ARKANSAS LIFE INSURANCE EXAM
Study Guide QUESTIONS AND
CORRECT ANSWERS
J is a producer who has induced an insured through misrepresentation to
surrender an existing insurance policy. What is J guilty of? - CORRECT
ANSWERS Twisting
What is implied authority defined as? - CORRECT ANSWERS
Authority that is not specifically given to an agent contract, but that an agent
can reasonably assume to carry out his/her duties
A person who is a nonsmoker, average weight, excellent health would fall into
what risk classification? - CORRECT ANSWERS Preferred
Which of the following is considered to be the period when the accumulated
value in an annuity is paid out? - CORRECT ANSWERS Annuitization
phase
An insurers claim settlement practices are regulated by the: - CORRECT
ANSWERS State insurance departments
An insurers ability to make unpredictable payouts to policy owners is called: -
CORRECT ANSWERS Liquidity
Which of the following pertains to the analysis of an applicants personal
information and determining whether insurance should be issued or declined? -
CORRECT ANSWERS Underwriting
,What does the Group Life underwriting risk selection process help protect
insurance companies from? - CORRECT ANSWERS Adverse Selection
The Arkansas Life & Disability Insurance Guaranty Association assures
payment of benefits from insurance policies for insolvent insurers, and covers
all of the following insured policies, EXCEPT: - CORRECT ANSWERS
Liability Insurance
What would happen if a life insurance applicant is given a conditional receipt
from an insurance agent and then dies the next day? - CORRECT ANSWERS
Claim will be paid if application is approved
A life insurance policy owner does NOT have the right to: - CORRECT
ANSWERS Revoke an absolute assignment
An employee under a group insurance policy has the right to name a beneficiary
and the right to: - CORRECT ANSWERS Convert to an individual
policy in the event of employment termination
The two major actions required for a policyholder to comply with the
Reinstatement Clause are - CORRECT ANSWERS Provide evidence of
insurability, past due premiums
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the
following statements is true? - CORRECT ANSWERS The policy may
be paid up early by using policy dividends
Ron has a life insurance policy with a face value of $100,000 and a cost of
living rider. If the consumer price index has gone up 4%, how much may Ron
increase the face value of the policy? - CORRECT ANSWERS $4,000
,($100,000 X .04 = $4,000)
Krissa purchases a 10-year level term life insurance policy that has a death
benefit of $200,000. Which of these statements is true? - CORRECT
ANSWERS The face amount and premium will remain constant over the
10-year period
What is Arkansas' REQUIRED grace period for a life insurance contract? -
CORRECT ANSWERS 31 days
A domestic insurance company in Arkansas MUST - CORRECT ANSWERS
Be organized under Arkansas Insurance laws
Simon has purchased a fixed immediate annuity. His payment amount will be
dependent upon principal, interest, and the contract's - CORRECT ANSWERS
Income period
What kind of life insurance policy issued by a mutual insurer provides a return
of divisible surplus? - CORRECT ANSWERS Participating life
insurance policy
No one is allowed to act as a producer for any insurance company in Arkansas
that - CORRECT ANSWERS Is unauthorized to do business in Arkansas
What MUST the company do prior to conducting an HIV related test? -
CORRECT ANSWERS Obtain a written consent from the proposed
insured
Which approach predicts a person's earning potential and determines how much
of that amount would be devoted to dependents? - CORRECT ANSWERS
Human life value approach
, If the annuitant dies before the annuity start date, - CORRECT ANSWERS
The premiums paid plus interest earned will be given to the beneficiary
If dividends are illustrated, the advertisement MUST state that the dividends
are: - CORRECT ANSWERS Not guaranteed
Intentional withholding of material facts that would affect an insurance policy's
validity is called a(n) - CORRECT ANSWERS Concealment
Field underwriting performed by the producer involves - CORRECT
ANSWERS Completing the application and collecting initial premium
Which of the following statements is CORRECT regarding an individual
applying for life or health insurance? - CORRECT ANSWERS The
applicants medical history may be analyzed and reported
Life insurance policies will normally pay for losses arising from - CORRECT
ANSWERS Commercial aviation
An example of rebating would be - CORRECT ANSWERS Offering a
client something of value not stated in the contract in exchange for their
business
Which type of insurance company allows their policyowners to elect governing
body? - CORRECT ANSWERS Mutual
Which type of life insurance policy pays the face amount at the end of the
specified period if the insured is still alive? - CORRECT ANSWERS
Endowment policy
Study Guide QUESTIONS AND
CORRECT ANSWERS
J is a producer who has induced an insured through misrepresentation to
surrender an existing insurance policy. What is J guilty of? - CORRECT
ANSWERS Twisting
What is implied authority defined as? - CORRECT ANSWERS
Authority that is not specifically given to an agent contract, but that an agent
can reasonably assume to carry out his/her duties
A person who is a nonsmoker, average weight, excellent health would fall into
what risk classification? - CORRECT ANSWERS Preferred
Which of the following is considered to be the period when the accumulated
value in an annuity is paid out? - CORRECT ANSWERS Annuitization
phase
An insurers claim settlement practices are regulated by the: - CORRECT
ANSWERS State insurance departments
An insurers ability to make unpredictable payouts to policy owners is called: -
CORRECT ANSWERS Liquidity
Which of the following pertains to the analysis of an applicants personal
information and determining whether insurance should be issued or declined? -
CORRECT ANSWERS Underwriting
,What does the Group Life underwriting risk selection process help protect
insurance companies from? - CORRECT ANSWERS Adverse Selection
The Arkansas Life & Disability Insurance Guaranty Association assures
payment of benefits from insurance policies for insolvent insurers, and covers
all of the following insured policies, EXCEPT: - CORRECT ANSWERS
Liability Insurance
What would happen if a life insurance applicant is given a conditional receipt
from an insurance agent and then dies the next day? - CORRECT ANSWERS
Claim will be paid if application is approved
A life insurance policy owner does NOT have the right to: - CORRECT
ANSWERS Revoke an absolute assignment
An employee under a group insurance policy has the right to name a beneficiary
and the right to: - CORRECT ANSWERS Convert to an individual
policy in the event of employment termination
The two major actions required for a policyholder to comply with the
Reinstatement Clause are - CORRECT ANSWERS Provide evidence of
insurability, past due premiums
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the
following statements is true? - CORRECT ANSWERS The policy may
be paid up early by using policy dividends
Ron has a life insurance policy with a face value of $100,000 and a cost of
living rider. If the consumer price index has gone up 4%, how much may Ron
increase the face value of the policy? - CORRECT ANSWERS $4,000
,($100,000 X .04 = $4,000)
Krissa purchases a 10-year level term life insurance policy that has a death
benefit of $200,000. Which of these statements is true? - CORRECT
ANSWERS The face amount and premium will remain constant over the
10-year period
What is Arkansas' REQUIRED grace period for a life insurance contract? -
CORRECT ANSWERS 31 days
A domestic insurance company in Arkansas MUST - CORRECT ANSWERS
Be organized under Arkansas Insurance laws
Simon has purchased a fixed immediate annuity. His payment amount will be
dependent upon principal, interest, and the contract's - CORRECT ANSWERS
Income period
What kind of life insurance policy issued by a mutual insurer provides a return
of divisible surplus? - CORRECT ANSWERS Participating life
insurance policy
No one is allowed to act as a producer for any insurance company in Arkansas
that - CORRECT ANSWERS Is unauthorized to do business in Arkansas
What MUST the company do prior to conducting an HIV related test? -
CORRECT ANSWERS Obtain a written consent from the proposed
insured
Which approach predicts a person's earning potential and determines how much
of that amount would be devoted to dependents? - CORRECT ANSWERS
Human life value approach
, If the annuitant dies before the annuity start date, - CORRECT ANSWERS
The premiums paid plus interest earned will be given to the beneficiary
If dividends are illustrated, the advertisement MUST state that the dividends
are: - CORRECT ANSWERS Not guaranteed
Intentional withholding of material facts that would affect an insurance policy's
validity is called a(n) - CORRECT ANSWERS Concealment
Field underwriting performed by the producer involves - CORRECT
ANSWERS Completing the application and collecting initial premium
Which of the following statements is CORRECT regarding an individual
applying for life or health insurance? - CORRECT ANSWERS The
applicants medical history may be analyzed and reported
Life insurance policies will normally pay for losses arising from - CORRECT
ANSWERS Commercial aviation
An example of rebating would be - CORRECT ANSWERS Offering a
client something of value not stated in the contract in exchange for their
business
Which type of insurance company allows their policyowners to elect governing
body? - CORRECT ANSWERS Mutual
Which type of life insurance policy pays the face amount at the end of the
specified period if the insured is still alive? - CORRECT ANSWERS
Endowment policy
