Insurance Test

One of the benefits of an annuity in regards to taxes is:

Earnings are tax deferred during the accumulation phase

A(n) _________ plan calls for the business to purchase life insurance policies on each of the business owners.

Entity

The reinsurance agreement that allows the reinsurer an opportunity to reject coverage for individual risks or price them higher due to their higher risk is known as a(n) ___________ agreement.

Facultative

If life insurance proceeds are paid to the deceased's estate they may be subject to ________ taxes.

Federal Estate

Which of the following life insurance policies has a current and guaranteed maximum premium stated in the policy?

Indeterminate Premium Life

Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent?

Irrevocable

All of the following are correct regarding Key Employee Life Insurance, except:

Premiums are deducted from the employee's salary

When an insurer requires that an insured be subjected to a medical examination, who pays for the medical exam?

The insurer

With a Current Assumption Whole life policy, what can happen if the cash values increase too quickly?

The policy could mature sooner than expected

Which of the following is a likely outcome if a buy-sell agreement in a two person partnership is not in place when one of the partners dies?

The surviving spouse of the deceased becomes the other partner

Qualified plan employer contributions are tax deductible when _________.

They are made

Illustrations must be retained as follows:

Until 3 years after the policy is no longer in force

If funds are prematurely withdrawn from a Modified Endowment Contract (MEC) they are subject to a _____% penalty on any gains.

10

To be fully insured for Social Security, generally a person must have worked and paid into the Social Security system for a minimum of ______ years.

10

A non-school employer can set up a TSA plan for their employees under which of the following IRC section?

501(c)(3)

Distributions from a Modified Endowment Contract (MEC) made on or after age _____ are not subject to any tax penalties.

59 1/2

_________ consist(s) of the amount of premium that is returned to the policyowner if the insurer achieves lower mortality and expense costs than expected.

A Dividend

The following license fees are required in Illinois, except:

A business entity license: $150 annually

Which of the following is NOT a disclosure requirement for accelerated benefits?

A description of the accelerated benefit's cash values

Which of the following statements is correct regarding cease and desist orders?

A person violating a cease and desist order relating to an unfair trade practice may be fined up to $1,000 per violation

Which of the following situations will require proof of insurability?

Adjusting the face amount up on a Universal Life insurance policy with Option A death benefit selected

Which of the following must be supplied to an applicant whose policy is being replaced?

An Outline of Coverage

Dividends if declared are paid __________.

Annually

Which of the following statements is correct regarding advertising requirements?

Any advertisement of annuities and variable life contracts directed toward a person age 65 or older must disclose that an insurer or insurance producer may contact the applicant

What is the primary reason why States have 'outlawed' Stranger Originated Life Insurance (STOLI) transactions?

At policy inception there is a lack of insurable interest

Which of the following is NOT correct regarding Premium Fund Trust Accounts?

C A The premium fund trust account must be maintained for 7 years B Producers maintaining a premium fund trust account must pay or credit any return premiums to the insured within 15 days after receipt C The premium fund trust account must be with any U.S. financial institution D Any prohibited withdrawals from the account constitute misappropriation of funds

A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n):

Contract of Adhesion

Which of the following is NOT correct concerning licensing and authority for viatical settlement licensees?

D A A viatical settlement contract must be filed with and approved by the Director B An applicant must provide a detailed plan of operation C An applicant must have qualifying experience, training, or education D A business entity may not be licensed as a viatical settlement provider

Which of the following is NOT correct regarding required time periods?

D A An insurer must reply to all pertinent communications within 15 days B An insurer must give the claimant a reasonable written explanation of the settlement or denial of a claim within 30 days after determining liability C An insurer must pay a claim within 30 days after determining that the loss is covered D An insurer must provide any necessary claim forms within 30 days

All of the following are true regarding responsibilities of agents, except:

D A Any reference to policy dividends must include a statement that dividends are not guaranteed B An agent may not refer to him/herself as a financial planner, investment advisor, or financial consultant to give the impression that he/she is in a business unrelated to sales C An agent must inform the prospective purchaser that he/ she is acting as a life agent D A presentation of benefits may display guaranteed and non-guaranteed benefits as a single sum

Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall?

Indexed

A life insurance applicant wants a combination of savings and insurance protection with guarantees. If the applicant is willing to pay premiums only until the age of 65, at which time the policy is fully paid-up, which of the following should he/she purchase?

Limited Pay Whole Life-Age to age 65

The purpose of the Re-Entry Term option is to:

Obtain a new term policy at a lower rate

The Social Security Survivor Benefit is computed using which of the following?

PIA

The name of the beneficiary designation that will pay a deceased beneficiary's share to the heirs of that beneficiary who predeceases the insured is called:

Per stirpes

The capital liquidation approach is similar to which of the following settlement options?

Period certain

Annuities may be funded with either a lump sum or on either a ______ or a ______ basis.

Periodic, flexible

An existing term life insurance policy may be exchanged for a new term life insurance policy on the ______ date.

Re-Entry

A new life policy is being purchased, and the producer knows that an existing contract through a different insurer will be lapsed. This is an example of:

Replacement

Policy __________ are the net premiums paid plus interest earned and reflect potential insurance contract obligations.

Reserves

_____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers.

Surplus lines

What portion of an employee's pension plan withdrawal is subject to tax?

The entire withdrawal

Ultimately, who will be responsible for proving that a policy was delivered, if not accomplished through reasonable means?

The insurer

The reinsurance agreement that automatically accepts all new risks presented by the company seeking or requesting reinsurance from the reinsurer is known as a ____________ agreement.

Treaty

Which of the following Annuities would potentially be the most negatively impacted by the overall stock market falling in value?

Variable

All of the following are life insurance policy prohibited provisions, except:

Voiding a policy for failing to repay any policy loan or loan interest when the total outstanding policy debt is greater than the policy's cash value

An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased.

Whole Life