NC Life Insurance
The actual number of annuity units is determined by:
the current value of one unit relative to the amount of premiums paid.
With the Joint and Full Survivor annuity option, if one dies:
the same income payments continue to the survivor for life.
"Combination contract" is a term used to describe life insurance programs which combine different forms of life insurance into a single package to produce a desired pattern of benefits.
true
"Small businesses" usually operate as sole proprietorships.
true
Which answer best completes the following sentence? "In the insurance business, risk can best be defined as ___________________________."
uncertainty regarding financial loss
The exclusion ratio is always considered 100% in _________ annuities.
variable
When a permanent life insurance policy is borrowed against under the policy loan provision, North Carolina law restricts the insurance company from charging a fixed rate higher than ________ annually.
8%
Which of the following are typically excluded in life insurance policies?
All - Suicide, war or military service, and hazardous occupation or hobby
Which of the following premium payment modes will result in the highest total out-of-pocket costs?
Monthly
Road rage is an example of what type of hazard?
Morale
Gail names her church as the beneficiary of her $100,000 life insurance policy. When Gail dies, who is responsible for the income taxes payable on the lump sum proceeds received by the church.
No income tax is payable on the death proceeds
Which of the following is NOT considered one of the three basic parts of a life insurance contract?
Security report
What are the two features that have the greatest effect on the amount of additional interest that may be credited to an equity-indexed annuity?
The Index Method and the Participation Rate
When does a tertiary beneficiary collect?
When the primary and secondary beneficiaries predecease the insured
Which of the following life policies contain fixed and guaranteed mortality rates AND fixed and guaranteed cash value?
Whole life
Social Security provides:
a death benefit, old age benefits, and disability benefits.
The Straight Life Income annuity option pays the annuitant:
a guaranteed income for the annuitant's lifetime.
Which of the following license holders must obtain 24 ICECs:
all of the above
Accumulation units are converted into annuity units:
at the time of annuity payout.
The Insuring Clause includes all of the following EXCEPT the:
beneficiary
What type of life insurance refers to temporary coverage of a specific hazard for a specific group?
blanket insurance policies
The _______________ is basically a savings account developing within the insurance policy.
cash value
A Salary Continuation Plan can be used for the _______________ of a disabled employee.
continuance of wages
During the variable annuity's accumulation period, periodic premium deposits, referred to as ________________, are made.
dollar cost averaging
"Replacement" means a transaction in which a new policy is purchased by a person who has never had insurance before.
false
In order for a 1035 Exchange to take place, the exchange must be with the same company that issued the original policy.
false
The type of annuity that provides a guaranteed rate of return is called a variable annuity.
false
Complete this sentence: "Typically, the shorter the premium-paying period, the _________________."
higher the premium
Most new life insurance policies are purchased by ______________ from life insurance agents.
individuals
Which type of life insurance is sold by home service insurers?
industrial life insurance
Policy reserves are the intangible amounts set aside by the _____________ out of the insurer's assets at the beginning of the policy period.
insurer
The _______________ bears the investment risk in a fixed annuity.
insurer
____________ term insurance provides a level amount of protection for a specified period, after which the policy expires.
level
Diverting insurance funds for personal use is an example of:
misuse of premiums
Risk Retention Groups (RRGs) are a form of __________ insurer.
mutual
The ______________ refers to the fact that a written contract cannot be changed by oral evidence.
parol evidence
The ____________ determines the life insurance policy's beneficiary.
policyowner
Purchasers of life insurance policies are _____________, but are not necessarily _______________.
policyowners; policyholders
The actual number of annuity units in a variable annuity contract is determined by the current value of one unit relative to the amount of:
premiums paid
Under the Law of Agency, an agent is the lawful representative of the:
principal
Bill gives Jim a couple of tickets to a Duke basketball game to thank him for purchasing a policy. This is an example of:
rebating
Statements made on an application are not considered warrantees, but are called ________________ as true to the best of the applicant's knowledge and belief.
representation
Barbara cashed in her 401k to purchase an annuity that will pay her $500 a month beginning right away for the rest of her life. This is a(n) _____________ annuity.
single premium immediate
Stock bonus retirement plans are similar to profit-sharing plans EXCEPT:
the benefits are delivered in the form of company stock instead of relying on the profits of the company.
Serious problems of misrepresentation are most likely to occur during which phase of the selling process?
the presentation of recommendations
Who is responsible for notifying the original insurer that a replacement policy may be issued?
the replacing agent
Most adjustable life policies are more expensive than conventional term policies or whole life policies.
true
The key factor behind ERISA's development was to encourage employers to establish employee health plans allowing them to self-insure.
true
The variable annuity has no minimum guarantee of growth.
true
When a life insurance policy is reinstated after lapse, the incontestable clause is usually regenerated.
true
Family Income policies are a combination of which two types of policies?
whole life and decreasing term
Franchise life insurance is also called:
wholesale insurance
In a Salary Continuation Plan, premiums are tax-deductible.
False
Mutual Insurers are owned by stockholders and stock insurers are owned by policyholders.
False
What does FICA stand for?
Federal Insurance Contributions Act
Using preprinted material in a sales presentation is recommended because:
such material generally has been reviewed for compliance.
When the youngest child reaches age 16 and the surviving spouse has not reached age 60, Social Security death benefits are:
temporarily suspended
In life insurance, a beneficiary designated as third in line to receive the proceeds or benefits if the other named beneficiaries do not survive the insured is the _____________ beneficiary.
tertiary
Which organization regulates the separate account in variable annuities?
the SEC
An "alien company" is a company incorporated under the laws of any jurisdiction inside of the United States
False
Bob's life insurance policy cash value is $10,000 and he has paid $8,000 in premiums. He now wants to surrender the policy for its cash value. How much is considered taxable?
$2,000
Both SARSEP and SIMPLE plans allow employees 50+ years of age to make catch-up contributions with a $_______ limit on a SARSEP and a $2,500 limit on a SIMPLE (2011).
$5,500; $2,500
Social Security disability benefits have a ________ waiting period.
5 month
With regard to annuity investments by seniors, "senior consumers" are typically defined as those individuals who are age:
65 or older
Tom is a newly appointed life, health and variable annuity agent with Acme Insurance Agency. He is writing his first insurance policy on his brother-in-law's life. Who does Tom legally represent in this transaction?
Acme Insurance Agency
An annuity must begin with a sum of money that can either be supplied through the single payment method or the periodic payment method. If the periodic payment method is used, the payment amount:
Can either be fixed or flexible
________________ requires the policyowner to benefit from the insured's continued existence or the insured's enjoyment of good health; or to suffer a loss when the insured dies or is disabled.
Insurable interest
Which of the following best describes the basic principal of group insurance?
It provides coverage for a number of people under a single contract.
Charles wants an annuity that provides income for he and his wife, Emma. If he should predecease Emma, he wants her to receive the same income payments for the rest of her life. Which type of annuity payout option should he select?
Joint and Full Survivor
Rob died in a car accident and his wife, Jean, survived. Their annuity was purchased to provide income for two people. Jean's annuity income will now provide her with two-thirds of the original payments. Which annuity payout method did they choose?
Joint and Two-Thirds Survivor
Matt has been a full-time firefighter in New York City for the past 20 years. His wife, Ashley, went to work after the children grew up and has been working for the past 9 years. Who would earn more through the Social Security program?
Matt, because Ashley has not contributed the minimum 10 years in FICA taxes to be fully insured.
What alternative does the insurer have if it is discovered that the insured misstated his age on the application?
Pay the benefit amount that the paid premiums would have purchased at the correct age.
What conversion rights belong to a surviving spouse of a group life insurance certificate holder?
The surviving spouse has the same conversion rights the insured employee possessed.
Except as otherwise provided by law, offering a rebate on life insurance premiums other than what is plainly expressed in the contract is prohibited.
True
Pure risk involves only the chance of loss.
True
When a policyowner surrenders his whole life policy for its cash value, he can receive an amount equal to the premiums paid into the policy tax-free.
True
In regard to variable annuities, which of the following statements is FALSE?
the annuitant bears no risk
The type of annuity that provides a guaranteed rate of return is called a ______________ annuity.
fixed
A life insurance contract is considered a valued contract because:
it pays a predetermined amount with no way to assess loss.
On a 10-year level term policy, if the insured dies after 10 years, what does the beneficiary receive?
nothing
Joan's insurance agent, Tim, has offered her a $100 dinner gift certificate if Joan purchases a life insurance policy from Tim. Tim has violated ethical sales practices by:
rebating