LIFE EXAM
incontestability clause
insurer cannot contest a claim based on misrepresentation or concealment by policyowner after the policy has been in force for 2 years
policy summary
insurer must provide a policy summary upon delivery of the policy
fixed annuities
insurer's general account guaranteed minimum interest rate
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
interest only
IIPRC
interstate insurance product regulation compact a single point of filing for the review and approval of certain insurance policy forms
variable annuities
investment in seperate accounts not guarantee of investment performance pays in units
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
joint life annuity
insurance policy
legal and binding contract
which two terms are associated directly with the premium
level or flexible
Adjustable life
level premiums and death benefits tied to the economy
term coverage
level, increasing, or decreasing
Which of the following best describes the difference between Pure Life and Life with Guaranteed Minimum settlement options?
life with guaranteed minimum will pay the remaining principal to the beneficiary
Jumping Juvenille policy
low face amount in early years then increase when the insured reaches a specific age
endowment policy
lowest amount of protection for same premium
misrepresentation
lying
The Interstate Insurance Product Regulation Compact is a contract between
member states and serves the insurers
Fixed annuities provide all of the following
minimum guaranteed rate of interest, future income payments, equal monthly payments for life
Readability standards
minimum score of 40 on Flesch
Life insurance proceeds
proceeds paid to a beneficiary are income tax free
promissory warranty
promise to do something if policy is activated
#80. If an insured continually uses the automatic premium loan option to pay the policy premium
the policy will terminate when the cash value is reduced to nothing
qualified annuity
favorable tax treatment
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
fixed amount
Single premium life insurance
generates immediate cash value
Qualified plan
grow tax deferred but at distribution will be taxed
Qualified plans
have tax benefits for both employer and employee has favorable tax treatment
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
illegal
pure life annuity
income is payable by the company only for the life of the annuitant
Employer contributions to a qualified plan
must have a vesting requirements
annuity period
period of time during which accumulated money is converted into income payments it may last for the lifetime of the annuitant
Permanent Insurance
permanent insurance provides lifetime death protection and a savings or cash value option.
An employer has sponsored a qualified retirements plan for its employees where the employer will contribute money whenever profit is reached
profit sharing plan
annuity
protect an individual from outliving his or her money?
Primary purpose of 401(k)
retirement
Equity indexed annuities
seek higher returns
SIMPLE Plans
small business not more than 100 employees
HR-10 (Keogh plans)
specifically for self-employeed and their employees qualified retirement plan IRS qualified retirement program A person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan.
Straight life annuity payments
stop at death
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend
straight life
The advantage to qualified plans to employers is
tax deductible contributions
Installments for a fixed period
the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be
In a life settlement contract, whom does the life settlement broker represent?
the owner
captive agent
An insurance producer who by contract is bound to write insurance for only one company or group of companies is classified as a/an
Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain?
Individual
A life insurance policy has a legal purpose if both of which of the following elements exist?
Insurable interest and consent
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?
Insurer's guaranteed minimum rate of interest
Which of the following is NOT true about a group annuity?
It can be owned by individual employees.
Which of the following is true regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred. NOT: It would not occur in a deferred annuity.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity
Jack and Jill are twins. When their grandfather died, he left each of them $100,000, which they each used to purchase an annuity. When they retire, since each select the life income option, which will receive the larger monthly annuity payment?
Jacks payment will be larger Because Jill's life expectancy is greater, her payments will be less.
Key Person Insurance
Key Person coverage may be funded by any type of life insurance.
Which of the following is true regarding a modified guaranteed annuity?
The owner is guaranteed a fixed interest rate for a specific period of time.
SIMPLE plan
tax defered until withdrawn
morale hazard
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? A morale hazard is someone who has an indifferent attitude towards an insurance company.
Moral Hazard
Moral hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer. - an individuals tendency to be dishonest
Reinsurance manager
A "reinsurance manager" is any person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer.
A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?
Joint and Survivor
When an annuity is written, whose life expectancy is taken into account?
annuitant
Defined Benefit Plans
-the amount of contributions made by the employer is determined by an actuarial formula - High-salaried employees with only a few years until retirement receive the highest contribution
After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within
20 days
How many hours of prelicensing education approved by the Commissioner must each applicant complete?
20 hrs
Within how many days of requesting an Investigative Consumer Report must an insurer notify the consumer in writing that the report will be obtained?
3 days
An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholders?
3%
All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?
A 60-year-old man Among other factors, the annuity income amount is based upon the annuitant's age and gender. An annuitant whose life expectancy is shorter will have the largest income installments. In this example, an older man will have the shortest life expectancy.
The equity in an equity index annuity is linked to
An index like Standard & Poor's 500.
In a defined contribution plan,
The contribution is known and the benefit is unknown
If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to
$1,000
The owner of a life insurance policy dies, and no beneficiary is named. One of the owner's friends paid for part of the funeral costs. What is the maximum amount of money that the friend could be issued from the insurance policy?
$1,000 dollars
What is the maximum life insurance coverage available to the state residents through the Wisconsin State Life Insurance Fund?
$10,000
License renewal
$35, renewal is the end of the month you were born every 2 years
Life Insurance Tax
premiums not tax deductible cash growth is tax deferred
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?
$8,000, 60 days
Social security
- 40 credits (about 10 working years)
Rebating is an unfair trade practice and is regulated by law. Examples of rebating
- an agent offers the use of his lake house - an agent offers to share his commission - an agent offers tickets to sporting event
SEP - Simplified Employee Pension Plan
- ease of plan administration - limit participation to members - higher tax deductible
All of the following information about a customer must be used in determining annuity suitability
- tax status, financial experience, and annual income
"Free look"
10 days
No individual life insurance policy may be contested after it has been in force for
2 years
Re-Hearings
20 days to request
An intermediary who acts in the procuring of insurance on behalf of an applicant for insurance or an insured
insurance broker
aleatory
An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk. - exchange of unequal values
What is the grace period of a life insurance policy?
31 days
What is the minimum duration of the grace period in a life insurance policy?
31 days
For how many years must an agent keep the original certificates of completion of CE hours?
4 years
In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5 Years
When replacing a policy, an insurer must maintain a file containing copies of all statements for
5 years
adhesion
A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.
All of the following could own group life insurance
A group sponsored by an employer. An alumni group. A debtor group. NOT: a group needing low cost life insurance
Which of the following persons is not required to complete CE?
A limited lines intermediary with 40 years of continuous licensure
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A portion of the benefit up to a limit is tax free; the rest is taxable income
Human life approach
A projection of insurance needs that is based upon the capitalization of an applicant's future earnings is
employees that may use a 403(b) plan for their retirement
A school bus driver. A part-time classroom aide. The vice president of a charitable organization. Teachers and not-for-profit organizations.
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?
Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit
third party ownership
An insured couple purchases a life insurance policy insuring the life of their grandson. A company purchases a life insurance policy on their manager, who is an important part of the operation. When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company.
mutual
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Which of the following products will protect an individual from outliving his or her money?
Annuity
annuity certain
Annuity Certain option allows the annuitant to select the time period or the amount for the benefits. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal Life
Which of the following statements is true of insurance licensing in the state of Wisconsin?
Applicants must pass a state licensing exam.
needs approach
Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed. - the annuitant assumes the risk on investment
Level Term Insurance
Both premium and face amount remains level throughout term of policy term policies do not develop cash values
Universal life
Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value.
immediate annuity
Can be purchased with a single premium and provides benefit payments immediately ex: winning the lottery
Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that that annuity owner will have to pay?
Current interest rate at the time of surrender
Notice regarding replacement
During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.
Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?
Endowment policy: the cash value in an endowment has to build up faster since the funds are intended to be used while the insured is alive
Ann is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity Indexed Annuity.
An agent selling variable annuities must be registered with
FINRA
Pure Risk
I loose or I do not loose
Speculative Risk
I win or I loose, not insurable
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installment for a fixed period
Essentials of an insurance contract
Legal Purpose Acceptance competent parties consideration accepted offer
NAIC
National Association of Insurance Commissioners - make recomendations
A prospective deferred annuity owner is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following?
Nonforfeiture option guarantees that the owner will receive a surrender value of the contract
unilateral contract
One-sided; only one party makes an enforceable promise
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
annuity period
PAYING OUT each payment is partially taxable
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
Permanent Life insurance
Decreasing Term Insurance
Premiums remain level, death benefit decreases
Increasing Term Insurance
Premiums remain level, face amount increases
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitants life and ceases at the annuitants death?
Pure Life
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
Which of the following would help prevent a universal life policy from lapsing?
Target Premium
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner
Annuities differ from life insurance in all of the following ways EXCEPT
The annuitant must be living to collect. There is no stated amount of death benefit. They can be used in a qualified retirement plan. NOT: They are purchased with premiums.
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is true?
The beneficiary will receive the greater of the money paid into the annuity or the cash value
consideration
The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss. ex: Representations on the application Submitting a Statement of Good Health Premium payment paying claims
#95. Which of the following statements about group life is correct?
The cost of coverage is based on the ratio of men and women in the group.
When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed?
The insurance company's general account
Transfer
When an individual purchases insurance, what risk management technique is he or she practicing?
When do full Social Security retirement benefits begin?
When the worker reaches age 65 and has earned the required amount of work credits.
Fraternal benefit society
Which of the following entities is not an insurer, but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?
Family Maintenance
Whole life pays a lump sum, and level term pays monthly benefits for the predetermined years of the policy A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?
family income policy
Wilma owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a rider.
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?
Withdrawn amounts are taxed on a last in, first out basis.
Are insurance company underwriters allowed to discriminate? A
Yes, but not unfairly
All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?
a 60 year old man
joint life annuity
a couple receives a set amount of income from their annuity, when the wife dies the husband no longer gets annuity payments
extended term
a nonforfeiture option with the highest amount of insurance protection
reinsurance broker
a person, other than an officer or employee of the ceding insurer, who solicits, negotiates, or places reinsurance cessions on behalf of a ceding insurer?
All of the following benefits are available under Social Security EXCEPT
a) Old-age and retirement benefits. b) Disability benefits. c) Death benefits. welfare benefits
The policyowner of a life insurance policy forgets to pay his monthly premium and then dies 10 days later. Which of the following is true?
a) The policy will pay full death benefits, less the premiums that were due.
Federal tax advantages of a qualified plan
accumulate on a tax deferred basis contributions are not counted as income to employee employer contributions are tax deductible NOT: At distribution, all amounts received by the employee are free of taxes.
Peril
actual cause of loss
authorized insurer
admitted
illustrations
agent and applicant are required to sign
express authority
agents contract with the principal
viatical settlement
allows an insured with a life-threatening condition to sell his/her existing policy in order to receive benefits when they are most needed.
ROTH IRA
allows contributions to continue past 70.5 and does not force distributions to start at age 70.5
guaranteed insurability option
allows the insured to purchase specific amounts of additional insurance at specific times without evidence of insurability
Family Term Rider
an amount of insurance on every family member
A Universal Life Insurance policy is best described as
an annually renewable term policy with a cash value account
Who can make a fully deductible contribution to a traditional IRA?
an individual not sponsored by an employer-sponsored plan
Under the 401(k) bonus or thrift plan, the employer will contribute
an undetermined percentage for each dollar contributed by the employee
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
annuitant must be a natural person
In an annuity, the accumulated money is converted into a stream of income during which time period?
annuitization period
straight life annuity
annuity payments to the annuitant for as long as she or he lives, payments stop at death
affirmative warranty
answered based on application
Deferred Compensation Funding
any employer retirement, savings, or other deferred compensation plan that is not a qualified retirement plan.
What form of life insurance may be used to fund a buy-sell agreement
any form of life insurance
senior consumer
any person age 65 or older
intermediary
any person who earns a commssion directly or indirectly and solicits, negotiates, advices and places SNAP
Roth IRA
anyone with earned income no age limit contributions are not tax deductible but earnings are tax free
All of the following are true regarding tax-qualified annuities EXCEPT
employer contributions are not tax deductible
The term "fixed" in a fixed annuity refers to all of the following
equal annuity payments, amount and length of payments, guaranteed rate of interest It is NOT a death benefit
What describes a ledger or proposal used to show both guaranteed and non-guaranteed elements of the policy?
basic illustration
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period. After the increase period, the premiums will
be level thereafter
Single premium immediate annuity
begin receiving income payments no later than 1 year
class designation
beneficiaries are not identified by name
SEP Simplified Employee Pension plan
benefit plan that is designed to be provided by a small employer for the benefit of the employees Larger amounts can be contributed Employer can contribute up to 3% of employees income
Which of the following is NOT true regarding an annuity certain?
benefits stop at an annuitants death
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
c) The benefit is received tax free.
Whole Life
cash accumulation
When Jerry purchased a life insurance policy, the agent dated the application 4 months prior. When asked by Jerry, the agent said he was allowed to backdate policies up to 6 months if it would
cause the insured to pay a lower premium
403(b) plan TSA
certain tax exempt employers that may provide a retirement plan for its employees
when both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
conditional
Annuities
contract between a policy holder and insurer lump sum funding insurer agrees to make periodic payments financial protection against living too long
All are defined benefit plans EXCEPT
contributions are tied to company profits
Qualified Retirement Plans
contributions by employer are tax deductible contributions grow tax deferred
An insurance producer just sold an insurance policy to his sister. What kind of business is this?
controlled
Which of the following will NOT be an appropriate use of a deferred annuity?
creating an estate
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, the report may contain the following:
credit history, habits, and prior insurance it may not include ancestry
Variable Universal Life
death benefit flexible face amount can be increased or decreased flexible premiums
Which of the following are NOT fundable by annuities?
death benefits
The following are considered exceptions to the early distribution rule:
death of the participant, the participant's disability, a divorce decree, as a series of equal payments (at least annually) over the participant's life expectancy, a loan from the plan, as part of a qualified rollover.
accumulation period
deferred annuities only PAYING IN - 10% penalty for pulling before 59.5
pure endowment
designed to payout the cash value like a retirement benefit commonly at age 65
payor benefit rider
determines when the premiums will be waived
10% tax penalty on distributions
distributions are made on a policy before 59.5
When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?
distributions are taxable
Nonqualified retirement plans
do NOT need IRS approval do NOT meet IRS requirements
Accidental Death rider
doubles death benefit accident must occur before specific age
Tax advantage to a qualified retirement plan
earnings in plan accumulate tax defered
tax sheltered annuity
excluded from employees current taxable income, but are taxable upon withdrawl only available to Certain groups of employees only.
Non qualified retirement plan
executive bonus
Nonqualified retirement plan
executive bonus plan
compulsive forfeiture
failure to comply with an insurance commissioner's order up to $5,000 a day
Group Life insurance
flat amount $10,000 employer may deduct premiums death benefits are always income-tax free
Jane is eligible for full death, retirement, and disability benefits under Social Security. Her worker status with Social Security is
fully insured
Multiple employer trust MET
group of groups for sole purpose of buying insurance - band together
Blanket life (group)
group of people during a short period of time
In life insurance policies, cash value increases
grow tax deferred
Fixed annuities
guarantee a minimum amount of interest to be credited to the purchase payment - company makes investments
Option A
has gradually increasing cash value and level death benefit
Installments for a fixed amount
has no life contingencies - a specific amount will be paid until funds are exhausted regardless if the person is dead or alive
straight whole life
have a level guaranteed face amount and a level premium for the life of the insured
qualified and nonqualified retirement plans
have taxation on accumulation
split dollar plans
helps one individual obtain life insurance at a cost lower than what would otherwise be
What is a primary difference between an IRA and an SEP?
much more money can be contributed to a SEP
an agents advertisements
must be approved by the agents boss
buyers guide to annuities
must be given before accepting the initial premium
Fair credit reporting act
must inform applicant within 3 days
#66. Using a class designation for beneficiaries means
naming beneficiaries as a group
To sell variable life insurance
need life insurance license and securities license
A woman divorces her husband at age 35 and collects distributions on her retirement plan as a result. What penalties will she have to pay?
none
Reduced paid-up
nonforfeiture options that provides coverage for the longest period of time
grace period
not less than 31 days
Implied Authority
not stated in the agent's contract but is required for the agent to conduct business
Life Insurance Benefits
not taxable as income to a beneficiary
Life settlements/viatical settlement
owner of a life isurance policy sells the policy for an amount less than the death benefit but greater than the cash surrender
Distributions pulled before 59.5
pay a 10% tax unless of divorce (no tax)
surrendering an annuity
pay current interest rate at time of surrender
A participating insurance policy may do which of the following?
pay dividends to the policy owner
period certain
pay you and your grandparent the same monthly dollar amount
accumulation period of annuity
pay-in-period
Which clause stipulates that life insurance premiums can be paid in advance of policy issuance?
payment of premium clause
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
payments for 15 years
Payor benefit rider
pays the premium if the insured becomes disabled or dies
What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries?
per stirpes
A policy with a cash value element
permanent
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?
permanent insurance
Absolute assignment
permanent transfer of ownership
controlled business
policies written on oneself
Universal Life Insurance
policy owner can determine his or her face amount and frequency of future premium payments
Variable Life Insurance
policyowner takes risk for how the cash value is invested cash value/face amount can increase or decrease
Straight Life
premium is level and payable to age 100
Whole Life Insurance
provides a lifetime of protection (to age 100) if person lives beyond age 100, policy pays face amount (cash value) the policy owner is entitled to policy loans
Term Life Insurance
pure insurance provides protection for a specific period of time or to a specific age option to renew without EOI
IRA Individual Retirement Account
qualified contributions can be made until 70.5 penalty if withdrawn before 59.5
defined benefit plan
qualified employer defines retirement
insurance provider considerded to be risk sharing
recip
insurance provider considered to be risk sharing
reciprocal
loss
reduction, decrease, or disappearance of loss
Person who has the authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer
reinsurance manager
Payor Benefit
releaves a minor from paying premiums if the parents dies
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
replacement rule
producer/agent
represents insurance company
broker
represents the buyer or applicant
Fair Credit Reporting Act 1970
requires fair and accurate reporting
Agent D submitted an application for life insurance on client A. No money was sent with the application. When Agent D attempted to deliver the policy, he discovered that A had suffered a heart attack since the application was taken. The agent should
return the policy to the insurer
All of the following are examples of risk retention
self insurance deductibles co payments
fixed-period installments
settlement option
hazard
situations or factors that may increase the possibility of a loss Events or conditions that increase the chances of an insured loss occurring
consideration provision
something of value
All other factors being equal, which of the following types of annuities will generally provide the highest monthly income?
straight life
An insurer is helping a married couple determine their children's needs, assets, and liabilities, in the event that one or both of the spouses should die. What is the term most closely associated with this?
survivor protection
adhesion
take it or leave it
Section 1035 exchange
tax-free exchange of an existing life insurance, endowment, or annuity contract for an equivalent new contract
accelerated death benefit
terminal illness pays death benefit while still alive
cash value
the amount available to the policy owner for a loan
If a policy is marketed with an illustration, who must sign the illustration?
the applicant and the agent
If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?
the change must be reported to the department
The market value adjustment in modified guaranteed annuities refers to which of the following?
the difference between the contract interest rate and the rate at surrender
Under a defined benefit retirement plan, who determines what benefits a retired employee will receieve
the employer
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
the insured would need written consent of the insurer
paid-up option
the insurer can accumulate dividends at interest and then use them, in addition to interest, and the policy's cash value to pay the policy earlier than planned
Which of the following might be considered an advantage of a family life insurance policy that provides coverage for children?
the policy may be converted to permanent insurance for the children without EOI
An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years
the premium will increase because the insured will be 5 years older
What is NOT true of life settlements
the seller must be terminally ill
A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?
the surrender value should be equal to 100% of the premium paid
Social Security is funded by a payroll tax imposed on a percentage of an employee's income. This percentage is called
the taxable wage base
Which of the following is true for both equity indexed annuities and fixed annuities?
they have a guaranteed minimum interest rate
Which of the following is the best reason to purchase life insurance rather than annuities?
to create an estate
What is the purpose of a proposal for a life insurance policy sold in connection with a security?
to provide the policyholder with a clear and accurate description of the policy coverage
collateral assignment
transfer of any cash value ownership
Multiple employer welfare arrangement (MEWA)
unions use to insure
requires a life insurance and securities license
variable annuity
#60. A Buyer's Guide must be presented
when the application is taken
Replacement of policy
within 5 business days, an insurer is required to send a letter informing policyowner must maintain copies prior to completing the application a statement signed both the applicant and producer
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce
without receiving written consent from an insurance regulatory authority
#37. Under what circumstances may an irrevocable beneficiary be changed?
written consent of the beneficiary
If the owner prematurely surrenders his deferred annuity before the annuitization period begins, which of the following is most likely to occur?
The owner will receive the premium payments that have been paid into the annuity, plus any interest, minus a surrender charge.
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments It may last for the lifetime of the annuitant.
A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?
The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
the date of medical exam
Life insurance as an executive bonus
the policy is owned by the employee
