DELAWARE LIFE INSURANCE EXAM 2025|170
QUESTIONS WITH ACCURATE SOLUTIONS
1. If a policyholder receives a dividend from their life insurance policy, how
should they report this on their tax return?
They do not need to report it as taxable income.
They must report it as taxable income under miscellaneous
income.
They must report it as a refund of premium paid.
They should report it as a capital gain.
2. If an applicant fails to disclose a pre-existing condition during the
insurance application process, what principle is likely violated, and what
could be the potential consequence?
Transparency; the insurer may increase the premium rates.
Utmost good faith; the insurer may deny the claim based on
misrepresentation.
Fair dealing; the insurer may issue a refund of premiums.
Informed consent; the insurer may cancel the policy immediately.
3. If a new insurance law is proposed in Delaware, what role would the
Delaware commissioner play in its implementation?
The Delaware commissioner would create marketing strategies for
the new law.
The Delaware commissioner would review and ensure the law is
executed properly within the insurance industry.
,The Delaware commissioner would conduct public hearings to
gather opinions on the new law.
, The Delaware commissioner would directly sell insurance policies
to consumers under the new law.
4. What is the consequence of willful misrepresentation in a life insurance
contract?
A minor infraction with no consequences
A requirement for additional premiums
An automatic approval of the policy
Fraud and grounds for voiding the contract
5. Describe the role of the Delaware commissioner in the context of
insurance regulation.
The Delaware commissioner is responsible for marketing
insurance products to the public.
The Delaware commissioner sets the premiums for all insurance
policies in the state.
The Delaware commissioner oversees the enforcement of
insurance laws to ensure compliance and protect consumers.
The Delaware commissioner evaluates insurance claims for
payment.
6. If an applicant is classified as a substandard risk due to a chronic health
condition, how might this affect their life insurance policy options?
They will automatically qualify for all types of policies.
They may have limited policy options and higher premiums
compared to standard risk applicants.
They will be eligible for lower premiums and more benefits.
They will have the same policy options as standard risk applicants.
, 7. What federal program is designed to provide medical insurance for the
poor in the United States?
Obamacare
social insurance
Medicaid
Medicare
social security
8. If a debtor becomes disabled and has credit accident and health
insurance, what financial obligation does this insurance fulfill?
It pays for the debtor's medical expenses during their disability.
It provides a lump sum payment to the debtor's beneficiaries upon
death.
It fulfills the obligation of making debt payments while the
debtor is disabled.
It accumulates cash value that the debtor can borrow against.
9. Describe why policy dividends in life insurance are not considered
taxable income.
Policy dividends are taxed as income because they represent
profit from the insurance company.
Policy dividends are not considered taxable income because
they are a return of excess premium paid by the policyholder.
Policy dividends are not taxable because they are considered a
gift from the insurer.
Policy dividends are taxable because they are paid out in cash to
the policyholder.
QUESTIONS WITH ACCURATE SOLUTIONS
1. If a policyholder receives a dividend from their life insurance policy, how
should they report this on their tax return?
They do not need to report it as taxable income.
They must report it as taxable income under miscellaneous
income.
They must report it as a refund of premium paid.
They should report it as a capital gain.
2. If an applicant fails to disclose a pre-existing condition during the
insurance application process, what principle is likely violated, and what
could be the potential consequence?
Transparency; the insurer may increase the premium rates.
Utmost good faith; the insurer may deny the claim based on
misrepresentation.
Fair dealing; the insurer may issue a refund of premiums.
Informed consent; the insurer may cancel the policy immediately.
3. If a new insurance law is proposed in Delaware, what role would the
Delaware commissioner play in its implementation?
The Delaware commissioner would create marketing strategies for
the new law.
The Delaware commissioner would review and ensure the law is
executed properly within the insurance industry.
,The Delaware commissioner would conduct public hearings to
gather opinions on the new law.
, The Delaware commissioner would directly sell insurance policies
to consumers under the new law.
4. What is the consequence of willful misrepresentation in a life insurance
contract?
A minor infraction with no consequences
A requirement for additional premiums
An automatic approval of the policy
Fraud and grounds for voiding the contract
5. Describe the role of the Delaware commissioner in the context of
insurance regulation.
The Delaware commissioner is responsible for marketing
insurance products to the public.
The Delaware commissioner sets the premiums for all insurance
policies in the state.
The Delaware commissioner oversees the enforcement of
insurance laws to ensure compliance and protect consumers.
The Delaware commissioner evaluates insurance claims for
payment.
6. If an applicant is classified as a substandard risk due to a chronic health
condition, how might this affect their life insurance policy options?
They will automatically qualify for all types of policies.
They may have limited policy options and higher premiums
compared to standard risk applicants.
They will be eligible for lower premiums and more benefits.
They will have the same policy options as standard risk applicants.
, 7. What federal program is designed to provide medical insurance for the
poor in the United States?
Obamacare
social insurance
Medicaid
Medicare
social security
8. If a debtor becomes disabled and has credit accident and health
insurance, what financial obligation does this insurance fulfill?
It pays for the debtor's medical expenses during their disability.
It provides a lump sum payment to the debtor's beneficiaries upon
death.
It fulfills the obligation of making debt payments while the
debtor is disabled.
It accumulates cash value that the debtor can borrow against.
9. Describe why policy dividends in life insurance are not considered
taxable income.
Policy dividends are taxed as income because they represent
profit from the insurance company.
Policy dividends are not considered taxable income because
they are a return of excess premium paid by the policyholder.
Policy dividends are not taxable because they are considered a
gift from the insurer.
Policy dividends are taxable because they are paid out in cash to
the policyholder.
