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What is the best way to define life insurance replacement?

A transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered.

When an existing life insurance policy is being replaced with a new one, a replacement notice MUST be given

at the time of taking the application

What is considered the purpose of the South Dakota Life and Health Guaranty Association?

Protects consumers from insolvent insurers

What is the primary reason for the Director’s examination of a producer’s insurance records?

To determine compliance with state insurance laws and regulations

Which entity is responsible for regulating claims settlement practices of insurers?

State insurance departments

Which of the following actions may result in a producer’s license being suspended?

Misappropriation of premiums

Which of the following actions would be considered a felony in the State of South Dakota?

Attempting to defraud an insurer

Which of the following is a requirement for an individual to receive an insurance license in South Dakota?

Passing the appropriate examination

Which is NOT an Unfair Claims Settlement Practice?

Refusing to pay persons bringing false or fraudulent claims

A producer MUST notify the Director of

conducting business under an assumed name

A client is issued a life insurance policy that differs from the coverage initially illustrated and applied for. Who must sign the revised illustration?

Applicant and producer

A producer’s license may only be suspended or revoked if the producer

has been afforded a right to a hearing

A prospective client was intimidated by a producer to purchase an insurance contract. The producer could be found guilty of

coercion

A(n) ____ insurer operates in the U.S but is headquartered outside the U.S.

alien

A(n)____producer lives in another state and transacts insurance in South Dakota.

nonresident

A life insurance policy that is paid annually must contain a grace period of at least ____ days.

30

An insruer wishing to conduct business in South Dakota MUST obtain a

certificate of authority

An order issued by the Director that prohibits a specific practice listed in the order is called a(n)

cease and desist

A producer is meeting with a client to determine whether an annuity will be suitable for purchase. Which of the following topics needs to be discussed with the client?

Financial status of the client

A statement MUST be signed by the _____ for any illustrations used in the sale of a life insurance policy.

producer

An administrative action taken against a producer MUST be reported to the Director within ____ days.

30

Any agreement that unreasonably restrains the business of the insurance is a violation of which Unfair Trade Practice?

Boycott, coercion, and intimidation

A viatical settlement broker represents the

Viator

How long must a producer maintain customer records for an insurance transaction?

Five years

Illustrations used in the sale of a life insurance policy MUST display

both guaranteed and non-guaranteed elements

Life insurance policies cannot be backdated more than ___ months from the date of issues.

6

In South Dakota, the Human Immunodeficiency Virus (HIV) consent form

must disclose who will be receiving a copy of the test results

Under which circumstance may an insurable interest exist between two individuals in absence of an economic interest?

They are marriage partners

Replacement regulations exist in order to

protect policy owners from misrepresentations and loss of benefits

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner’s life

What does a 401(k) plan generally provide its participants?

Salary- deferral contributions

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion

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

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

All of these insurance products require an agent to have proper FINRA securities registrations in order to sell them, EXCEPT for:

Modified Whole Life

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

Credit life insurance is typically issued with which of the following types of coverage?

Decreasing Term

The underwriting process involves all of these, EXCEPT for:

Policy loan

How are both IRA distributions normally taxed"?

Distributions are received tax-free

Which of these is NOT a reason for purchasing life insurance on the life of a minor?

If both parents were to die, it would provide death benefits to the child

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child

Post-tax dollar contributions are found in:

Roth IRA investments

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type is this?

Renewable

Term insurance has which of the following characteristics?

Expires at the end of the policy period

All of these statements concerning Settlement Options are true, EXCEPT:

Only the beneficiary may select

Which of these is NOT relevant when determining the amount of personal life insurance needed?

Local employment rate

Any changes made on an insurance application requires the initials of whom?

Applicant

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

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