Utah Life Insurance Test 2023 (solved)

Minimum Age to receive a license - Answer- 18 Continuing Education Hours - Answer- 24 Hours every 2 years (3 Hours must be in ethics) Insurer must respond to claimant communications within how many days? - Answer- 15 days Commissioner Powers and duties include: - Answer- Imposing penalties, including fines, suspensions, and revocations. All insurance forms (riders, policies, applications, endorsements, and contracts) must be filed and approved by the Commissioner. Gramm-Leach-Bliley Act (GLBA) - Answer- Consumer - An individual about whom a company collects information is a consumer. Customer - A customer is a consumer that has developed an ongoing relationship with a financial institution. Privacy Notices must explain: - Answer- What info the company gathers about the customer. Where that info is shared How the company safeguards that info Fair Credit Reporting Act - Answer- Responsible for the opt-out opportunity, but the privacy notice must inform the customer of this right under the GLBA. Insurance Consultants - Answer- To become licensed as an insurance consultant, a producer must have been licensed and actively transacted inurance for at least three of the four years immediately preceding the application for a consultants license. License Requirements - Answer- 18 years old at least. Appointments - Answer- All producers must be appointed by at least one insurer. Misrepresentation - Answer- It is illegal to make any written or oral statement, sales presentation, or comparison that; misrepresents the dividends, benefits, advantages, conditions, or terms of any policy. Example: uses a name of any insurance policy that misrepresents its true nature. False Advertising - Answer- It is illegal for any producer to formulate or use an advertisement or statement that is untrue, deceptive, or misleading regarding any insurance company or persons associated with that company. Defamation - Answer- Making any statement, written or oral, that is false or maliciously critical of the financial condition of an insurance company or a producer representing that company is illegal. Rebating - Answer- Offering valuable consideration, other than that which is offered in the contract as an inducement to purchase a policy is illegal. Coercion - Answer- Forcing a person to buy insurance through a particular company or producer. Unfair Discrimination - Answer- It is illegal to unfairly discriminate between individuals of the same class and equal life expectancy in the rates, dividends, benefits, or terms of any life or life annuity contract. Unfairly discriminate between neighborhoods within a municipality and of essentially the same hazard. Use sexual orientation in the underwriting process or in the determination of insurability. A producer cannot share commissions with: - Answer- Someone that is not a life insurance agent. Monies may not be commingled with the producer's personal funds. Insurance Fraud: - Answer- Anyone who knowingly misappropriates insurance premiums, makes any material false statement of an insurance application, or makes a false insurance claim commits insurance fraud. McCarran Ferguson Act - Answer- The fed govt had the right to regulate the business of insurance but only to the extent that such business is not regulated by state law (which most are) They did this with the intent of not having to regulate them against the provisions of the fed antitrust laws. Notice to Applicant - Answer- Notifies the applicant that a report will be ordered concerning their past credit history and any other life or health insurance for which they have previously applied. Consumer Reports - Answer- Information on a person's credit, character, reputation, or habits. Third-Party Ownership - Answer- Businesses that own policies on key employees. Medical Information Bureau - Answer- Reports issued by the MIB are another source of information which may aid the underwriter in determining whether or not to accept a risk. This is a non-profit trade association that maintains medical information on applicants for life or health insurance. Applicants or are denied coverage due to information in an MIB report must be given explanations and an opportunity to challenge information about their medical history that may be inaccurate. Changes in the Application - Answer- Any changes made to an insurance applicant after it is completed must be initialed by the applicant. Classifications of Risks - Answer- Standard Risks - Reflects average exposures and fall into a normal range. These risks can be insured for standard rates and premiums. Substandard Risks - Higher risked people that can still receive insurance for a higher premium. Preferred Risks - Below average risk and pay lower premiums Declined Risk - Insurer company has decided not to insure the applicant. Morality Rate - Answer- The number of deaths per 1,000 people. Level Premium - Answer- Set amount premium with out increasing or decreasing over the policy Premium Mode - Answer- Simply the frequency with which a policy premium will be paid. Human Life Vale Approach - Answer- Focuses on an individual's future stream of income. It considers such things as annual salary and expenses, years remaining until retirement, and future value of current dollars. (how much will the insured make?) Needs Approach - Answer- This technique focuses on the needs of survivors. It considers such things as funeral expenses, final illness, continuing family income needs, children's education, retirement income etc. (How much will the survivor need?) Buy -Sell agreement - Answer- Legal document outlining the business continuation plan. A stock purchase plan - Answer- A price is determined and each stockholder agrees to purchase a proportionate share of the deceased shareholder's stock. Stock redemption plan - Answer- The corporation is the owner, beneficiary, and premium payor of the life insurance policies and the corporation agrees to purchase the deceased's stock Capital Retention - Answer- Only take out the interest of the policy and conserve the principal. Fiduciary - Answer- Person in a position of financial trust. It is the producer's duty to accurately and thoroughly complete all applications for insurance, collect initial premiums, and promptly submit them to the company. Replacement - Answer- Is for the purchase of one life insurance policy to replace another. Premium collection - Answer- Producer is encouraged to collect the insitial premium with the application. The coverage is not effective until the policy is delivered and the initial premium has been paid. Conditional receipt - Answer- Usually makes the coverage effective as of the date of application. Unconditional and Binding Receipts - Answer- The company liable for the risk from the date of application, regardless of the applicant's insurability. This coverage lasts for specified time, or until the insurer issues the policy. Amendments - Answer- Insurer may amend (make changes) the policy's terms depending on the results of the underwriting process. Convertible Term Policy - Answer- Allows a policy-owner to convert or exchange the temporary protection for some form of permanent protection without evidence of insurability. The conversion must be made prior to expiration of the term. When a policy is converted, the premium will be based on attained age. Advantages and Uses of Term Insurance - Answer- One of the most common uses is to provide a substantial amount of coverage at a minimum cost. Whole Life Insurance - Answer- Gets its name from the fact that the policy is designed to provide coverage for the whole of life (usually up to age 100, although some mortality tables have been adjusted to age 120). Permanent Insurance - Answer- Whole life is also called this because the maturity date is beyond the life expectancy of most individuals. However a whole life policy actually consists of a combination of a savings element (the advancing cash value) and a decreasing amount of net insurance. When a whole life policy reaches its maturity date (age 100), the cash value would equal the face amount. More Whole Life - Answer- Because Whole life Policies include cash values in addition to net insurance protection, the premiums have to cover mortality costs, expenses, and the savings account. For this reason, whole life policies are more expensive than term life policies. Whole Life Cash Values Accumulation - Answer- As years go on, Cash Value accomodation increases and insurance protection goes up. Assume the Face Value of the above policy is $100,000. The first day the policy is in force, the insured has $100,000 in protection. If the insured should die one week, one month, one year, 10 years, or 50 years later, the insured's beneficiaries would be paid $100,000 at the time of death. The face amount policy remains the same throughout the life of the policy (and the insured). Level Premiums - Answer- Premiums for permanent insurance policies are designed to remain level during the entire period the policy is in force. In the early years of the contract, the insured actually pays in more premium than is needed to provide the current year's insurance protection, whereas in later years less than is needed is paid in. The net result is that the premium remains the same for the entire life of the contract. In addition, the company has the opportunity to invest the money at a favorable return, which helps reduce the cost of insurance. Guaranteed Cash Value - Answer- Whole life policies include a savings element that is guaranteed to accumulate and earn a specified rate of interest. usually the policy has little or no cash value during the first couple of policy years. In the third year, cash values begin to accumulate. Policy Loan - Answer- An insured may also borrow a portion of the cash value in this form. But it must be paid back (with interest) in order to restore policy values. Non forfeiture Value - Answer- The cash value in the policy belongs to the policyowner. If the PO wishes, some or all of the cash value may be withdrawn from the policy. Any withdrawal of cash value will reduce both the Face Value of the policy and the amount of cash value available. Continuous premium Whole Life - Answer- Most common type of Whole life insurance sold. These policies stretch the premium payments over the whole life of the insured. Often referred to as Straight life insurance. Example of Whole Life Insurance - Answer- 20-pay life means premium payments for 20 years but lifetime (to age 100) protection. Life paid up at 65 means premium payments up to age 65 but lifetime protection. A 20 pay life policy matures at age 100 or upon the death of the insured, whichever comes first. The principle difference with limited-pay policies is simply the length of the premium paying period. Current assumption whole life policies - Answer- Known as Interest sensitive whole life. Offer flexible premium payments that are tied into current interest rate fluctuations. Insurance company reserves the right to increase or decrease the premium within a certain range depending on interest rate fluctuations. Advantages and Uses of Whole Life Policies - Answer- The principal advantage of whole life is that it is permanent insurance and can be used to satisfy permanent needs such as the cost of death, dying and final burial expenses. The level premium allows the PO to know exactly what the cost of insurance will be and offers a form of forced savings. Whole life builds a living benefit through its guaranteed cash value, which enables to PO to use some of this cash for emergencies, as a supplemental source of retirement income, and for other living needs. Adjustable Life Insurance - Ans