Life 4 test and results: 2007

Friday, February 9, 2007

last one taken at 6:30 am

Life Law 1

1. Which of the following constitutes replacement?

	Reducing the face amount of one policy and buying another
	Electing a non-forfeiture option and buying another policy
	Borrowing 25% of more against the cash value and buying another policy
	All the above

2. Policy assignment is:

	Assessing for more premium
	The policy owner assigns certain ownership rights to a second party
	The insured assigns certain ownership rights to a second party
	The beneficiary assigns back his/her rights

3. Borrowing money from a life insurance policy at 5% to invest in a variable universal life policy could be considered:

	leveraging
	churning
	embezzlement
	a pretty cool idea

4. Old Man AnnaCee, 67 yrs old, has had a policy for 16 years. In addition to his regular grace period he will have an additional grace period of how many days?

	30 days
	21 days
	31 days
	there are no additional days

5. Real Deal wants to name her husband as the beneficiary of her life policy; however, she wishes to retain all of the rights of ownership. Real should have has husband named as:

	irrevocable beneficiary
	revocable beneficiary
	secondary beneficiary
	tertiary beneficiary

6. A Dually Licensed Agent:

	Is an agent representing two insurance companies
	Has completed this course and passed the State exam
	Holds an insurance and a securities license at the same time
	Was administered the oath by Tom Dually

7. Replacement is defined as any life insurance transaction in which new insurance is to be purchased and existing insurance is to be modified in certain specific ways. A way in which the existing insurance may be modified that brings the transaction within the definition of replacement is:

	Conversion to reduced paid-up ins, continued as extended term Insurance, or otherwise reduced in value by use of nonforfeiture benefits or other policy values.
	Converting term insurance to variable life
	Borrowing 10% of the cash value from a policy to pay the premium on a new policy
	Re-issuing a newer policy form without any reduction in cash value

8. The suicide clause provides that proceeds will never be paid in cases of self-destruction.

	True
	False

9. At what time must the "Buyer's Guide" be delivered to the client?

	At the initial interview
	Prior to accepting the premium, unless there is a ten day free look
	Before delivery of the policy
	No buyer's guide is required

10. Florida rules on disclosure require:
I. A buyers guide and summary prior to acceptance of a premium
II. A 10 day free look and buyers guide provided at delivery
III. Florida does not require a buyers guide

	I only
	II only
	III only
	I & II

11. Monty died in year 2 of his 20 year family income policy. Which of the following statements is true concerning the payout?

	it will pay monthly for 20 years
	it will pay monthly for 18 years
	I could not care less, I have really, really had it

12. "Twisting" in policy replacement involves all the below except:

	Any form of misrepresentation
	Failure to disclose all relevant facts
	Stripping cash values to make outside investments
	Replacing policies after full disclosure of all relevant values and facts

13. A life insurance policy is considered incontestable after it has been in force for a period of:

	45 days
	6 months
	3 years
	2 years

14. Which of the following statements about the Misstatement of Age provision in a life insurance policy is true?

	If the insured's age has been overstated, it provides that a premium refund and the face amount of the policy will be payable.
	If the insured's age has been understated, it provides that a Death benefit smaller than the face amount of the policy will be payable.
	It becomes inoperative after the expiration of the policy's Contestable period.
	It is an optional provision.

15. The use of an IRREVOCABLE beneficiary option may do all the following EXCEPT:

	Limits the owners normal ability to exercise all her policy rights.
	Protect the rights of an alienated beneficiary.
	Restricts the owner from borrowing cash values.
	Does not restrict the owner in the use of the loan values in the policy.

16. When changing from a whole life to a variable life policy, the agent must provide notification to the policyowner within how many days?

	10 days
	15 days
	30 days
	45 days

17. Which of the following agencies regulate Variable Life insurance products:

	The State Department & Henry Kissinger
	The Office of Insurance Regulation & Securities and Exchange Commission
	The Office of Insurance Regulation & Federal Trade Commission
	The Office of Insurance Regulation & Florida Securities Department

18. Which of the following is called the fifth dividend option?

	paid-up
	cash
	term
	reduction of premiums

19. Which of the following are disadvantages of naming the insured's estate as beneficiary:
I. Creditors can easily attach the proceeds
II. Proceeds increase the size of the estate
III. If there is a will it may be contested.
IV. The advantages of settlement options are lost

	I & II
	I & III
	II & III
	all the above

20. Using existing cash values to purchase additional insurance is considered:

	Churning
	Twisting
	a hanging offense
	I dont' know

21. Joe has a $10,000 whole life insurance policy with an adjustable loan interest rate. Moody's bond index is 12%. If Joe were to borrow against his cash value, what is the most the insurance company could charge Joe for the loan?

	5%
	10%
	12%
	no charge, loans are free of interest

22. An "association group" may be eligible for group life insurance under Florida law if they meet which of the following criteria?
1. Must have been in existence for three years
2. Must hold monthly meetings
3. If the plan is contributory, a minimum of 100 members must participate
4. If the plan is non-contributory, all members must participate

	1, 2, & 4
	2, 3, & 4
	1 & 2
	3 & 4

23. Which of the following statements is not correct regarding an association group?

	must have been in existence for one year
	must be a natural group
	if the plan is non contributory all members must participate
	if the plan is contributory at least 100 members must participate

24. The "Spendthrift Clause" enables a beneficiary to collect all policy proceeds even though:

	The insured was disabled and owed the last premium
	There were policy loans against the cash value
	The Insured had large outstanding debts
	The beneficiary will probably blow the money

25. Mary's age on the application for a $100,000 life insurance policy indicates that she is 31 when in fact she is actually 30 years old. This fact was discovered after her death. Which course of action would the company take?

	Increase the death benefit to what the premium would have purchased for a 30 yr old woman
	Pay the $100,000 and return the over charged premium
	Pay the $100,000
	Lower the death benefit to what the premium would have purchased for a 30 yr old woman

26. Which is the correct statement regarding policy replacement?

	State laws prohibit replacement.
	Twisting and replacement are synonymous terms.
	Agents must follow the replacement procedure outlined in Florida Law.
	Cash value buildups are always better in new policies.

27. All of the following statements concerning a family plan life insurance policy are true except:

	coverage for children is normally term
	children born later are immediately covered
	the coverage for children will usually terminate at age 18 or 21
	the children's term can be converted

28. The _________ provision states the insurance company will pay the death proceeds.

	consideration
	entire contract
	insuring
	reinstatement

29. Shirley has a $10,000 life policy. She borrows $500 from the cash value at a rate of 5%. Five months later Shirley suffers a small calamity which put her in the grave. Her beneficiary will receive:

	$10,000
	$9500
	$9525
	$9475

30. If the insurance company were to cancel a group life insurance policy it must notify the certificate holders covered under the group. How may the insurance company perform this action?

	the insurance company must notify each certificate holder
	the insurance comapany notifies the master contract holder

31. An individual may convert his industrial insurance policies to ordinary policies when his industrial policies total at least:

	$10,000
	$5000
	$1000
	$3000

32. Ways in which DIVIDENDS may be used by the policy-owner include all the following EXCEPT:

	As stock in the company
	Applied to reduce the premium.
	Left to accumulate with interest.
	Used to buy additional paid-up insurance.

33. The Viatical Settlement Act
I. Requires licensing for brokers and providers
II. Allows licensed life agents to perform the functions of a Viatical Broker
III. Provides for regulation of these products by the Dept. of Financial Services

	I only
	II only
	III only
	all of the above

34. If a Dually Licensed Agent knows that a policy is going to be lapsed, according to the Dually Licensed Life Agent's rule, he/she must notify which of the following with-in 15 days?

	The policy-owner only
	The Chief Financial Officer
	The company whose policy is being replaced
	The policy-owner and the company whose policy is being replaced

35. From a TAX standpoint, when a policy-owner surrenders a life Insurance policy and receives a lump-sum payment of the cash value, which of the following applies?

	A lump-sum payment is totally exempt
	The lump sum, less the policyowners cost basis, is taxable as ordinary income
	The lump sum, less the policyowner's cost basis, is taxable as capital gains
	The lump sum payment is taxable under the annuity rule

36. The Viatical Settlement Act includes all of the following except:

	licensing of viatical settlement providers
	allows licensed agents to perform the functions of a viatical broker
	regulates terms of viatical agreements
	viatical providers are regulated by Dept. of Viatical Settlements

37. The maximum policy loan interest rate:

	10% if fixed rate or, if adjustable rate, tied to Standard and Poor's bond index
	10% if fixed rate or, if adjustable rate, tied to Moody's bond index
	5% if fixed rate or, if adjustable rate, tied to Standard and Poor's bond index
	5% if fixed rate or, if adjustable rate, tied to Standard and Poor's bond index

38. Which of the following statements concerning par and non-par policies is correct?

	premiums for par policies are higher than non-par
	the cash value for a par policy will be higher, assuming everything else is equal but the premium
	premiums for non-par policies are higher
	the cash value for a non-par policy will be higher, assuming everything is equal but the premium

39. Which of the following statements about the assignment of a life insurance policy is (are) true?
I. Most insurance companies require that notice of any assignment of a policy be filed at the home office
II. An insurance policy cannot be assigned to any lending institution for securing a loan without the insurers permission.

	I only
	II only
	Both I and II
	None of the above

40. The incontestable clause applies to all the following except:

	concealment
	fraud
	suicide
	impersonation

41. Munch withdraws $2,000 of accumulated dividends from his life insurance policy. What will be the TAX RESULT?
I. Accumulated dividends & any interest credited will be tax exempt.
II. Accumulated dividends will be taxable income to Munch.
III. The dividends are exempt from income tax, but any interest credited will be taxable.

	I only
	II only
	III only
	I & II

42. Temporary term for interim coverage may be used to defer the effective date of an original policy for how many months?

	1-11
	1-12
	0-11
	0-12

43. Robert had a $100,000 policy which he converted to a reduced paid-up policy with a $55,000 death benefit. At the same time Robert purchased a Variable Universal policy that allowed him to choose the investments. Which word best describes this?

	Twisting
	churning
	replacement
	styling

44. A life insurance company's legal reserve shows on the balance sheet as:

	An asset
	A liability

45. In a viatical settlement the viator is:

	the person buying the policy
	the insured
	the agent acting on behalf of the person selling the policy
	the agent acting on behalf of the person buying the policy

46. Which of the following is correct concerning the grace period for folks aged 64 & over?
1. They are afforded an additional 31 days of grace
2. They are afforded an additional 21 days of grace
3. Does not apply to policies held less than one year
4. Have no idea what you are talking about

	1 only
	1 & 3
	2 & 3
	4

47. All the following statements concerning the Tax Treatment of life insurance are true EXCEPT:

	Premiums for business Key Person policies are not deductible.
	Premiums paid on policies owned by a qualified charitable organization are usually deductible to the donor premium payor.
	Premiums paid for life insurance in non-qualified plans are deductible.
	Group life premiums are usually deductible if the program benefits are not discriminatory.

48. An insured has a $50,000 whole life insurance policy which has an accumulated cash value of $30,000. Upon the advice of his insurance agent he uses $20,000 of the cash value to pay for a single premium life insurance policy from the same company. The remaining $10,000 is used to purchase an annuity.Which of the following best describes the agent's recommendations?

	rebating
	twisting
	churning
	wisdom

49. Sigmund buys a $10,000 life insurance policy on Guirty with a payor provision. Sigmund dies 4 years later. What happens to the premium?

	Policy is paid up for life
	Premiums are waived until Guirty reaches age 25
	Premiums must be paid by Guirty until age 25
	Guirty is responsible to pay all premiums

50. Which of the following provisions provides a sequence of beneficiaries for the distribution of policy proceeds in the event of the simultaneous death of both the insured and the primary beneficary.

	Common Disaster Provision
	Per Stirpes
	Per Capita
	Per Lineage

51. Who regulates qualified retirement plans?

	the state
	the state & the SEC
	ERISA
	MALISSA

52. Titus has absolutely assigned his $100,000 life insurance policy to the bank to cover a $75,000 mortgage. His wife is named as primary beneficiary. If Titus were to die which statement correctly reflects the insurance company's obligation?

	the insurance company would pay the bank $75,000 and $25,000 to his wife
	the insurance company would pay his wife $75,000 and the bank $25,000
	his wife would receive the entire amount
	the bank would receive the entire amount

53. The Florida Uniform Simultaneous Death act
1. Provides that when it is impossible to determine who dies last it is assumed the insured died last
2. It was designed to clear the way for paying claims
3. It determines who should be the surviving beneficiary

	I only
	II only
	III only
	I and II

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Thursday, February 8, 2007

test 4 second time around answers

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1. Correct!

2. Which of the following statements concerning social security benefits is true?
Correct Answer:	Michael retired at age 65. He has a 15 year old totally disabled daughter and a wife, age 45. The child will receive income for life. The wife also will receive a monthly benefit, even though she is under age 62.
Explanation:	DEATH BENEFITS: The child only receives a benefit until he/she is 18 (19 if in high school). They did away with college funding. RETIREMENT BENEFITS: The wife will receive a benefit, even though she is under age 62, because the child was disabled before age 22. The child will receive a benefit indefinately. DISABILITY BENEFITS: His disability benefit will be less because he had taken early retirement. TAXATION: S.S. benefits may be taxed up to 85%.
Concept:	None
	No further information available.

3. A Coverdell Savings Account is:
Correct Answer:	An after tax savings vehicle for education
Explanation:	These are education savings accounts funded with after tax dollars where the interest will not be taxed if the money is used for educational purposes. The monies must begin being distributed by the time the child reaches age 18. The contribution limits are capped at $2000. There are income limits that apply and a 10% penalty if certain conditions are not met. Page 250
Concept:	None
	No further information available.

4. Correct!

5. Which of the following statements is true concerning split dollar insurance?
Correct Answer:	It is a method of purchasing insurance.
Explanation:	Split dollar is a method of purchasing insurance. It is used by the businees owner, who has the ability to pay for insurance in order to help the employee purchase insurance if the emplyee has the need, but not the ability to pay.
Concept:	None
	No further information available.

6. In a typical split dollar policy the employer and the employee split the cost of the insurance. On an annual basis, the employer's outlay is equal to the:
Correct Answer:	increase in cash value
Explanation:	The employer's part of the premium is equal to the increase in cash value. The employee pays the balance. This is not really the way it is done, but the book says so. So be it!
Concept:	None
	No further information available.

7. Correct!

8. Correct!

9. Correct!

10. Correct!

11. Correct!

12. Which is not the primary purpose of Key Person insurance?
Correct Answer:	tax deductible premiums
Explanation:	Premiums are not deductible.
Concept:	None
	No further information available.

13. Which of the following best describes the normal conversion benefit available to terminated employees under a group life insurance policy?
Correct Answer:	The employee may convert to an individual whole life policy within 31 days without submitting evidence of insurability.
Explanation:	none
Concept:	None
	No further information available.

14. Correct!

15. Correct!

16. Correct!

17. Correct!

18. Correct!

19. Correct!

20. Correct!

21. Correct!

22. Correct!

23. Which of the following is true concerning key person life insurance?
Correct Answer:	The cash values are listed as an asset on the company's balance sheet.
Explanation:	The policy is acually a liability. But, the cash value is a tangible amount that adds to the balance sheet. The premiums are not tax dedcutible. As for split dollar, there is no such beast as a split dollar policy, split dollar is a METHOD of buying insurance, not a particular policy.
Concept:	None
	No further information available.

24. Correct!

25. Correct!

26. Correct!

27. Correct!

28. Correct!

29. Correct!

30. All the following statements concerning deferred compensation plans are correct except:
Correct Answer:	They receive favorable tax treatment from the IRS.
Explanation:	If someone were in a high tax bracket and receiving a bonus, taxes could eat the bonus. The bonus would be deferred, applying the bonus to a cash value policy on the life of anyone the company chooses. If the person died before retirement the proceeds of the policy would be paid to the person's beneficiary. If the person lived to retirement, the cash would be used to supplement retirement. Can discriminate with a deferred comp. plan.
Concept:	None
	No further information available.

31. Correct!

32. Correct!

33. Correct!

34. Correct!

35. Correct!

36. Which type of group coverage would give the individual a policy?
Correct Answer:	franchise insurance
Explanation:	Franchise insurance, also known as wholesale insurance, would give the indiviual a policy. Remember, with employer group insurance, the employee receives a certificate.
Concept:	None
	No further information available.

37. Correct!

38. For a group life plan to receive favorable tax treatment, the government imposes certain requirements to ensure that the rank-and-file employees are not discriminated against. Which of the following statements regarding eligibility requirements is not correct?
Correct Answer:	The life insurance must be the same amount for all.
Explanation:	The insurance does not have to be the same dollar amount. However, the amount of insurance provided to all employees must bear a uniform relationship to their level of compensation or position. In other words, a manager would receive more insurance than a supervisor. The cost for any amount of insurance above $50,000 would be included in the employee's salary for tax purposes.
Concept:	None
	No further information available.

39. Correct!

40. Correct!

41. Correct!

42. Correct!

43. Correct!

44. Correct!

45. Correct!

46. Correct!

47. Correct!

48. Correct!

49. Correct!

50. Correct!

51. Correct!

52. Correct!

53. Correct!

54. Correct!

55. Correct!

56. Correct!

57. Which of the following statements concerning Multiple Employer Trusts (METs) are true? 1. They are designed for employers with a large number of employees. 2. They may be self-funded or funded with contracts from insurance companies. 3. The employer must join the trust. 4. Employees receive a policy.
Correct Answer:	2 & 3
Explanation:	METs are designed for employers who have a small number of employees. If the MET is funding the trust with insurance contracts rather than self-funding, then the trust is the contract holder and each employee is receiving a certificate. Pg 190
Concept:	None
	No further information available.

58. Correct!

59. For whom is the entity plan best suited?
Correct Answer:	a partnership with many partners
Explanation:	The word "entity" tells you the question is referring to a partnership. The business purchases "one" policy on each of the partners. Had it been a corporation, the "stock-redemption" would have been used. Corporations-stock-redemption....Partnerships-Entity
Concept:	None
	No further information available.

60. Concerning Buy/Sell Plans in a corporation, with 3 equal stockholders, how many policies would be needed?
Correct Answer:	Stock Redemption - 3 policies
Explanation:	none
Concept:	None
	No further information available.

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Life 4 test and results

Friday, February 9, 2007

life law 1

last one taken at 6:30 am

Thursday, February 8, 2007

test 4 second time around answers

Blog Archive

About Me

1. Correct!

2. Correct!

3. Correct!

4. Old Man AnnaCee, 67 yrs old, has had a policy for 16 years. In addition to his regular grace period he will have an additional grace period of how many days?
Correct Answer:	21 days
Explanation:	For "natural "persons, aged 64 or older, there is an additional lapse notice of 21 days. Pg. 443 21st ed
Concept:	Grace Periods
	Chapter 29

5. Correct!

6. A Dually Licensed Agent:
Correct Answer:	Holds an insurance and a securities license at the same time
Explanation:	The agent must be insurance licensed as well as securities licensed.
Concept:	Administration and Regulation
	Chapter 29

7. Replacement is defined as any life insurance transaction in which new insurance is to be purchased and existing insurance is to be modified in certain specific ways. A way in which the existing insurance may be modified that brings the transaction within the definition of replacement is:
Correct Answer:	Conversion to reduced paid-up ins, continued as extended term Insurance, or otherwise reduced in value by use of nonforfeiture benefits or other policy values.
Explanation:	Be aware of what constitutes replacement. Any reduction in values, face amount or cash value will be deemed replacement and all the rules regarding replacement apply. I.E. notification to the issuing company as well as to the replacing company and full and fair disclosure.
Concept:	Marketing Practices
	Chapter 29

8. Correct!

9. Correct!

10. Florida rules on disclosure require: I. A buyers guide and summary prior to acceptance of a premium II. A 10 day free look and buyers guide provided at delivery III. Florida does not require a buyers guide
Correct Answer:	II only
Explanation:	Florida law does require a buyers guide be given to the applicant prior to acceptance of the premium if there is no 10 day free look. In Florida THERE IS A 10 DAY FREE LOOK!!!!. So, the law reads that if there is a ten day free look, which there is, then the buyer's guide may be given when the policy is delivered. The buyers guide is a guide that is "language the consumer can understand" HeeHeeHeeHee!!!! Lawmakers. And these guys get paid.
Concept:	Marketing Practices
	Chapter 29

11. Monty died in year 2 of his 20 year family income policy. Which of the following statements is true concerning the payout?
Correct Answer:	it will pay monthly for 18 years
Explanation:	The clock (in this case a 20 year clock) starts ticking with the family income policy the day the policy is issued, because it uses decreasing term to provide the income. The family maintenance's clock will start ticking at the time of death, because it uses level term.
Concept:	Life Insurance Policies
	Chapter 5

12. "Twisting" in policy replacement involves all the below except:
Correct Answer:	Replacing policies after full disclosure of all relevant values and facts
Explanation:	none
Concept:	Prohibited Practices
	Chapters 4 & 29

13. Correct!

14. Correct!

15. Correct!

16. Correct!

17. Which of the following agencies regulate Variable Life insurance products:
Correct Answer:	The Office of Insurance Regulation & Securities and Exchange Commission
Explanation:	The State's Department of Financial Services and the Securities and Exchange Commission always jointly regulate Variable Life products since it involves insurance AND securities.
Concept:	Administration and Regulation
	Chapter 29

18. Correct!

19. Which of the following are disadvantages of naming the insured's estate as beneficiary: I. Creditors can easily attach the proceeds II. Proceeds increase the size of the estate III. If there is a will it may be contested. IV. The advantages of settlement options are lost
Correct Answer:	all the above
Explanation:	none
Concept:	Beneficiaries
	Chapter 7

20. Correct!

21. Correct!

22. An "association group" may be eligible for group life insurance under Florida law if they meet which of the following criteria? 1. Must have been in existence for three years 2. Must hold monthly meetings 3. If the plan is contributory, a minimum of 100 members must participate 4. If the plan is non-contributory, all members must participate
Correct Answer:	3 & 4
Explanation:	An association of professionals licensed by the state must have been in existence for at least two years. The meetings must be held at least annually. Pg. 445...21st ed.
Concept:	Administration and Regulation
	Chapter 29

23. Which of the following statements is not correct regarding an association group?
Correct Answer:	must have been in existence for one year
Explanation:	the association must have been in existence for two years. Examples are CPA's, Lawyers, etc..
Concept:	Administration and Regulation
	Chapter 29

24. Correct!

25. Mary's age on the application for a $100,000 life insurance policy indicates that she is 31 when in fact she is actually 30 years old. This fact was discovered after her death. Which course of action would the company take?
Correct Answer:	Increase the death benefit to what the premium would have purchased for a 30 yr old woman
Explanation:	If the error was discovered after death, the benefit would be adjusted. If the error was discovered before death, the premium would be adjusted.
Concept:	Options, Provisions & Riders
	Chapters 6 & 29

26. Correct!

27. Correct!

28. Correct!

29. Correct!

30. Correct!

31. An individual may convert his industrial insurance policies to ordinary policies when his industrial policies total at least:
Correct Answer:	$3000
Explanation:	He would convert these for convenience & perhaps a lower cost per $1000 of insurance.
Concept:	Conversions
	Chapter 29

32. Correct!

33. Correct!

34. If a Dually Licensed Agent knows that a policy is going to be lapsed, according to the Dually Licensed Life Agent's rule, he/she must notify which of the following with-in 15 days?
Correct Answer:	The policy-owner only
Explanation:	Page 437... A dually licensed agent is one who holds an insurance license and a securities license.
Concept:	Administration and Regulation
	Chapter 29

35. From a TAX standpoint, when a policy-owner surrenders a life Insurance policy and receives a lump-sum payment of the cash value, which of the following applies?
Correct Answer:	The lump sum, less the policyowners cost basis, is taxable as ordinary income
Explanation:	none
Concept:	Taxation
	Throughout

36. Correct!

37. Correct!

38. Which of the following statements concerning par and non-par policies is correct?
Correct Answer:	premiums for par policies are higher than non-par
Explanation:	Participating policies are generally of a higher premium because they have an added expense for unexpected claims. If these claims do not occur then that money is returned to the policyowner in the form of a refund(dividend). It does not affect the cash values. The cash values of par and non par policies will be the same if all else is equal.
Concept:	Par and Non-Par Policies (Dividends)
	Chapters 2 & 29

39. Correct!

40. The incontestable clause applies to all the following except:
Correct Answer:	impersonation
Explanation:	This is an except question. We are looking for the one it does not apply to. In other words, which one can be contested forever. Remember the three I's (Impersonation, Intent to murder, no Insurable interst). These are all exceptions to the rule.
Concept:	Options, Provisions & Riders
	Chapters 6 & 29

41. Correct!

42. Correct!

43. Robert had a $100,000 policy which he converted to a reduced paid-up policy with a $55,000 death benefit. At the same time Robert purchased a Variable Universal policy that allowed him to choose the investments. Which word best describes this?
Correct Answer:	replacement
Explanation:	Any reduction in policy benefits would constitute a replacement and require action from the replacing agent. This action consists of 1. Replacement forms & 2. Full & fair disclosure. ...pg.438 21st..ed.
Concept:	Prohibited Practices
	Chapters 4 & 29

44. Correct!

45. In a viatical settlement the viator is:
Correct Answer:	the insured
Explanation:	page 440
Concept:	Marketing Practices
	Chapter 29

46. Which of the following is correct concerning the grace period for folks aged 64 & over? 1. They are afforded an additional 31 days of grace 2. They are afforded an additional 21 days of grace 3. Does not apply to policies held less than one year 4. Have no idea what you are talking about
Correct Answer:	2 & 3
Explanation:	Folks 64 and older are afforded an additional 21 days of grace if they have held their policies for more than one year. These requirements do not apply to policies that payable monthly or more frequently. pg. 443.21st ed.
Concept:	Grace Periods
	Chapter 29

47. Correct!

48. An insured has a $50,000 whole life insurance policy which has an accumulated cash value of $30,000. Upon the advice of his insurance agent he uses $20,000 of the cash value to pay for a single premium life insurance policy from the same company. The remaining $10,000 is used to purchase an annuity.Which of the following best describes the agent's recommendations?
Correct Answer:	churning
Explanation:	Twisting is defined as replacement with misrepresentation. Twisting is external, from one company to another. Churning is replacement with misrepresentation with-in the same company. Any replacement must be for the benefit of the insured.
Concept:	Prohibited Practices
	Chapters 4 & 29

49. Correct!

50. Correct!

51. Who regulates qualified retirement plans?
Correct Answer:	ERISA
Explanation:	Employee Retirement Income Security Act (ERISA)regulates qualified plans. It sets forth funding , participation, vesting, termination requirements, etc..The state does in fact regulate financial planners but not retirement plans.
Concept:	Administration and Regulation
	Chapter 29

52. Titus has absolutely assigned his $100,000 life insurance policy to the bank to cover a $75,000 mortgage. His wife is named as primary beneficiary. If Titus were to die which statement correctly reflects the insurance company's obligation?
Correct Answer:	the bank would receive the entire amount
Explanation:	Titus should have elected a collateral assignment, in which case the bank would have only been paid the balance of the loan. Since he did an absolute assignment, the bank would receive the entire amount.
Concept:	Options, Provisions & Riders
	Chapters 6 & 29

53. Correct!