license is required.
    Explanation
    If an agent's license is inactive, it means that the agent is not authorized to transact any insurance business for which a license is required. This implies that the agent cannot legally sell insurance or perform any activities related to insurance that require a license.

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  • 5. 

    If the Commissioner issues a Notice of Seizure for documents and the individual falls to send those documents what is the penalty ?

    • 1 year in jail

    • $1000 fine

    • 1 year in jail and / or $1,000 fine

    • Each state handles discipline in its own way

    Correct Answer
    A. 1 year in jail and / or $1,000 fine
    Explanation
    If an individual fails to send the documents after receiving a Notice of Seizure from the Commissioner, the penalty is 1 year in jail and/or a $1,000 fine.

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  • 6. 

    Which of the following must any person engaged in the business of acting as an insurance agent or broker who receiveds compensation for arranging or directing sales in connection with a premium financing agreement do?

    • Provide a list of the potential complaint lodged against the broker or agent through past customers.

    • Provide records of interest payments to the broker agent with respect to interest paid by the insurer.

    • Maintain a list of accounts un connection with compensation exempted in premium financing payments for three years.

    • Provide a list of current accounts for any client who wishes to see the records.

    Correct Answer
    A. Maintain a list of accounts un connection with compensation exempted in premium financing payments for three years.
    Explanation
    The correct answer is to maintain a list of accounts in connection with compensation exempted in premium financing payments for three years. This means that any person engaged in the business of acting as an insurance agent or broker who receives compensation for arranging or directing sales in connection with a premium financing agreement must keep a record of accounts where the compensation is exempted from premium financing payments. This record must be maintained for a period of three years.

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  • 7. 

    All the following would be considered one of the three major types of loss exposure except:

    • Liability loss exposure

    • Financial loss exposure

    • Human and personel loss exposure

    • Property loss exposure

    Correct Answer
    A. Financial loss exposure
    Explanation
    The correct answer is Financial loss exposure. This is because financial loss exposure is not one of the three major types of loss exposure. The three major types of loss exposure are liability loss exposure, human and personnel loss exposure, and property loss exposure. Financial loss exposure refers to the potential financial losses that a company may face, but it is not considered one of the three major types of loss exposure.

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  • 8. 

    Tony Brown has a CLU certification. Which of the following names would be automatically approved for his agency's use?

    • Tony Brown CLU and Company

    • Brownies Insurances Services

    • Brown Insurance

    • None of these would be automatically approved

    Correct Answer
    A. None of these would be automatically approved
    Explanation
    The question states that Tony Brown has a CLU certification. However, none of the given options include the term "CLU" in the agency's name. Therefore, none of these options would be automatically approved for his agency's use.

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  • 9. 

    A person has paid $50,000 into a fixed aunnuity over 20 years. When he decised to begin income payments the insurer calculates that he will receive $4,000 per year for life, which means that he will receive a total of $100,000. Int he first 10 years of payment how much is taxable each year?

    • $0

    • $800

    • $2,000

    • $4,000

    Correct Answer
    A. $2,000
    Explanation
    The taxable amount each year in the first 10 years of payment is $2,000. This can be calculated by dividing the total amount received over 20 years ($100,000) by the number of years the payments will be received (20), resulting in an annual payment of $5,000. Since the person will receive $4,000 per year, the difference of $1,000 is not taxable. Therefore, the taxable amount each year is $5,000 - $1,000 = $2,000.

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  • 10. 

    According to the Code, all insurers must maintain a department to investigate:

    • Possible abuses of rating laws

    • Possible arson

    • Possible fraudulent claims from insureds

    • Possible fraud by insurers

    Correct Answer
    A. Possible fraudulent claims from insureds
    Explanation
    According to the Code, all insurers must maintain a department to investigate possible fraudulent claims from insureds. This means that insurance companies are required to have a specific department dedicated to examining and verifying claims made by policyholders to ensure that they are not fraudulent. This is important to prevent any misuse or abuse of the insurance system and to protect the interests of both the insurer and other policyholders.

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  • 11. 

    What does the Insurance COmmissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage?

    • Request his certificate of authority

    • Authorize agent with a certificate of convenience

    • Suspend or revoke the license of the agent

    • Fine the insurance company

    Correct Answer
    A. Suspend or revoke the license of the agent
    Explanation
    The Insurance Commissioner has the right to suspend or revoke the license of the agent if they lack authority from an insurer named on a binder for coverage. This means that the agent is not authorized to sell insurance on behalf of the insurer, which is a violation of licensing regulations. By suspending or revoking the agent's license, the Insurance Commissioner is taking appropriate action to ensure that only authorized individuals are selling insurance and protecting consumers from potential fraud or misconduct.

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  • 12. 

    An insured bought an aunnuity ten years agon. He will retire in five years. To determine the value fo the aunnuity, the number of accumulation units is multiplied by the value of the seperate account. What type o annuity was purchased?

    • Variable annuity

    • Fixed premium annuity

    • Tax sheltered annuity

    • Single payent annuity

    Correct Answer
    A. Variable annuity
    Explanation
    The insured purchased a variable annuity. In a variable annuity, the value of the annuity is determined by the number of accumulation units multiplied by the value of the separate account. This means that the value of the annuity can fluctuate based on the performance of the investments in the separate account.

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  • 13. 

    The class beneficiary designation which means that the beneficiaries will receive equal shares of the death benefit devided among the surving members of the class is

    • Class beneficiary designation, equal shares

    • Per capita

    • Per stirpes

    • Per diem

    Correct Answer
    A. Per capita
    Explanation
    Per capita is the correct answer because it means that the beneficiaries will receive equal shares of the death benefit divided among the surviving members of the class. This means that each individual in the class will receive an equal portion of the benefit, regardless of their relationship to the deceased.

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  • 14. 

    The mathematical rule that says that as the numver of individual but similar exposure units increases the easier it is o predict losses is which of the following?

    • Insurable interest standard

    • Contract law

    • The law of large numbers

    • Materiality

    Correct Answer
    A. The law of large numbers
    Explanation
    The law of large numbers is a mathematical principle that states that as the number of individual but similar exposure units (such as insurance policies) increases, the easier it becomes to predict losses. This is because with a larger sample size, the results become more stable and predictable. Therefore, the law of large numbers is the correct answer to this question.

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  • 15. 

    Which of the following is a description of a Life and Disability Analyst?

    • A broker paid fees fror service

    • A person licensed to assist an agent in soliciting life insurance

    • A person licensed to advise clients about life and disability isnrance for a fee

    • Any agent

    Correct Answer
    A. A person licensed to advise clients about life and disability isnrance for a fee
    Explanation
    The correct answer is "A person licensed to advise clients about life and disability insurance for a fee." A Life and Disability Analyst is someone who has the necessary license to provide advice to clients regarding life and disability insurance. They are specifically trained in this area and are authorized to charge fees for their services.

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  • 16. 

    What happens to a license after the death of a natural person  who hold a valid insurance license?

    • It always terminates

    • It may be transfered to another person

    • The license becomes inactive until the expiration date

    • The license must be returned tot he Commissioner to cancel the license

    Correct Answer
    A. It always terminates
    Explanation
    After the death of a natural person who holds a valid insurance license, the license always terminates. This means that the license is no longer valid and cannot be transferred to another person or remain inactive until the expiration date. The license must be cancelled by returning it to the Commissioner.

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  • 17. 

    Which of the following are common insruance policy provisions?

    • Reinstatement, suicide, pre-existing conditions

    • Entire contract, grace period, reinstatement

    • Entire contract, incontestability, pre-existing conditions

    • Grace period, suicide, right to return

    Correct Answer
    A. Entire contract, grace period, reinstatement
    Explanation
    The common insurance policy provisions are the entire contract, grace period, and reinstatement. The entire contract provision states that the written policy and any attached endorsements constitute the entire agreement between the insured and the insurer. The grace period provision allows the insured a specified period of time after the premium due date to pay the premium without the policy lapsing. The reinstatement provision allows the insured to reinstate a lapsed policy by paying any outstanding premiums and providing evidence of insurability.

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  • 18. 

    With the cost of living rider, the life insurance polcy holder:

    • Must increase or decrease the face value of the policy as the index increases or decreases

    • Gets the automatic increase in the dace value if there is an increase in the cost of living index. There is an additional premium for the additional coverage

    • Gets the automatic increase in the face value if the index goes up. There is no charge except for the flat charge for the rider

    • All of the above are false

    Correct Answer
    A. Gets the automatic increase in the dace value if there is an increase in the cost of living index. There is an additional premium for the additional coverage
    Explanation
    The correct answer states that the life insurance policy holder gets an automatic increase in the face value of the policy if there is an increase in the cost of living index. This means that as the cost of living increases, the policy holder's coverage also increases. Additionally, there is an additional premium that needs to be paid for this additional coverage. This explanation aligns with the information provided in the question.

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  • 19. 

    All of the following statements refardung survorship life insurance are ture except:

    • It is particularly well situated to provide cash to cover estate taxes

    • The policy face amounts are usually for more than $1,000,000

    • Age of the insured

    • The amount of disability income insurance in force

    Correct Answer
    A. The amount of disability income insurance in force
    Explanation
    Survivorship life insurance is a type of policy that covers two individuals and pays out the death benefit only after both insured parties have passed away. It is commonly used to provide funds to cover estate taxes upon the death of the second insured person. The policy face amounts for survivorship life insurance are typically high, often exceeding $1,000,000. The age of the insured individuals is an important factor in determining the premiums and coverage of the policy. However, the amount of disability income insurance in force is not related to survivorship life insurance, as disability insurance covers income loss due to disability rather than death.

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  • 20. 

    All of the following statements regarding survivorship life insruance are true, except:

    • It is particularly well situated to provide cash to cover estate taxes

    • The policy face amounts are usually for more than $1,000,000

    • If offers premiums that are quite low compared to what you would be charged for separate policies

    • The policy face amount is made out based only on the death of the first to die

    Correct Answer
    A. The policy face amount is made out based only on the death of the first to die
    Explanation
    Survivorship life insurance is a type of policy that covers two individuals and pays out the death benefit only upon the death of the second insured person. This means that the policy face amount is not made out based only on the death of the first to die. Instead, it provides coverage for both individuals and pays out when the second insured person passes away. The other statements mentioned in the question are true, such as survivorship life insurance being well-suited for covering estate taxes, having high policy face amounts, and offering lower premiums compared to separate policies.

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  • 21. 

    Which of the follwing is not an option for the use fo the policy dividends?

    • Fund the distribution of monthly income payment

    • Purchase paid-up additions

    • Reduce the current premium

    • Purchase one year term insurance

    Correct Answer
    A. Fund the distribution of monthly income payment
    Explanation
    The use of policy dividends can be to purchase paid-up additions, reduce the current premium, or purchase one year term insurance. However, funding the distribution of monthly income payments is not an option for the use of policy dividends.

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  • 22. 

    What information can a party to a contract of insurance be allowed NOT to communicate accourding to California Law?

    • Information which the other party already knows

    • Information not specifically asked by an agent and company, even if it's considered relevant

    • Information wich is material to the contract

    • Information which cannot be proven but it material

    Correct Answer
    A. Information which the other party already knows
    Explanation
    According to California Law, a party to a contract of insurance can be allowed not to communicate information which the other party already knows. This means that if the other party is already aware of certain information, there is no obligation for the party to communicate it again. The rationale behind this is that there is no need to duplicate information that is already known by both parties.

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  • 23. 

    According to the CA Insurance Code, a judgment ageinst an applicant who entered a plea of "nolo contendere" is considered to be 

    • Innocent by code, but guilty by law

    • Innocent

    • Referred to the Insurance Commissioner fo option

    • Convicted

    Correct Answer
    A. Convicted
    Explanation
    According to the CA Insurance Code, a judgment against an applicant who entered a plea of "nolo contendere" is considered to be convicted. This means that even though the applicant did not technically admit guilt, the judgment still indicates a finding of guilt by the court. Therefore, the correct answer is convicted.

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  • 24. 

    The policy pervision which prevents an insurer from voiding a policy for misstatements after two years is:

    • Incontestability

    • Indemnity

    • Misrepresentation

    • There is no such provision

    Correct Answer
    A. Incontestability
    Explanation
    Incontestability is the policy provision that prevents an insurer from voiding a policy for misstatements after two years. This means that once the policy has been in force for two years, the insurer cannot cancel or void the policy based on any misrepresentations made by the insured. This provision is designed to protect the insured and provide them with certainty and stability in their insurance coverage. It allows the insured to have peace of mind knowing that their policy cannot be retroactively canceled or voided based on any misstatements made in the past.

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  • 25. 

    The clause that protects the proceeds fo ta life insrauce policy from attachment by creditors after the death of the insured is:

    • Common disaster clause

    • Spendthrift clause

    • Incontestability clause

    • Beneficiary clause

    Correct Answer
    A. Spendthrift clause
    Explanation
    The spendthrift clause is the correct answer because it is a clause that protects the proceeds of a life insurance policy from being attached by creditors after the death of the insured. This clause ensures that the beneficiary of the policy receives the full amount without it being used to pay off any outstanding debts or claims. It provides a safeguard for the beneficiary's financial security and prevents creditors from accessing the funds.

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  • 26. 

    Which of the following gives individuals the right to purchase additional life insurance regardless of their insurability?

    • Incontestability

    • Accelerated death benefit

    • Guaranteed insurability

    • Waiver of premium

    Correct Answer
    A. Guaranteed insurability
    Explanation
    Guaranteed insurability gives individuals the right to purchase additional life insurance regardless of their insurability. This means that even if their health or other factors change, they can still buy more coverage without having to go through medical underwriting or proving their insurability again. This option provides flexibility and ensures that individuals can increase their coverage as their needs change over time.

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  • 27. 

    Which is NOT par of transactiong insurance?

    • Solicitation

    • Establishing a list of clients

    • Negotiation

    • Waiver of premium

    Correct Answer
    A. Establishing a list of clients
    Explanation
    Establishing a list of clients is not part of transactional insurance. Transactional insurance refers to the process of buying and selling insurance policies, and it involves activities such as solicitation (seeking potential clients), negotiation (discussing terms and conditions with clients), and waiver of premium (waiving the requirement to pay premiums under certain circumstances). However, establishing a list of clients is more related to marketing and lead generation, rather than the actual transactional process of insurance.

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  • 28. 

    An insurer organized under the laws of the State of California is a:

    • Domestic insurer

    • Foreign Insurer

    • Non-alien insurer

    • Non-admitted insurer

    Correct Answer
    A. Domestic insurer
    Explanation
    A domestic insurer is an insurance company that is organized and licensed under the laws of a specific state. In this case, since the insurer is organized under the laws of the State of California, it is considered a domestic insurer.

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  • 29. 

    An insured and beneficiary die in a car accident and it is impossibe to determin who died first,. Who will reveive the life insurance proceeds?

    • The insured's estate

    • The insurance company retains the proceeds?

    • The beneficiary's estate

    • Both the insured's and beneficiary's estate will share

    Correct Answer
    A. The insured's estate
    Explanation
    When the insured and beneficiary die simultaneously in a car accident and the order of their deaths cannot be determined, the general rule is that the insured's estate will receive the life insurance proceeds. This is because the insured is the policyholder and the beneficiary's right to the proceeds is contingent upon the insured's death. Since it is impossible to determine who died first, the insured's estate is considered the rightful recipient of the proceeds.

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  • 30. 

    A beneficiary wants to receive $2,000 per month until the principal and interest are exhausted. Which settlement option shiuld be chosen?

    • Fixed amount option

    • Cash option

    • Fixed period option

    • Interest option

    Correct Answer
    A. Fixed amount option
    Explanation
    The beneficiary should choose the fixed amount option. This option allows them to receive a fixed amount of $2,000 per month until both the principal and interest are exhausted. This ensures a consistent and predictable income stream for the beneficiary over a period of time.

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  • 31. 

    Which of the following applies to the social insurance program known as Social security

    • Contributions are compulsory for most workers

    • Benefits are based upon a contract with the insured

    • Benefits are paid to each individual matching their contributions

    • All insured workers begin to receive benefits at age 65

    Correct Answer
    A. Contributions are compulsory for most workers
    Explanation
    The correct answer is "Contributions are compulsory for most workers." This means that most workers are required to contribute a portion of their income to the social insurance program known as Social Security. This contribution is typically deducted from their wages or salary.

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  • 32. 

    Any person who diverts or misappropriates fiduciary funds is guilty of 

    • Misrepresentation

    • Forgery

    • Fraud

    • Theft

    Correct Answer
    A. Theft
    Explanation
    The correct answer is "Theft" because when a person diverts or misappropriates fiduciary funds, they are essentially taking someone else's money without permission or legal right. This act constitutes theft as it involves unlawfully obtaining and using someone else's funds for personal gain. Misrepresentation refers to providing false information, forgery involves creating fake documents or signatures, and fraud encompasses deceptive acts to gain an unfair advantage. While these actions may sometimes be involved in cases of diverting fiduciary funds, the act itself is best described as theft.

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  • 33. 

    A probationary period in a group policy is intended for people:

    • Who decline to join the group policy during the eligibility period

    • With other coverage after a qualifying event

    • With a pre-existing condition when they joined the group

    • Who joined the group after effective date

    Correct Answer
    A. Who joined the group after effective date
    Explanation
    The probationary period in a group policy is intended for individuals who joined the group after the effective date. This means that they became a part of the group policy after it had already taken effect. The purpose of the probationary period is to assess the eligibility and suitability of these individuals for the group policy. During this period, their coverage may be limited or subject to certain conditions until their eligibility is confirmed.

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  • 34. 

    An insurer owned by policyholders is

    • Fraternal insurer

    • Capital stock insurer

    • Mutual insurer

    • Reciprocal exchange

    Correct Answer
    A. Mutual insurer
    Explanation
    A mutual insurer is an insurance company that is owned by its policyholders. Policyholders are considered members of the company and have the right to vote on important decisions, such as the selection of board members. In a mutual insurer, any profits that are generated are typically distributed back to the policyholders in the form of dividends or reduced premiums. This ownership structure ensures that the company operates in the best interest of its policyholders rather than shareholders.

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  • 35. 

    All of the following are valid reasons for the Insurance COmmissioner to deny the appocant for an insruance license except:

    • Applicant does not have a good business reputation

    • Applicant is not properly qualified to perform duties

    • Applicant does not have a California business address

    • Applicant lacks integrity

    Correct Answer
    A. Applicant does not have a California business address
    Explanation
    The Insurance Commissioner may deny an applicant for an insurance license if they do not have a good business reputation, if they are not properly qualified to perform duties, or if they lack integrity. However, the lack of a California business address is not a valid reason for denial.

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  • 36. 

    An agent who replaces an existing life insruance contract, must do all of the following, except:

    • Submit a copy of the replacement notice to the applicant

    • Submit a copy of the replacement notice to the existing insurer

    • Submit a copy of the replacement notice to the replacing insurer

    • Obtain a signed statement from the applicant as to whether insurance is to be replaced

    Correct Answer
    A. Submit a copy of the replacement notice to the existing insurer
    Explanation
    An agent who replaces an existing life insurance contract must submit a copy of the replacement notice to the applicant, submit a copy of the replacement notice to the replacing insurer, and obtain a signed statement from the applicant as to whether insurance is to be replaced. However, they do not need to submit a copy of the replacement notice to the existing insurer.

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  • 37. 

    Why should a contigent beneficiary be named in a life insurance policy?

    • To determine who receives the policy benefits if the primary beneficiary is deceased

    • To become the policy owner f the primary beneficiary is deceased

    • To allow creditors to received policy proceeds

    • To share the proceeds with the primary beneficiary

    Correct Answer
    A. To determine who receives the policy benefits if the primary beneficiary is deceased
    Explanation
    A contingent beneficiary should be named in a life insurance policy to determine who will receive the policy benefits if the primary beneficiary is deceased. This ensures that the policy benefits are distributed according to the insured's wishes and avoids any confusion or disputes regarding the distribution of the proceeds. By naming a contingent beneficiary, the insured can have peace of mind knowing that their loved ones will be taken care of even if the primary beneficiary is unable to receive the benefits.

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  • 38. 

    Which statement best describe a life insurnace policy dividend?

    • It is a stockholders right

    • It is found in a non-participating whole life policy and in a comparable participating policy

    • It is a distribution of excess funds accumulated by the insurer on participating policies

    • It is the interest paid to the policy holder from the cash value of a permanent insurance policy

    Correct Answer
    A. It is a distribution of excess funds accumulated by the insurer on participating policies
    Explanation
    A life insurance policy dividend is a distribution of excess funds accumulated by the insurer on participating policies. This means that when the insurer collects more premiums than necessary to cover the costs and claims, they distribute the excess funds back to the policyholders. This is typically seen in participating policies, where policyholders have the opportunity to share in the profits of the insurance company. It is not a stockholder's right, found in non-participating policies, or the interest paid from the cash value of a permanent insurance policy.

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  • 39. 

    In order for an entity to hold a license, a co-partnership whose membership has changed must do all of the following, except:

    • Obtain the signature of the general partner on the application for registration

    • At least one person who will exercise the agency powers of the partnership must remain with the co-partnership

    • Return the old license with signature of the original partners to the Commissioner with an explanation

    • Submit a new application to the Commissioner within 30 days of change of partners with the names of the new members of the partnership

    Correct Answer
    A. Return the old license with signature of the original partners to the Commissioner with an explanation
    Explanation
    The requirement to return the old license with the signature of the original partners to the Commissioner with an explanation is not necessary for an entity to hold a license when a co-partnership's membership has changed.

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  • 40. 

    The Federal Act that is designed to protect group plan participants, establish pension equality, and mandates strict reporting and disclosure requirements is:

    • COBRA

    • DEFRA

    • TEFRA

    • ERISA

    Correct Answer
    A. ERISA
    Explanation
    ERISA stands for the Employee Retirement Income Security Act. This federal act is designed to protect group plan participants by establishing pension equality and imposing strict reporting and disclosure requirements. It ensures that employees receive the benefits they are entitled to and provides guidelines for the administration and management of employee benefit plans. ERISA also sets standards for fiduciaries who manage these plans, aiming to safeguard the interests of plan participants and beneficiaries.

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  • 41. 

    The person whose life is the object of a life insurance policy is

    • Applicant

    • Policy owner

    • Insured

    • Beneficiary

    Correct Answer
    A. Insured
    Explanation
    The person whose life is the object of a life insurance policy is referred to as the insured. This individual is the one who is covered by the policy and whose death or survival will determine the payment of the insurance benefits. The insured is typically the person whose life is being insured for financial protection in the event of their death.

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  • 42. 

    How is Insurance Commissioner selected

    • An annual meeting of insurance professionals in the state

    • Appointed by the governor

    • A group of qualified applicants voted on by the legislature

    • An election by the people

    Correct Answer
    A. An election by the people
    Explanation
    The Insurance Commissioner is selected through an election by the people. This means that the citizens of the state have the opportunity to vote for their preferred candidate for the position of Insurance Commissioner. This democratic process allows for the selection of the commissioner to be determined by the will of the people, ensuring that the individual chosen for the position has the support and trust of the public.

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  • 43. 

    A policy is returned to the insurer within 10 days of the date the policy is delivered. How much of the premium is returned to the applicant?

    • None

    • 50%

    • 80%

    • 100%

    Correct Answer
    A. 100%
    Explanation
    If a policy is returned to the insurer within 10 days of delivery, the entire premium is returned to the applicant. This means that the applicant will receive a full refund of the amount they paid for the policy.

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  • 44. 

    The SEC involved in the regulation of

    • Universal life policies

    • Interest-sensitive the policies

    • Variable the policies

    • All annuities

    Correct Answer
    A. Variable the policies
    Explanation
    The SEC (Securities and Exchange Commission) is involved in the regulation of variable policies. Variable policies are insurance contracts that allow policyholders to invest their premiums in various investment options, such as stocks, bonds, and mutual funds. These policies offer the potential for higher returns but also come with higher risks. Given the SEC's role in overseeing the securities industry and protecting investors, it makes sense that they would be involved in regulating variable policies to ensure transparency, fairness, and compliance with securities laws.

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  • 45. 

    The guaranteed insurability rider provides that the policy holder can purchase more insurance:

    • Any time during the policy owner's life, on his own life, without proof of insurability

    • On the lives of his dependents at certain specified ages

    • On his own life at specified ages provide the policy owner is insurable

    • On his own life at certain specified ages without proof of insurability

    Correct Answer
    A. On his own life at certain specified ages without proof of insurability
    Explanation
    The guaranteed insurability rider allows the policyholder to purchase additional insurance on their own life at certain specified ages without having to provide proof of insurability. This means that they can increase their coverage at specific times without needing to go through the process of proving that they are still insurable.

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  • 46. 

    The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, except:

    • To establish the penalties for failure to comply with replacement requirements

    • To reduce the opportunity for misrepresentation and incomplete disclosures

    • To protect the interests of life insurers and their agents

    • To assure the purchaser receives information to amke an informed decision

    Correct Answer
    A. To protect the interests of life insurers and their agents
    Explanation
    The purpose of laws regarding the replacement of life and annuity contracts is to establish penalties for failure to comply with replacement requirements, reduce the opportunity for misrepresentation and incomplete disclosures, and assure that the purchaser receives information to make an informed decision. However, it does not include protecting the interests of life insurers and their agents. These laws are primarily designed to protect consumers and ensure fair practices in the insurance industry.

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  • 47. 

    Who has the right to change life insurance policy beneficiaries?

    • The insurer

    • The beneficiary

    • The policyholder

    • The insured

    Correct Answer
    A. The policyholder
    Explanation
    The policyholder has the right to change life insurance policy beneficiaries. As the person who owns the policy, they have the authority to make changes to it, including selecting or changing the beneficiaries. The policyholder can decide who will receive the death benefit payout upon their passing, and they have the flexibility to update this information as needed throughout the policy term.

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  • 48. 

    A person who acts in a capacity that requires an active license wthout having a valid license, is guilty of a:

    • Fraud

    • Misdemeanor

    • Felony

    • Misrepresentation

    Correct Answer
    A. Misdemeanor
    Explanation
    If a person acts in a capacity that requires an active license without having a valid license, they are guilty of a misdemeanor. A misdemeanor is a less serious criminal offense than a felony, typically punishable by a fine or imprisonment for a short period of time. In this case, the person is committing a crime by misrepresenting their qualifications and engaging in a regulated activity without the necessary license.

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  • 49. 

    Any attempt by an existing insurer or their agent to dissuade a policy owner from replacing an existing life insurance or annuity contract is known as

    • Replacement

    • Reinstatement

    • Assignment

    • Conservation

    Correct Answer
    A. Conservation
    Explanation
    Conservation refers to the act of preserving or maintaining an existing life insurance or annuity contract. In this context, any attempt by an existing insurer or their agent to dissuade a policy owner from replacing their current contract can be considered as conservation. It involves efforts to retain the policyholder and prevent them from switching to a different insurance or annuity contract.

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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
  • Sep 06, 2012
    Quiz Created by
    Nailsexam123

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