EXAMFX: LIFE INSURANCE PRACTICE
EXAM.
Anginsuredgpurchasedgagvariableglifeginsurancegpolicygwithgagfacegamountgofg$50,000.gOv
ergtheglifegofgthegpolicy,gstockgperformancegdeclinedgandgthegcashgvaluegfellgtog$10,000.gIf
gtheginsuredgdies,ghowgmuchgwillgbegpaidgout?g-gans--$50,000
Whichgofgthegfollowinggdocumentsgmustgbegprovidedgtogthegpolicyownergorgapplicantgduri
nggpolicygreplacement?g-gans--NoticegRegardinggReplacement.
Thegpresidentgofgagmanufacturinggcompanyghasgofferedgonegofgthegcompany'sgofficersgag
specialgindividualgannuitygplangthatgisgunavailablegtoglower-
echelongemployees.gThisgplangwouldgbegfundedgwithgbefore-
taxgcorporategdollars,gandgitgdoesgnotgmeetggovernmentgapprovalgstandards.gThisgannuity
gplangisg-gans--Agnonqualifiedgannuitygplan.
Duringgreplacementgofglifeginsurance,gagreplacingginsurergmustgdogwhichgofgthegfollowing?
g-gans--Obtaingaglistgofgallglifeginsurancegpoliciesgthatgwillgbegreplaced
Angindividualghasgjustgborrowedg$10,000gfromghisgbankgongag5-
yearginstallmentgloangrequiringgmonthlygpayments.gWhatgtypegofglifeginsurancegpolicygwo
uldgbegbestgsuitedgtogthisgsituation?g-gans--Decreasinggterm.
Anginsurancegpolicygthatgonlygrequiresgagpaymentgofgpremiumgatgitsginception,gprovidesgin
surancegprotectiongforgtheglifegofgtheginsured,gandgmaturesgatgtheginsured'sgageg100gisgcal
ledg-gans--Singlegpremiumgwholeglife.
WhichgofgthegfollowinggstatementsgisgTRUEgconcerninggthegAccidentalgDeathgRider?g-
gans--Itgwillgpaygdoublegorgtriplegthegfacegamount.
WhichgofgthegfollowinggstatementsgconcerninggagSimplifiedgEmployeegPensiongplang(SEP
)gisgINCORRECT?g-gans--SEPsgaregsuitablegforglargegcompanies.
Inginsurance,gangoffergisgusuallygmadegwheng-gans--
Angapplicantgsubmitsgangapplicationgtogtheginsurer.
Angindividualgisgpurchasinggagpermanentglifeginsurancegpolicygwithgagfacegvaluegofg$25,00
0.gWhilegthisgisgallgtheginsurancegthatghegcangaffordgatgthisgtime,ghegwantsgtogbegsuregthatg
additionalgcoveragegwillgbegavailablegingthegfuture.gWhichgofgthegfollowinggoptionsgshouldg
begincludedgingthegpolicy?g-gans--Guaranteedginsurabilitygoption
,WhogcangmakegagfullygdeductiblegcontributiongtogagtraditionalgIRA?g-gans--
Angindividualgnotgcoveredgbygangemployer-sponsoredgplangwhoghasgearnedgincome
Agproducergisghelpinggagmarriedgcouplegdeterminegthegfinancialgneedsgofgtheirgchildrenging
thegeventgonegorgbothgshouldgdiegprematurely.gThisgisgagpersonalgusegofglifeginsurancegkn
owngasg-gans--Survivorgprotection.
Whengisgthegearliestgagpolicygmayggogintogeffect?g-gans--
Whengthegapplicationgisgsignedgandgagcheckgisggivengtogthegagent
Whichgofgthegfollowinggisgagkeygdistinctiongbetweengvariablegwholeglifegandgvariablegunive
rsalglifegproducts?g-gans--Variablegwholeglifeghasgagguaranteedgdeathgbenefit.
Whenganginsuredgmakesgtruthfulgstatementsgongthegapplicationgforginsurancegandgpaysgth
egrequiredgpremium,gitgisgknowngasgwhichgofgthegfollowing?g-gans--Consideration
Agpolicygwillgpaygthegdeathgbenefitgifgtheginsuredgdiesgduringgtheg20-yeargpremium-
payinggperiod,gandgnothinggifgdeathgoccursgaftergtheg20-
yeargperiod.gWhatgtypegofgpolicygisgthis?g-gans--Levelgterm
AgReturngofgPremiumgtermglifegpolicygisgwrittengasgwhatgtypegofgtermgcoverage?g-gans--
Increasing
Allgofgthegfollowinggaregdutiesgandgresponsibilitiesgofgproducersgatgthegtimegofgapplicationg
EXCEPTg-gans--
Changeganygincorrectgstatementgongthegapplicationgbygpersonallyginitialinggnextgtogthegcor
rectedgstatement.
Thegpolicyownergpaysgforgherglifeginsurancegannually.gUntilgnow,gsheghasgcollectedgagnon
taxablegdividendgcheckgeachgyear.gSheghasgdecidedgthatgshegwouldgrathergusegthegdivide
ndsgtoghelpgpaygforghergnextgpremium.gWhatgoptiongwouldgallowghergtogdogthis?g-gans--
Reductiongofgpremium
Anginsuredgpaysgag$100gpremiumgeverygmonthgforghisginsurancegcoverage,gyetgtheginsur
ergpromisesgtogpayg$10,000gforgagcoveredgloss.gWhatgcharacteristicgofganginsurancegcontr
actgdoesgthisgdescribe?g-gans--Aleatory
Thegproposedginsuredgmakesgthegpremiumgpaymentgongagnewginsurancegpolicy.gIfgthegin
suredgshouldgdie,gtheginsurergwillgpaygthegdeathgbenefitgtogthegbeneficiarygifgthegpolicygisga
pproved.gThisgisgangexamplegofgwhatgkindgofgcontract?g-gans--Conditional
Whatgdoesg"level"grefergtoginglevelgtermginsurance?g-gans--Facegamount
Whatgisgthegpurposegofgagfree-lookgperiodginginsurancegpolicies?g-gans--
Itgallowsgtheginsuredgtogrejectgthegpolicygwithgagfullgrefund.
, Whichgprovisiongofgaglifeginsurancegpolicygstatesgtheginsurer'sgdutygtogpaygbenefitsgupongt
hegdeathgofgtheginsured,gandgtogwhomgthegbenefitsgwillgbegpaid?g-gans--Insuringgclause
Whichgofgthegfollowinggbestgdescribesgannuallygrenewablegtermginsurance?g-gans--
Itgisglevelgtermginsurance.
Allgofgthegfollowinggaregexamplesgofgthird-
partygownershipgofgaglifeginsurancegpolicygEXCEPTg-gans--
Anginsuredgborrowsgmoneygfromgthegbankgandgmakesgagcollateralgassignmentgofgagpartgo
fgthegdeathgbenefitgtogsecuregthegloan.
AllgofgthegfollowinggaregtruegregardinggthegguaranteedginsurabilitygridergEXCEPTg-gans--
Thisgridergisgavailablegtogallginsuredsgwithgnogadditionalgpremium.
Anginsuredgpurchasedgag15-
yearglevelgtermglifeginsurancegpolicygwithgagfacegamountgofg$100,000.gThegpolicygcontain
edgangaccidentalgdeathgrider,gofferinggagdoublegindemnitygbenefit.gTheginsuredgwasgsever
elyginjuredgingangautogaccident,gandgafterg10gweeksgofghospitalization,gdiedgfromgtheginjuri
es.gWhatgamountgwouldghisgbeneficiarygreceivegasgagsettlement?g-gans--$200,000
WhichgofgthegfollowinggstatementsgisgTRUEgaboutgagpolicygassignment?g-gans--
Itgtransfersgrightsgofgownershipgfromgthegownergtoganothergperson.
WhichgofgthegfollowinggnamedgbeneficiariesgwouldgNOTgbegablegtogreceivegthegdeathgben
efitgdirectlygfromgtheginsurergingthegeventgofgtheginsureds'gdeath?g-gans--
Agminorgsongofgtheginsured
Anginsurer'sgemployeegisginvestigatinggagclaimgandgdocumentsgeachgactiongthatgisgtakengi
ngtheginvestigation.gTheginsuredgbelievesgthatgthegemployee'sgmethodsgviolatedghisgconst
itutionalgrights.gWhichgofgthegfollowinggentitiesgshouldgbegconsulted?g-gans--Director
WhichgofgthegfollowinggisgNOTgconsideredgagmisrepresentationgasgitgpertainsgtogunfairgtra
degpractices?g-gans--Makinggcomparisonsgbetweengdifferentgpolicies
Anginsuredgpurchasedganginsurancegpolicyg5gyearsgago.gLastgyear,gshegreceivedgagdivide
ndgcheckgfromgtheginsurancegcompanygthatgwasgnotgtaxable.gThisgyear,gshegdidgnotgrecei
vegagcheckgfromgtheginsurer.gFromgwhatgtypegofginsurergdidgtheginsuredgpurchasegthegpoli
cy?g-gans--Mutual
HowgdoesgangindividualgbecomegthegInsurancegDirectorgingthisgstate?g-gans--
AppointedgbygthegCommissioner
Whengtransactinggbusinessgingthisgstateganginsurergformedgundergtheglawsgofganothergcou
ntrygisgknowngasga/ang-gans--Alienginsurer.
EXAM.
Anginsuredgpurchasedgagvariableglifeginsurancegpolicygwithgagfacegamountgofg$50,000.gOv
ergtheglifegofgthegpolicy,gstockgperformancegdeclinedgandgthegcashgvaluegfellgtog$10,000.gIf
gtheginsuredgdies,ghowgmuchgwillgbegpaidgout?g-gans--$50,000
Whichgofgthegfollowinggdocumentsgmustgbegprovidedgtogthegpolicyownergorgapplicantgduri
nggpolicygreplacement?g-gans--NoticegRegardinggReplacement.
Thegpresidentgofgagmanufacturinggcompanyghasgofferedgonegofgthegcompany'sgofficersgag
specialgindividualgannuitygplangthatgisgunavailablegtoglower-
echelongemployees.gThisgplangwouldgbegfundedgwithgbefore-
taxgcorporategdollars,gandgitgdoesgnotgmeetggovernmentgapprovalgstandards.gThisgannuity
gplangisg-gans--Agnonqualifiedgannuitygplan.
Duringgreplacementgofglifeginsurance,gagreplacingginsurergmustgdogwhichgofgthegfollowing?
g-gans--Obtaingaglistgofgallglifeginsurancegpoliciesgthatgwillgbegreplaced
Angindividualghasgjustgborrowedg$10,000gfromghisgbankgongag5-
yearginstallmentgloangrequiringgmonthlygpayments.gWhatgtypegofglifeginsurancegpolicygwo
uldgbegbestgsuitedgtogthisgsituation?g-gans--Decreasinggterm.
Anginsurancegpolicygthatgonlygrequiresgagpaymentgofgpremiumgatgitsginception,gprovidesgin
surancegprotectiongforgtheglifegofgtheginsured,gandgmaturesgatgtheginsured'sgageg100gisgcal
ledg-gans--Singlegpremiumgwholeglife.
WhichgofgthegfollowinggstatementsgisgTRUEgconcerninggthegAccidentalgDeathgRider?g-
gans--Itgwillgpaygdoublegorgtriplegthegfacegamount.
WhichgofgthegfollowinggstatementsgconcerninggagSimplifiedgEmployeegPensiongplang(SEP
)gisgINCORRECT?g-gans--SEPsgaregsuitablegforglargegcompanies.
Inginsurance,gangoffergisgusuallygmadegwheng-gans--
Angapplicantgsubmitsgangapplicationgtogtheginsurer.
Angindividualgisgpurchasinggagpermanentglifeginsurancegpolicygwithgagfacegvaluegofg$25,00
0.gWhilegthisgisgallgtheginsurancegthatghegcangaffordgatgthisgtime,ghegwantsgtogbegsuregthatg
additionalgcoveragegwillgbegavailablegingthegfuture.gWhichgofgthegfollowinggoptionsgshouldg
begincludedgingthegpolicy?g-gans--Guaranteedginsurabilitygoption
,WhogcangmakegagfullygdeductiblegcontributiongtogagtraditionalgIRA?g-gans--
Angindividualgnotgcoveredgbygangemployer-sponsoredgplangwhoghasgearnedgincome
Agproducergisghelpinggagmarriedgcouplegdeterminegthegfinancialgneedsgofgtheirgchildrenging
thegeventgonegorgbothgshouldgdiegprematurely.gThisgisgagpersonalgusegofglifeginsurancegkn
owngasg-gans--Survivorgprotection.
Whengisgthegearliestgagpolicygmayggogintogeffect?g-gans--
Whengthegapplicationgisgsignedgandgagcheckgisggivengtogthegagent
Whichgofgthegfollowinggisgagkeygdistinctiongbetweengvariablegwholeglifegandgvariablegunive
rsalglifegproducts?g-gans--Variablegwholeglifeghasgagguaranteedgdeathgbenefit.
Whenganginsuredgmakesgtruthfulgstatementsgongthegapplicationgforginsurancegandgpaysgth
egrequiredgpremium,gitgisgknowngasgwhichgofgthegfollowing?g-gans--Consideration
Agpolicygwillgpaygthegdeathgbenefitgifgtheginsuredgdiesgduringgtheg20-yeargpremium-
payinggperiod,gandgnothinggifgdeathgoccursgaftergtheg20-
yeargperiod.gWhatgtypegofgpolicygisgthis?g-gans--Levelgterm
AgReturngofgPremiumgtermglifegpolicygisgwrittengasgwhatgtypegofgtermgcoverage?g-gans--
Increasing
Allgofgthegfollowinggaregdutiesgandgresponsibilitiesgofgproducersgatgthegtimegofgapplicationg
EXCEPTg-gans--
Changeganygincorrectgstatementgongthegapplicationgbygpersonallyginitialinggnextgtogthegcor
rectedgstatement.
Thegpolicyownergpaysgforgherglifeginsurancegannually.gUntilgnow,gsheghasgcollectedgagnon
taxablegdividendgcheckgeachgyear.gSheghasgdecidedgthatgshegwouldgrathergusegthegdivide
ndsgtoghelpgpaygforghergnextgpremium.gWhatgoptiongwouldgallowghergtogdogthis?g-gans--
Reductiongofgpremium
Anginsuredgpaysgag$100gpremiumgeverygmonthgforghisginsurancegcoverage,gyetgtheginsur
ergpromisesgtogpayg$10,000gforgagcoveredgloss.gWhatgcharacteristicgofganginsurancegcontr
actgdoesgthisgdescribe?g-gans--Aleatory
Thegproposedginsuredgmakesgthegpremiumgpaymentgongagnewginsurancegpolicy.gIfgthegin
suredgshouldgdie,gtheginsurergwillgpaygthegdeathgbenefitgtogthegbeneficiarygifgthegpolicygisga
pproved.gThisgisgangexamplegofgwhatgkindgofgcontract?g-gans--Conditional
Whatgdoesg"level"grefergtoginglevelgtermginsurance?g-gans--Facegamount
Whatgisgthegpurposegofgagfree-lookgperiodginginsurancegpolicies?g-gans--
Itgallowsgtheginsuredgtogrejectgthegpolicygwithgagfullgrefund.
, Whichgprovisiongofgaglifeginsurancegpolicygstatesgtheginsurer'sgdutygtogpaygbenefitsgupongt
hegdeathgofgtheginsured,gandgtogwhomgthegbenefitsgwillgbegpaid?g-gans--Insuringgclause
Whichgofgthegfollowinggbestgdescribesgannuallygrenewablegtermginsurance?g-gans--
Itgisglevelgtermginsurance.
Allgofgthegfollowinggaregexamplesgofgthird-
partygownershipgofgaglifeginsurancegpolicygEXCEPTg-gans--
Anginsuredgborrowsgmoneygfromgthegbankgandgmakesgagcollateralgassignmentgofgagpartgo
fgthegdeathgbenefitgtogsecuregthegloan.
AllgofgthegfollowinggaregtruegregardinggthegguaranteedginsurabilitygridergEXCEPTg-gans--
Thisgridergisgavailablegtogallginsuredsgwithgnogadditionalgpremium.
Anginsuredgpurchasedgag15-
yearglevelgtermglifeginsurancegpolicygwithgagfacegamountgofg$100,000.gThegpolicygcontain
edgangaccidentalgdeathgrider,gofferinggagdoublegindemnitygbenefit.gTheginsuredgwasgsever
elyginjuredgingangautogaccident,gandgafterg10gweeksgofghospitalization,gdiedgfromgtheginjuri
es.gWhatgamountgwouldghisgbeneficiarygreceivegasgagsettlement?g-gans--$200,000
WhichgofgthegfollowinggstatementsgisgTRUEgaboutgagpolicygassignment?g-gans--
Itgtransfersgrightsgofgownershipgfromgthegownergtoganothergperson.
WhichgofgthegfollowinggnamedgbeneficiariesgwouldgNOTgbegablegtogreceivegthegdeathgben
efitgdirectlygfromgtheginsurergingthegeventgofgtheginsureds'gdeath?g-gans--
Agminorgsongofgtheginsured
Anginsurer'sgemployeegisginvestigatinggagclaimgandgdocumentsgeachgactiongthatgisgtakengi
ngtheginvestigation.gTheginsuredgbelievesgthatgthegemployee'sgmethodsgviolatedghisgconst
itutionalgrights.gWhichgofgthegfollowinggentitiesgshouldgbegconsulted?g-gans--Director
WhichgofgthegfollowinggisgNOTgconsideredgagmisrepresentationgasgitgpertainsgtogunfairgtra
degpractices?g-gans--Makinggcomparisonsgbetweengdifferentgpolicies
Anginsuredgpurchasedganginsurancegpolicyg5gyearsgago.gLastgyear,gshegreceivedgagdivide
ndgcheckgfromgtheginsurancegcompanygthatgwasgnotgtaxable.gThisgyear,gshegdidgnotgrecei
vegagcheckgfromgtheginsurer.gFromgwhatgtypegofginsurergdidgtheginsuredgpurchasegthegpoli
cy?g-gans--Mutual
HowgdoesgangindividualgbecomegthegInsurancegDirectorgingthisgstate?g-gans--
AppointedgbygthegCommissioner
Whengtransactinggbusinessgingthisgstateganginsurergformedgundergtheglawsgofganothergcou
ntrygisgknowngasga/ang-gans--Alienginsurer.
