life law 1

Life Law 1

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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!

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