Life insurance mastery
the penalty for early withdrawals from an IRA or other qualified retirement plan is
10% of the withdrawn amount
a whole life insurance policy is returned to the issuing insurer 9 days after delivery by the agent. what portion of the premium will be refunded to the policy owner?
100% of the amount paid to the insurer
which of the following allows employees to elect to reduce their current salaries by deferring amounts into a retirement plan
401K
all of the following types of plans are reserved for smaller employees except
401k's
what retirement plan could a sole proprietor pay into as long as all full time employees are also covered
Keogoh
contributions to which of the following qualified retirement plans are not tax deductible
Roth IRA
the conversion of a cash value life insurance policy into an annuity in a nontaxable transaction is generally known as
a 1035 exchange
annuity that guarantees a minimum rate of return is
a fixed annuity
all of the following statements regarding specialized forms of life insurance are correct except
a joint life insurance policy is a form of term life insurance that covers 2 individuals and pays the death benefit when the first insured dies
the type of policy that is paid up after a specifies period of years and endows at age 100 is
a limited pay policy
all of the following should be eligible to establish a Keogh retirement plan except
a major stockholder employee in a family corporation
jill is interested in buying an annuity but is not sure how she wants to find it or when she wants to start receiving annuity payments. which of the following is not available under any circumstances
a periodic premium immediate annuity
any life insurance transaction in which it is known that a policy will be lapsed to surrendered or reissued with decrease in cash value is considered to be
a replacement transaction
a keogh would be appropriate for which of the following
a self employed person and her employees
Liz purchases an immediate annuity. the annuity contract must be
a single premium annuity
if the initial premium is not paid until the policy is delivered, what must the agent obtain?
a statement of good health
a voluntary relinquishment of a known right is called
a waiver
transferring total ownership of a life insurance policy may be accomplished in which of the following ways
absolute assignment
the time during which she funds are being paid into an annuity is called the
accumulation period
all of the following statements are true regarding modified endowment contracts except
an MEC may be exchanged for another policy that is not an MEC
an insurer incorporated in canada but doing business in california would be
an alien insurer
what type of contract is designed to first accumulate and the distribute funds over a period of time
an annuity policy
an example of unfair discrimination is best demonstrated by which of the following situations
an insurer assigns a premium rating to an applicant because of studies that suggest members of the applicants race
Which of the following situations describes an instance of unfair discrimination
an insurer refuses to issue a policy to male applicant who works in the theater industry because he is assumed to be at a higher risk for HIV
which of the following statements concerning federal income taxation of annuities is correct?
annuity death benefits in whole or in part are taxable to the beneficiary
conservation is
any attempt by an insurer or an agent to discourage a client from replacing current coverage
a policy may be issued in all of the following ways except
as an exchange policy covering someone other than the original applicant
a universal life policy may be surrendered for its cash value
at any time
when must the buyers guide to life insurance be provided to an applicant
at the time the policy is delivered
insurable interest in a life policy must exist
at the time the policy is written, but not at the time of death
to prevent the lapse of a whole life insurance policy at the end of the grace period, cash value will be used by the insurer to pay the premium. this is called
automatic premium loan
funds held by an insurance producer in a fiduciary capacity
cannot be converted to an individuals or firms own use
carol wants her annuity settlement to guarantee that the entire annuity principal amount will be paid out. what should she choose?
cash refund annuity
long life insurance company insures substandard risks. which of the following will it employ to compensate for the higher death rates it expects
charge increased premiums for substandard risks
an agent license is renewed by paying the applicable renewal fee and completing
continuing education
which rider provides for an automatic increase in benefits to offset the effects of inflation
cost of living adjustment
which of the folioing may an insurer require AIDS testing during underwriting
coverage amounts
which of the following factors my an insurer consider when deciding whether to require AIDS testing during underwriting
coverage amounts
which of the following would not be part oft he duties of the state insurance commissioner
create new insurance laws
which of the following contracts would not be subject to the life insurance replacement laws?
credit life insurance
an individual who wants to insure a home mortgage with life insurance in the most economical means possible would be best served with which of the following types of life insurance
decreasing term
circulation of a maliciously critical statement about an insurer's financial condition to damage the insurers reputation or business is
defamation
for the insurance company to pay the accidental death benefit, most companies require that the insured
die within 90 days of the accident
all of the following statements are true regarding policy dividends except
dividends paid to policy owners are excluded from the insurers annual statement
which of the following statements about contributions to qualified plan is correct?
employees have 100% vested interest in benefits made from their own contributions
which of the following statements about qualifies retirement plans is not correct?
employer contributions are taxable to the employee in the year of contribution
life insurance contracts insuring clause
expresses the insurers intent to pay for covered losses in exchange for payment of premium and compliance with policy terms
what term best describes a representation that does not correspond to the facts
false
what type of annuity offers a guaranteed interest rate during accumulation and guaranteed payments after annuitization
fixed annuity
each of the following is a personal use of life insurance proceeds except
funding a buy-sell agreement
which of the following characteristics is not considered by underwriters when underwriting group insurance
individual medical histories
controlled business refers to
insurance business written by an agent on himself or a family member
which provision includes the insurance company's promise to pay the claim
insuring agreement
which settlement option allows only the earnings on the death benefit to be paid to a beneficiary
interest only
a cease and desist order
is issued by the insurance commissioner when it appears an unfair trade practice has occurred
which of the following statements about an equity indexed annuity is correct?
its interest is tied to a stock market related index
renewable term life insurance may be described as
level death benefit, increasing premium
a principal function of annuities is to
liquidate a principal sum
in the absence of any other election, the automatic settlement option in a life insurance policy is
lump sum in cash
which of the following premium payment modes is the most expensive
monthly
life insurance replacement regulations apply to which of the following kinds of insurance
most individual life insurance policies and annuities
which of the following statements is true regarding life policy dividends
mutual insurance companies issue participating policies that may pay an annual dividend
what is the usual federal income tax treatment of individual life insurance
non deductibility of premiums, non taxable death benefits
non qualified annuity benefits are a combination of principal and interest. what is the tax status of the portion of the benefit payments that represents a return of principal
not taxable
the fair credit reporting act
obligates insurers that use a third party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source
suitability is
obtaining information from the applicant to determine whether an insurance or annuity product is appropriate
which of the following statements is true regarding life policy replacement?
patterns of improper replacement may subject an insurer to disciplinary action
the underwriting classification which is most favorable to an insured is
preferred
with respect to a 10 year level term policy all of the following statements are correct except
premium payments increase gradually over the term
at all times, agents must uphold their fiduciary duty. the best example of this is
promptly submitting an insured's premium to the home office
Guaranty associations have been created for the purpose of
protecting insureds in the event of a member insurance company's insolvency
if a producer offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy, the producer is committing the unfair practice known as
rebating
what nonforfeiture option allows a whole life policy owner to convert their insurance to a paid up policy with a lower face amount that the original policy
reduced paid up insurance
which standard nonforfeiture option would use a whole life policy's surrender value to purchase a paid up policy with a smaller face amount of insurance that the original policy
reduced paid-up insurance
all of the following are considered unfair trade practices except
replacement
all statements and descriptions in any application for an insurance policy by an insured are deemed to be
representations not warranties
funds set aside by an insurer to pay future claims are called
reserves
all of the following retirement plans offer tax deductible contributions except
roth IRA
all of the following are required to sign an application for life insurance except
the beneficiary
all of the following are basic premium factors except
the insured's annual income
Who is the responsible for controlling the content form and distribution of insurance policy advertisements
the insurer
in life insurance, the entire contract is considered to be
the policy and application
which of the following is a term life insurance policy
the policy has a face amount of 100,000, every 5 years the premium increases and at the end of 20 years the policy terminates with no cash value
which of the following individuals must have an insurable interest in the insured
the policyowner
significant feature of adjustable life insurance is that
the premiums may be increased or decreased from time to time by the policy owner
with a conditional life insurance receipt, coverage may become effective as early as the date
the receipt is given to the applicant if the applicant is approved as a standard risk
which of the following best describes the annuity period
the time during which payments are made to the annuitant
all of the following are reasons for insurance and annuity replacement laws except
to protect insurers and agents against dishonest applicants
which of the following requires a min required distribution at age 70.5?
traditional IRAs
devine Twisting
twisting is when the producer makes an unfair politic comparison in order to get the insured to lapse 1 policy and purchase a new policy with another insurer
paul owns an adjustable life policy. which of the following statements about his policy are true
upon showing evidence of insurability, paul can increase the face amount of his policy
which of the following products pays based on units
variable annuity
which of the following types of life insurance policy was designed to combine the protection features of traditional life insurance with the cash value growth potential of securities
variable life
which of the following riders requires the insured to be totally disabled before it becomes effective
waver of premium rider
which of the following affects the deductibility
whether or not the ITA owner participates in a qualified employer plan