1. The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period.
A. Conservation
B. Automatic Premium Loan
C. Reinstatement
D. Mode of Premium
2. A universal life policy has a death benefit of $125,000 and a cash accumulation value of $15,000. Generally, what will happen to the policy if there is a $5,000 partial withdrawal?
A. The policy will immediately be voided by the insurer
B. The policy will become paid up
C. The death benefit or cash accumulation will be reduced by the partial withdrawal
D. The policy will be used as collateral for a loan from the insurer for which interest will be charged
3. In order to make sure that a creditor of the insured is not paid more than the outstanding loan at time of claim, the policyowner should:
A. Indicate the percentage of the face amount the creditor will receive
B. Specify a dollar amount the creditor should receive at time of claim
C. Purchase a decreasing benefit policy that matches the loan repayment schedule
D. Name the creditor as a primary beneficiary
4. When there is enough cash value within a life policy to pay the premium, the Automatic Premium Loan provision prevents the policy from:
A. Surrendering
B. Converting
C. Lapsing
D. Renewing
5. All of the following are situations in which the insurer is obligated to pay out a death benefit after the insured has died, except:
A. The insurer discovers the gender of the insured was misstated
B. The premiums have not been paid and have been overdue for 3 years
C. An insured commits suicide 7 years after the policy was issued
D .The insured was an experienced pilot who died in a plane crash but had a policy issued with an aviation rider for an additional premium
6. With respect to Fraternal Benefit Societies, which of the following statements is NOT correct?
A. The regulations that apply to producers do not apply to Society producers
B. A fraternal benefit society operates for the benefit of its members and their beneficiaries
C. A Society's license is continuous unless revoked or suspended
D. A fraternal benefit society is taxed only on real estate it owns and office equipment it purchases
7. Which of the following statements is true regarding interest on life insurance proceeds?
A. Interest on the proceeds is payable from the date of death to the date of payment
B. The insurer may retain the proceeds and pay the beneficiary or policyholder respectively interest on those proceeds
C. Interest on the proceeds must be paid at the rate of 6% per annum
D. Interest on the proceeds is payable from 30 days following the date of death to the date of payment
8. Which of the following statements is true regarding the Standard Nonforfeiture Law?
A. A life insurance policy that develops, or has the potential to develop a cash value that does not contain the nonforfeiture options, cannot be delivered or issued for delivery
B. The Standard Nonforfeiture Law applies to reinsurance
C. The Standard Nonforfeiture Law applies to group insurance
D. The insurer may not defer the payment of any cash surrender value after the demand with surrender of the policy
9. Which of the following is incorrect with regard to AIDS testing?
A. An insurer may refuse to renew a life insurance policy on the basis of a positive HIV test result
B. An insurer that requires an individual to be tested for HIV must give that individual prior written notice of such requirements
C. An insurer may disclose HIV test results for statistical purposes as long as the insured is not identified
D. No insurer may request an applicant to take an HIV related test without first receiving that applicant's written authorization
10. With regard to determining annuity suitability, a producer would NOT consider the senior customer's:
A. Tax status
B. Investment objectives
C. Financial status
D. Health status
11. Which of the following is not among the powers and duties of the Commissioner?
A. Review and approve rates and policy forms
B. Conducting investigations, examinations, and hearings associated with administering the insurance laws
C. Act to protect the best interests of authorized insurers
D. Establish rules and regulations needed to enforce the insurance law's
12. Which of the following is correct with respect to annuity suitability?
A. An insurer may issue an annuity regardless of whether the annuity is suitable based on the consumer's suitability information
B. The insurer or producer must make reasonable efforts to obtain a consumer's suitability information before the annuity is purchased, exchanged or replaced
C. Contracts used to fund pension or welfare benefit plans are not exempt from the annuity suitability requirements
D. A producer still has an obligation regarding the suitability of annuity for an applicant if the applicant decides to enter into the annuity transaction not based on the insurer's or producer's recommendation.