Final Exam

1. Which clause was designed to protect the beneficiary if the insurance carrier attempts to deny payment of a death claim?
Incontestable clause
Insuring clause
Reinstatement clause
Death clause

2. Which analysis method helps an agent to maintain suitable sales conduct—assessing a client not only according to age, occupation and income earned, but also their financial needs?
Debt analysis
Capital needs analysis
Repayment analysis
Miscellaneous analysis

3. Which regulation requires insurers to deliver to purchasers of life insurance information that will improve the buyer’s ability to select the most appropriate plan of life insurance for the buyer’s needs and improve the buyer’s understanding of the basic features of the policy that has been purchased or is under consideration?
NAIC Life Insurance Disclosure Model Regulation
Employee Retirement Income Security Act
NAIC Security & Information Act
Basic Information Act

4. These kinds of annuities depend upon whether the customer has immediate income needs or would like to defer income and encourage it to grow for future use?
Immediate or Deferred
Single or Flexible
Fixed or Variable
Yield or Guarantee

5. When determining the capability of a client to evaluate investment risk, and agent should consider:
The general level of experience of the institutional customer in financial markets and specific experience with the type of instruments under consideration
The customer's ability to understand the economic features of the security involved
The customer's ability to independently evaluate how market developments would affect the security
All of the above

6. Which annuities are the simplest variety, providing guaranteed interest rates, guaranteed fixed investments, and the predictability of a set payout?
Set annuities
Fixed annuities
Variable annuities
Sunk annuities

7. The interest rate credited to the fixed indexed annuity is determined using an indexing formula. The most common index used is the:
Bitcoin
S&P 500
Nasdaq
Russell 2000

8. The _____ requires representatives to have a “reasonable basis” for recommending a variable annuity transaction
FINRA Rule 2821
Employee Retirement Income Security Act
NAIC Security & Information Act
Basic Information Act

9. Rule 2821 is focused on four main areas related to variable annuities, which is not one of them?
Suitability
Principal review and approval
Upselling
Training

10. For each variable annuity sale or exchange, both registered representatives and supervisors must complete written documents to support the following:
Efforts to gather sufficient information from the customer
The basis for their belief that the variable annuity and the initial subaccount allocations are suitable for the client, including a description of particular features and benefits
For exchanges, their basis for concluding that the transaction is suitable for the client in light of any surrender charge in the existing contract, any new surrender period in the new contract, and any benefits lost in the existing contract.
All of the above

11. The major advantage of a variable annuity is the tax advantage of deferred taxation on:
Dividends, interest, and capital gain
Estate planning
Assets
All of the above

12. Which is not a shared characteristic that both variable annuities and fixed annuities share:
Retirement income is their primary purpose
Purchase methods are the same
The same interest rates
The same types of annuity options

13. The following are true of variable annuities but not of fixed annuities:
Retirement income is their primary purpose
Purchase methods are the same
There is no guarantee of the principal, interest or the amount of payment
The guarantee of expense and mortality

14. Which annuity does not include a premium schedule and allows the contract owner to vary the amount of premiums paid as long as they fall between minimum and maximum amounts?
Single premium
Periodic premium
Flexible premium
Lump sum premium

15. The annuitant faces several risks for loss of investment in a variable annuity, name one?
Economic risk
Rising interest rates
Inflation
All of the above

16. Which type of life insurance is not regulated by Replacement Model Regulation?
Whole
Term
Permanent
Group

17. Replacing insurers are required to notify any other existing insurer that may be affected by the proposed replacement within how many business days?
1 day
5 days
14 days
30 days

18. Which is not considered a violation of Replacement Model Regulation?
Any deceptive or misleading information set forth in sales material
Failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement
The intentional incorrect recording of an answer
None of the above

19. In retirement, which is not a client's priority?
Retaining principal
Maximizing income
Minimizing taxes
Accumulating wealth

20. How many quarters of work are required for an individual to be fully insured for life under Social Security?
20
40
60
80

21. An estate plan is an arrangement for the transfer what?
Assets
Benefit
Social Security
Will

22. An investigation by legislators into the level of competence among the public on insurance uncovered the following:
People do not understand how limited the coverage they purchased is
Policies have a tendency to be more focused on limiting claims than to restricting claims to legitimate circumstances
Sales presentations can be misleading and lack substantial information
All of the above

23. Simply put, _____involves learning what is right or wrong, and then doing the right thing.
Ethics
Insurance
Twisting
Upselling

24. Which is not one of the four areas of ethical responsibility for an insurance agent:
Responsibilities to the agent’s insurer are covered under the concept of agency. The agent owes his or her insurer the duties of good faith, honesty and loyalty
Responsibilities to the agent’s favorite sports club require the agent to maintain the highest level of professional conduct and integrity in all sports contact in order to maintain a strong, positive image of the sports industry
Responsibilities to policy owners require the agent to meet the needs of the client, provide quality service, maintain loyalty, confidentiality, timely submission of applications and prompt policy delivery
Responsibilities to the public require the agent to maintain the highest level of professional conduct and integrity in all public contact in order to maintain a strong, positive image of the industry

25. Agents fulfill their ethical responsibilities to their insurers by providing the appropriate ____ to meet their consumers’ needs, as well as, quality service.
Products
Margins
Sales
All of the above

26. Which is not a duty of an agent to a prospect?
Educating the prospect about insurance products and the underwriting process
Treating all information obtained with confidentiality
To make the sale as quickly as possible
Disclosing all necessary information so that an informed decision can be made by both the insurer and the prospect

27. Which is not a duty of an agent?
See to it that the application is completed both accurately and completely
Properly explain why required information is necessary and how the information will be evaluated by the underwriter
To earn the highest commission as possible
Ensure that accuracy and honesty are imperative in the application

28. The agent or broker is responsible for service before and after the sale, which is not incuded in those services?
Maintaining accurate client records
Maintaining complete and accurate records of all business transactions
Knowledge of new coverage and products
Changing the policy to one with a higher commission

29. Which is an example of a of a prohibited activity?
Forgery
Misrepresentation
Discriminiation
All of the above

30. Advising a client that an auto policy will cover liability when it is only for collision is an example of:
Misrepresentation
Altering applications
Premium theft
Unlicensed sales

31. Advising the customer of benefits or funds that will be received, but they are not specified in the contract is an example of:
Altering applications
Premium theft
Unlicensed sales
Rebating

32. Pre-retirement planning should begin at about age ___ or sooner.
20
30
40
65

33. When selling annuities, an example of possible agent and broker abuses would be:
Individuals sold deferred contracts when they needed immediate income
Existing annuity owners, only a few years away from the end of their surrender charge periods, convinced to exchange their contracts for new contracts that impose new eight to ten year surrender charge periods
Individuals not informed of fees assessed on withdrawals
All of the above

34. Which law is named for an elderly Florida couple who were victims of a blatantly unsuitable annuity sale?
Elderly Vulnerable Act
John and Patricia Seibel Act
Elderly Suitability Act
John and Jane Doe Act

35. The “Safeguard Our Seniors Act” also:
Makes the act of “twisting” an annuity to a senior consumer a third degree felony
Extends the “free look” period for the purchase of an annuity by a senior consumer from 14 to 30 days
Authorizes the Department to require an agent to make monetary restitution to a senior consumer they’ve harmed
All of the above

36. Before executing a purchase or exchange of an annuity resulting from a recommendation to a senior consumer, a reasonable effort must be made to obtain information concerning the suitability of the recommendation. Which would not be included in this information?
Investment objectives of the consumer
The source of the funds to be used to purchase the annuity
The prospects favorite sports clubs
The applicant’s annual income

37. What is the name of the responsibility that includes handling of client funds and the maintaining of confidential information?
Dexterity responsibility
Fiduciary responsibility
Annuity responsibility
Windowing responsibility

38. Insurers and insurance agents must maintain or make available to the department records of the information collected from the senior consumer and other information used in making the recommendations that were the basis for insurance transactions for how many years after the insurance transaction is completed by the insurer?
1 year
2 years
5 years
10 years

39. What is the penalty for churning or twisting?
Misdemeanor of the third degree
Misdemeanor of the second degree
Misdemeanor of the first degree
First degree felony

40. Which fund could also be considered an emergency expense fund, helping to cover things that come up during bereavement?
Supplemental fund
Readjustment fund
Educational fund
Retirement fund