Idaho Insurance Exam

Insurers earn interest on the policy premiums they receive. What is the commonly assumed rate of return insurers expect?

2.5-3%

Free-look period for annuity contracts in idaho?

20 days!

What is the death benefit option to some variable universal life policies?

A death benefit equal to the sum of the policy's specified amount plus the total premiums paid

What is required in a group life policy under the misstatement of age provision?

A statement describing the method of adjusted premiums if mistake has been made.

How are accelerated life insurance benefits taxed?

Accelerated benefits are not taxable if the insured meets the definition of terminally ill OR chronically ill

What amount of a group life insurance policy is taxable when the benefit is above $50,000?

Anything above $50,000 is taxed on $25,000

What is the term for a policyowner transfering ownership of a life policy?

Assignment

When a group life insurance plan is split between the company and the enrolled employees what percentage of employees need to be enrolled?

At least 75% of eligible employees must enroll in that plan

Which provision protects against the unintentional lapse of a life insurance policy

Automatic premium loan

What are ways to fund a traditional IRA?

Certificates of deposit, securities, annuities

What is the technical term for the portion of an insurance commpany's earnings that is available for distribution to policy owners in the form of policy dividends?

Divisible surplus

In a Multiple Employer Trust (MET) who is the policy owner?

EmployER (the boss you dyslexic nerd)

What must an agent do to figure out a family's lump sum needs if the breadwinner dies?

Estimate the amount of cash needed to pay debts, taxes, and funeral expenses

What is a buyer's guide for?

Explain general features, benefits, and conditions of the type of insurance being considered by the client.

What type of annuity guarantees both the annuity's principal and a specified rate of interest to be credited to the contract?

Fixed annuity

Which life settlement options do not include a life contingency provision?

Fixed period option

What is the result of paying premiums more frequently than once a year?

Higher annual preiums to account for lost interest and additional insurer costs

What is the accelerate benefits rider?

If a person is diagnosed with non-terminal critical illness (non-terminal cancer).

In an employer non-contributory plan how much of the group must be covered?

If its NON-contributory 100% of the group must be covered.

What is a key difference between uninversal life and tradition whole life?

In a universal life policy the owner may take partial withdrawals from the cash value

What factor can fixed annuity payments?

Inflation and loss of purchasing power over time

Survivorship life insurance policies

Insure more than one person but pay the death benefit only when the second insured dies. Premiums are about the same as for two comparable single-life policies

What happens to the cash value of a whole life policy?

It DEcreases

What happens to the cash value of a whole life policy?

It decreases over time

What happens to a mortality charge of a universal life police over time

It increases over time

Why are annuities called the mirror image of life insurance?

Life insurance creates an estate, while annuities liquidate an estate (to pay an amount over time).

What is the expense component of insurance premium pricing known as?

Loading

What is the rider that provides financial support for medical care, nursing home care, and assisted living care for extended periods?

Long-term Care rider

For a misrepresentation to affect the validity of an insurance policy, it must be what?

Material

When can a producer alter provisions on an annuity?

NEVER

What does an agent collect when switching a consumer to a different plan?

Name of existing insurer, Name of insured, Policy umber (if known)

In third-party ownership, the insured under the life insurance policy generally has what?

No rights to the policy

Is there a minum required distribution from a Roth IRA?

No, not at 70 1/2

If a policy was instated ten years ago to the day will the insurance be distributed

No, on the day of policy lapse all coverage is terminated.

Are distributions of a Roth IRA taxable to a person over 59 1/2?

No, they are not taxable as long as the account was held by the owner for AT LEAST 5 years

Can Roth IRAs contributions be deducted?

No, they cannot be deducted

Insurers will also consider which of the following in evaluating risk.

Numerical rating system to evaluate the risk posed by proposed insureds

What is the per capita distribution method?

Policy proceeds are paid only to the beneficiaries who are alive and have been named in the policy

Net Single Premium

Premium that a person must pay in a lump sum to receive all the benefits promised in the policy if no insurer expenses were considered

What are all statements by the policy owner in the application process called?

Representations

What is the most common Qualified small employer Plan?

Simplified Employee Pension plan

What life contingency option provides the highest monthly payment?

Straight life income

What is the Present value of money?

Sum of money needed today to grow a specified sum in the future, using a specified interest.

What is the 7-pay test?

The 7-pay test applies specifically to the premiums paid into a contract during its first seven years. If this amount exceed the net level premiums that would have been required to produce a paid-up policy after seven even annual payments, then the policy is a Modified Endowment Contract.

Who funds salary continuation plan

The employer funds the benefit. Unlike traditional differed compensation where the employee funds the benefit

What happens to a traditional IRA if the owner dies before all his funds have been paid out?

The funds will be paid and taxed to the beneficiary

What will happen if a traditional IRA owner dies before all of the funds in his or her account have been paid out?

The funds will be paid and taxed to the beneficiary.

Who generally has no rights in a third-party ownership of a life insurance policy?

The insured

What can annuity settlement options be based on?

The length of the annuitant's life or the joint lives of two annuitants a fixed number of years a combination of the two.

In a 20-pay whole life policy what happens at the end?

The owner will stop paying premiums but will retain the face amount of the policy until they are 100 yrs old.

What is the per stirpes distribution method?

The proceed of a life insurance policy pass down to the beneficiary's children if the named beneficiary dies before the insured.

Any after-tax contributions made toward the cost of group life coverage are treated in what way?

They are subtracted from the imputed income on a dollar-for-dollar basis.

What is the policy face value mimite when converting a juvenile policy?

UP TO 5x the coverage under the family policy

What is cliff vesting?

Under a cliff vesting plan there are 100% contributions form the employer for a fixed period of time and stop completely once that time has lapsed.

The main difference between a traditional deferred compensation plan and a salary continuation plan is that

Under a salary continuation plan, the employer funds the benefit.

Key difference between variable life and variable universal life insurance

Variable life insurance require a fixed premium payable for the life of the policy while variable universal life permits premium flexibility.

Under a joint life insurance policy, when does the insurer pay the death benefit?

When the first insured dies

When can a waiver of premium or a waiver of cost rider to a universal life policy be added?

When the policy is issued or at a later date.

Under a survivorship life insurance policy, when does the insurer pay the death benefit?

When the surviving spouse dies BOTH DED

Can a company keep insurance on key employees if they leave?

Yes, regardless of rank. Simply have to be key

When an annuity owner makes premium deposits and allocates them among the contract's subaccounts, what are these funds used to buy?

accumulation units

What are survivorship life insurance policies primarily for

pay estate taxes and other settlement costs when the second insured dies.

Why does an insurance company issue a conditional receipt?

to cover the proposed insured before policy issue

Can an employee convert to an individual policy when the group coverage ends?

yes, within 31 days following termination or retirement from the group

Universal vs. Traditional

you CAN withdraw on universal. You Cannot!! withdraw on Traditional