insurance exam problems to review
a whole life policy is surrendered for a reduced paid-up policy. The cash value in the policy will
continue to increase >>> the new policy continues to build its own cash value
which of the following terms refers to the nontaxable portion of each annuity benefit payment?
cost base >>> the anticipated return of the PRINCIPAL paid in
Chris, who is unlicensed, works part-time in her father's insurance agency. She may perform all of the following activities EXCEPT
Collect premium for in-force policies and explain coverages to clients that have existing policies written by her father
variable insurance and variable annuities are regulated by
SEC, FINRA, and Departments of Insurance
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
a policy is reissued with a reduction in cash value
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
extended term
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
fixed amount
how will life insurance proceeds that are paid as a lump sum received by the beneficiary?
free of federal income taxation
under which of the following conditions would life insurance proceeds be taxable by the federal government?
if there is a transfer for value
which of the following is NOT true regarding a deferred annuity?
income payments begin within 1 year from the date of purchase >>> begin sometime after 1 year
which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?
insurance application
which of the following statements describes one of the reasons individuals purchase life insurance?
it creates an immediate estate >>> when the insured dies
which of the following is NOT true of the agent's implied authority?
it is specifically stated in the contract
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will
adjust the death benefit to what the premium would have purchased at the actual age or gender
how long is an insurer bound by the actions of its appointed producer?
as long as the appointment remains in force
which distribution(s) from a Modified Endowment Contract would be taxable as income at theme received to the extent that the cash value of the contract immediately before the payment exceeds the investment in the contract?
both partial cash surrender and policy loan
The reduction of premium option uses the dividend to reduce
next year's premium
contributions to Roth IRAs are
not tax deductible >>> and excess contributions are subject to a 6% tax penalty
which of the following best defines the unfair trading practices of rebating?
offering an inducement of something not specified in the policy
which dividend option will increase the death benefit?
paid-up additions >>> uses the dividend to purchase small amounts of the same type of insurance as the original policy
a married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making premium payments due to death or disability. What policy rider should their agent recommend?
payor benefit >>>provides protection to the insured minors
Annuities certain limit the amount paid by the annuity to a certain fixed
period or fixed amount >>> either method until all the funds are liquidated
what is the difference between a straight life policy and a 20-pay whole life policy?
premium payment period >> a limited pay whole life, just like straight life, endows for the face amount if the insured lives to age 100. the premium is, however, completely paid off in 20 years
which of the following would not be a violation of state insurance regulations?
producer c uses her license to write uncontrolled business only
All of the following are true about key-person insurance EXCEPT
the death benefit is taxable to the business >>> key person life insurance is not deductible by the business and the death benefit is not taxable to the business
life insurance creates an immediate estate. which of the following best explains this statement/
the face value of the policy is payable to the beneficiary upon the death of the insured
If the annuitant dies before the annuity start date, which of the following is true?
the interest is taxable
which of the following would NOT be eligible for coverage under key person?
the owner of a shop >>> the owner is a principal not a key person