Life Insurance Practice Exam #2
C.
403(b) Plan
A.
5% B. 10% C. 15% D. 50%
A.
50% of the amount withdrawn.
C.
50% of the required minimum distribution.
At what age can a participant receive distributions for a qualified plan without incurring a 10% penalty? A. 45 B. 55 1/2 C. 59 D. 59 1/2
59 1/2
D.
6% of the amount withdrawn.
A.
6% on excess withdrawals.
B.
60 days.
C.
90 days.
D.
A contract of adhesion.
D.
A directory of paramedical services and providers.
A.
A domestic insurer.
B.
A foreign insurer.
A.
A government entity that reviews medical information.
B.
A higher premium.
A.
A lower premium.
B.
A lump sum death benefit amount equal to the premiums paid.
D.
A lump sum payment based on the starting fund amount minus what has been paid.
C.
A lump sum payment equal to the fund amount on the annuitization date.
C.
A non-qualified retirement plan for employees of charitable and not-for-profit organizations.
D.
A non-qualified retirement plan for the owner of a closely held corporation and its employees.
B.
A personal contract.
A.
A qualified retirement plan for a sole proprietor and employees.
B.
A qualified retirement plan for employees of a publicly held corporation.
B.
A reciprocal insurance exchange.
C.
A source of medical information to alert insurers to adverse medical history.
C.
A unilateral contract.
C.
Certainty of financial loss.
B.
Child.
C.
Children Rider
D.
Close friend.
A.
Coercion.
B.
Coercion.
C.
Coercion.
D.
Coercion.
C.
Grace Period provision
D.
Grace Period.
B.
Guaranteed Interest Rate.
A.
Insurance benefits to the public at large.
C.
Insured signs the change request.
C.
Insurer
D.
Insurer and insured sign the change request.
C.
Insurers.
D.
Insuring Clause.
C.
Interest Only
A.
Interest earned on the withdrawal may be taxable.
D.
Interest only settlement of a death benefit.
A.
Interest rates
B.
Intimidation.
D.
Intimidation.
A.
Invested by the insurance company.
C.
Invested conservatively.
D.
Invested in bonds.
D.
Legal purpose
B.
Level payments.
B.
Level premium deferred annuity.
A.
Life Annuity
A.
Life Annuity with Period Certain.
C.
Life Income
D.
Life Income
A.
Policyowner signs the change request.
B.
Policyowners.
C.
Premium amounts
D.
Premium is not based on risk.
D.
Premiums are paid by the annuitant.
A.
Premiums left unpaid will be deducted from Melanie's estate.
B.
Premiums paid and earnings will be included in Melanie's estate.
C.
Premiums paid minus earnings will be included in Melanie's estate.
C.
Profit Sharing Plan.
B.
Provide reimbursement for medical expenses.
B.
The amount contributed during the accumulation period.
A.
The annuitant is the contract owner.
D.
The annuitant's age when the annuity was purchased.
D.
The annuity carrier assumes the interest rate risk.
B.
The applicant
A.
The applicant is covered from that date. if she is insurable at the end of the underwriting process.
B.
The applicant is insurable only if she dies before the underwriting process is completed.
B.
The applicant.
C.
The beneficiary is named by the annuitant.
C.
The beneficiary of the insured is terminally ill.
A.
The benefit option chosen.
B.
The benefit will be reduced by the amount paid plus interest lost by the insurer.
C.
The benefit will be reduced by the amount withdrawn from the face value of the policy.
A.
The cash value in the policy exceeds the cash value of a seven-pay whole life policy.
A.
The claim will be denied upon the death of the insured.
D.
The death benefit is not usually considered as taxable income.
B.
The death benefit paid to the beneficiary will be less the loan amount plus interest.
C.
The death benefit will be equal to the loan amount.
D.
The death benefit will be reduced by the amount of the withdrawal.
A.
The physician
D.
The policy is issued by a fraternal benefit society.
C.
The policy is issued by a stock company.
D.
The policy owner
C.
The premiums paid by the employer are tax deductible.
D.
The principal portion of the payment is taxed; the interest is not taxed.
C.
The producer and the insurer.
A.
The producer.
C.
The same premium.
C.
The total premium paid in the policy's first 7 years exceeds the gross premium to fund a universal life policy with the same face amount.
B.
The total premium paid in the policy's first 7 years exceeds the net premiums of a term life policy.
B.
The whole payment is received tax free.
A.
The whole payment is taxed.
B.
Their interest rates are guaranteed.
C.
Their monthly benefit pay out amount can vary.
C.
There may be a surrender charge for withdrawals.
A.
They are characterized by a general account.
B.
Tied to an index such as the S&P 500.
B.
To allow a free month of premiums.
C.
To allow the policy owner to examine the policy.
D.
Tom, age 60, a mechanic for an auto dealer.
A.
Traditional IRA
A.
Twisting.
A.
Uncertainty of financial loss.
D.
Unfair claims settlement practices.
A.
Unfair discrimination.
C.
Unfair discrimination.
D.
Unfair discrimination.
A.
Unilateral
B.
Universal Life
D.
Variable
D.
Variable Life
B.
Variable annuity.
D.
Variable payments.
A.
Waiver of Premium
C.
Waivers.
A.
Warranties.
B.
Wavier of Premium provision.
B.
Workers' compensation policies.
D.
Aleatory
C.
All underwriting stops and the claim is declined if the applicant dies.
B.
Always pay the policy proceeds.
D.
Ambiguities.
A.
An agent doing a review of his/her client's coverage.
D.
An agent helping a client file a claim.
B.
An agent offering additional coverage to his client.
C.
An agent promptly forwarding premiums to the insurance company.
A.
An aleatory contract.
C.
An alien insurer.
B.
An association of physicians who write insurance rules.
D.
An executive officer of the insurer.
D.
An export insurer.
D.
Annual
C.
Annuitization period.
B.
Annuity payments are based on the annuitant's life expectancy.
A.
Annuity period.
B.
Any form of life insurance may be used for key employee coverage.
D.
Any statements made on the application are believed to be conditional.
A.
Application.
C.
Arlene, age 72. a nurse for a veteran's hospital.
D.
Assignment
D.
Assignment clause
B.
Installment payments of a death benefit.
B.
10% penalty and tax on interest earned
A.
10% penalty and tax on premium paid
A.
Age
D.
Catastrophic illness.
B.
Cause of a peril.
A.
$0. the insured died from an illness. not an accident
C.
$100.000. the insured died from an illness, not an accident
D.
$200,000. the insured died in an accident, it does not matter that the heart attach was the cause of the accident
B.
$50.000. the insured died from an illness. therefore half the death benefit will be paid
A.
0% B. 10% C. 20% D. 50%
D.
0% because Rob is older than 59 1/2•
C.
10% of the amount withdrawn.
B.
10% on withdrawals after age 59 1 2.
D.
180 days.
B.
25% of the amount withdrawn.
A.
30 days.
B.
Agent
D.
Agent
B.
AIDS.
A.
Accidental Death
B.
Accumulate at Interest
B.
Accumulates funds for educational expenses.
B.
Accumulation period.
B.
Adhesion
C.
Adjust the death benefit for inflation.
C.
Adjustable Life
C.
Advertising of the Guaranty Association.
C.
Advice and consent
D.
Benefit period.
C.
Benefits increase with the cost of living.
D.
Board of Directors.
B.
Boycotting.
D.
Buy-sell Agreement.
D.
Buying insu ance.
D.
Cash value guarantees
A.
Cash value in excess of premium.
B.
Cash Refund Annuity
D.
Cash accumulation.
B.
Competent parties
C.
Concealment.
C.
Conditional
D.
Confinement to a long term care facility.
D.
Consideration clause
C.
Continuous Annuity.
A.
Contributions are tax-deductible.
C.
Cosmetic surgery.
C.
Current Interest Rate.
A.
Debt to income approach.
A.
Defamation.
B.
Defamation.
C.
Defamation.
C.
Deferred
D.
Deferred Annuity.
C.
Deferred Compensation Agreement.
D.
Difference between the Current and Guaranteed Interest Rate.
D.
Disability Income
A.
Dividends are paid to policyowners.
B.
Dividends are paid to stockholders.
B.
Employee
A.
Employer
C.
Employment.
B.
Endorsement
The policy and a copy of the application, along with any riders and amendments, is called the? A. Whole contract B. Complete contract C. Entire Contract D. Primary Contract
Entire Contract
A.
Equity Indexed Life
C.
Installment Refund Annuity
C.
Estate conservation.
A.
Estate liquidation.
B.
Exposure
C.
Exposures.
A.
Expressed
A.
False advertising.
D.
False advertising.
B.
Family Term Rider
B.
Fixed Amount
A.
Fixed Period
C.
Fixed annuity.
B.
Flexible Premium
C.
Flexible payments.
D.
Flexible premium deferred annuity.
C.
Guaranteed lnsurability
C.
Guaranteed mortality and administrative costs.
B.
Habits.
A.
Has a level death benefit.
D.
Hazard that causes a claim.
D.
Hazardous
B.
Hazards.
A.
Hobbies.
B.
Human life value approach.
D.
IQ
D.
IRA distributions are tax free and not included in Melanie's estate.
B.
IRA.
D.
IRA.
A.
Immediate
A.
Immediate annuity.
C.
Implied D.Apparent
B.
Incontestable Clause.
C.
Incontestable Clause.
D.
Increase the mortality rate over the life of the policy.
Information collected from employment records, credit reports or other sources that include written or oral information concerning credit, character, reputation or habits is called a(n) A. Investigative consumer report B. Fair Credit Report C. Consumer Report D. Medical Information Bureau Report
Investigative Consumer report
A beneficiary who has a vested interest in the proceeds of a life insurance policy is the A. Irrevocable beneficiary B. Primary beneficiary C. Secondary beneficiary D. Contingent beneficiary
Irrevocable beneficiary
C.
It must be for the exclusive benefit of employees or their beneficiaries.
B.
It must be formalized in writing.
D.
It must be funded with life insurance. •
C.
It remains the same.
A.
Jason, age 26, a self-employed copywriter.
B.
Joint Life Annuity
A.
Joint and Survivor Annuity
Which settlement options guarantees an income for two or more recipients for as long as the live? A. Single life options B. Fixed amount installments C. Life income D. Joint and Survivor
Joint and survivor
A.
Keogh Plan.
C.
Keogh.
A.
Key Employee Plan.
D.
Life or health insurance to its members.
D.
Life with Period Certain
C.
Life with Period Certain Annuity
B.
Liquidity.
C.
Lump sum settlement of a death benefit.
B.
Marsha, age 40, a proofreader for a newspaper.
C.
Medicaid policies to all society members.
B.
Medical history
A.
Minimum Interest Rate.
A.
Misrepresentation.
B.
Misrepresentation.
C.
Misrepresentation.
A.
Misstatement of Age Clause.
A.
Monthly
C.
Mortality + interest
A.
Mortality - interest
D.
Mortality - interest - expense
B.
Mortality+ expense - interest
C.
Mother.
D.
Needs approach.
C.
Never flying in an airplane.
D.
No death benefit will be paid to the beneficiary.
C.
No penalty and tax on interest and premium paid
D.
No penalty and tax on interest earned
A.
Nonforfeiture
A.
Not pay the policy proceeds under any circumstances.
C.
Not taxable
A.
Nothing, a refund life annuity only pays until death of the annuitant.
A.
Offer and acceptance
C.
One-year Term
C.
Ordinary life approach.
D.
Paid-up Additions
C.
Pay a reduced death benefit based on the insured's actual age.
The insured died four months after a $100,000 life insurance policy was issued and delivered. At the time of the claim the company noticed the original application was missing some key information. What will the company do? A. Return the premiums paid to the insured's estate B. Pay the death claim because the insurer waived the right to obtain the missing information C. Deny the claim D. Require the beneficiary to furnish the missing information
Pay the death claim because the insurer waived the right to obtain the missing information
B.
Pay the face amount of the policy if the death occurred after the end of the incontestable period.
C.
Pay the policy proceeds only if it would have issued the policy to the proposed insured had he/she been living.
D.
Pay the policy proceeds up to an established limit.
D.
Pay the stated death benefit less the unpaid premium owed to the company as a result of the understated age.
A.
Paying a deductible.
A.
Perils.
D.
Period Certain Annuity
D.
Place of residency.
B.
Policy delivery.
D.
Policy renewal.
An annuity is considered fixed when it does all of the following Except? A. Guarantees a minimum rate of return B. Provides level income payments C.Pays a specific dollar amount for each annuity benefit payment D. Provides the annuitant with either the guaranteed or current interest rate, whichever is less.
Provides the annuitant with either the guaranteed or current interest rate, whichever is less.
A.
Pure
B.
Qualified Retirement Plan.
B.
Quarterly
C.
Rebating.
A.
Reduce premium expense and increase the death benefit.
C.
Reduced Cash Surrender
B.
Reduced Paid-up
A.
Reduction of Premium
D.
Refund Life Annuity
B.
Refund Life Annuity.
A.
Reinstatement provision.
A.
Renal failure.
Statements in the application for insurance that are believed to be true to the best of applicant's knowledge are called? A. Warranties B. Representations C. Waivers D. Ambiguities
Representations
B.
Representations.
B.
Return of Premium
D.
Risks.
B.
Roth IRA
D.
SEP.
D.
SIMPLE Plan
C.
Semi-annual
C.
Sex
A.
Single lump-sum payment.
C.
Single premium deferred annuity.
A.
Single premium immediate annuity.
C.
Speculative
D.
Spouse Rider
A.
Spouse.
A.
Stockholders.
D.
Straight Life Annuity.
B.
Surrender Value
B.
Surrender charges
D.
Systematically liquidates both principal and interest.
A.
TSA.
B.
Tax-deferred
A.
Taxed as earned income
D.
Taxed less than interest earned
D.
The original face amount will be paid to the beneficiary.
C.
The paramedic's exam.
A.
The employer must have an insurable interest in the employee's life and his or her written consent to purchase the policy.
A.
The full death benefit will be paid to the beneficiary.
A.
The insured has a catastrophic illness.
B.
The insured is terminally ill.
C.
The insurer
C.
The interest portion of the payment is taxed: the principal is not taxed.
3.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time due to statements in the application is known as the
D.
The loan value at the end of the policy's seventh year is greater than the total of the premiums paid on the policy.
To prevent individuals from profiting from a loss, insurance companies must be certain that A. The owner and insured are related B. There is no cash value in the policy C. The face amount of the policy is only five times the insured's annual salary D. Insurable interest exist
insurable interest exist
The penalty for early withdrawals from an IRA before age 591
is
Statements in the application for insurance that must be true to the best of the applicant's knowledge are called
•
B.
Irrevocable beneficiary signs the change request.
B.
It applies only to term life insurance policies.
A.
It commences when the application is signed.
D.
It commences when the policy is delivered.
D.
It continues to increase.
B.
It decreases.
The receipt given to a life insurance applicant when the application is completed and the initial premium is received is called a(n)? A. Insurable Receipt B. Conditional Receipt C. Unconditional Receipt D. Insuring Receipt
Conditional Receipt
The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called? A. Limited payment B. Life paid-up premium C. Continuous premium (Straight) life D. Single premium whole life
Continuous premium (Straight) life
D.
Accumulate at Interest
If the missstatement of age is discovered during the processing of a life insurance claim, what will the insurance company do? A. Rescind the policy because incorrect information was given on the application B. Adjust the death benefit based on the premiums that were paid C. Automatically pay the total death benefit to the primary beneficiary D.Pay half of the death benefit to the primary beneficiary
Adjust the death benefit based on the premiums that were paid
Which type of policy allows the insured to change the amount of the death benefit, the amount of premium, or the type of coverage as their needs change? A. Adjustable life B. Universal life C. Joint life D. Variable life
Adjustable life
C.
Extended Term.
A.
Fixed Amount
B.
Fixed Period
A life settlement option that pays out the death benefit incrementally, in a specific amount until all the proceeds are exhausted is called A. Interest only B. Fixed-amount installments C. Fixed -period installments D. Life income
Fixed-amount installments
A.
It is forfeited.
C.
It is optional on all life insurance policies.
A life insurance death benefit paid in a lump sum to a beneficiary is A. Not subject to any taxes B. Not subject to estate taxes but subject to federal tax C. Subject to federal taxes only D. Subject to federal, state, and estate taxes
Not subject to any taxes
B.
Partial surrenders are only available from whole life policies.
D.
Reduced Paid-up Insurance
D.
Reduced Paid-up Insurance.
C.
Reduction of Premium
A.
Refuse to pay the claim based on material misrepresentation on the application.
C.
Reinstatement Clause.
A.
Reinstatement provision
All of the following apply to the waiver of premium rider except A.The premium is wavied only if the insured is permanently disabled. B. There is a waiting period of 6 months before the premium is waived C. The company continues the policy in force as if the premiums were being paid D. There is no charge for this rider
There is no charge for this rider
C.
Transfer of Value
A.
Cash
B.
Cash Surrender Value.
Each of the following is a typical characteristic of group life insurance EXCEPT A. Evidence of insurability is usually required B. The master policy is issued to the sponsor group C. The plan has a grace period D. Individual cerificates are issued
Evidence of insurability is usually required
A.
Extended Term
B.
Nonforfeiture option
A.
One-year Term.
B.
Ownership clause
D.
To extend coverage pass the end of the policy's term.
A.
To protect the policyowner against an unintentional lapse of policy.