chapter 1 and 2 exma

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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


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