Colorado Life Insurance Final Exam PREP AG Questions and Answers Graded A+

The life insurance rider that pays the face amount plus the total premiums paid into the policy is known as: - Return of premium What kind of company can the Commissioner file a complaint to enjoin and restrain from continuing violations of the insurance regulations of Colorado? - Foreign or alien Does a loan on the cash value of a life insurance policy accrue interest, and if so, how is the interest handled? - Yes, the interest can be paid annually, or added to the loan. What approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities? - Needs A decreasing term life policy would be the most appropriate for: - A 41 year old lawyer who wants a policy to pay his mortgage if he dies (decreasing term life generally is used as mortgage insurance) A producer or business entity shall report to the Commissioner any administrative action taken against the producer within: - 30 days Richard is thinking about transferring some of the ownership rights of his policy to his brother Randy. What term is used for this type of transfer? - Assignment Jeff has limited financial resources, but finds himself in a position where he needs a good deal of protection. A __________would probably best suit his needs at this time. - Term policy On November 5, Zoe fills out an application for a life policy. On November 6, the agent accepts the premium for the policy. The policy is delivered on November 7. Which date does the Free Look period start? - November 7 Insurance producers must complete how many hours of continuing education each licensing period? - 24 hours Jacob, James and Jonathan are triplets, and all applied for the same type of insurance coverage at the same time. For James and Jonathan the rates were the same. Jacob's rate was quite a bit higher. What is the most likely reason for this difference? - Risk classification If the cash values of an annuity are invested in securities, it is a: - Variable annuity If an agent were to publish literature that is false or maliciously critical of another insurer calculated to injure a person engaged in the business of insurance, the agent would be committing: - Defamation An agent has a fiduciary responsibility to all the following, EXCEPT: - Other agents Alex's life policy lapsed, which Nonforfeiture option would the insurer send him the value of the policy? - Cash surrender Investment risk is completely taken by the policyowner is what type policy? - Variable universal life Jennifer made an additional premium payment on her Adjustable Life policy. Which of the following is not a way that her policy is affected by this payment? - The value of nonforfeiture options may decrease. What type group plan requires 75% participation? - Contributory If more than one beneficiary is named, who is the first in line? - Primary Application - In life insurance, insurable interest must be present at the time of: Over-funded life insurance policies where the proceeds are subject to taxation are called: - MECs (Modified Endowment Contracts) After what policy year of any life insurance policy, can suicide of the policyowner not be used as defense against the payment of benefits? - First In Colorado, what is the minimum number of individuals a group life policy will cover? - 3 individuals Which of the following is a duty of the Commissioner? - Examining applications and issuing certificates of authority to insurance companies to transact insurance business Dylan is looking at buying an equity-indexed life policy; it will likely be tied to: - Dow Jones Industrial Average. Who has the right to change the beneficiary on a life policy? - The policyowner What guarantees Jason the right to question the source and validity of consumer information used to rate a policy? - Fair Credit Reporting Act If an applicant states their age is 30 on an application for life insurance, when they were actually 37, what is the insurer likely to do? - Pay the death benefit based on the applicant's actual age. Which of the following must happen before an HIV test is performed on an applicant? - A consent form must be signed by the applicant prior to the test. Which rider on Diane's life policy will help her out when she is confined to a nursing home with a terminal illness? - Accelerated benefit rider Life insurance death benefits that can be accessed tax-free when the insured is still alive are called: - Accelerated benefits Which of the following would NOT be considered unfair discrimination? - Discrimination abased on occupation All of the following must be listed in the notice regarding replacement, EXCEPT: - Statement identifying preprinted sales materials How many days does an insurance producer have to report to the Commissioner any administrative action taken against them as well as any criminal prosecution that occurs in another jurisdiction? - 30 days When Jason filled out his application his statements had to be ______________ to be considered legal. - Representations Phil and Sarah bought a life policy in which both are insured. Sarah dies before Phil. If the policy pays the death benefit after Phil dies, it is a: - Survivorship life The policyowner's obligation to pay the premium is the: - Consideration Clause The fact that the application is part of the policy is stated in: - The entire contract Insurance producers must provide any applicant who has existing policies with a written notice of the replacement regulations which must be signed by: - Both the applicant and the producer A license is considered to be used for controlled business if the total amount of premiums on controlled business would exceed the total amount of premiums on all other insurance business during any: - 12-month period The Beauty Shop Cosmetic Company purchases a life insurance policy on Anna, the company's leading salesperson. Which business continuation plan does this company have? - Key person insurance Blake died 20 days after his group life insurance coverage was terminated. He did not apply for individual coverage. Which of the following is true? - His beneficiary will receive the full death benefit. Life insurance applications require a signature from - A life insurance application requires the agent, proposed insured, and the policy owner if different from the insured to sign it. The manner in which the proceeds of a life policy are handled are specified in what provision? - Settlement options