Life Insurance Exam: Ch. 1-6

Premium

the money paid to the insurance company for the insurance policy

Lapse

policy termination due to nonpayment of premium

Death Benefit

the amount paid upon the death of the insured in a life insurance policy

Fraud

Intentional misrepresentation or deceit with the intent to induce a person to part with something of value

When transacting business in this state an insurer formed under the laws of another country as a(n) a. admitted insurer b. alien insurer c. domestic insurer d. foreign insurer

b. alien insurer

Hazards are

conditions that increase the probability of an insured loss occurring

Insurance is a contract by which one seeks to protect another from

loss

An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of a. a financial institution b. the insurer c. another insurance producer d. a client

d. a client

Insured

A person covered by an insurance policy; may or may not be the policy owner

Insurer (principal)

the company who issues an insurance policy

Agent/Producer

a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer

Policy Summary

Documents delivered to the policy owner which includes information about premium amounts, cash values, surrender values, and death benefits for specific policy years.

An insurance company and insured are settling a lawsuit involving a life insurance policy. The insurer believes that the application would help to establish material facts in the case. Which of the following is TRUE? a. once a policy is issued, it is permissible to use the application in litigation, provided that the insured is notified b. if less than 2 years have passed since the policy issue date, it is acceptable for the application to be considered as evidence c. state law prohibits applications from being used in litigation d. applications can only be used in court cases if they are attached to or endorsed upon the issued policy

d. applications can only be used in court cases if they are attached to or endorsed upon the issued policy

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue. Coverage commences on the date of the application or the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

Which of the following insurers are owned by stockholders? a. fraternal b. stock c. mutual d. reciprocal

b. stock Only stock insurance companies are owned and controlled by stockholders.

T/F Insurance is the transfer of risk of loss. The cost of an insured's loss is transferred over to the insurer and spread among other insureds.

True

T/F A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.

True

T/F The application is the basic source of information used by the company in the risk selection process.

True

Beneficiary

a person who receives something good from someone else such as an inheritance

If the insurer cancels an agency contract, it must notify the commissioner in writing within how many days? a. 10 b. 15 c. 20 d. 30

b. 15

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? a. 4 credits b. 6 credits c. 10 credits d. 40 credits

b. 6 credits To be considered currently (or partially) insured, an individual must have earned 6 credits during the last 13-quarter period.

The term "illustration" in a life insurance policy refers to a. charts and graphs b. a presentation of nonguaranteed elements of a policy c. a depiction of policy benefits and guarantees d. pictures accompanying a policy

b. a presentation of nonguaranteed elements of a policy

A small employer owns a group health insurance policy. The employer does not pay the premium by the premium due date and fails again to pay by the end of the grace period. The insurer cancels the policy. Which of the following is true? a. the insurer will pay all losses only up to the premium due date b. the insurer will pay all losses through the end of the grace period c. the insurer will pay all losses continuing after the grace period ends d. this varies with every insurer, to there is not enough information to answer this question

b. the insurer will pay all losses through the end of the grace period

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. This company is guilty of a. unfair claim practice b. rebating c. misrepresentation d. concealment

c. misrepresentation

Perils are

causes of loss

Who might receive dividends from a mutual insurer? a. stockholders b. agents c. policyholders d. subscribers

Who might receive dividends from a mutual insurer?

Applicant or Proposed Insured

a person applying for insurance

Provided that it is a first offense, what is the maximum penalty for failing to respond to a subpoena? a. $5,000 b. $500 c. $100 d. $10,000

a. $5,000 Any person violating an insurance law or regulation is liable to a penalty of no more than $5,000 for a first offense and no more than $10,000 for each subsequent offense.

What is the fine for violating the Commissioner's cease and desist order? a. $5,000 b. $10,000 c. $20,000 d. $1,000

a. $5,000 If a person violates a cease and desist order, the commissioner may assess a fine of up to $5,000 for each violation.

Which of the following is the basic source of information used by the company in the risk selection process? a. application b. agent's report c. warranty d. consumer report

a. application

Which of the following types of insurance would be written by a limited lines agent? a. credit insurance b. variable life insurance c. surplus life insurance d. term life insurance

a. credit insurance Limited lines agent can write the following types of insurance: bail bonds, car rental insurance, credit insurance, ticket insurance, travel insurance, group mortgage cancellation, legal insurance, self-storage personal property insurance, and special nonresident limited lines.

Which of the following is NOT allowed in credit life insurance? a. creditor requiring that a debtor buys insurance from a certain insurer b. creditor having a collateral assignment on the policy c. creditor requiring that a debtor has a life insurance d. creditor becoming a policy beneficiary

a. creditor requiring that a debtor buys insurance from a certain insurer

Which of the following would be considered a nonqualified retirement plan? a. split-dollar plan b. 401k c. Keogh plan d. Roth IRA

a. split-dollar plan

All of the following statements concerning an employer sponsored non qualified retirement plan are true EXCEPT a. the employer can receive a current tax deduction for any contributions made to the plan b. the plan is a legal method of accumulating money for retirement needs c. the plan can discriminate as to who may participate d. the plan is not approved for favorable tax treatment by the IRS

a. the employer can receive a current tax deduction for any contributions made to the plan Employers do not receive a current tax deduction for any contributions made to a nonqualified plan. The plans are legal; however, they do not qualify for any favorable tax treatment under the IRS rules.

Which of the following entities is held responsible for the contents of an insurer's advertisement on a local tv station? a. the insurance company b. the department of insurance c. the TV station d. the guaranty association

a. the insurance company

It is the responsibility of which of the following to make sure that an applicant/policyholder has a policy summary and buyer's guide? a. department of banking and insurance b. insurer c. applicant d. commissioner

b. insurer

Solicitation rules would apply to which of the following types of coverage? a. group life b. whole life c. deferred annuity d. variable life

b. whole life

What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating? a. $10 b. $50 c. $100 d. $200

c. $100 In this state, promotional materials, articles of merchandise, or gifts that have a redeemable value of $100 or less are not considered "valuable consideration," and therefore, are allowed.

A licensee violates an insurance regulation. A hearing is held, and the person is found guilty. If this is the person's first offense, the penalty iis no more than a. $1,500 b. $3,000 c. $5,000 d. $1,000

c. $5,000 The penalty for a first offense violation of insurance laws is no more than$5,000. The penalty for each subsequent violation is no more than $10,000

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a. coverage cannot be converted when an individual leaves the group b. premiums are determined by age, occupation, and individual underwriting c. 100% participation of members is required in noncontributory plans d. each member covered receives a policy

c. 100% participation of members is required in noncontributory plans If the employer pays all of the premium, then all employees must be included.

Within how many days must a producer report claims to the insurer a. 3 business days b. 5 calendar days c. 5 business days d. 3 calendar days

c. 5 business days

All advertisements are the responsibility of the a. agency that produces them b. consumer protection agency c. insurer d. commissioner

c. insurer

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? a. there are not enough people in the group to qualify for group life insurance b. the group has not been established for long enough c. the purpose of the group was to purchase life insurance d. their profession poses too high of a risk for the insurer

c. the purpose of the group was to purchase life insurance In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a. policy loans are taxable distributions b. accumulations are tax deferred c. withdrawals are not taxable d. distributions before age 59 1/2 incur a 10% penalty on policy gains

c. withdrawals are not taxable Any distributions from the MECs are taxable, including withdrawals and policy loans.

Life Insurance

coverage on human lives

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another, and what is the tax consequence of a direct transfer? a. $8,000, no tax consequence b. $8,000, tax on growth only c. $10,000, tax on growth only d. $10,000, no tax consequence

d. $10,000, no tax consequence During an IRA direct transfer (direct rollover), the full amount gets reinvested from one plan to the other.

If an insured requires an application in order to reinstate a policy, and if the insured requests reinstatement in writing, an application must be delivered to the insured within a. 7 days b. 10 days c. 15 days d. 30 days

d. 30 days

A "certification of license status" report can be run on any currently licensed New Jersey producer, but can only contain information on formal disciplinary actions taken within the past a. 7 years b. 10 years c. 6 months d. 4 years

d. 4 years

By how many days does the discontinuance of a group insurance policy reduce the time limit for providing notice of claim or proof of loss? a. 0 days b. 5 days c. 15 days d. 30 days

a. 0 days Discontinuance of the group policy or contract does not reduce the required time limit for providing notice of claim or proof of loss.

Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would be best considered as a. a violation of the New Jersey Insurance Fraud Prevention Act b. a permissible act c. grounds for license revocation d. a violation of the "unsatisfied claim and judgment fund law"

a. a violation of the New Jersey Insurance Fraud Prevention Act

Which of the following is a duty of the commissioner of insurance in this state? a. amend rules and regulations b. imprison insurance code violators c. establish insurance rates d. appoint individual producers

a. amend rules and regulations

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered a. discrimination b. twisting c. controlled business d. adverse selection

a. discrimination Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

A person takes out a loan in order to pay off his house. He dies several years later, having paid off only a small portion of the debt. Which of the following is TRUE? a. if the lender has credit insurance, this amount will be paid to the lender b. the state government will pay the balance to the lender c. the lender will not recover this money d. the federal government will pay the balance to the lender

a. if the lender has credit insurance, this amount will be paid to the lender Credit life is insurance on the life of a debtor that will pay off the outstanding loan balance in the event of the borrower's death.

What describes the specific information about a policy? a. policy summary b. illustrations c. buyer's guide d. producer's report

a. policy summary A policy summary describes the features and elements of the specific policy for which a person is applying.

Insurance is the transfer of a. risk b. loss c. hazard d. peril

a. risk Insurance is a transfer of risk of loss from an individual or business entity to an insurance company.

The supreme court stated that insurance is interstate commerce and is therefore subject to regulation by the federal government in the decision of what case? a. the U.S. vs the South-Eastern Underwriters Association b. McCarran-Ferguson vs New York c. Rosche-Wall vs Alabama d. Paul vs Virginia

a. the U.S. vs the South-Eastern Underwriters Association

The maximum the insurance guaranty association will pay to an individual for life insurance death benefits is a. $250,000 b. $500,000 c. $1,000,000 d. $100,000

b. $500,000

Which of the following was created to protect policy owners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment? a. NJ consumer protection organization b. NJ life and health guaranty association c. NJ insurance consumer protectorate d. NJ insurance solvency association

b. NJ life and health guaranty association

The president of a manufacturing company has offered one of the the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is a. illegal b. a nonqualified annuity plan c. a n executive annuity plan d. subject to government standards

b. a nonqualified annuity plan Nonqualified plans are a perfectly legal way for selected employees to receive certain types of benefits. Before-tax corporate dollars can be used for these plans, and they are not subject to government standards. However, because of this, nonqualified plans contributions are not tax-deductible, unlike with qualified plans.

When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a(n) a. agent b. broker c. solicitor d. consultant

b. broker

Which of the following will NOT be considered unfair discrimination by insurers? a. assigning different risk classifications to applicants based on gender identity b. discriminating in benefits and coverages based on the insured's habits and lifestyle c. charging applicants with similar health histories different premiums based on their ethnicity d. cancelling individual coverage based on the insured's marital status

b. discriminating in benefits and coverages based on the insured's habits and lifestyle

Using names or titles that have a tendency to misrepresent the true nature of a policy is an example of what illegal practice? a. rebating b. false advertising c. defamation d. twisting

b. false advertising

If an insured worker has earned 40 quarters of coverage, the worker's status under social security disability is a. permanently insured b. fully insured c. partially insured d. correctly insured

b. fully insured You are permanently insured if you are fully insured and you will not lose your fully-insured status when you stop working under covered employment. You have earned the maximum 40 QCs, so you are permanently (and fully) insured.

In life insurance policies, cash value increases a. are only taxed when the owner reaches age 65 b. grow tax deferred c. are income taxable immediately d. are taxed annually

b. grow tax deferred Generally life insurance cash values are only income taxed if the policy is surrendered (totally or partially) and the cash value exceeds the premium paid

Fred is the owner of a whole life insurance policy. Some of the details involving benefit payments are not expressed in the policy, but the insurer proposed an arrangement 10 years ago. Fred has still not agreed formally to the terms of the proposal. When the policy matures, what will the insurer do? a. hold Fred's money in a segregated fund until it can come to a formal agreement with Fred b. hold Fred's money in its general fund until it can come to a formal agreement with Fred c. execute the terms of the proposed agreement, while charging Fred a penalty of no more than 2.5% of the monthly payout until an agreement is established d. execute the terms of the proposed agreement, since Fredd did not formally disagree

b. hold Fred's money in its general fund until it can come to a formal agreement with Fred

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are a. guaranteed b. not taxable since the IRS treats them as a return of a portion of the premium paid c. paid at a fixed rate every year d. taxable as ordinary income

b. not taxable since the IRS treats them as a return of a portion of the premium paid

Which of the following documents delivered to the policy owner includes information about premium amounts, cash values, surrender values, and death benefits for specific policy years? a. a buyer's guide b. a policy summary c. a notice regarding replacement d. a privacy notice

b. policy summary A policy summary usually includes all the listed information, and must be delivered along with a new policy.

Which of the following will be included in a policy summary? a. primary and secondary beneficiary designations b. premium amounts and surrender values c. copies of illustrations and applications d. comparisons with similar policies

b. premium amounts and surrender values A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

All of the following are unfair claims settlement practices except a. falling to acknowledge pertinent communication pertaining to a claim b. suggesting negotiations in setting the claim c. refusing to pay claims without conducting a reasonable investigation d. failing to adopt and implement reasonable standards for settling claims

b. suggesting negotiations in setting the claim

All of the following are unfair claims settlement practices EXCEPT a. failing to acknowledge pertinent communication pertaining to a claim b. suggesting negotiations in settling the claim c. refusing to pay claims without conducting a reasonable investigation d. failing to adopt and implement reasonable standards for settling claims

b. suggesting negotiations in settling the claim

The Paul vs. Virginia case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today? a. it still stands in full. Insurance and securities are still regulated by two distinct agencies b. the decision has changed. insurance is considered to be interstate commerce, and is subject to regulation by the federal government c. the decision has changed. insurance and securities are now regulated by the same federal agency d. it still stands in full. insurance is not considered to be interstate commerce, and is not subject to regulation by the federal government

b. the decision has changed. insurance is considered to be interstate commerce, and is subject to regulation by the federal government After 75 years, the supreme court reversed its decision in US vs. Southeastern Underwriters.

All of the following are true of key person insurance EXCEPT a. the key employee is the insured b. the plan is funded by permanent insurance only c. there is no limitation on the number of key employee plans in force at any one time d. the employer is the owner, payor and beneficiary of the policy

b. the plan is funded by permanent insurance only Key Person coverage may be funded by any type of life insurance

If an insurer requires an application in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured a. 90 days in advance of renewal b. within 30 days of the insured's request c. within 10 days of the insured's request d. 30 days in advance of renewal

b. within 30 days of the insured's request

Losses cannot

be transferred

What is the official name for the Social Security Program? a. defined Benefit Retirement Insurance b. Qualified Pension Plan c. Old Age Survivors Disability Insurance d. Social Insurance Program

c. Old Age Survivors Disability Insurance (OASDI)

How is an insurance consultant different from an insurance producer? a. a consultant does not get paid commissions b. a consultant represents the insurer c. a consultant does not sell policies, but only offers advice d. a consultant does not need an insurance license

c. a consultant does not sell policies, but only offers advice

If a company has a Simplified Employee Pension plan, what type of plan is it? a. the same as an IRA, with the same contribution limits b. an undefined contribution plan for large businesses c. a qualified plan for a small business d. the same as a 401K plan

c. a qualified plan for a small business A Simplified Employee Pension (SEP) is a type of qualified plan suited for the small employer or for self-employed. An SEP iis an employer-sponsored IRA with an expanded contribution rate up to 25% of compensation or a specified maximum contribution amount.

If an insurance company makes a statement that its policies are guaranteed by the existence of the insurance guaranty association, that would be considered a. a required disclosure b. a legal representation of the association c. an unfair trade practice d. a misrepresentation

c. an unfair trade practice

How is the insurance Guaranty Association funded? a. by NAIC b. by the government c. by the members - authorized insurer d. by the department of insurance

c. by the members - authorized insurer Guaranty Association is funded by its members: all authorized insurers are required to contribute to a fund to provide for the payment of claims for insolvent insurers.

To legally transact insurance in this state, an insurer most obtain which of the following? a. business entity license b. certificate of insurance c. certified of authority d. power of attorney

c. certified of authority

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a. twisting b. defamation c. false advertising d. unfair claims

c. false advertising

Which of the following best describes a misrepresentation? a. making a maliciously critical statement that is intended to injure another person b. discriminating among individuals of the same insuring class c. issuing sales material with exaggerated statements about policy benefits d. making a deceptive or untrue statement about a person engaged in the insurance business

c. issuing sales material with exaggerated statements about policy benefits

What significance did Paul vs, Virginia have on the insurance industry? a. it was decided that insurance required a separate federal regulatory agency from securities products b. it was decided that insurance licenses should not be issued by the federal government and should instead be issued by individual states c. it was decided that insurance was not interstate commerce and could not be regulated by the federal government d. it was decided that insurance was interstate commerce and should therefore be regulated by the federal government

c. it was decided that insurance was not interstate commerce and could not be regulated by the federal government

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called a. warranties b. common errors c. material misrepresentations d. fraudulent statements

c. material misrepresentations

All of the following are characteristics of group life insurance EXCEPT a. individuals covered under the policy receive a certificate of insurance b. certificate holders may convert coverage to an individual policy without evidence of Insurance c. premiums are determined by the age, sex, and occupation of each individual certificate holder d. amount of coverage is determined according to nondiscrimination rule

c. premiums are determined by the age, sex, and occupation of each individual certificate holder

Which of the following applicants would NOT qualify for a Keogh Plan? a. someone who is over 25 years of age b. someone who works for a self-employed individual c. someone who works 400 hours per year dd. someone who has been employed for more than 12 months

c. someone who works 400 hours per year A person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan.

Which of the following is TRUE regarding the insurance amount in a credit life policy? a. allowable amount of coverage is determined by the state insurance commissioner b. the amount of coverage can be greater than the amount owed c. the creditor can only insure the debtor for the amount owed d. the creditor may insure the debtor for an unlimited amount of coverage

c. the creditor can only insure the debtor for the amount owed Credit insurance cannot pay out more than the balance of the debt, so that there is no financial incentive for the death of the insured.

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? a. the date of issue b. the date of application c. the date of medical exam d. the date of policy delivery

c. the date of medical exam If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings? a. employer's matching contribution can be 50% of employee's salary b. 75% of employees' contributions are taxed c. they are tax-deferred until withdrawn d. taxes must be paid in full

c. they are tax-deferred until withdrawn Taxation is deferred on both contributions and earnings until funds are withdrawn.

What is the purpose of a disclosure statement in life insurance policies? a. to help consumers compare policy prices b. to protect agents and insurers against lawsuits c. to explain features and benefits of a proposed policy to the consumer d. to obtain important underwriting information from the applicant

c. to explain features and benefits of a proposed policy to the consumer

What is the purpose of key person insurance? a. to insure retirement benefits are available to all key employees b. to maintain an account that insures the owner of a company remains solvent c. to lesson the risk of financial loss because of the death of a key employee d. to provide health insurance to the families to key employees

c. to lesson the risk of financial loss because of the death of a key employee

All of the following professional designations are recognized by the department as acceptable substitutes for education and examination requirements EXCEPT a. chartered property/casualty underwriter (CPCU) b. chartered financial consultant (ChFC) c. chartered life underwriter (CLU) d. Professional Insurance Agent (PIA)

d. Professional Insurance Agent (PIA)

Who is a third-party owner? a. an insurer who issues a policy for two people b. an employee in a group policy c. an irrevocable beneficiary d. a policyowner who is not the insured

d. a policyowner who is not the insured Third-party owner is a legal term used to identify an individual or entity that is not an insured under the contract, but that has a legally enforceable right under it

All of the following are examples of third-party ownership of life insurance policies EXCEPT a. an insured couple purchases a life insurance policy insuring the life of their grandson b. a company purchases a life insurance policy on their manager, who is an important part of their operation c. when an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company d. an insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

d. an insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

Which of the following authorities is in charge of investigating claims held against licensees? a. governor b. state law enforcement c. federal bureau of investigation d. commissioner

d. commissioner The Commissioner has the power to conduct investigations, administer oaths, interrogate licensees, and issues subpoenas to any licensee or other person in connection with any investigation, hearing, or other proceeding.

Which of the following is an insurance professional who offers advice regarding benefits of advantages of an insurance policy to clients for a fee? a. producer b. broker c. counselor d. consultant

d. consultant

Which of the following would be the beneficiary in credit life insurance? a. insured b. company c. borrower d. creditor

d. creditor The creditor is the owner and the beneficiary of the policy.

Which of the following is NOT a duty of the commissioner? a. establishing a system of insurer and producer examinations b. enforcing the insurance code c. suspending or revoking licenses of insurance code violators d. developing insurance rates

d. developing insurance rates

Which of the following best describes an insurance company that has been formed under the laws of this state? a. sovereign b. alien c. foreign d. domestic

d. domestic

When an employee terminates coverage under a group insurance policy, coverage continues in force a. for 60 days b. until the employee can obtain coverage under a new group plan c. until the employee notifies the group insurance provider that coverage conversion policy is issued d. for 31 days

d. for 31 days

Which of the following is TRUE of a qualified plan? a. it does not need to have a vesting schedule b. it may discriminate in favor of highly paid employees c. it may allow unlimited contributions d. it has a tax benefit for both employer and employee

d. it has a tax benefit for both employer and employee A qualified plan is approved by the IRS, which then gives both the employer and employee benefits in deductibility of contributions and tax deferral of growth.

Death benefits payable to a beneficiary under a life insurance policy are generally a. subject to income taxation by the federal government b. exempt from income taxation if under $10,000 c. exempt from income taxation if over $10,000 d. not subject to income taxation by the federal government

d. not subject to income taxation by the federal government When the premiums are paid with after tax dollars, the death benefit is generally not subject to federal income taxation

A small employer owns a group health insurance policy. The employer neglects to pay the premium by the payment due date. The employer fails to pay the premium yet again by the end of the grace period. Which of the following will happen? a. the policy will continue for the certification holders only b. the certificate holder will be transferred to another policy c. the certificate holders will have to pay for all claims that were incurred after the premium due date d. the policy will terminate

d. the policy will terminate

All of the following would be eligible to establish a Keogh retirement plan EXCEPT a. a sole proprietor of a service station who employs four employees b. a sole proprietor of film development store with no employees c. a hairdresser who operates her business at her house d. the president and employee of a family corporation

d. the president and employee of a family corporation Keogh plans are for self-employed individuals and their employees

Which of the following is included in the term "insurance-related conduct"? a. insurer's acting with the scope of the insurance code b. producer's ethical behavior c. producer licensing d. transmitting funds between producers and the insurance company

d. transmitting funds between producers and the insurance company

A producer's appointment lasts for how long? a. 2 years b. 3 years c. 5 years d. until it is terminated

d. until it is terminated

Adverse Selection

insuring of risks that are more prone to losses than the average risk

Who does an insurance agent represent? a. him/herself b. the insurer c. the insured d. the department

the insurer

Policyowner

the person entitled to exercise the rights and privileges in the policy