Download MA Producer Life Insurance Exam Prep: Questions and Answers and more Exams Insurance law in PDF only on Docsity!
MA Producer Life Insurance Exam Prep
Questions and Answers Already Passed
Which of the following is an example of an unauthorized insurance company in Illinois?
Company C, a Florida-based company that does not hold a certificate of authority Illinois but whose products are approved by the Illinois insurance department
Company D, a Canadian company that holds a certificate of authority in Illinois
Company B, an Iowa-based company that does not hold a certificate of authority in Illinois and sells products that are not approved by the Illinois insurance department
Company A, an Illinois-based company that holds a certificate of authority in Illinois and 32
other states ✔✔Company B, an Iowa-based company that does not hold a certificate of authority
in Illinois and sells products that are not approved by the Illinois insurance department
All of the following statements regarding the career agency distribution system are correct EXCEPT:
There are two types, the general agency system and the managerial system.
The managerial form of career agency system uses company employees as the agency managers.
Personal producing general agents (PPGAs) are commonly hired to manage career agencies.
It uses agents who primarily if not exclusively represent one insurer. ✔✔Personal producing
general agents (PPGAs) are commonly hired to manage career agencies.
Why would a large manufacturer choose to self-insure rather than buy an insurance policy from an insurance company?
to avoid having to comply with state insurance laws dealing with employee benefits
so they can pick and choose which losses they cover
to shelter company cash from federal taxation
to save insurance premiums by paying relatively minor losses out of company funds ✔✔to save
insurance premiums by paying relatively minor losses out of company funds
The federal Risk Retention Act of 1986 contains guidelines for which of the following entities?
risk retention groups
Fraternal insurance companies
reinsurance companies
surplus lines insurance companies ✔✔risk retention groups
To be considered insurable, a risk (and the potential loss it represents) must meet which one of the following requirements?
The loss must be definable as to time, cause, and location.
The loss must be certain to occur.
John refuses to buy life insurance because he figures he has enough money in his savings to pay for his burial when he dies.
Robert purchases life insurance because he figures doing so is far less expensive than trying to save all the money his survivors would need upon his death.
Carol eats a healthy diet and exercises regularly, hoping that doing so will keep her healthy.
✔✔Robert purchases life insurance because he figures doing so is far less expensive than trying
to save all the money his survivors would need upon his death.
An insurance producer tells a life insurance applicant that he has the authority to waive the medical exam that is normally required by the insurer with every application. The insurer may be required to accept the application without a medical exam due to the producer's:
express authority
imputed authority
implied authority
apparent authority ✔✔apparent authority
The purpose for the Policy Summary, which must be given to every insurance applicant before an application is signed, is to:
provide buyers with details of the specific insurance contract they are considering for purchase
explain the step-by-step process involved in purchasing the recommended product
explain the general features, benefits, and conditions of the type of insurance being considered
disclose all the hidden costs associated with the policy being applied for ✔✔provide buyers with
details of the specific insurance contract they are considering for purchase
Though not specifically cited in the producer's contract, the producer is expected to telephone prospects on the insurer's behalf to arrange sales appointments. This is an example of what kind of producer authority?
implied authority
apparent authority
perceived authority
express authority ✔✔implied authority
The contract between the producer and insurer, setting forth certain acts and duties the producer is specifically authorized to perform, describes the producer's:
implied authority
apparent authority
express authority
agency authority ✔✔express authority
consideration
unilateral ✔✔unilateral
An applicant for a $500,000 whole life insurance policy pays the initial premium along with his application. In this case, what has the applicant done?
made a counteroffer to the insurer
accepted a counteroffer from the insurer
made an offer to the insurer
accepted an offer from the insurer ✔✔made an offer to the insurer
How often must the Commissioner examine the affairs and transactions of every authorized insurer?
once every two years
once every five years
once every three years
annually ✔✔once every five years
Which of the following is not within the powers of the Commissioner of Insurance?
writing insurance laws
examining insurers
investigating insurance producers
issuing insurance regulations ✔✔writing insurance laws
Which of the following is NOT a power granted to the Massachusetts Commissioner of Insurance?
investigating suspected violations of the insurance code
enforcing insurance laws
issuing regulations to administer the insurance code
writing insurance laws ✔✔writing insurance laws
Which of the following is directly responsible for regulating the insurance industry in Massachusetts?
Commissioner of Insurance
state legislature
Attorney General
Governor ✔✔Commissioner of Insurance
rebating premiums
discrimination among risks
fixing premium rates among insurers
coercion ✔✔discrimination among risks
Which of the following is clearly not a rebate?
giving an insurance prospect a gift for considering a policy
accepting a gift in exchange for buying insurance
reducing premiums due to an insurer's favorable claims experience
returning a portion of the premium on a new policy ✔✔reducing premiums due to an insurer's
favorable claims experience
All of the following statements are true about applying for a nonresident producer's license in Massachusetts EXCEPT:
The home state must grant licenses to Massachusetts residents on a reciprocal basis.
An applicant's license must be in good standing in the home state.
An applicant must establish residency in Massachusetts.
An applicant must pay a fee. ✔✔An applicant must establish residency in Massachusetts.
To qualify for an insurance producer's license in Massachusetts, a person must have all of the following EXCEPT:
licensing fee
college degree
good moral character
18 years of age ✔✔college degree
In Massachusetts, which of the following persons is NOT required to have an insurance producer's license?
Richard, who only sells variable annuities
Mickey, who negotiates insurance contracts
Sven, who administers employee benefits for his employer
Maureen, who sells life insurance ✔✔Sven, who administers employee benefits for his employer
What must an insurance company do to make a producer its agent?
appoint the producer as its agent
employ the producer
accept an insurance application submitted by the producer
license revocation
license suspension ✔✔imprisonment
Which of the following actions would NOT subject a producer to license probation, suspension, revocation, or nonrenewal?
failure to meet sales goals
falsifying financial records
disobeying a cease and desist order
incompetency ✔✔failure to meet sales goals
After the first 36-month period following licensure, a producer is required to complete how many hours of continuing education per license renewal period?
45 hours
24 hours
36 hours
12 hours ✔✔45 hours
Federal law requires that businesses fairly and accurately report consumer information through which of the following?
CAN-SPAM Act
Telemarketing Sales Rule
Fraud and False Statements section
Fair Credit Reporting Act ✔✔Fair Credit Reporting Act
Which of the following pieces of legislation controls the manner in which businesses treat consumer information when it is used for insurance purposes?
Fair Credit Reporting Act
Consumer Privacy Act
Fraud and False Statements section
Interstate Commerce Clause ✔✔Fair Credit Reporting Act
Which of the following best describes insurable interest?
It refers to the role life insurance can play in protecting policyowners from investment fraud.
It refers to the financial relationship between the policyowner and the insured person or property.
It describes the basic relationship between the insurance company and the policyowner.
It refers to the maximum amount of insurance that may be purchased on the insured person or
property. ✔✔
All of the following are automatically deemed to represent an insurable interest EXCEPT:
ABC Corp. (the applicant) and its key executive
Karen (the disabled applicant, age 28), and her father who cares for her.
Sue (the applicant) and her husband
Frank (the applicant) and his elderly neighbor ✔✔Frank (the applicant) and his elderly neighbor
Life insurance has been purchased by ABC Company on the lives of two partners, Hugh and Danny, and three key employees Eileen, Vern, and June. Which of the following would apply if Hugh and June were to leave the business?
The company could keep the life insurance it has on both Hugh and June, even though both are no longer employed there.
The company would have to drop its coverage for both Hugh and June within 30 days of their departures.
The company could keep the life insurance it has on Hugh, since he is a principal of the company, but would have to drop June's coverage, because she is not.
The company can only retain its coverage on June because she is not a principal of the company.
✔✔The company could keep the life insurance it has on both Hugh and June, even though both
are no longer employed there.
When may an insurer cancel either whole life or term life insurance?
The insurer may cancel either type of policy without reason at any time.
The insurer may not cancel either type of life insurance policy under any circumstances.
The insurer may cancel either type of policy only if the insured becomes uninsurable.
The insurer may cancel both types of policies if the policyowner does not pay the premiums. ✔✔The insurer may cancel both types of policies if the policyowner does not pay the premiums.
Sylvia's insurer guarantees a fixed death benefit for the policy she owns. Based on this, which one of the following benefits is also most likely guaranteed with this policy?
policy dividends
her ability to borrow an interest-free loan from the cash value
payment of premiums on Sylvia's behalf in the event of emergencies
the policy's cash value ✔✔the policy's cash value
Harry and Connie each want to buy life insurance that will provide a guaranteed death benefit whenever they die, will generate a guaranteed cash value they can access while living, and even return excess premiums to them. Which of the following would best fit this couple's needs?
term life insurance
variable life insurance
participating whole life insurance
Which of the following most accurately describes the basic function of a life insurance policy's net premium?
The net premium is the amount an individual actually pays to provide all the benefits promised in the policy regardless of premium mode.
The net single premium is the amount required to cover the policy's promised benefits, without accounting for the insurer's policy-related expenses.
The net premium is the amount actually charged to the policyowner.
The net premium represents the insurer's mortality charge. ✔✔The net single premium is the
amount required to cover the policy's promised benefits, without accounting for the insurer's policy-related expenses.
Alice wants to spread her life insurance premiums over the year, rather than pay a single annual premium. She asks her agent what that would mean in terms of the sum of premiums paid. Which of the following is the correct response?
Whichever mode of premium she chooses, the sum of premiums over the course of the year is the same.
The sum of premiums will be lower than if she paid a single annual premium.
The sum of premiums may be higher or lower than the single annual premium, depending on whether the annual premium is paid at the start or end of the policy year.
The sum of premiums will be higher than if she paid a single annual premium. ✔✔The sum of
premiums will be higher than if she paid a single annual premium
All the following statements about the net premium for a traditional life insurance policy are correct EXCEPT:
Calculating the net single premium is the first step in calculating the gross premium charged to the policyowner.
The net premium is the insurer's estimated cost to provide the policy benefits without accounting for the insurer's expenses.
The net premium reflects two of the three premium factors: mortality and interest.
The net single premium for a traditional life insurance policy is the amount actually charged to
the policyowner who wants to purchase the policy with a single premium payment. ✔✔The net
single premium for a traditional life insurance policy is the amount actually charged to the policyowner who wants to purchase the policy with a single premium payment.
With respect to third-party ownership of life insurance in the personal insurance market, all the following statements are true EXCEPT:
The insured has the right to name the beneficiary.
Policy ownership can be transferred to anyone without there having to be an insurable interest between that person and the insured.
