Free Insurance Licensing OH-Life-Agent-Series-11-44 Practice Exam with Questions & Answers

Under Section 1035 of the Internal Revenue Code, a policyholder can exchange a life insurance policy for another life insurance policy, an endowment policy, or an annuity contract without recognizing a gain or loss, provided the exchange is made directly between insurance companies and the policyholder does not receive any cash or other benefits in the process. This tax-free exchange allows the policyholder to replace outdated or underperforming policies without immediate tax consequences.

Alife annuity certainensures that payments will continue for aspecified periodeven if the annuitant dies before that time. If the annuitant dies early, the payments go to a beneficiary for the remaining period.

"An annuity certain guarantees payment for a fixed period, regardless of whether the annuitant is alive for the entire period. If death occurs, payments continue to a named beneficiary."

According to Ohio insurance regulations, once an insurance agent submits an application or enters into an agency agreement with an insurer, the insurer must file the agent’s appointment with the Ohio Superintendent of Insurance within 30 days. This appointment legally authorizes the agent to act on behalf of the insurer in the state.

The primary purpose of life insurance is to provide a death benefit to beneficiaries upon the death of the insured. This financial protection helps cover expenses such as funeral costs, outstanding debts, and provides income replacement for dependents. According to the Ohio Life Insurance Study Guide, life insurance is designed to offer financial security to loved ones in the event of the insured's untimely death.

Thecommon disaster clauseis used to address situations where the insured and beneficiary die in the same accident. It presumes that theinsured outlived the beneficiary, ensuring that the proceeds go to a contingent beneficiary or the estate of the insured.

"The common disaster clause assumes that the insured survived the beneficiary when both die in the same incident, ensuring proceeds are distributed accordingly."

A Cost of Living Adjustment (COLA) rider is an optional feature that can be added to a life insurance policy to help protect the death benefit against inflation. This rider automatically increases the policy's face amount periodically, typically in line with the Consumer Price Index (CPI), ensuring that the purchasing power of the death benefit remains consistent over time.

A limited payment whole life policy provides permanent life insurance coverage for the insured's entire life, but the premiums are paid only for a specified period (e.g., 10, 20 years, or until age 65). After the premium period ends, the policy remains in force for life with no additional premium payments required.

Level premium term insurancehas premiums that remain the same throughout the policy term. The premium is based on an average cost over the term, providinglevel protection with level payments.

"Level premium term life insurance features a fixed premium that does not change during the term of the policy, as it is based on an average of the risk over the entire period."

Apparent Authorityarises when a third party reasonably believes, based on the agent's actions or representations, that the agent has the authority to act on behalf of the insurer, even if the agent does not have actual authority. This perception can bind the insurer to the agent's actions if the third party's belief is justified. Apparent authority is established through the agent's conduct and the insurer's representations, not through explicit agreements.

Group life insurance policies are most commonly used by employers to provide life insurance coverage to their employees. This type of policy offers financial protection to the beneficiaries of the employees in the event of their death. Typically, these policies cover all eligible employees without requiring individual underwriting, making it a convenient and cost-effective way to provide this important benefit.

The Ohio Revised Code states:

"A life insurance policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer. All of the employees of the employer, or all of any class or classes of employees, are eligible for life insurance."

This clarifies that the primary and most common use of a group life insurance policy is to insure company employees.