Power Team English 1

Who would be eligible to contribute to an IRA?. A 75-year old professional earning income. A 35-year old receiving monthly unemployment checks. An 18-year old non-working student. A 50-year old school teacher.

The Waiver of Cost of Insurance rider is found in what type of insurance?. Juvenile Life. Joint and Survivor. Universal Life. Whole Life.

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?. Consumer Privacy Act. The Fair Credit Reporting Act. Unfair Trade Practices Law. The Guaranty Association.

Which of the following riders would NOT cause the Death Benefit to increase?. Guaranteed Insurability Rider. Cost of Living Rider. Accidental Death Rider. Payor Benefit Rider.

An insured has the right to return the new insurance policy for a full refund during the. Grace period. Free-look period. Settlement period. Probationary period.

Which of the following is NOT true regarding a Certificate of Authority?. It is equivalent to an insurance license. It is issued by the state department of insurance. It is issued to group insurance participants. It may be necessary for transacting business in a specific state.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?. Premiums are taxable to the employee. Premiums are not tax deductible as a business expense. Premiums are tax deductible by the key employee. Premiums are tax deductible as a business expense.

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders?. 2%. 2.5%. 3%. Whatever interest rate the company deems appropriate.

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a. Joint and survivor annuity. Deferred annuity. Pure annuity. Joint life annuity.

Each of the following factors are used in determining insurance rates EXCEPT. Mortality. Expenses. Dividends. Interest.

When may a representation be withdrawn?. At any time. After the policy is issued. Within the first 2 years of the policy. Prior to the issuance of the policy.

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. The insurer will pay the full death benefit from the group policy to the beneficiary. The insurer will pay a reduced death benefit to the beneficiary. The insurer will pay the death benefit minus one month's premium.

All of the following statements are true regarding policy dividends EXCEPT. They are refunds of unused premiums. They are generated by mutual insurers. They are guaranteed. They are paid to the policyholders.

If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on a life insurance application?. Mother’s maiden name. Name, age, height, and weight. Birthplace. Hair and eye color.

Which of the following types of insurance covers the whole family in a single contract?. Family Income Policy. Survivorship Policy. Whole Life Policy. Family Policy.

An agent has how many days in which to receive an appointment after the issuance of an insurance contract?. 30 days. 10 days. 14 days. 21 days.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will. Automatically pay the policy proceeds. Pay the policy proceeds only if it would have issued the policy. Pay the policy proceeds up to an established limit. Not pay the policy proceeds under any circumstances.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?. Universal Life – Option B. Equity Indexed Universal Life. Variable Universal Life. Universal Life – Option A.

The California Insurance Code is. Rules established by the Department of Insurance. A code of ethics. Regulations established by the Insurance Commissioner. Statutes established by the State Legislature.

In the event of a loss, business overhead insurance will pay for. Loss of profits. Salary of the business owner. Rent. Medical bills of the business owner.

Events in which a person has both the chance of winning or losing are classified as. Retained risk. Speculative risk. Insurable. Pure risk.

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to. The insured's spouse. The policyowner. The insurance company. The contingent beneficiary.

The term “illustration” in a life insurance policy refers to. A depiction of policy benefits and guarantees. Pictures accompanying a policy. Charts and graphs. A presentation of nonguaranteed elements of a policy.

Which nonforfeiture option has the highest amount of insurance protection?. Decreasing Term. Reduced Paid-up. Extended Term. Conversion.

In addition to penalties, fines, and possible imprisonment for violating the provision relating to misrepresentation, the Commissioner may suspend the license of such person for a period up to. 6 months. 1 year. 3 year. 5 year.

Hazard is best defined as. The uncertainty of loss. Neglect to communicate a material fact. A deliberate attempt to deceive. Something that increases the risk of loss.

An agent solicited a policy for a client who originally qualified for standard premiums. During the underwriting process, the applicant was rated as a substandard risk and assigned a higher premium. Upon policy delivery, the agent failed to mention that the premiums would be higher, and the client filed a lawsuit against the insurer. This is an example of. Concealment and will not be covered by an Errors & Omissions policy. An unfair claim settlement. An omission and will be covered by an Errors & Omissions policy. A misrepresentation and is illegal.

Which of the following is true regarding the spendthrift clause in life insurance policies?. It is the same as irrevocable settlement clause. It can protect the policy proceeds from creditors of the beneficiary. It allows the beneficiary to select a different settlement option. It is only used when the beneficiary is a minor.

Which component increases in the increasing term insurance?. Cash value. Interest on the proceeds. Premium. Death benefit.

Which of the following statements about the reinstatement provision is true?. It permits reinstatement within 10 years after a policy has lapsed. It provides for reinstatement of a policy regardless of the insured's health. It guarantees the reinstatement of a policy that has been surrendered for cash. It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated.

A domestic insurer issuing variable contracts must establish one or more. Liability accounts. Annuity accounts. General accounts. Separate accounts.

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n). Keogh Plan. Roth IRA. SEP. 403(b) Plan (TSA).

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT. The employer pays a bonus to a selected employee to fund the policy. It is considered a nonqualified employee benefit. The policy is owned by the company. Any type of insurance policy may be used.

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?. Pay-out period. Liquidation period. Depreciation period. Annuitization period.

The legal definition of "person" would NOT include which of the following?. A business entity. A corporation. A family. An individual human being.

Which of the following settlement options in life insurance is known as straight life?. Life with period certain. Fixed amount. Life income. Single life.

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?. The applicant. The producer. The beneficiary of the applicant. The insurance company.

All of the following are insurable events as defined in the Insurance Code EXCEPT. An insured goes to the hospital for a broken arm. An insured is sued for libel and slander. An insured loses a large sum in a poker game. A guest trips and breaks his leg in the insured's house.

Which is generally true regarding insureds who have been classified as preferred risks?. They keep a higher percentage of any interest earned on their policies. Their premiums are lower. They can borrow higher amounts off of their policies. They can decide when to pay their monthly premiums.

Which of the following will NOT be an appropriate use of a deferred annuity?. Accumulating retirement funds. Accumulating funds in an IRA. Funding a child’s college education. Creating an estate.

Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that the annuity owner will have to pay?. There are no penalties imposed for surrendering annuities prematurely. Guaranteed minimum interest rate stipulated in the contract. Current interest rate at the time of surrender. Flat fee determined by an index of interest gains, combined with the amount of time the annuity would take to mature.

What is the purpose of a suicide provision within a life insurance policy?. To protect the policyowner. To protect the insurer from persons who purchase life insurance with the intention of committing suicide. To limit the insurer's liability after the 2 year waiting period. To deter the policyowner from committing suicide.

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least. 20 days. 30days. 45 days. 60 days.

If an IRA annuitant dies after the annuity has been paid up, what effect will this have on the annuitant's estate?. The IRA must be converted to an annuity policy for the listed beneficiary. The entire value of the contributions and benefits will be included. Only partial value of the contributions will be included. IRA funds will be redirected to the federal government.

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called. Conditions. Utmost good faith. Acceptance. Consideration.

Insurance policy is. A statement of insurable interest. A verbal or written agreement between two parties to transfer risk. Any method used to transfer or avoid catastrophic risk. A written instrument in which a contract of insurance is set forth.

When a discontinued policy contained a death benefit, what term is used in the CIC to describe the length of the applicable extension of benefits?. Client’s discretion. Insurer’s discretion. Until death or cancellation. Reasonable.

Concerning Juvenile Life insurance, which of the following statements is INCORRECT?. It can be a limited premium payment policy. Juvenile Life is classified as any life insurance written on the life of a minor. Usually a parent or guardian is the applicant for insurance on the life of a minor. Juvenile Life is classified as any life insurance purchased by a minor.

Which of the following is an example of a limited-pay life policy?. Level Term Life. Straight Life. Life Paid-up at Age 65. Renewable Term to Age 70.

Profitable distribution of exposures serves the purpose of. Preventing the insurer from being estopped. Helping the insurer determine payable benefits. Protecting the insurer against adverse selection. Helping the insurer select only the ideally insurable risks.

Representations in insurance contracts qualify as. Express warranties. Misrepresentations. Facts. Implied warranties.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?. Legal. Physical. Moral. Morale.

The protection of the insurer from adverse selection is provided in part by. A drop in applicants. A reduction in coverage. A profitable distribution of exposures. Reducing costs.

What is the official name for the Social Security program?. Defined Benefit Retirement Insurance. Qualified Pension Plan. Old Age Survivors Disability Insurance. Social Insurance Program.

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT. Employee and employer contributions are not counted as income to the employee for income tax purposes. At distribution, all amounts received by the employee are tax free. Employer contributions are tax deductible as ordinary business expense. Funds accumulate on a tax-deferred basis.

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 a 12-year-old student.

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called. Premature distribution. Rollover. 1035 exchange. Qualified distribution.

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?. Paid-up addition. Accumulation at interest. Cash option. Reduction of premium.

The following are features of the Indexed Universal Life EXCEPT. Policy's cash value is dependent on the performance of the equity index. Sale of this product requires a securities license. Flexible premium. Adjustable death benefit.

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?. $0. $100,000. $200,000. $100,000 plus the total of paid premiums.

Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?. Variable annuity. Annuity certain. Fixed annuity. Refund life.

What is the waiting period on a Waiver of Premium rider in life insurance policies?. 30 days. 3 months. 5 months. 6 months.

If an IRA annuitant dies after the annuity has been paid up, what effect will this have on the annuitant's estate?. IRA funds will be redirected to the federal government. The IRA must be converted to an annuity policy for the listed beneficiary. The entire value of the contributions and benefits will be included. Only partial value of the contributions will be included.

The Waiver of Cost of Insurance rider is found in what type of insurance?. Joint and Survivor. Juvenile Life. Universal Life. Whole Life.

Which two terms are associated directly with the premium?. Renewable or convertible. Level or flexible. Fixed or variable. Term or permanent.

What type of account will most likely be established for a minor?. Credit life. Estate planning. Trust. Annuity.

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least. 20 days. 30 days. 45 days. 60 days.

What is the purpose of a fixed-period settlement option?. To provide a guaranteed income for life. To provide a guaranteed amount of money each month. To provide a guaranteed income for a certain amount of time. To settle the insurance company’s liability.

According to the California Insurance Code, any agent violating the regulations relating to misrepresentation will be charged with a. Misdemeanor, a fine not to exceed $500, and a possible 1-year imprisonment. Felony, a fine not to exceed $2,000, and a possible 2-5 year imprisonment. Felony, a fine not to exceed $5,000, and a possible 2 year imprisonment. Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment.

What license or licenses are required to sell variable annuities?. No license is required. Both a life insurance license and a securities license. Only a life insurance license. Only a securities license.

An insured falsely reports the theft of a valuable item in order to collect payment from the insurance policy. This is an example of. Twisting. Misrepresentation. Fraud. Concealment.

Which of the following would qualify as an implied warranty in an insurance contract?. Contract’s legal purpose. Statements in the policy. An oral representation by the applicant. The applicant’s signature.

All of the following are insurable events as defined in the Insurance Code EXCEPT. An insured is sued for libel and slander. An insured loses a large sum in a poker game. A guest trips and breaks his leg in the insured's house. An insured goes to the hospital for a broken arm.

Concealment as defined by the California Insurance Code is. Statement based on the best knowledge and belief of the person giving the information. Neglect on the part of insured to communicate the information waived by the other party. Neglect on the part of insured to communicate all information known to be material to the insurer. Failure to communicate information that should be known.

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?. Statewide predetermined annual interest rate. Insurer's guaranteed minimum rate of interest. Investment performance of the company. Investment performance of the insured.