Paying insurance premiums on a more frequent basis will cause the policy to have

You’re required to maintain all funds that represent premium in the separate premium account. This includes:

Inhaltsverzeichnis Show

Common causes of shortages in separate premium accounts
Which of the following terms means the frequency of premium payment?
What affects the amount of an insurance premium quizlet?
What is the premium of an insurance policy quizlet?
Which factors are taken into consideration when an insurance company determines the premium rate?

Premium taxes
Premium financing proceeds
Agency bill cancellation return premiums

It’s important to provide the business oversight necessary to protect the account from shortages.

See RCW 48.18.170 (leg.wa.gov).

Common causes of shortages in separate premium accounts

Some fail to make timely deposits into the separate premium account. Some insurers are sweeping the account within one day. If a daily deposit is not made, the sweep may occur before the funds are deposited and overdraw the account.
Poor recordkeeping practices that result in transferring more fee and agency-bill commission income from the separate premium account than the agency is entitled to are common.
Uploading errors that result in transmitting a payment multiple times can result in shortages.
Skimming occurs when not all of the funds are deposited into the separate premium account. This can happen when the agency collects substantial premiums in the form of currency and coin. (Look for insurer sweeps coming out of the bank account or check payments by your agency without a corresponding receipt of premium money.)
Advancing premiums for customers without maintaining an official record of the account receivable happen often. Look for insurer sweeps coming out of the bank account or check payments by your agency without a corresponding receipt of premium money. Without a list of whose premium has been advanced and some corresponding paperwork/agreement, your agency may not collect premium. The source of the account shortage also may be difficult to pinpoint later.
Sometimes refunding agency bill cancellation return premiums from the account without depositing the unearned commission amount the agency owes from the operating account happens.
Bank fees are covered to transmit payments to finance companies as an accommodation for clients without reimbursing the costs from the operating account. These customer accommodation fees should be reimbursed to the premium account from the operating account.
Bank charges assessed against the separate premium account can cause a shortage (e.g. monthly service charges; NSF (non-sufficient funds) charges on client checks, and overdraft charges). It’s a good practice to monitor the bank account on a frequent basis (daily if possible) to spot problems before they compound. The bank fees should be reimbursed to the premium account from the operating account, if the agency is not maintaining sufficient additional funds in the premium account.
Merchant fee credit/debit card processing charges coming out of the premium proceeds can cause shortages. Some agencies process all card transactions online to the insurer or broker’s account, to avoid having to absorb the merchant fees. If your agency processes card transactions in the separate premium account, you’ll need to:
- Maintain additional funds in the account sufficient to absorb the fees.
- Track the additional funds remaining in the account.
- Periodically deposit additional funds in the account to prevent the merchant fees from depleting insurance premiums.

Game Title: Colorado L&H

Question: 1

How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed	Dividends are not taxble
Taxed as ordinary income	Taxed as capital gains
If the dividends exceed the total premium payments for the insurance policy, the excess dividends are considered taxable income

Game Title: Colorado L&H

Question: 2

An immediate annuity consists of a:
Single premium	Variable premium
Flexible premium	Deferred premium
An immediate annuity has a single premium.

Game Title: Colorado L&H

Question: 3

Why is an applicant’s signature required on a life insurance application?
To attest that the statements on the application are accurate to the best of the applicant’s knowledge	To attest that the statements on the application are warranties
To give power of attorney to the producer if needed	To attest that all statements on the application are guaranteed to be true
An applicant's signature represents that the statements on the application are true to the best of the applicant's knowledge.

Game Title: Colorado L&H

Question: 4

When a minor is designated as the sole primary beneficiary,
A guardian will be court-appointed in the event of a death claim	A contingent beneficiary must be named
The minor has immediate access to all proceeds upon death of the insured	It is known as a tertiary beneficiary

Game Title: Colorado L&H

Question: 5

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable	Tertiary
Irrevocable	Contingent
With a revocable beneficiary designation, the policyowner may change the beneficiary at any time without notifying or getting permission from the beneficiary.

Game Title: Colorado L&H

Question: 6

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory	Adhesion
Unilateral	Consideration
Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss.

Game Title: Colorado L&H

Question: 7

C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most?
The cost	The nonforfeiture options
The contestable period	The assignment of ownership
In this situation, the cost of insurance is most important when an insured owner is trying to decide whether to convert term insurance at the insured's original age or the insured's attained age.

Game Title: Colorado L&H

Question: 8

In Colorado, a life insurance applicant has __ days after policy for a full refund of premium if not satisfied for any reason
15	10
20	25
The free-look period for individual life insurance is 15 days.

Game Title: Colorado L&H

Question: 9

Which of the following nonforfeiture options offers the highest death benefit?
Extended term	Cash surrender
Reduced paid-up	Dividend
Choosing the "extended-term option" allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy.

Game Title: Colorado L&H

Question: 10

Who is not eligible to receive commissions from the sale of an insurance product?
Corporate executive	Licensed home office employee
Personal producer	General agent
A corporate executive is not eligible to receive commissions from the sale of an insurance product.

Game Title: Colorado L&H

Question: 11

Life insurance immediately created an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable Life	Universal life
Fixed annuity	Modified endowment contract
The variable nature of a variable whole life insurance is its death benefit. However, if investment performance is poor, the death benefit will not go lower that the policy's guaranteed minimum.

Game Title: Colorado L&H

Question: 12

If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a
Separate insurance trust account	Joint savings account
Combined trust account	Bonded insurance trust account
If a producer is going to deposit any premium or returned premium funds into a bank or savings account (until remitting the funds to the insurer or person entitled to the funds), he/she must use a separate insurance trust account. Any such deposits are subject to Colorado fiduciary law.

Game Title: Colorado L&H

Question: 13

A Variable Annuity has which of the following characteristics?
Underlying equity investments	Only available with single premium
Offers a fixed interest rate	Does not require an insurance license
Variable annuities involve underlying equity investments in a separate account.

Game Title: Colorado L&H

Question: 14

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?
Contributory	Noneligible
Noncontributory	Eligible
Employees share in the premium cost with contributory plans.

Game Title: Colorado L&H

Question: 15

Company Z has a cross purchase buy-sell agreement in place among its 3 founding partners. If the agreement is funded with individual insurance, what would it require?
Each partner must own a policy on the other partners	One policy is owned and paid for by the company
One policy is owned by the company and premiums are split equally among the partners	Each partner owns their own individual policy
In this situation, each partner must own a policy on the other partners.

Game Title: Colorado L&H

Question: 16

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 basis builds quicker than one paid on an annual basis	The face amount of a life policy on a monthly basis is higher that one paid on an annual basis
A premium payment mode that is more frequent than an annual payment will result in a higher gross premium.

Game Title: Colorado L&H

Question: 17

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums	Refund of all premiums paid, plus interest
Refund of all premiums paid	Full face amount
If an insured dies during the grace period of a life insurance policy before paying the past due premium, the beneficiary will receive the face amount of the policy less any past due premiums.

Game Title: Colorado L&H

Question: 18

A company that has not been authorized to operate in Colorado is known as
A nonadmitted insurer	A prohibited entity
An alien company	An undesirable carrier

Game Title: Colorado L&H

Question: 19

A limited-pay life policy has:
Premium payments limited to a specified number of years	Graded death benefits
No cash value	Premium payments that are paid to age 100

Game Title: Colorado L&H

Question: 20

Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement	Insuring
Conversion	Consideration
Most insurers require evidence of insurability be provided upon reinstatement of a lapsed policy.

Game Title: Colorado L&H

Question: 21

ABC insurance company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has:
Waived one of its legal rights	Issued a voidable policy
Committed an act of fraud	Assigned the risk to a reinsurer
If an insurer accepts an application that contains unanswered questions and makes the application part of the life contract, the company has waived one of its legal rights.

Game Title: Colorado L&H

Question: 22

In Colorado, which of the following is true regarding the commingling of an insured’s funds with the funds of the producer?
It is never okay	It is okay with the insured's written approval
It is okay with the insurer's written approval	It is okay if records are kept on the transaction
It is never okay to commingle the insured's funds with the producer's funds.

Game Title: Colorado L&H

Question: 23

If a producer chooses to conduct business under an assumed name, when must notification be given to the Commissioner?
Prior to using the assumed name	No notice is required
No later than 30 days after using the assumed name	At the time of license renewal
An insurance producer doing business under any name other than the producer's legal name is required to notify the commissioner of insurance prior to using that assumed name.

Game Title: Colorado L&H

Question: 24

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M’s policy goes into effect, EXCEPT:
Free-look period has expired	Policy is delivered
Insurance company issues policy	Initial premium is collected
In this situation, the policy will go into effect after all these actions occur EXCEPT the expiration of the free-look period.

Game Title: Colorado L&H

Question: 25

Which information is NOT included in the Colorado Supplement to the Summary of benefits and coverage form?
Insurer’s prior year financials	Deductibles
Covered cancer screenings	Balanced billing

Game Title: Colorado L&H

Question: 26

If a producer is found to be writing primarily controlled business,
The commissioner will not renew the license	The producer will be forced to return all commission to the insurer
The commissioner will have the producer imprisoned	The product must assign a portion of the business to another producer

Game Title: Colorado L&H

Question: 27

All of the following are considered a form of advertisement EXCEPT
Communication or materials used within an insurer’s own organization	Newspapers
Free lunch seminars	Telemarketing scripts

Game Title: Colorado L&H

Question: 28

An insurer that terminates a producer’s appointment must inform the Commissioner within how many days?
30	15
45	55

Game Title: Colorado L&H

Question: 29

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion	Modification
Exchange	Adjustable
The conversion provision allows the policyowner to change the policy to a permanent life policy without providing evidence of insurability.

Game Title: Colorado L&H

Question: 30

What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase	Benefit payments start within 5 years of initial purchase
Normally tied to a specific equity or stock index	Periodically contributions begin immediately
An immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase.

Game Title: Colorado L&H

Question: 31

A life insurance applicant realized he failed to disclose material medical history and calls the producer. Any changes made to the application must be initiated by the
Applicant	Producer
Underwriter	Insurance commissioner
When an applicant makes a mistake in the information given to a producer in completing the application, the applicant can have the producer correct the information, but the applicant must initial the correction.

Game Title: Colorado L&H

Question: 32

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?
Life settlement contract	Cash surrender
Buy-sell arrangement	1031 exchange
A life settlement contract allows a policyowner to sell a life insurance policy for more than its cash value.

Game Title: Colorado L&H

Question: 33

Which of the following is a duty of the Commissioner?
Reviewing and approving license applications	Writing insurance laws
Settling insurance rates	Settling sales quotes

Game Title: Colorado L&H

Question: 34

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
Additional Whole Life coverage at specified times	Additional term life coverage at any time
Additional term life coverage at specified intervals	Additional whole life coverage at any time
A guaranteed insurability option in a whole life policy permits the policyowner to purchase, without evidence of insurability, stated amounts of whole life insurance at specified times.

Game Title: Colorado L&H

Question: 35

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
Risk classification	Warranty review
Insurable interest	Inspection report
Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates.

Game Title: Colorado L&H

Question: 36

Which of the following is NOT a problem when existing life insurance is replaced with new coverage?
Comprehensive coverage may increase under the new policy	The risk that a financial loss will occur when values in the existing policy end and new values are built in new coverage
The new policy may be based on the insured's attained age, with higher premiums than existing coverage	The policyowner may pay additional costs for the new policy to issue

Game Title: Colorado L&H

Question: 37

Which of these do NOT constitute policy delivery?
Policy issued with a rating	Policy mailed to applicant
Policy mailed to agent	Policy delivered to the applicant by the agent
All of these constitute delivery of the policy EXCEPT issuing a rated policy.

Game Title: Colorado L&H

Question: 38

Under the USA patriot act, insurers are required to report receipt of cash payments in excess of:
$10,000	$7,500
$5,000	$2,500
The anti-money laundering provisions of the USA patriot act require insurers to report any cash payments received that are greater than $10,000.

Game Title: Colorado L&H

Question: 39

Which of these statements concerning an individual straight life annuity is accurate?
Payments are made to an annuitant for life	Life expectancy of the annuitant is not a factor
The payments are received tax-free	Only available to employees of nonprofit charitable, educational, and religious organizations
A single life annuity pays for the life of the annuitant.

Game Title: Colorado L&H

Question: 40

A statement made by an insured in an insurance application that must be true to the best of one’s knowledge and which becomes a part of the contact is known as:
A representation	An insuring agreement
A mutual assent	A warranty
A representation is a statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract.

Game Title: Colorado L&H

Question: 41

A life insurance policy that provides a policyowner with cash value along with a level face amount is called:
Whole life	Level term
Credit life	Ordinary life

Game Title: Colorado L&H

Question: 42

The automatic premium loan provision is designed to:
Avoid a policy lapse	Provide a source of revenue to the insurance company
Allow a policyowner to request a policy loan	Allow a policyowner to take out additional coverage without evidence of insurability
The purpose of the automatic premium loan is to keep the policy from lapsing.

Game Title: Colorado L&H

Question: 43

When may the Commissioner issue an emergency cease and desist order?
If there is suspicious of an unauthorized person engaging in insurance business without being licensed	If there is a suspicion of an insurance policy being replaced
When an insurance agency does not reach their annual sales quota	For any reason the commissioner sees appropriate

Game Title: Colorado L&H

Question: 44

One becomes eligible for social security benefits after having been disabled for:
5 months	3 months
6 months	12 months
Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period

Game Title: Colorado L&H

Question: 45

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?
Conditional	Binding
Initial premium	Contingent
A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect.

Game Title: Colorado L&H

Question: 46

The USA Patriot act was signed in to law as a response to
The 9/11 terrorist attacks	The McCarran-Ferguson Act of 1945
The Fair Credit Reporting Act of 1970	The 1945 End of WWII Act

Game Title: Colorado L&H

Question: 47

How does the Commissioner attain this position?
Appointed by the Governor	Elected by the NAIC
Elected by residents of Colorado	Appointed by the state Senate
The commissioner is appointed and serves at the pleasure of the Governor.

Game Title: Colorado L&H

Question: 48

Which of the following is CORRECT regarding a producer’s fiduciary responsibility with client’s funds?
A producer may never commingle personal funds with funds paid by or to a client	A producer may commingle personal funds with funds paid by or to a client with the client's written permission
A producer may commingle personal funds with funds paid by or to a client with insurer's written permission	A producer may commingle personal funds with funds paid by or to a client with prior approval from the department of insurance
A producer may NEVER commingle personal funds with funds paid by or to a client.

Game Title: Colorado L&H

Question: 49

A $20,000 life insurance policy application is completed; however, the producer does not collect the initial premium. At what point does the coverage go into effect?
When the applicant receives the policy and pays the initial premium	When the MIB report is received
Upon a completed medical examination	Upon policy approval

Game Title: Colorado L&H

Question: 50

A producer that only sells insurance to family members is said to be engaging in
Controlled business	Family business
Domestic business	Personal business
Insurance written in the licensee's own interests of his/her spouse or employer is called controlled business.

Game Title: Colorado L&H

Question: 51

Which of the following offers an insurance applicant the right to review the contract and receive a full refund?
Free-look period	Probation period
Elimination period	Refund period
The free-look period offers an insurance applicant the right to review the contract and receive a full refund.

Game Title: Colorado L&H

Question: 52

G takes out a life insurance policy on October 8, 2008. On August 3, 2009, G takes his own life. When G’s beneficiary files a claim,
The claim will be denied under the suicide provision	The claim will be paid under the settlement provision
The premiums will be returned under the free-look provision	The benefit will double under the accidental death provision
After the life insurance policy has been in effect for 1 year, an insurer may not use an insured's suicide as a reason to refuse payment of policy benefits. This policy was in effect for less than 1 year.

Game Title: Colorado L&H

Question: 53

Which of the following statement is CORRECT regarding insurable interest in a life insurance contract?
A person generally is considered to have an unlimited insurable interest in himself or herself	The beneficiary must have insurable interest in the insured at the time of death
If the beneficiary no longer has insurable interest in the insured during the contestable period, the policy must be cancelled	A new beneficiary must be designated if the original beneficiary no longer has insurable interest in the insured

Game Title: Colorado L&H

Question: 54

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable life	Modified whole life
Universal life	Adjustable life

Game Title: Colorado L&H

Question: 55

A policy loan is made possible by which of these life insurance policy features?
Cash Value provision	Extended term provision
Owner's rights provision	Consideration clause

Game Title: Colorado L&H

Question: 56

Insurance policies are considered aleatory contracts because
Performance is conditioned upon a future occurrence	They are "take it or leave it" contrtacts
Both parties consent to the contract	The contract is voidable upon proof of fraud
Insurance contracts are aleatory. This means there is an element of chance and potential for unequal exchange of value or consideration for both parties. An aleatory contract is conditioned upon the occurrence of an event.

Game Title: Colorado L&H

Question: 57

Traditional Individual retirement annuity (IRA) distributions must start by:
April 1st of the year following the year the participant attains age 70 ½	April 1st of the year following the year the participant attains age 59 ½
Age 59 1/2	Age 65
Distributions from a traditional IRS must be made by April 1 following the year the participant turns age 70 1/2 or an excise tax will be assessed.

Game Title: Colorado L&H

Question: 58

Which of the following types of Term life policies most likely contains a Renewability feature?
10 Year convertible term	Increasing term
Decreasing term	Variable term
A 10 year convertible term life policy contains a renewability provision.

Game Title: Colorado L&H

Question: 59

If an applicant for an annuity refuses to provide suitability information, the producer should
Obtain the consumer’s signed statement documenting his or her refusal to provide suitability information	Obtain consent from the insurer to proceed
Obtain consent from the commissioner to proceed	Cancel the application

Game Title: Colorado L&H

Question: 60

A producer license may be suspended or revoked if the producer is found to be engaging in
Misrepresentation	Converting a term life policy to a whole life policy
Selling with a nonresident license	Replacement

Game Title: Colorado L&H

Question: 61

K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?
Straight life	Endowment
10-year renewable term	Joint life
Straight life insurance policies provide an insured the greatest amount of permanent protection per dollar of annual premium.

Game Title: Colorado L&H

Question: 62

What is being delivered during a policy delivery?
Insurance contract to the proposed insured	A binding receipt to the proposed insured
Application and initial premium to the insurer	Policy summary sheet and disclosure material to the proposed insured
Policy delivery refers to the delivery of the insurance contract to the applicant.

Game Title: Colorado L&H

Question: 63

Which of these is NOT a source of funding for social security benefits?
Federal government	Self employed individuals
Employees	Employers

Game Title: Colorado L&H

Question: 64

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?
Term Life	Straight life
Endowment	Annuity
Term life provides the greatest amount of protection for a temporary period.

Game Title: Colorado L&H

Question: 65

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer’s signature, then send the application off to the insurance company	Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company
Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company	Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company

Game Title: Colorado L&H

Question: 66

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
Immediate annuity	Flexible premium deferred annuity
Variable annuity	Straight life annuity
Immediate annuities start providing income payments usually starting within 30 days from the purchase date.

Game Title: Colorado L&H

Question: 67

The entity whose sole purpose is sharing medical data among its member companies is called the
Medical Information Bureau (	National Association of Insurance Commissioners (NAIC)
State government	State underwriting Association

Game Title: Colorado L&H

Question: 68

Which of these is considered a statement that is assured to be true in every respect
Warranty	Estoppel
Guarantee	Representation
A warranty is a statement that is considered guaranteed to be true.

Game Title: Colorado L&H

Question: 69

A life insurance policy would be considered a wagering contract WITHOUT
Insurable interest	Premium payment
Agent solicitation	Constructive delivery
Without insurable interest, a life insurance policy would be considered a wagering contract.

Game Title: Colorado L&H

Question: 70

What Group Term Life feature permits an individual to depart from the group and continue to be covered without provided evidence of insurability
Conversion	Entire contract
Owner's rights	Nonforfeiture options
The conversion privilege allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability.

Game Title: Colorado L&H

Question: 71

Term life policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period
Varies according to the contract	May be altered by the policyowner
Is controlled by the NAIC	Is the same in all contracts
The conversion period varies according to the contracts.

Game Title: Colorado L&H

Question: 72

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole life	Term life
Credit life	Universal life
Whole life is designed to mature at age 100.

Game Title: Colorado L&H

Question: 73

An insured's inability to perform two or more activities of daily living may trigger which type of life policy rider?
Long term care	Waiver of premium
Accelerated death benefit	Accidental

Game Title: Colorado L&H

Question: 74

Which of the following provisions guarantees that premiums will be waived if a Juvenile life policyowner becomes disabled?
Payor clause	Family maintenance clause
Assignment provision	Automatic premium loan provision

Game Title: Colorado L&H

Question: 75

B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?
Interest only	Interest and dividends
Dividends only	Neither interest nor dividends are taxable
Some life insurance policies (known as participating policies) pay dividends to their policyholders. Dividends are generally not taxed as income to the policyowner. However, interest is taxable as income for federal income tax purposes.

Game Title: Colorado L&H

Question: 76

A producer who violates a cease and desist order may, after a hearing, be fined up to
$500	$250
$750	$1000
Violating a cease and desist order may result in fines of up to $10,000 per violation (if an insurer) or up to $500 per violation (if a producer).

Game Title: Colorado L&H

Question: 77

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:
Probability of making timely premium payments	Driving history
If applicant is a tobacco user	Overall health of the applicant
The purpose of these reports is to provide a picture of an applicant’s general character and reputation.

Game Title: Colorado L&H

Question: 78

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?
Key person life policy	Universal life insurance policy
Graded insurance policy	Executive insurance
An architecture firm that would suffer financially from the death of a project manager should purchase a key person life policy.

Game Title: Colorado L&H

Question: 79

A producer must remit premiums to the insurer within __ days after receipt.
45	10
15	30

Game Title: Colorado L&H

Question: 80

How would a contingent beneficiary receive the policy proceeds in an accidental death and dismemberment (AD&D) policy
If the primary beneficiary dies before the insured	If the primary beneficiary is a minor at the time of the insured's death
If the insured died of accidental causes	If the insured died of natural causes

Game Title: Colorado L&H

Question: 81

What is the purpose of a policy summary?
It highlights the critical parts of the policy issued	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

Game Title: Colorado L&H

Question: 82

Ultimately, who is responsible for a producer-generated advertisement?
Insurer	Producer
The department of insurance	Life and health guaranty association
All advertisements, regardless of by whom written, created, designed or presented, are the responsibility of the insurer whose policies are advertised - even if they aren't directly aware of them.

Game Title: Colorado L&H

Question: 83

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
Upon retirement, payments received by employees from the accumulated savings in tax-sheltered annuities are treated as ordinary income.

Game Title: Colorado L&H

Question: 84

Which of these is NOT considered to be a cost connected with an individual’s death?
Business expenses	Funeral expense
Tax liability	Probate cost

Game Title: Colorado L&H

Question: 85

If an annuity application was not taken in person, an insurer must provide the applicant a Buyer’s Guide
Within 5 business days of the insurer receiving the application	At the time of application
At the time of a policy issue	At the time of policy delivery
When the application is not taken in person, a buyer's guide must be sent no later than five business days after the insurer receives the application.

Game Title: Colorado L&H

Question: 86

When does a Guaranteed insurability rider allow the insured to buy additional coverage?
At future dates specified in the contract with no evidence of insurability required	10 year increments
At future dates specified in the contract with proof of insurability required	At any time while policy is active
This rider provides specific dates on which additional life insurance policies can be bought without providing proof of insurability.

Game Title: Colorado L&H

Question: 87

Which situation allows the producer to also be the beneficiary on a client’s application for life insurance?
When insurable interest exists	When no insurable interest exists
With the insurer's written authorization	Never

Game Title: Colorado L&H

Question: 88

Which of the following potential insurance sales would be subject to replacement regulations?
A new policy that causes an existing life insurance policy to be surrendered	A new policy issued by the same insurer as part of a conversion privilege
A credit life insurance policy that causes an existing credit life insurance policy to be forfeited	A new group life policy that is replacing an existing group life policy
A new policy that causes an existing life insurance policy to be surrendered would be subject to replacement regulations.

Game Title: Colorado L&H

Question: 89

Which is true concerning a Variable Universal life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment	Policyowner has no say where the investment will go but can choose the premium mode
The investment vehicle for this type of policy is held in the insurer's general portfolio	The death benefit can vary but the policyowner has no say in the premium amount paid
With variable universal life, the policyowner controls the investment of cash value and selects the timing and amount of premium payments.

Game Title: Colorado L&H

Question: 90

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused/denied	Request will be accepted only if in writing by the insured
Change will be made only if premiums are paid current	Change will be made immediately
An irrevocable designation may not be changed without the written consent of the beneficiary.

Game Title: Colorado L&H

Question: 91

The purpose of the __ period clause is to avoid an unintentional lapse of a life insurance policy.
Grace	Incontestable
Conversion	Reinstatement

Game Title: Colorado L&H

Question: 92

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:
The cost	The health of the insured
The amount of coverage being coverted	Who will be beneficiary

Game Title: Colorado L&H

Question: 93

According to the Colorado fraud statue, all of the following must contain a warning against insurance fraud EXCEPT
Certificated of authority	Applications
Policies	Claim forms
Certificates of authority are not required to mention the Colorado fraud statue.

Game Title: Colorado L&H

Question: 94

Which of the following is an example of defamation?
A brochure including an untrue statement regarding competitor’s ability to pay claims	A pamphlet listing a competitor's financial rating
A verbal statement of a competitor's complaint ratio	A truthful estimate of dividends

Game Title: Colorado L&H

Question: 95

What action can a policyowner take if an application for a bank loan requires collateral?
Assign policy ownership to the bank	Utilize accelerated benefits provision
Borrow against policy cash value and use a down payment	Name bank as a beneficiary

Game Title: Colorado L&H

Question: 96

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
Risk classification	Warranty review
Insurable interest	Inspection report
Underwriting, another term of risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates.

Game Title: Colorado L&H

Question: 97

Stranger Originated Life insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal purpose (insurable interest)	Consideration
Competent parties	Offer/acceptance
A STOLI arrangements is used to circumvent state insurable interest statutes.

Game Title: Colorado L&H

Question: 98

A return of premium life insurance policy is:
Whole life and increasing term	A nonforfeiture option
Interest-sensitive	Variable life
A return of premium life insurance policy is whole life insurance with a death benefit rider of increasing term insurance equal to the amount of premiums paid. If the insured dies within the period of term, the beneficiary will receive face amount plus the value of all paid premiums.

Game Title: Colorado L&H

Question: 99

A 55-year-old recently received a $300,000 distribution from a previous employer’s 401K plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty tax on $30,000

All withdrawals from qualified retirement plans are taxable as current income and any withdrawals made before age 59 ½ is subject to additional tax penalty of 10% if the amount withdrawn.

Game Title: Colorado L&H

Question: 100

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Entire cash surrender value is taxable	Premiums are normally not tax deductible
Cash dividends are normally not taxed	Proceeds are received tax-free if there is a named beneficiary
The total cash surrender value is NOT taxable but the interest gained is taxable.

Game Title: Colorado L&H

Question: 101

J is issued a Life insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy’s death benefit also remains at $100,000. Which type of life insurance policy is this?
Modified Premium Life	Endowment
Graded premium life	Straight life
Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter.

Game Title: Colorado L&H

Question: 102

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy	Family lump sum policy
Family survivor policy	Family income policy
A family maintenance policy pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period.

Game Title: Colorado L&H

Question: 103

From what point must the insurer pay interest on the proceeds of a death claim?
Date of death	Date insurer is notified of the death claim
Date claim is received by insurer	Date claim is postmarked
Interest on a death claim is payable beginning from the date of death.

Game Title: Colorado L&H

Question: 104

On June 1, 2004 G takes out a $20,000 Whole Life insurance policy with an Accidental Death and Dismemberment rider. On July 15, 2005 G intentionally overdoses on sleeping pills and takes her own life. What will G’s beneficiary receive as a death benefit?
$20,000	$40,000
$0	The premiums that G paid in to the policy
Colorado does not allow an insurer to deny a life insurance claim due to suicide after the policy has been in force for 1 year.

Game Title: Colorado L&H

Question: 105

When does a life insurance contract become effective if the initial premium is not collected during the application process?
When producer delivers policy and collects initial premium	After all medical and personal information has been evaluated
When insurer receives initial premium from the producer	After application has been approved by the underwriters

Game Title: Colorado L&H

Question: 106

Which of the following is required for a life insurance lapse notice?
Reason stated why the policy will lapse	Notice mailed to policyowner within 10 days before the effective date of lapse
Notice mailed to policyowner within 30 days before the effective date of lapse	Automatic premium loan explanation

Game Title: Colorado L&H

Question: 107

P owns a $25,000 life policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at age 70	Straight life
Modified life	Whole life paid-up at age 70
An endowment policy is characterized by cash values that grow at a rapid pace so that the policy matures or endows at a specified date (before age 100).

Game Title: Colorado L&H

Question: 108

Who benefits in Investor-originated life insurance (IOLI) when the insured dies?
Policyowner	Beneficiary
Insured	Insurer
The policyowner (investor) benefits upon the death of the insured.

Game Title: Colorado L&H

Question: 109

An insurer may normally delay the payment of a cash value loan or surrender value for up to
6 months	2 months
4 months	8 months

Game Title: Colorado L&H

Question: 110

Which of the following statements is true regarding the replacement of a life insurance policy in Colorado?
The replacing insurer must maintain copies of all records regarding the replacement for at least 5 years	The producer must maintain copies of all records regarding the replacement for at least 5 years
The insurer whose policy is being replaced must keep all records regarding the replacement for at least 5 years	All parties must maintain copies of all records regarding the replacement for at least 10 years

Game Title: Colorado L&H

Question: 111

The Commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances EXCEPT
Writing controlled business	Selling insurance without a license
Engaging in fraudulent activity	Endangering the public

Game Title: Colorado L&H

Question: 112

A license is deemed to be used for controlled business if during any 12-month period
The licensee’s total premiums on controlled business exceeded the total premiums on all other business	The license wrote more than 10 policies on controlled business
The license wrote policies totaling more than $25,000 on controlled business	The licensee's total premiums on controlled business made up more than 25% of his total premiums

Game Title: Colorado L&H

Question: 113

Which of the following statements about noncontributory employee group life insurance is FALSE?
A minimum number of employees is required to participate	All eligible employees must be covered
No evidence of insurability required	Must have conversion rights

Game Title: Colorado L&H

Question: 114

The amount of monthly disability benefits payable under social security is affected by which of the following factors?
Amount of the benefits available from other sources	Insured's tax bracket
Nature of the disability	Insured's education level

Game Title: Colorado L&H

Question: 115

When must insurable interest be present in order for a life insurance policy to be valid?
When the application is made	When the insured dies
Within the incontestability period	Before the insured dies
Insurable interest must exist when the application is made for it to be valid.

Game Title: Colorado L&H

Question: 116

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following, EXCEPT:
Signed HIPAA disclosure	Signed amendment
Signed statement of good health	The required premium
The HIPPA disclosure should be taken at the time of sale with the application.

Game Title: Colorado L&H

Question: 117

How long does the coverage normally remain on a limited-pay life policy?
Age 100	Age 65
When premium payments stop	At the discretion of the insurer
Even though the premium payments are limited to a certain period, the insurance protection extends until the insured's death, or to age 100.

Game Title: Colorado L&H

Question: 118

The incontestable clause allows an insurer to:
Contest a claim during the Contestable period	Disallow a change of ownership throughout the contestable period
Disallow a change of beneficiary during the contestable period	Contest a claim at anytime if the cause of death was accidental
The incontestable clause or provision specifies that after a certain period of time (usually two years from the issue date), the insurer no longer has the right to contest the validity of the life insurance policy so long as the contract continues in force.

Game Title: Colorado L&H

Question: 119

What is the maximum amount the Commissioner can fine an insurer for each violation of a cease and desist order?
$10,000	$500
$1,000	$5,000

Game Title: Colorado L&H

Question: 120

What provision in a life insurance policy states that the application is considered part of the contract?
Entire contract provision	Application provision
Policy exclusions provision	Incontestability provision
The entire contact provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract.

Game Title: Colorado L&H

Question: 121

A key employee policy is taken out by Company X on its vice president. 10 years later, this employee leaves company X and begins working for company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?
Company X	Company Y
The employee's estate	The employee's family
With key person insurance, the company purchases, own, pays the premiums and is the beneficiary of the life insurance policy on the key person.

Game Title: Colorado L&H

Question: 122

What does a face amount plus cash value policy pay upon the insured's death?
Face amount plus the policy's cash value	Face amount plus the policy's dividends
The greater amount plus the policy's death benefit or the cash value	Face amount plus total premium paid throughout the life of the policy
A face amount plus cash value policy is a contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value.

Game Title: Colorado L&H

Question: 123

Which of the following information is NOT required to be included in a Whole life policy?
Policy's guaranteed dividend table	Policy's loan interest rate
Policy's premium	Policy's cash value table

Game Title: Colorado L&H

Question: 124

Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year term coverage for his wife on the same policy. Which of these policies did Y purchase?
Whole life policy with an other insured rider	Endowment with extended term
Endowment with a payor benefit	Family income policy
In this situation, the applicant purchased a whole life policy with an other insured rider.

Game Title: Colorado L&H

Question: 125

Paying insurance premiums on a more frequent basis will cause the policy to have
Higher Premiums	Lower premiums
Average premiums	Graded premiums
The more frequent a policy's premiums are paid throughout the course of the year, the higher the premiums will be.

Game Title: Colorado L&H

Question: 126

Credit life insurance is:
Issued in an amount not to exceed the amount of the loan	Issued in any amount at the discretion of the applicant
Used in the event of loss of income	Coverage that waives the premiums on a loan payment in the event of total disability
Credit life insurance is designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid.

Game Title: Colorado L&H

Question: 127

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?
Conditional receipt	Binding receipt
Warranty receipt	Backdated receipt
A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be acceptable risk.

Game Title: Colorado L&H

Question: 128

When replacing an existing life insurance policy, the replacing insurer must notify the existing insurer within
5 business days	10 business days
15 business days	20 business days

Game Title: Colorado L&H

Question: 129

What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to	Who the beneficiary is and what rights the beneficiary is entitled to
Ownership cannot be assigned after the incontestable period	Allows the policyowner to adjust the death benefit and premium amount at anytime
The ownership clause in a life insurance policy is a provision that indicates who is the policyowner and provides a general description of the owner's rights.

Game Title: Colorado L&H

Question: 130

What type of annuity has a cash value that is based upon the performance of its underlying investment funds
Variable	Deferred
Flexible	Fixed
A variable annuity’s cash value will depend on the results of its investment funds.

Game Title: Colorado L&H

Question: 131

All of these are considered to be a benefit under social security, EXCEPT for:
Unemployment	Survivorship
Disability	Retirement

Game Title: Colorado L&H

Question: 132

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
At the time of application	After the contestable period
When the policy proceeds are paid	When the insured dies
With life insurance, insurable interest must exist only at the policy inception.

Game Title: Colorado L&H

Question: 133

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
Variable whole life insurance is both an insurance and securities product.

Game Title: Colorado L&H

Question: 134

Who is NOT required to sign a life insurance application?
Beneficiary	Adult insured
Policyowner	Agent
All of the following individuals must sign a life insurance application EXCEPT the beneficiary.

Game Title: Colorado L&H

Question: 135

A non-contributory plan requires __ participation of all eligible employees
100%	25%
50%	75%
The percentage of eligible employees participating in a non-contributory plan is required to be at 100%.

Game Title: Colorado L&H

Question: 136

K owns a whole life policy. If K wants an increasing death benefit to protect against inflation, which dividend option should she choose?
Paid-up additional insurance	Cash option
Reduced premiums	Accumulate with interest

Game Title: Colorado L&H

Question: 137

If a producer offers to refund part of a prospect’s premium in exchange for the purchase of a life insurance policy, the producer is committing the illegal act of
Rebating	Defamation
Twisting	Conservation
A producer who offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy is committing the illegal act of rebating.

Game Title: Colorado L&H

Question: 138

K’s whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy’s reinstatement EXCEPT
K will forfeit he right to use the automatic loan provision upon reinstatement	K must reinstate within a state period
K must pay back interest and premiums	K must provide evidence of insurability

Game Title: Colorado L&H

Question: 139

What type of policy would offer a 40-year-old the quickest accumulation of cash value?
20-pay life	Paid-up at 65
30-pay life	Straight whole life
In this situation, a 20-pay life policy offers the quickest accumulation of cash value.

Game Title: Colorado L&H

Question: 140

Term insurance has which of the following characteristics?
Expires at the end of the policy period	Builds cash value
Has nonforfeiture options	Endows at the end of the policy period
With term insurance, the policy expires at the end of the policy period.

Game Title: Colorado L&H

Question: 141

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
Life income	Interest only
Fixed period	Fixed amount
The life income settlement options pays a specified amount to the annuitant with no residual value payable to a beneficiary.

Game Title: Colorado L&H

Question: 142

Which of the following words may be used in the advertisement of life insurance or annuities?
Guaranteed	Risk-free
Investment	Savings
"Guaranteed" is an allowable word in the advertisement of life insurance or annuities.

Game Title: Colorado L&H

Question: 143

Which of the following is TRUE about a qualified retirement that is "top heavy"?
More than 60% of plan assets are in key employee accounts	More than 30% of plan assets are in key employee accounts
More than 40% of plan assets are in key employee accounts	More than 50% of plan assets are in key employee accounts

Game Title: Colorado L&H

Question: 144

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer’s obligation in the event N was killed while flying as a student pilot?
Exclusion	Misrepresentation
Collateral assignment	Concealment
Exclusion are specified hazards listed in a policy for which benefits will not be paid.

Game Title: Colorado L&H

Question: 145

Which of the following is an example of rebating?
Returning a portion of premium as inducement to purchase insurance	Cancellation of an insurance policy without cause
Sale of mass-marketed insurance products	Offer of temporary insurance coverage
Returning a portion of a premium as inducement to purchase insurance is an example of rebating.

Game Title: Colorado L&H

Question: 146

Which of these is NOT an element of Life insurance premiums?
Morbidity rate	Mortality rate
Insurer's expenses	Interest credit

Game Title: Colorado L&H

Question: 147

A life insurance arrangement which circumvents insurable interest statutes is called:
Investor-Originated Life Insurance	A contract of adhesion
An indemnity contract	Key person insurance
Investor-originated life insurance (or IOLI) is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premium, then collect the death benefit when the insured dies.

Game Title: Colorado L&H

Question: 148

What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit to a named beneficiary	Promise to never cancel coverage
Promise to not raise premiums	Promise to accept an insured's assignment of benefits
Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary.

Game Title: Colorado L&H

Question: 149

Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE?
Taxed as ordinary income	Partially taxable
Tax deductible	Nontaxable
Accumulated interest earned on dividends from an insurance policy is taxed as ordinary income.

Game Title: Colorado L&H

Question: 150

Employer noncontributory group life policies must allow for all of the following EXCEPT
Insured can determine the benefit amount	Conversion privilege
Insured can name of beneficiary	Minimum participation requirements
All of these must be allowed in employer noncontributory group life policies EXCEPT "insured can determine the benefit amount".

Which of the following terms means the frequency of premium payment?

The premium payment mode is the frequency that premium payments are made. More frequent premium payments means lower premiums.

What affects the amount of an insurance premium quizlet?

-The greater the risk, the higher the premium. -Actuaries base life insurance premiums on three factors: mortality, interest, and expenses.

What is the premium of an insurance policy quizlet?

An insurance premium is the amount of money that an individual or business must pay for an insurance policy. The insurance premium is income for the insurance company, once it is earned, and also represents a liability in that the insurer must provide coverage for claims being made against the policy.

Which factors are taken into consideration when an insurance company determines the premium rate?

The premium rate for a life insurance policy is based on two underlying concepts: mortality and interest. A third variable is the expense factor which is the amount the company adds to the cost of the policy to cover operating costs of selling insurance, investing the premiums, and paying claims.