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TN LIFE PRODUCER EXAM | QUESTIONS
AND CORRECT ANSWERS | ALREADY
GRADED A+ | LATEST VERSION (JUST
RELEASED)
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? Partially taxable Tax Deductible Nontaxable Taxed as ordinary income ------CORRECT ANSWER---------------Taxed as ordinary income Which of the following is an example of defamation?
- Making statements that encourage the purchase of term life insurance over whole life insurance
- Publishing a newsletter that makes reference to reputable brokers in the area
- Circulation brochures that falsely denounce the financial condition of an insurer
- Issuing pamphlets containing false information about term life insurance --- ---CORRECT ANSWER---------------Circulating brochures that falsely denounce the financial condition of an insurer D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to? Ex-wife Current wife Estate Split equally between the ex-wife and current wife ------CORRECT ANSWER---------------Ex-wife
Term Life Policies that have the ability to be converted to permanent coverage may do so during a specified time period. This conversion period may be altered by the policyowner is controlled by the NAIC is the same in all contracts varies according to the contract ------CORRECT ANSWER--------------- Varies according to contract The combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy Decreasing Universal Variable Level ------CORRECT ANSWER---------------Decreasing A policy that becomes a Modified Endowment Contract (MEC): will no longer allow for policy loans must be placed in an irrevocable trust can never be reinstated after a lapse will lose many of its tax advantages ------CORRECT ANSWER--------------- Will lose many of its tax advantages A business entity can be defined as a(n)
- agency that must only operate outside of Tennessee
- agency that must only operate inside of Tennessee
- association or a limited liability company
- business that requires approval by the Attorney General to transact business ------CORRECT ANSWER---------------Association or a limited liability company
- Is not required ------CORRECT ANSWER---------------Must be sent by registered or certified mail to the producer's address on file S is covered by a whole life policy. Which insurance product can cover his children? Assignment provision Payor Benefit Accelerated benefit rider Child term rider ------CORRECT ANSWER---------------Child term rider What is the purpose of a Policy Summary It details the commissions earned by the agent It guarantees a policy will be issued It allows the consumer to compare the costs of different policies It highlights the critical parts of the policy issued ------CORRECT ANSWER- --------------It highlights the critical parts of the policy issued P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
- P cannot borrow against the policy's cash value when disabled
- P will have to pay income taxes on the amount of premiums waived
- P will still receiver declared dividends
- P cannot assign ownership of the policy while premiums are being waived ------CORRECT ANSWER---------------P will still receive declared divideneds Which of the following Life insurance policies combine term insurance with an investment element? Increasing Term Life Decreasing Term Life Universal Life Graded Life ------CORRECT ANSWER---------------Universal Life
The Tennessee Guaranty Association is subject to review and regulation by the Commissioner. A financial statement must be submitted no later than _____ of each year. January 3rd February 13th March 30th April 30th ------CORRECT ANSWER---------------March 30th Which of these is a valid Tennessee regulation for referral fees?
- Referral fees can be unlimited in amount
- If the referral sale involves replacement, the Notice Regarding Replacement form is not required
- Referral fees may only be paid in the event a policy is purchased
- The Commissioner may establish by rule a maximum amount for each referral ------CORRECT ANSWER---------------The Commissioner may establish by rule a maximum amount for each referral The amount of coverage on a group credit life policy is limited to: Half of the insured's total loan value The insured's total loan value 75% of the insured's total loan value $25,000 ------CORRECT ANSWER---------------The insured's total loan value Which of the following information is NOT required to be included in a Whole Life policy? Policy's loan interest rate Policy's guaranteed dividend table Policy's premium Policy's cash value table ------CORRECT ANSWER---------------The Commissioner may establish by rule a maximum amount for each referral
- Only a 10% penalty on the withdrawal of funds ------CORRECT ANSWER- --------------Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified plan S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? 403(b) Plan Deferred Premium Single Premium Period Certain ------CORRECT ANSWER---------------Single Premium Quarterly premium payments increase the annual cost of insurance because:
- insurer risk exposure is greater
- interest to the insurer is increased while administrative costs are decreased
- mortality costs are greater
- interest to the insurer is decreased while the administrative costs are increased ------CORRECT ANSWER---------------interest to the insurer is decreased while the administrative costs are increased The USA Patriot Act was enacted in: 2001 2002 2003 2004 ------CORRECT ANSWER--------------- 2001 Variable Whole Life Insurance can be described as: Both an insurance and securities product an insurance product only
a securities product only the insurance company assumes the investment risk ------CORRECT ANSWER---------------Both an insurance and securities product The automatic Premium Loan Provision is designed to:
- Provide a source of revenue to the insurance company
- Avoid a policy lapse
- Allow a policyowner to request a policy loan
- allow a policyowner to take out additional coverage without evidence of insurability ------CORRECT ANSWER---------------Avoid a policy lapse All of these are considered a producers breach of fiduciary duty EXCEPT: Misappropriation of premiums Conversion of premiums Improper withholding of premiums Allowing premiums to be submitted electronically ------CORRECT ANSWER---------------Allowing premiums to be submitted electronically A(n) _______ ________ Life policy combines investment choices with a form of Term coverage: Straight Whole Variable Universal Variable Term Adjustable Universal ------CORRECT ANSWER---------------Variable Universal When engaged in an insurance transaction in Tennessee, the producer represents the: insured Commissioner beneficiary insurer ------CORRECT ANSWER---------------Insurer
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: Bilateral Unilateral Aleatory Adhesion ------CORRECT ANSWER---------------Bilateral Typically a life insurance death benefit is paid as a lump-sum payment. A(n) _________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment. Settlement Dividend Conversion Aleatory ------CORRECT ANSWER---------------Settlement Which of the following statements is CORRECT about accelerated death benefits?
- The full face amount is available as an accelerated benefit
- Those on Social Security disability automatically qualify for this benefit
- This provision is usually provided with an increase in premium
- Must have a terminal illness to qualify ------CORRECT ANSWER------------- --Must have a terminal illness to qualify A life insurance policy would be considered a wagering contract WITHOUT insurable interest premium payment agent solicitation constructive delivery ------CORRECT ANSWER---------------insurable interest
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death? Survivorship Life Family Plan Joint Life Whole life and Level Term Rider ------CORRECT ANSWER---------------Joint life Which rider provides coverage for a child under a parent's life insurance policy? Spouse term rider Base insured rider Payor benefit rider Child term rider ------CORRECT ANSWER---------------Child term rider Which of the following consists of an offer, acceptance, and consideration? Warranty Estoppel Contract Representation ------CORRECT ANSWER---------------Contract Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? Modified Whole Life 20 - Pay Life Decreasing Term Endowment ------CORRECT ANSWER---------------Decreasing Term T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? Income for a fixed period stated in the contract Income that cannot be outlived by the owner
No limit to the fine ------CORRECT ANSWER---------------$1,000 per violation The premiums paid by an employer for his employee's group life insurance are usually considered to be: tax-deductible to the employer partially deductible to the employee tax-deductible to the employee taxable income to the employee ------CORRECT ANSWER---------------tax- deductible to the employer An insured may normally delay the payment of a cash value loan or surrender value for up to 2 months 4 months 6 months 8 months ------CORRECT ANSWER---------------6 months T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company,
- does NOT have to make any further payments
- MUST make full payments to the beneficiary
- MUST make half-payments to the beneficiary
- has the option to continue making payments based on what has already been paid out ------CORRECT ANSWER---------------does NOT have to make any further payments
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? Agents report MIB Report Inspection report Attending physicians report ------CORRECT ANSWER--------------- Inspection Report P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? Family Benefit policy Family Maintenance policy Family income policy Family Survivor policy ------CORRECT ANSWER---------------Family Maintenance policy The Commissioner notifies the association of an insolvent insurer no later than ____ after receiving notice of the insurer's insolvency 3 days 5 days 10 days 30 days ------CORRECT ANSWER---------------3 days What type of policy would offer a 40-year old the quickest accumulation of cash value? Paid-up at 65 20 - pay life 30 - pay life Straight whole life ------CORRECT ANSWER--------------- 20 - pay life
W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n): Flexible Premium Deferred Annuity Variable Annuity Immediate Annuity Straight Life Annuity ------CORRECT ANSWER---------------Immediate annuity K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? Return of premiums paid Cash value plus interest $20,000 death benefit Face amount plus intersest ------CORRECT ANSWER---------------$20, death benefit Post-tax dollar contributions are found in 401K investments Traditional IRA investments SIMPLE Investments Roth IRA Investments ------CORRECT ANSWER---------------Roth IRA Investments B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of additional Term life coverage at any time additional Term life coverage at specified times additional Whole Life coverage at any time additional Whole Life coverage at specified times ------CORRECT ANSWER---------------additional Whole Life coverage at specified times
One becomes eligible for Social Security disability benefits after having been disabled for 3 months 5 months 6 months 12 months ------CORRECT ANSWER---------------5 months J applies for an insurance policy. What BEST describes the particular terms of this policy? AM Best Statement Policy Summary Provisional Page Buyer's Guide ------CORRECT ANSWER---------------Policy summary All of these are powers of The Commissioner EXCEPT Hold hearings Enforce insurance laws Incarcerate a producer Issue subpoenas ------CORRECT ANSWER---------------Incarcerate a producer Which of these Nonforfeiture Options continue a build-up of cash value? Waiver of Premium Extended Term Reduced Paid-Up Cash Surrender ------CORRECT ANSWER---------------Reduced Paid-Up What type of life insurance incorporates flexible premiums and an adjustable death benefit? Endowment Policy Modified Whole Life
Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner? Irrevocable beneficiary Tertiary beneficiary Primary beneficiary Revocable beneficiary ------CORRECT ANSWER---------------Irrevocable beneficiary All individuals covered under a group contract will receive a(n) certificate receipt of coverage master policy individual policy ------CORRECT ANSWER---------------certificate How long does an individual have to "rollover" funds from an IRA or qualified plan? 60 days 90 days 120 days No limit ------CORRECT ANSWER---------------60 days J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct?
- The gross premium is higher on a monthly payment mode as compared to being paid annually
- The gross premium is lower on a monthly payment mode as compared to being paid annually
- The cash value from a life policy paid on a monthly basic builds quicker than one paid on an annual basis
- The face amount of a life policy paid on a monthly basis is higher than one paid on an annual basis ------CORRECT ANSWER---------------The gross
premium is higher on a monthly payment mode as compared to being paid annually K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? Binding Initial Premium Conditional Contingent ------CORRECT ANSWER---------------Conditional All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT Income derived from the TSA is received income tax-free TSA's are available to public school employees Contributions to the TSA are tax-deductible Interest earned by TSA is tax deferred ------CORRECT ANSWER------------- --Income derived from the TSA is received tax-free Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase? Joint policy Joint survivor policy Whole life policy with other insured rider Whole life policy with a Guaranteed insurability option ------CORRECT ANSWER---------------Whole life policy with other insured rider Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? Consideration
