chapter 1 and 2 exma
Premature IRA distributions are subject to a penalty tax of
10%
premature IRA distributions are subject to a penatly tax of
10%
remature IRA distributions are subject to a tax of
10%
what min % of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?
100%
first time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdaral penalty
10K
after conducting a hearing, the superintendent is empowered to issue a cease and desist order. a violation of such an order is punishable by a monetary fine not to exceed
10k
an individual participant personally received eligible rollver funds from a profit sharing plan. what is the income tax withholding requirements for this transaction?
20 % for income tax.
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income tax
a licensee whos name or adress changes must notify the superintendent within _____ days
30 days
administrative action taken against a producer must be reported to the superintendent within how many days of the final disposition
30 days
an insurance company may not use a policy form unless it has been approved by the superintendent for at least
30 days
any administrative action taken against a producer MUST be reported to the superintendent within ___ days after the final disposition
30 days
after the first 3 years of licensure, a producer must complete ____ hurs of contining eduactoin
45 hours
each domestic company must have its financial reccords examined by the superintendent every __ years
5 yrs
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
what is the face amount of a 50k graded death benefit life insuranc epolicy when issued
50k but incrases annuily until fully insured
The time limit an individual has to "rollover" funds from an IRA or qualified plan is
60 days
time limit an individual has to rollover funds from an ira or qulaified plan
60 days
a material change in a modified endowment contract results in
7 pay test
in MA, life insurance policy loans may charge a maxium fixed rate of
8%
according to ERIS regulations a summary plan desciprtion must be provided to a new plan memebr within ____ days of memebr eligibility date
90
ERISA requires that a summary plan description must be provided to a new plan memeber within how many days following the new memebrs eligitbility date
90 days
who is the beneficiary in a life insurance policy
The stated person or entity who is designated to receive the death proceeds
Insurance crimes which affect interstate commerce are prosecuted by the
US atterney general
an insurance policy that can also be classified as a securities product is called
VARIABLE life
Which report contains information regarding an individual's general reputation and credit standing?
a consumer report
an example of misrepresentaiton si
a producer misleading or failing to adequately disclose the title and true nature of a policy offered to the potential insured
life insurance replacement can be best defined as
a transacion in which a new life insurance policy is purchased and an existing life insurance policy is surrendered
a life insurance policy provision that has the ability to reduce the dath benefit is called the
accelerated living benefit
an agents authority to bind an insurer to an insurance contract may be granted in the
agents license and insurance companys certificate of authority
which of these would not be a valid reason to add the waiver of premium rider to a life insurnace policy
allows a policy loan to cover preimum payments if the policy owner becomes totally disabled.
what is the tax treatment of benefit payments for a non-qualified annuity
always taxable otherwise, only earnings are taxed as income, principal is not
an indiviudal who purchases a modified life insurnace policy expects
an improvement in future income
which of the following is NOT a reason for a business to buy key person life insurance
an incrased pension liability if the key employee dies
if a replacement is involved in the sale of a life insuranc epoliyc, a producer must provide a replacement notice no later then the
application date
which statemetn regardn the cash vlue of whole life insurance policy is correct
available to the policyowner when the policy has been sureenedered
which statement regarding the cash value of a whole life insurance policy is correct
available to the policyowner when the policy has been surrendered
A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?
beneficiary reveives 50k tax free
taking a sum of money and decreasing it in size is called
capital liquidation
which of the following types of insureres limits the exposures it writes to those of its owners
captive insurer
which statement regarding the waiver of premium rider is accurate
cash payment is not directly provided to the policyowner
what is considered the collateral on a life insurance policy loan
cash value
which of the following is NOT a condition that must be met for an accidental death benefit to be paid
caus eof death must be from a job related injusry
which of the following is NOT a condition that must be met for an accidental death benefit to be paid
cause of death must be from a job related injury
which would be described as a beneficiary designation by class?
children of the insured
An employee welfare plan exempt from ERISA regulations would be
church plans
what is not considered to be a violation of the federal fruad and false statements act
claims reimbusment
the payment of the first premium, the promise to pay a coverd loss, and the agreement to abide by the policy condiitons are examples of
consideration
an annuitys accumulation period may
continue after the purchase payments stop
Interest is credited to a fixed annuity no lower than the variable contract rate contract guaranteed rate current rate of inflation prime rate
contract guaranteed rate
what term refers to insurance written on the interest of the licnesee, their employer, and their immediate family
controlled business
which term refers to insurance wrtitten on the interest of the licensee, the licensees employer, or their immediate family?
controlled business
any employee insured under a group life insurance plan is normally
convered with term life insurance
which of the following does not involve a life settlement transaction
converting term life coverage to whole life insurance
which of the following is generally a form of group credit life insurance
decreasing term insurance
which of these life insurance policis does not contain a cash value provision
decreasing term life
whihc annuity allows contributions to an ira
deferred -in accumulation phase may be used to fund an ira
which of these is NOT an underwriting responsibility of a life insurance agent
determining the final rate classificaiton
if a life insurance applicant is shown future premiums are to be paid out of non-guarnateed values, the illistration used in the sales presenation must
disclose that premium payments must need to be resmed depednign on actual results
chris is issued an insurance policy that contains an attachend agreement which alters the terms of the policy. this is called..
endorsement
which of these is NOT considered a type of limited payment whole life insurnace
endownet at age 70
the application is part of the annuity contract according to the
entire contract clause
scott has a life insurance policy which the dividends are left with the insurance company. this particular policy may be paid up when the cash value plus accumulated dividends..
equal the net single premium for the sam eface amount at the insured attained age
a policyonwer fell behind on premium payments of a whole life policy and is now in the grace period. how much will the benefiicary receive if the insured dies during this grace period and the policy contains an outstanding policy loan
face amount minus the loan balance and past due premium
if an insured dies during the grace period without having apid the premium how much does the inruere pay
face value minus premiums due
what is the insurer responsible for when a producer is acting iwhtin the scope of authority granted in the agency contract
for acts by the producer that re authority only
what is the insurere responsible for whn a producer is acting within the scope of authority granted in the angecy contadct
for acts by the produer that are authority only
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate
for federal income tax reasons
whic life insurance policy provision allows a policyowner to cancel the poliyc and receive a full refund within a limited time period after policy delivery ?
free look period
when the disclosure of an insured nonpublic info is involved, what is the insurer obligated to do
give notice, explain, and allow opting out
what is an insurance contract that identifies individulas by relationship to a specific organization
group insurance
what is the name of the rider that provides an additional purchase option in a life insurance policy
guaranteed insurability ride
a single premium deferred annuity sometimes contains a bailout feature. which statement regarding this feature is correct
if the interest rate falls below a specified level, the surrender charge is waived.
An annuity which starts paying monthly benefits within a month after issuance is called a(n)
immiedate annuity
XYZ insurance company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. which authority grants the producer the right to collect premiums
implied authority
the unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called
implied authority
XYZ Corp has implemented a qualified retirement plan. This plan may NOT discriminate
in favor of highly compensated employees
the medical information bureau consists of memebrs from which group
insurance companies
in what situation could an insurace policys coverage be modified
insured at a substandard risk
which of the following is true regarding a person receiving a waiver of premium benefit
insured must be disabled for a period of tiem
which of teh following is true regarding a person receving a waiver of premium benefit
insured must be disabled for a period of time
when premiums are determiend, one factor would be expenses of the
insurer
which is not true about universal life insurance
it nroamlly has a min guaranteed cash value for duration of the policy
the insurance coverage in a variable life insurance policy may vary based on the value of
its underlying investments
which life insurance settlement option pays lifetime benefits to tow or more ppl
joint and survivor
what life insurance covers two or more ppl and pays face amount updon death of first insured
joint life
what type of insurance policycovers two or more personas and pays the face amoutn upon the death of the first insured
joint life
a life insurance beneficiary died after receiving only 6 payments under the poliys life income settlement option. what happends with the remaining balance of the death proceeds?
ketp by the insurance company
which of the following is associated with an immediate annuity
lack of accumulation perid
an arragement where an individual is authorized to act on behalf of another person or company is called
law of agnecy
the death proceeds of a credit life insurance policy are typically paid to the
lender
the death proceeds of a credit life insurance policy are typically paid to the
lender.
how mch is paid to a policyowner in a life (viatical) settlement
less than the death benefit
how much is normally paid to a policyowner in a life (viatical) settlement
less than the death benefit.
life settlements are typically negotiated through an
life settlement broker
wich of these do NOT indicuate the presence of insurabel interest in a life insurance contract
lifelong friendship
an insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT
living in a rural area
joe is a life insurance policyowner who has failed to pay interest on his policy loan. what will result from his nonpayment
loan amount increases to reflect amount of interest due w
which of the following situations would an insurance agent need to guard against liability for professional errors and omissions
making a rec to a client to replace existing coverage
an insurance contract may be voided if a misrepresentation found on the application is determiend to be
matrial
an employer that offers a qulified retirement plan as opposed to a non qualifeid one, is elgiable to
max tax deductible contributions to the plan
why do insureres require a minimum number of employee to participate in a group insurance plan
minimzie adverse selection
what is a considered a valid reason for an insureres refusal to pay policy proceeds directly to a minor?
minors are normally not capable of handling money in a reasonable manenr
in mass, false adverstising is an axample of
misrepresentation
which of the following is considered to be an unfair claims settlement practice
misrepresenting pertinent policy povisiions relating to coverage after a loss
chirs is shopping for life insurance and in mainly concerned with the policys death benefit. which index should he be looking at when making comparisons?
net payment cost index.
the right in which allow the owner of a deferred annuity to surrender the cash value before the annuity date are called
nonforfeiture options
what is not tru abt uni life insuranec
normally has a minimum guanrateed cash fvalue for duration of the ployyc
which element of a contract consititutes a definite and unqualified proposal by one party to antoher
offer
insurable interest involves what assumption?
one person benefits from another persons continued life
all of these statemetns correctly decribe an aleatory contract excpet
only one party makes any kind of enforceabel offer.
all of these statments correctly describe an aleatory contract except
only one party makes any kind of legally enforcable offer
a life insurnace guaranteed insurability rider gives the insured the right, without proving insurability to
periodically purchase additiaonl insurance
a life insruance guaranteed insurability rider gives the insured the right, without proving insurability, to
periodically purchase additional insurance
a life insurance policys contingent beneficiary is the
person who receives the death benefits if the primary beneficiary dies before the inured
a producer sold a life insurance policy but did not provide the applicatn iwth a basic illustration. in this case, the insurer is required to provide the applicant with a policy summary no later than the
policy delivery date
which of the following is a true statement regarding universal life insurance
policy states how much of each premium is used towards company expenses
according to the law of large numbers, how would losses be affected if the number of similar insured units increases?
predictability of losses would be improved
what typically changes at the re etnry option date found in some term life policies
premium
When must a producer provide disclosure about information practices to an applicant?
prior to or at the time of signing the application
a life insurance producer is required to give a disclosure notice about information practices to an applicant
prior to or at time of signing the application
which of these factors does NOT affect life insurance premium rates
producer certification
whic of the following outlines the authority given to the producer on behlaf of the insurer
producer contract
which of the following outlines the authority given to the producer on behalf of the insurer
producer contract
the authority for a producer to bind an insurer to an insurance contract is found in the
producers appointment
replacement regulations exist in order to
protect policyowners from misrepresentation and loss of benefits
the automatic premium loan provision can be accurately described as a
provision that provides a policy loan to pay any premiums by the end of the grace period
what is considered interstate travel under the federal fruad and false statements act
purerto rico
Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as
reasonable expectations
which of these is NOT an unfair claims settlement practice
refusing to pay persons bringing false or fruadulent claims
a life insurance policys waiver of premium rider has the ability to
relieve the insured of premium payments following an innitial waiting period after the insured becomes totally disabled
how can an insurance company minimize exposure to loss
ruinsuring risk
What does a 401(k) plan generally provide its participants?
salary deferral option
assets that back the non guarneteed values of life insurenace policy products are held in which account
separate account set up by the insurer
what type of risk involves the potential for loss AND the possibility for gain
speculatvie
an example of rebating woudl be
splitting the commision with the buyer on a sale of insurance
which entity is responsible for regulating claims settlement practices of insurers?
state insurance deparments
which of these is a ture statment regarding survivor benefits under a qualified retirement plan
survivor benefits can only be waived with the written conent of a parried emplpyees spouse
the premiums paid by an employer for his employees group life insurance are usually considered to be
tax deductible to the employer
the interest credited to the cash values of personally owned non qualified annuities is considered
tax deferred
the exclusion ratio determines
the amount of an annuity payment subject to income tax
which statement regarding the joing and survivor life insurnace ettlement option is NOT true
the amount of each installment is larger than the single life income option
all of these statements concerning group credit lfie insurance are false except
the face amount is based on the outstanding loan balance
all of these statments concerning group credit life insurance are false eXCEPT
the face amount is based on the outstanding loan balance
all of htese statements concerning group credit life insurance are false except
the face amount is based on the outstanding loan blance
what happens when an ititail offer is answered with a counteroffer?
the initial offer is void
which statement regarding a fixed period settlement option is correct?
the installment payment amount is determined by the total number of installments
under the law of agency, the principal is considered to be
the insurer
what acts as the acceptace of an insurance policy offer
the issued policy
an arrangement where an individual is authorized to act on behalf of another person or company is established through
the law of agnecy
an advantage of owning a flexible remium life insurance plicy would be
the policy owner can make policy changes wihtout difficulty
whos interests are being protected with the existence of replacement rules
the policyowern
what is considered teh collateral on a life insurance policy loan
the policys cash value
what is considered the collateral on a life insurance policy loan
the policys cash value
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
the producer
a notice of information practices must be fiven to policyholder at least every _______ years
three
which of these is NOT a reason to buy a term life policy
to accumulate savings
the owners cost basis for a non-qualified deferred annuity i typically the same as the
total periums pad -
a hold-harmless clause is an example of risk
transfer
how is a collateral assignment used in a life insurance contrat
transfers specific ownership right ot a creditor
how is a collateral assignment used in a life insurance contract
transfers specific ownership rights to a crediotr
how is a collateral assignment use din a life insurance contract
transfers specific ownership rights to a creditor
how is a collateral assignemtn used in a life insurance contract
transfers speicifc ownership rights ot a creditor
a business becoming incorporated is an example of risk
transkfer
disadvantage of naming a trust as a beneficiary
trust administartion fees reduce policy proceeds
when does interest income for a flexible premium deferred annuity get reported for federal income taxes?
upon recieving distributions from the contract
an insurance policy that can also be classified as a securities product is called
variable life
an insurance policy that can also be classified as a securities product is called
variable life -considered securities contractacst as well as insurance contracts
a terminally ill policyowner decides to sell his life insurance policy at a discount to help support his family. this sale is called a(n)
viatlical settlement
an insurance co can be liable for a producers unauthorized act
when the agency contract is unclear concerning the authority given
an insurance co can be liable for a produers unauthorized acts
when the agency contract is unclear concerning the authority given
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
when the conditions of the reciept are met
a policyowner is permitted to take out a policy loan on a whole life policy at what point
when the policy has a cash value
under which circumstance is the interest rate guaranteed within a market value adjusted annuity
whne the contract has been held for the period specifieid in the policy
which life insurance policy would be eligible to include an automatic premium loan provision?
whole lif e bc has cash value
which life insurance policy would be eligable to include an automatic premium loan provision
whole life -bc of the cash value
which life insurance policy would be eligible to include an automatic premium loan provision
whole life -bc of cash value that it builds
the conversion option for group term insurance may be excersized by an employee
within 31 days of terminiated employemnt
according to federal fraud and false statements regulation, what is required for a prohiited person to transact insurance business in this state
written consent from the state insurance regulatory agency
the following are all elements of a valid contract except
written evidence
according to the ERSIA regulations, a summary plan description must be provided to a new plan memebr )) days after the memebrs eligibiliyt date
90 days
accoridng at ERISA a summary plan description must be provided to a new memebr after how many days of their ligibility date
90 days
the superintendent must be notified by the insurer with ___ of a producers appointment
15 days
a teacher retired at age 63, and has a tax sheltered annuity TSA. periodic deposits total 120k and the value of the contract is now work 200k. how much is taxed if the current value is surrendered today.
200k. tax sheltered annuitys are funded with pre tax dollars so the entire value is taxed when surrendered.
upon meeting company requirements, a lapsed life insurance policy may be reinstated for up to___ years
3 years
must notify the superintendtn within ___ days of any change of name or adress
30 days
an individual working part-time has a gross income of 5k for the year. if this inidivual has an IRA, what is the maxiumum DEDUCTIBLE ira contribution allowable
5k
how long do most states allow an insurance co to delay the payment of a cash surrender under the delayed payment provision
6 months
which benefit is noramlly payable to a life insurance policyowner when the insured's life expectancy has been severly limited
accelerated living benefit
a producer working for an insurance company may be personally liable for
acts performed which are prhobited in the agnecy contract
Which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and 100% survivor annuity?
ages 71 and 73, the oldest.
tim is retired and devorced. he receives benefits form a qualified retirement plan from his former employer. the plans trustee has decided to split these benefit payments between tim and his ex wife, which is violating which IRS rule
alienation of benefits
the absolute assignment of al ife insurance poliyc results in
all incidents of owernship transferred to the assingnee
the absolute assignment of a life insurance policy results in
all incidents of owership transfered to the asignee
which of the following is NOT a reason for a business to buy key person life insurance
an increased pension liability if the key employee dies
which type of policy can group term life insurance normally be converted to
an individual permanent life insurance policy
in a qualified retirement plan, the yearly contributions to an employees account
are restiricted to max limits set by the IRS
how many an insurance compnay classify an accidental death benefit on a lfie policy
as an optional policy rider
how may an insurance company classify an accidental death benefit on a life policy
as an optional policy rider
group life insurance is typically issued
as level term insurance
which of these statements regarding insurance is false
as the number of insured units increases , the number of losses decreases
when does the insured stop making payments under a third payment whole life policy
at the time of death of 30 years after the policies inception, whatever comes first.
the IRS has a minimum coverage rule regarding qualified retirment plans. this rule states that each qualified plan is required to
benefit a broad cross-section of employees
what is the tax treatment of benfit payments for a non qualified annuity
benenfit payments are always taxable
Who normally pays the premiums for group credit life insurance?
borrower
who normally pays teh preiums for grou pcredit life insurance
borrower
voluntarily terminating an insurnace policy is also known as
cancelation
the principal source of info about applicants identity age and marital status is all on
completed application
the insurer's obligation to pay a claim depends on whether the insured or beneficiary hahs complied with all policy conditions. this makes the policy a(n)..
conditional contract
the insurers obligation to pay a claim depends on whether the insured or beneiciary has complied with all policy conditions. this makes the poilcy a
conditional contract
which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions
conduit IRA -a holding tank for funds that originally came from a qualifeiid plan and are on their way to another qualified plan
what can be used to avoid the mandatory withholding tax on qualified distrbutions
conduit ira
which of the following can be used to avoid the mandatory withhold tax on qualified plan distributions
conduit ira, a holding tank for funds that orgionally came from a qualified plan and are on their way to another qulaified plan
interest is created to a fixed annuity no lower than the
contract guarnateed rate
courts will normally side with the insured bc an insurance policy is an
contract of adhesion
courts side iwht the insured bc the insurance policy is an
contract of adhesision
the main purpose of an annuity is to
create a stream of income
whic of the following is NOT guaranteed in a whole life policy
dividend scale
whichof the following is not guarnateed in a whole life policy
dividend scale
an employer has a group life coverage for his employees. how would an employee in poor health be treated in this situation?
eligible for the same as other eployes
when using the needs approach for life insurnace planning, a lump sum may be created to provide for all of the following except
employee benefits
which statement concerning an adjustable life insurance policy is FALSE
evidence of insurability is required when there is a change in premium
death benefits from a life insurance policy are normally considered to be
except from income tax
An officer for a corporation takes out numerous unsecured loans from the company's qualified retirement plan. Which of these rules is the plan in violation of? Key employee rule Top heavy rule Vesting rule Exclusive benefit rule
exclusisive benefit rule
the powers directly given to a produer in an agency contract are called
express
an appointed producers implied authority is derived from
express authority
which life insurance policy option allows the policy owner to have coverage equal to the net death benefit of the lapsed policy
extended term nonforfeiture option.
which life insurance policy option allows the plicyowner to have coverage equal to the net death benefit of the lapsed policy
extended term nonforgeiture option
which life insurance policy allows the onwer to have coverage equal to the net death benefit of the lapsed plicy
extended term nonforteiture option
when an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement
eye exam
what statment concerning adjustable life insurance is accurate
face amount and premiums can be changed simulatneously by the policyowner
a consumer who has been recently denied insurance, credit, or employment based off an unfavoarbale consumer report MUST be advised as such. whihc of the following does this stauttue originate from
fair credit reporting act
which benefit supplement added to a life insurance policy insures an entire family
family term rider
An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?
federal income tax withholding. must withhold 20% of the distribution for federal taxes on a rollover
which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy
federal premium taxes
When an annuity contract has been surrendered, how will the surrender charges affect the final contract settlement?
final contract settlement will be reduced
which setllement option makes minimum guaranteed dollar payments over a stated number of years
fixed period
what type of premiums are associated with individual mortgage protection life insurance policies
fixed premiums
what are premiums for group credit life insurance based on?
flat rate unrelated to the borrowers age
how long does one premium payment cover in a single premium whole life insurance policy
full life of policy
a retirement plan with an employer that is considered to be 80% vested, can be interepreted by
if employment is terminated 20% of the funds could be forfeited.
a policy owner has just borrowed from a life insurance policys cash value. which of thse is true
in the event of death, the loan amount is deducted from the policy proceeds
which tax would an ira particiaptn be subjected to on distributions recieved prior to age 59.5
income and penatly tax
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
income tax and penalty tax
which life insurance clause prohbits an insurance company from questioning the validity of the contract after the stated period of time has paced
incontestable clause
a business may purchse an annuity for all of the following reasons except
informally funding a non-qualified degerred compensation plan
all of these are considered features of whole life insurance EXCEPT
initiail premium is lower than for an equivalent amount of term insurnace
advantage of term life insurance
initial premium is lower comapred to equivalent amout of whole life insuranc e
which statement is INCORRECT about the interest only setllement option in a life insurance policy
interest on proceeds must be paid by the beneficiary
which statement is INCORRECT about the interest only settlement option in a life insurance policy
interest on proceeds must be paid by the beneficiayry
in what way are insurance policies said to be aleatory
involves potential for the unequal exchange of value
a policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her atual age. if she dies and the insurere discovers teh misstatement of age, how much will the insurance company pay?
less than the face amoutn
what is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old
less than the policys face amount
what is the guarnateed cash value of a whole life insurance policy when the insured turns 65 years old
less than the polocys face amount
laura added a childrens rider to her life insurance policy. what type of coverage was added
level term
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
after the extended term life nonfortetirue option is chosen, the available insurance will be
level term for a stated period of time.
what is another term used for pure life annuity
life income
whhich of the following is TRUE about a qualified retirement plan that is TOP HEAVY
more than 60% of the plan assets are in key employee accounts
whyatt is shopping for life insuarnce and is mainly concerned with the policys death benefit. which index should he be looking at when making comparisons?
net payment cost index. -useful for comparing future costs (ex, 20, 30 yeras) if one will continue to pay premiums and does not take the policys cash value
an agents whos actions exceed the authrotiy granted by contract is
not backed by the insurer
an agent whos actions exceed the authority granted by contract is
not backed by the insurere
an agent whose actions exceed the authority granted by contract is
not backed by the insurere
a life insurance company just paid a 100K death benefit to a beneficiary. when the insured died, the cash value was 15k, and the total premiums paid equaled 10k. how much of the proceeds will be added to the beneficiarys gross income for federal income tax purposes
nothing. proceeds paid as a lump sum death benefit are exempt from federal income tax
which element of a contract consititutes a definite and unqualified proposal by one party to another
offer
all of these statements correctly describe an aleatory contract except
only one party makes any kind of legally enforceable offer.
emloyers often purchase life insurance on a key employee in order to
pay for finding and training a replacemet if they die prematurely
A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called
period certain
dividiends from a mutual insurance company are paid to whom
policholders
a signed good health statement may be requested by a life producer at the time of
policy delivery
a signed good health statment may be requested by a life producer at the time of
policy delivery
which of the following is a true statement about life insurance
policy indicates how much of each premium is used toward company expenses
all fo these are accurate statements regarding universal life insurance EXCEPT
policy loans are not permitted -ya they are
what happens when a policyowner borrows against the cash value of their life insurance policy
policy proceeds are reduced by the outstandind loan balacne
what happens to ta life insurance policy when the policy loan balance exceeds teh cash value?
policy will no longer be in force
whos interestes are beingn protected with the existence of repacement rule
policyowner
whose interests are being protected with the existence of replacement rules
policyowner
which of the following accuratly describes a participating insurance policy
policyowners may be entitiled to recieve dividens
which of these must be disclosed in a universal life policy
policys surrender charges
a producer has indicated to a potential client that the proposed life insurance policy is covered by the MASS health and life insurance guarantee assoaciation. this action is
prohibited by law.
whihc benefit can be found in an quity indexed annuity but not in a fixed annuity
protection against long term inflation
the automatic premium loan provision can be accureately described as a
provision that provides a policy loan to pay any premiums by the end of a grace period
a koegh plan is a
qualified retiremnet plan for the self employed
which of these occurrences could improve an insurers ability to reduce premiums
rate of earnings on investments increase
An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called
reaonsable expectations
What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?
responsible for acts by the prducer that are authority only
which of the following would most likely purchase an immediate annuity?
retiree having a lump sum to invest
during an annuitys liquidation phase, the annuitant normally
reveives benefit payments at regular intervals
which of teh following is NOT a dividend option fo alife insurance policy
reveiving the entire policy cash value
what kind of arrangement gives the policy owner the right to change the beneficiay
revocable designation
whic term describes the elimination of a hazard
risk avoidance
a group owned insurance co that is formed to assume and spread the liability risk of its memers
risk retention
A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a
risk retention group
which of the following desribes the act of insuraning a risk against possible loss
risk transfer
secruty laws passed by congress are enforced by which federal agency
security and exchange commission
a life insurance producers underwiting dutities may include
seeking additional info requested by the insurance co
an example of rebating would be
splitting the commision with the buyer on a sale of insurance
how does the cost for a survivorship life policy compare to the cost of combining two separate indicudal life insurnace polcies
surviviorship life policy is lower
The interest paid during an annuity's payout period is considered nontaxable taxable as ordinary income taxable as capital gains tax-deductible
taxable as ordinary income
the interest paid during an annuitys payout period is considered
taxable as ordinary income
how are monthly life annuity benefit payments treated under a tax sheltered annuity
taxed as ordinary income
which statemetn regarding the joint and survivor life insurance setllement option is NOT true
the amount of each installment is larger than the single life income option
which statement regarding the join and survivor life insurance settlement option is NOT true
the amount of each installment is larger than the single life income option.
k is an agent who takes an application for individual life insurance and accepts a check from the client. he submits the application and check to the insurance company, however the check was never signed by the applicant. if the application is approved, when will the coveage be effective?
the date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
when a producer acts within the scope of his/her contractual authority, which of the following is legally responsible for these actions?
the insurer
rick recently died and left behind an individual ira account in his name. his widow was forwarded the balance of the IRA. the transfer of risk IRA account balance to his surviving spouse qualfifis for
the marital deduction -the transfer of deceasced IRA account to a surviving spouse
what is the face amunt of a 50k graded death benefit life insurance policy when the policy is issued
under 50k but increasase over time.
what is the face amount of a 50k graded death benefit when the policy is issued
under 50k, but incrases annually until fully insured.
which of the following is NOT considered to be an expense for surpviving fam memebers of a deceased wage earner
unemployment tax expenses
a producer who misrepped pertinent policy provisions related to a claim commited a
unfair claims settlment practice
which of the following statments about universal life insurance is NOT true
universal life insurnae normally has a minimum guaranteed cash value for duration of the policy
an indiviaul retirement account rollover contributions are
unlimited by dollar amount
an individual retirement acoutn IRA rollover contributions are
unlimited by dollar amount
how long does protection normally extend to under a limited pay whole life policy
until age 100
an insurance policy that can be also classifed as a securities product is called
variable life. bc of the transfer of investment risk from insurer to policyowner
an insurance companys failure to enforce a contracts provision si called
waiver
an insurance companys failure to enforece a contracts provision is called a
waiver
what qualifies as acceptance of an insurance contract offer?
an issued policy
what is an accurate description of the premium in a graded premium life insurance policy
annual incrases then remains fixed
whihc is inccorecte regarding a tax sheltered annuity
annual investment gails are included in particiapts gross income -wrong, they are deffered
which statement is incorrect concerning a tax sheltered annuity
annual investment gains are included in particiapts gross income -no, they are DEFERRED in gross income
a description of a qulaified plans insurance contract may be found in which ERISA reporting form
annual return/report (form 5500)
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?
annuitant
The surrender charge on many deferred annuity contracts are waived when the
annuitant dies or becomes disabled
a description of a qulaified plans insurance contract may be found in which ERISA repoting form
annula return / report form 5500
use of XYZ inrusnace company brochures, business cards, and ratiing guids is an example of
apparant authority
the use of XYX insurance company brochures, business cards and rating guids is an example of
apparent authority -what a memeber of the public assumes an agency has
in what situation could an insurance policys coverage be modified
applicant is a substandard risk
in what situation could an insurance policys coverage be modified
applicant is at a substandard risk
if a replacement was involved in the sale of a life insurance policy, a producer must provide a replacement notice no later than the
application date
before soliciiting applications for an insurer, a producer must secure an
appointment
which of the following is not required for the renewal of a producers licene
appointment by an insurer
in the event of preium default, which life insurance providion will use the cash value to keep the policy in force?
automatic premium loan
in the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
automatic premium loan
which statement regarding the cash value of a whole life insurance policy is correct
available to the policy owner when policy has ben surrendered
which of these is NOT considered to be a cost connected with an indiiduals death
business expenses
which of these is true regarding the exchange of consideration among parties involved in an insurance contract
can be unequal. ->aleatory contract, unqequal exchange
which of these is a ture statement regarding survivior benefits under a qualified retirement plan?
can only be waived with the written consent of a married employees spouse
which of the following types of insurers limits the exposures it writes to those of its owners
captive insurer
which statment regarding the waiver of premium rider is accurate
cash ayment is not directly prodivded ot the policyowner
whic of these is not an advantage of term life insurance
cash benefit will be provided if the insured is alive at end of period -> no. no cash benefit with term insurance
a foreign insurer wishing to conduct business in MA must obtain a
certificate of authority
a foreign insurere wishing to conduct business in MAS must obtain a
certificate of authority -to have the AUTHORITY to work in mass
the policy provision that permits an employee to change from group life ocverage to an individual life coverage is called the
conversion provision
the total of premiums paid inot the policy minus dividends received in cash or used to offset premiums is refered to
cost basis
according to the needs approach, an emergency reserve funds primary purpose is to
cover the cost of unexpected expenses
Any employee insured under a group life insurance plan is normally
covered with term life insurnace
what is NOT an intended use of an annuity
create new funds upon the death of a wage earner
life settlement proceeds may be subject to the claims of
creditors
which of the following disability buy -sell agreements is best suited for businesses with a limited number of partners
cross purchase agreement
which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners
cross-purchase agreement -allows a companys partneres to purchase the shares/interest of a partner who dies.
when a sum of money undergoes capital liquidation, that sum will
decrease in size
what effect does interest income have upon insurance premiums
decreases premium
whihc of the following is genreally a form of group credit life insurance
decreasing term insuerance
A qualified profit-sharing plan is designed to
distribute a portion of company earnings to its employees
An officer for a corporation takes out numerous loans from the company's qualified retirement plan. Which of these rules is the plan in violation of? Key employee rule Top heavy rule Vesting rule Exclusive benefit rule
exclusive benefit rule
rick owns a vairbale universal life policy and chooses a variable death benefit option. what will typically happen to the death benefit as a result of this selection.
fluctuate with changes in the cash account
what is considered a valid reason for small corporations to insure the lives of its major stockholders
fund a buy-sell agreement
insruable interest in ones own life is legally considered as
generallly unlimited
insurable interest in ones own life is legally considered as
generally unlimited
what is the name of the rider the provides an additional purchase option in a life insurance policy
guarnteed insurability rider
what is the name of the rider that provides an additional purchase option in a life insurance policy
guranteed insurability ride
a condition that incraeses the possibility of financial loss
hazard
For insurance purposes, similar objects which are exposed to the same group of perils are referred to as
homogenious exposure units
which of the folloiwng is NOT subject to the promise to pay in an insuring clause
how the premium is calculated.
which of the following is NOT subject to the promise to pay in an insuring clause
how the premium is calucated
which of the following is not subject to the promise to pay in an insuring clause
how the premium is calucated
when an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. what exactly does needs analysis involve?
identitifeis the needs of an indiidual and the individuals dependents
after an insurance application has been originated, the producer normally
is the major personal contact to the insured
which of these is not a true statment of the war exclusion
it applies to civil insurrections
which statemetn regarding the certificate of insurance is accurate?
it indicates evidence of an employees insurance coverage
which of these is NOT a common life insurance nonforfeiture option
life income annuity
joe is a life insurance policyowner who as failed to pay interest on his policy loan. what will result from his nonpayment
loan amount is increased to reflect the amount of interest due
which of these is NOT relevant when determining the amount of personal life insurance needed
local unemployemnt rates
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT
make additional payments inot the annuity -bc is its a SINGLE PREMIUM, no more
the superintendent is empowered to perform each of the following acts except
make rules that are consistent with those of neighboring states
what would be a vlaid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual
management of proceeds
what would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual
managment of proceeds
a trustee- to -trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the amount transfered
a trustee to trustee transfer of rollover funds in a qulaified plan allows a participant to avoid
mandatory income tax withholding on the amount tresnferred
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax witholding on the amount transfered
what determines how much an annuitant is paid for a vairable annuity
market value variations of the secirities backing it
John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract?
mary.
an insurance contract may be voided if a misrepresentaiton found on the application is determined to be
material
an insurance contract may be voided if a misrepresentation found on the application is determined to be
material
A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called
period certian
which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy
portion of the payments paid comes from interest caluclated on the proceeds of the policy
what what way rae insurance policies said to be aleatory
potentail for unequal exchange of value
the law of large numbers enbale an insurere to
predict losses
what typically changes at the re-entry option date found in some term life policies
premium
which statement regarding the life insurance premium for a childrens rider is true?
premium remains the same no matter how many children
whic of these statments regarding the extended term insurance nonforteture option in a life policy is accurate
premium to purchase the coverage comes from cash value
how is the insured protected if a payor benefit rider is attached to the life insurance policy
premiums are waived if payor dies or is disabled
a retirement plan that sets aside part of the companys net income for distributions to qualified employees is called a
profit sharing
a retirement plan that sets aside part of the companys net income for distributions to qualified emplyees is called
profit sharing plan
ambiguities in an insurnace contract are typically interprented in favor of the insured. this rule is referred to as
reasonable expecations
ambiguities in insurance contracts are typically interpreted in favor of the insured. this rule is referred to as
reasonable expectations
what may result in a producers license being suspended
rebating a portion of the commision to the insured
a life insurance policyowner sells her policy to a third party in a life settlement. under this transaction, the policyowner
receives an amount less than the policys death benefit
what effect can a long term care benefit rider have on a life insurance policy
reduced death benefit. -> benefit used to pay cost of nurisng home
what could be the potential result of taking out a cash calue loan under a life insurance policy
reduces the amount receivable upon surrender of the contract
a life insurance policyowner would life a dividend option that results in a limited current outlay of funds. which dividend option would be chosen
reduction of premium payment
When a lapsed policy's premium has been paid current, it has the potential of being
reinstated
when a lapsed policys premium has been paid current, it has the potential of being
reinstated, by paying back the premiums, interest, and any outstanding loans
An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this?
reinsurance contract
how cna an insurance company minimize exposure to loss
reinsuring risk
according to the IRS a company may NOT do which of the following in regards to funds in a qualified retirement plan
reposessess the funds for business purposes
statements made by an insured on a accident and health insurance application are conidiered to be
representations
t is coverd by an accidental death and dimemberment (AD&D) policy that contains an irrevocable beneficiary. what action will the insurance company take if T requests a change of beneficiary?
request of change will be refused
what is the accounting meansurement of an inurance companys future obligations to its policyowners
reserves
a life insurance producers underwriting duties may include
seeking additional info requested by the insurance company
which of these factors does NOT influence an individuals need for life insurance
self maintenece expenses
Assets that back the non-guaranteed values of variable life insurance products are held in which account?
separate account set up by the insurer
which life insurance policy porvision prohibits a beneficiary from commuting encumbering withdrawing or assigning any portion of the proceeeds prior to actual deceipt from the compay
spendthrift clause ->prevents benefieciary from recklessly spending benefits by requiring the benefits to be paid in fized amounts or installments over a period of time
ZYX copr gives money to an employee to purchase a life insurance policy and allows the employee to selevt the beneficiry. what kind of plan is this
split dollar. -arrangemnt where an empoyer and and employee share in the cost of purchasing a life insurance policy on the employee
who regulates an insurers claim settlement practices
state insurance department
contributions made by an employee to a qualified retirement plan are required to be
subject to a vesting schedule
contributions made by an employee to a qulaified retiremnet plan are reuqired to be
subject to a vesting schedule
contributions made by an employee to a qualified retirement plan are requred to be
subject to a vesting scheudle
what happens to the cash value of a market value adjusted annuity if surrended prior to the started guarntee period
subject to makret avlue adjustmetn
whihc of these is a ture tatment regarding surivor beneifts undera qualifed retirement plan
surivior benefits can only be waived with the written conesnt of a married employees spouce
an insurere wil typically assess a back end load on a deferred annuity that is cancelled during the early contract years. this is referred to as?
surrender charge
who is considered to be the owner of 403b tax sheltered annuity
the participating employee
who is normally considered to be the owenr of a 403 b tax sheltered annuity
the participating employee
under an adjustable life insurance policy, which of the following pay NOT be changed without further underwriting
the person insured cannot be changed without underwriting
a business becoming incorporated is an example of risk
transfer
a hold harmless clause is an example of risk
transfer
a hold-harmless clause is an example of
transfer
what would be the disadvantage of maining a trust as beneficiary of a life insurance policy
trust administration fees would reduce policy proceeds
a life insurance policy can be contested by the insurer only during the first ------- years of the contract
two
which of the following statements about universal lief insurance is not true
universal life insurance normally has a minimum guaranteed cash value for duration of the policy -this is not ture
which of the following statements about univesral life insurance is Not true
universal life insurance normally has a minimum guaranteed cashvalue for duration of the policy -it has it for the whole policy
giving up a known right on a voluntary basis is called
waiver
during the application process, a statement made by an applicant that becomes part of the contract is considered to be a
warranty - guarnateed to be true in eery respect and therefore becomes part of the contract
during the application process, a statemtn made by an applicant that becomes parat of the contract is considered to be a
warrenty
a contract is considered void in all of the following situations except
when consideration is unequal
