Alabama State Insurance Exam FX
If a producer changes his residential address who must he/she notify? - ANS This
change will need to be reported to the Commissioner.
Which of the following is NOT true regarding minors purchasing insurance policies in
this state? - ANS Minors at the age of 14 are allowed to buy their own policies.
What is the penalty for IRA distributions that are below the required minimum for the
year? - ANS 50%
All of the following are business uses of life insurance EXCEPT - ANS Funding against
general company financial loss.
Which of the following is called a "second-to-die" policy? - ANS Survivorship life
The term "fiduciary capacity" deals with a producer's - ANS Position of financial trust.
Which is NOT true about beneficiary designations? - ANS The beneficiary must have
insurable interest in the insured.
An IRA purchased by a small employer to cover employees is known as a - ANS
All of the following applicants for an insurance producer license are exempt from
prelicensing education requirements EXCEPT - ANS An applicant for a dealer's license.
An agent accepts the premium payment 35 days after it is due, telling the insured that
there will not be a problem keeping the policy in force. This is an example of what type
of agent authority? - ANS apparant
Which of the following determines the length of time that benefits will be received under
the Fixed-Amount settlement option? - ANS Size of each installment
What is a major problem with naming a trust as the beneficiary of a life insurance
policy? - ANS They are expensive to administer.
Contracts that are prepared by one party and submitted to the other party on a take-it-
or-leave-it basis are classified as - ANS Contracts of adhesion.
All of the following statements concerning the use of life insurance as an Executive
Bonus are correct EXCEPT - ANS The policy is owned by the company.
Which of the following is considered to be a morale hazard? - ANS Driving recklessly
, When transacting business in this state an insurer formed under the laws of another
country is known as a/an - ANS Alien Insurer
When a reduced-paid up nonforfeiture option is chosen, what happens to the face
amount of the policy? - ANS It is reduced to the amount of what the cash value would
buy as a single premium.
The policyowner wants to make sure that upon his death, the life policy will pay a
portion of the proceeds annually to his spouse, but that the principal will be paid to their
children when they reach a certain age. Which settlement option should the policyowner
choose? - ANS Interest only option
Under which nonforfeiture option does the company pay the surrender value and have
no further obligations to the policyowner? - ANS Cash surrender
An insured has a Modified Endowment Contract. He wants to withdraw some money in
order to pay medical bills. Which of the following is true? - ANS He will have to pay a
penalty if he is younger than 59½.
When would a misrepresentation on the insurance application be considered fraud? -
ANS If it is intentional and material
In Alabama, an insurance company certificate of authority is issued for what period of
time? - ANS Perpetual
If an application for an annuity is gathered any way other than face-to-face, within how
many days after the insurer receives the completed application must the applicant be
given a Buyer's Guide? - ANS 5 business days
An insured committed suicide one year after his life insurance policy was issued. The
insurer will - ANS Refund the premium payments
The death benefit under the Universal Life Option B - ANS Gradually increases each
year by the amount that the cash value increases.
The type of policy that can be changed from one that does not accumulate cash value
to the one that does, is a - ANS Convertible Term Policy.
All of the following entities regulate variable life policies EXCEPT - ANS The Guaranty
Association.
A family's income need is greatest during which period? - ANS Family Income
Dependency
A rider attached to a life insurance policy that provides coverage on the insured's family
members is called the - ANS Other-insured rider.
If a producer changes his residential address who must he/she notify? - ANS This
change will need to be reported to the Commissioner.
Which of the following is NOT true regarding minors purchasing insurance policies in
this state? - ANS Minors at the age of 14 are allowed to buy their own policies.
What is the penalty for IRA distributions that are below the required minimum for the
year? - ANS 50%
All of the following are business uses of life insurance EXCEPT - ANS Funding against
general company financial loss.
Which of the following is called a "second-to-die" policy? - ANS Survivorship life
The term "fiduciary capacity" deals with a producer's - ANS Position of financial trust.
Which is NOT true about beneficiary designations? - ANS The beneficiary must have
insurable interest in the insured.
An IRA purchased by a small employer to cover employees is known as a - ANS
All of the following applicants for an insurance producer license are exempt from
prelicensing education requirements EXCEPT - ANS An applicant for a dealer's license.
An agent accepts the premium payment 35 days after it is due, telling the insured that
there will not be a problem keeping the policy in force. This is an example of what type
of agent authority? - ANS apparant
Which of the following determines the length of time that benefits will be received under
the Fixed-Amount settlement option? - ANS Size of each installment
What is a major problem with naming a trust as the beneficiary of a life insurance
policy? - ANS They are expensive to administer.
Contracts that are prepared by one party and submitted to the other party on a take-it-
or-leave-it basis are classified as - ANS Contracts of adhesion.
All of the following statements concerning the use of life insurance as an Executive
Bonus are correct EXCEPT - ANS The policy is owned by the company.
Which of the following is considered to be a morale hazard? - ANS Driving recklessly
, When transacting business in this state an insurer formed under the laws of another
country is known as a/an - ANS Alien Insurer
When a reduced-paid up nonforfeiture option is chosen, what happens to the face
amount of the policy? - ANS It is reduced to the amount of what the cash value would
buy as a single premium.
The policyowner wants to make sure that upon his death, the life policy will pay a
portion of the proceeds annually to his spouse, but that the principal will be paid to their
children when they reach a certain age. Which settlement option should the policyowner
choose? - ANS Interest only option
Under which nonforfeiture option does the company pay the surrender value and have
no further obligations to the policyowner? - ANS Cash surrender
An insured has a Modified Endowment Contract. He wants to withdraw some money in
order to pay medical bills. Which of the following is true? - ANS He will have to pay a
penalty if he is younger than 59½.
When would a misrepresentation on the insurance application be considered fraud? -
ANS If it is intentional and material
In Alabama, an insurance company certificate of authority is issued for what period of
time? - ANS Perpetual
If an application for an annuity is gathered any way other than face-to-face, within how
many days after the insurer receives the completed application must the applicant be
given a Buyer's Guide? - ANS 5 business days
An insured committed suicide one year after his life insurance policy was issued. The
insurer will - ANS Refund the premium payments
The death benefit under the Universal Life Option B - ANS Gradually increases each
year by the amount that the cash value increases.
The type of policy that can be changed from one that does not accumulate cash value
to the one that does, is a - ANS Convertible Term Policy.
All of the following entities regulate variable life policies EXCEPT - ANS The Guaranty
Association.
A family's income need is greatest during which period? - ANS Family Income
Dependency
A rider attached to a life insurance policy that provides coverage on the insured's family
members is called the - ANS Other-insured rider.
