Practice quizzes life insurance
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?
$50,000
Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the commissioner
12 months
If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days of the date that the contract is executed
15 days
If an insurer terminates a producer, the Commissioner must be notified. How many days does the insurer have to deliver this notice?
30 days
Within how many days does a license have to inform the commissioner of a change of address
30 days
What is the penalty for IRA distributions that are below the required minimum for the year
50%
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Which of the following is not an allowable 1035 exchange
A whole life insurance policy is exchanged for a term insurance policy
Which concept is associated with "exclusion ratio"
Annuity payments
Producers are permitted to share or split commissions, providing that
Both are properly licensed for the line of insurance.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender
To legally transact insurance in this state, an insurer must obtain which of the following?
Certificate Authority
When a policy owner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
Class designation
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death.
Which of the following will not be considered unfair discrimination by insurers
Discriminating in benefits and coverages based on the insured's habits and lifestyle
Which of the following is true regarding taxation of dividends in participating policies
Dividends are not taxable.
What method is used to determine the taxable portion of each annuity payment
Exclusion ratio
In a direct transfer, how is money transferred from one retirement plan to a traditional IRA
From trustee to trustee
Which is true about the cash surrender nonforfeiture option
Funds exceeding the premium paid are taxable as ordinary income.
Life insurance death proceeds are
Generally not taxed as income
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any circumstances
The commissioner may waive prelicensing requirements or examinations for someone who has been a licensed insurance producer
In preceding 12 months
Who can make a fully deductible contribution to a traditional IRA?
Individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.
Which statement regarding insurance risks is not correct
Insured's cannot be randomly selected
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will
Issue the policy anyway and pay the face value to the beneficiary
Michigan's continuing education requirement has each of the following characteristics except
It allows for up to 15 excess credit hours to be carried forward to the next reporting period
Which of the following is true about the 10-day free look period in a life insurance policy
It begins when the policy is delivered
Which of the following is true of a qualified plan
It has a tax benefit for both employer and employee.
All of the following statements are true regarding installments for a fixed period annuity settlement except
It is a life contingency option
All of the following statements are true regarding installments for a fixed period annuity settlement option except
It is a life contingency option.
In which of the following situations is it legal to limit coverage based on marital status
It is never legal to limit coverage based on marital status
The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of year is called
Life income with period certain
Is an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to
Live at least to his life expectancy
Which of the following is not true regarding policy loans
Money borrowed from the cash value is taxable.
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
Which of the following best describes a pure life annuity settlement option
Pure life provides payments for as long as the annuitant is alive.
Which type of retirement account does not require the owner to start taking distributions at age 72?
Roth IRA
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
A licensed counselor MAY NOT perform which of the following duties?
Solicit business as an insurance producer
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 interest earned on policy dividends is
Taxable. Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.
Which of the following best describes taxation during the accumulation period of annuity
Taxes are deferred
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to
The contingent beneficiary
Which of the following individuals could qualify for a temporary insurance license
The designee of a producer that is called to active service with the Navy
Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insured's death
The minor son of the insured
Which of the following is true regarding a market value adjusted annuity
The owner is guaranteed a fixed interest rate for a specific period of time.
What happens if a deferred annuity is surrendered before the annuitization period
The owner will receive the surrender value of the annuity.
All of the following statements are true regarding installments for a fixed amount except
The payments will stop when the annuitant dies.
Which of the following best describes what the annuity period is
The period of time during which accumulated money is converted into income payments
An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?
The policy will terminate when the loan amount with interest equals or exceeds the cash value.
Which of the following is not true regarding equity indexed annuities
They earn lower interest rates than fixed annuities.
Which of the following is true for both equity indexed annuities and fixed annuities
They have a guaranteed minimum interest rate.
All of the following are true regarding guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
The two types of assignments are
absolute and collateral
Which of the following is a short term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated
annuity certain
Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?
discrimination
Which of the following terms is used to name the nontaxed return of unused premiums
dividend
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
false advertising
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
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
immediate
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
larger
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?
pure life
An insurance company receives an application with some information missing and issues the policy anyway. What is this called
waiver