Policy Riders and Provisions Pt 1
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
A. Waiver of Cost of Insurance
B. Cost of Living Rider
C. Accelerated Benefit Rider
D. Guaranteed Insurability Rider
D. Guaranteed Insurability Rider
A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
A. Waiver of premium
B. Assignment
C. Incontestability Period
D. Automatic premium loan
D. Automatic premium loan
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
A. Foreign
B. Domestic
C. Nonadmitted
D. Alien
A. Foreign
Provided that is it the first offense, what is the maximum penalty for failing to respond to a subpoena?
A. $5,000
B. $500
C. $100
D. $10,000
A. $5,000
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?
A. Standard risk is also known as high exposure risk
B. Standard risk requires extra rating
C. Standard risk is representative of the majority of people
D. Standard risk pays a higher premium than a substandard risk
C. Standard risk is representative of the majority of people
The insured has his wife named as the beneficiary to her life insurance. To ensure his wife had income for life he chose the life income settlement option. The amount of the payments will be determined by taking into account all of the following except
A. The insured age at death
B. The beneficiary's life expectancy
C. Face amount of the policy
D. Projected Interest Rates
A. The insured age at death
What happens when a policy is surrendered for its cash value?
A. The policy can be converted to term coverage
B. Coverage ends but the policy can be reinstated at any time
C. The policy can be reinstated by paying back all policy loans and premiums
D. Coverage ends and the policy can't be reinstated
D. Coverage ends and the policy can't be reinstated
Bill's license was revoked 2 years ago. How much longer will he have to wait in order to request his license to be reinstated?
A. 1 year
B. 3 years
C. He can apply now
D. 2 years
B. 3 years
If a producer's license is revoked they must wait 5 years to apply for a new one
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of
A. Loading
B. Twisting
C. Coercion
D. Defamation
C. Coercion
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will the coverage begin?
A. On the application date
B. When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
C. When the agent submits the application to the company and the company issues a conditional receipt
D. On the designated effective date
B. When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
The automatic premium loan provision is activated at the end of the
A. Grace period
B. Free-look period
C. Elimination period
D. Policy period
A. Grace period
An insured pays $1200 annually for her life insurance premium. The insured applies this years $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe
A. Cash option
B. Flexible premium
C. Reduction of premium
D. Accumulation at Interest
C. Reduction of premium
A producer was found guilty of a 3rd violation of the insurance code. What would be the monetary penalty he will have to pay?
A. $15,000
B. $25,000
C. $5,000
D. $10,000
D. $10,000
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
A. Coercion
B. Misleading advertising
C. Defamation
D. Rebating
A. Coercion
Which of the following is NOT an example of a valid insurable interest?
A. Business partners in each other's lives
B. Debtor in the life of a creditor
C. Child in parents lives
D. Employer in key employee's life
B. Debtor in the life of a creditor
A father owns a life insurance policy on his 15 year old daughter. The policy contains the optional Payor Benefit Rider. If the father becomes disabled, what will happen to the life insurance premiums
A. The premiums will become tax deductible until the insured's 18th birthday
B. The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums
C. The insured's premiums will be waived until she is 21
D. Since it is the policy owner, and not the insured, who has become disabled, the life insurance will not be affected
C. The insured's premiums will be waived until she is 21
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
A. The policy covers only the natural children of the insured
B. It is permanent insurance
C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age
D. Each child covered must show evidence of insurability
C. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age
What significance did U.S. vs South-Eastern Underwriters have on the insurance industry?
A. It reversed the decision of Paul vs. Virginia, determining the insurance is not interstate commerce and should not be regulated federally
B. It determined that insurance licenses should no longer be issued by the individual states and should instead be issued by the federal government
C. It reversed the decision of Paul vs. Virginia, determining that insurance is interstate commerce and should be regulated federally
D. It determined that insurance licenses should no longer be issued by the federal government and should instead be issued by individual states
C. It reversed the decision of Paul vs. Virginia, determining that insurance is interstate commerce and should be regulated federally
Which of the following would not be considered rebating?
A. Giving a client a $50 pen with the insurer's logo during the insurance application process
B. Sending a $150 gift certificate to the insured's employee after the insurance has been effected as a thank you for the referral
C. Collecting a lower premium than what's specified in a policy as a token of client appreciation
D. Sharing commission with the insured
A. Giving a client a $50 pen with the insurer's logo during the insurance application process
An individual applied for a life insurance policy and paid the initial premium. The issuer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
A. The date of the policy delivery
B. The date of the issue
C. The date of the application
D. The date of the medical exam
D. The date of the medical exam
An insured purchased a life insurance policy in 2010 and died in 2020. The insurance company discovers at that time that the insured had misstated information about her insurance history on the application. What will the insurer do?
A. Pay the death benefit
B. Pay a decreased death benefit
C. Refuse to pay the death benefit because of the misstatement on the application
D. Sue for the right to not pay the death benefit
A. Pay the death benefit
When a reduced paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
A. It is reduced to the amount of what the cash value would buy as a single premium
B. It remains the same as the original policy, regardless of any differences in value
C. It is increased when extra premiums are paid
D. It decreases over the term of the policy
A. It is reduced to the amount of what the cash value would buy as a single premium
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
A. Rebating
B. Twisting
C. Coercion
D. False advertising
A. Rebating
An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the commissioner of this action?
A. April 15th
B. April 5th
C. April 11th
D. April 30th
A. April 15th
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
A. 3 days
B. 10 days
C. 7 days
D. 5 days
D. 5 days