Wrong answers

The waiting period for SS disability is

5 months

What is to be expected of a Modified Life policy?

A future change in premium payments

A policyowner who permanently changes the ownership of a life insurance policy is exercising which contractual option?

Absolute assignment

What type of policy can group term life insurance normally be converted to?

An individual permanent policy

Traditional individual retirement annuity (IRA) distributions must start by

April 1st of the year following the year the participant attains age 70 1/2

A life insurance company has determined that a recently deceased insured had understated her age at the time of application 5 years prior. How will this affect the insurer's claim disbursement?

Beneficiary will receive reduced policy benefits

When does interest accrue on unpaid death benefits according to Indiana Law?

Date of insured's death

When does interest acrue on unpaid death benefits according to Indiana law?

Date of insured's death

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

Distribution is subject to federal income tax withholding

A life insurance policy that offers cash value and is tied to the S&P with a guaranteed minimum rate of return is called

Equity Indexed Life

When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?

Establishes the needs of the individual and his dependents

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

Fund a buy-sell agreement

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate rises above a certain level, the surrender charge is waived

Which life insurance settlement option pays lifetime benefits to two or more people?

Joint and Survivor

How much is normally paid to a policyowner in a life (viatical) settlement?

Less than the face amount

What happens to the cash value of a market value adjusted annuity if it's surrendered early?

Market value adjustment is applied

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

Ordinary income tax and a 10% tax penalty for early withdrawal

What does a 401(k) plan generally provide its participants?

Salary-deferral contributions

What does a fixed life annuity offer protection against?

Savings depletion because of longevity

After fifteen years, a Whole Life policy is surrendered. Which of the following can the policyowner expect?

Taxes are owed on the amount of cash value that exceeds the premiums paid

How much will be taxable if a policyowner, age 55, surrenders a Universal Life policy?

Taxes are owed on the amount of cash value that exceeds the premiums paid

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA

In a qualified retirement plan, the yearly contributions to an employee's account

are restricted to maximum levels set by the IRS

A Split-dollar plan would most likely be had by a(n)

department manager

An insurance company can write an Accidental Death and Dismemberment policy as a(n)

individual policy or rider

The function of a Discretionary Provision is to protect the

insurer

A Dread Disease policy is characterized by

limited benefits

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid

mandatory income tax withholding on the transfer amount

A Survivorship Life policy's proceeds are typically used to

pay estate taxes

The annuitant in a single premium deferred annuity (SPDA)

receives immediate benefit payments

How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision?

6 months

Required minimum distributions for qualified retirement plans must start at age

70 1/2

When a producer submits an application that reveals personal information regarding the applicant, who supplies the privacy notice?

Producer

How are dividends from a participating life insurance policy normally treated?

Typically not subject to Federal income taxes

Which type of life insurance is characterized by separate accounts?

Variable Universal

A life insurance policy which is characterized by flexible premium payments is called

Variable Universal Life

What type of permanent life insurance offers a guaranteed minimum face amount and allows for future increases in coverage?

Variable Whole Life

When does interest income in a deferred annuity get reported for federal income taxes?

When the distributions are received

A deferred annuity is used to

accumulate funds for the future

John owns a deferred annuity and is currently paying no income taxes on the investment gains. This annuity is now in the

accumulation phase

Which of these can be altered by the policyowner in an adjustable life insurance policy?

amount of premium paid

To be eligible for Social Security Disability benefits, an employee must be unable to perform

any occupation

Annuitization can be described as

converting a cash value into periodic income

What is considered a valid reason for an insurer's refusal to pay death benefits directly to a minor?

Minors are normally not capable of handling money in a reasonable manner

Which of the following is TRUE about a qualified retirement that is "top heavy"?

More than 60% of plan assets are in key employee accounts

How must a life insurance policy's loan interest rate be set, according to Indiana law?

Must be set at or below the state-mandated maximum

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

None

What determines how much of a retirement benefit one will receive from Social Security?

Primary Insurance Amount

A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds were rolled over?

Income taxes plus a 10% penalty tax on $30,000

Which assumption concerning the investment risk of a Fixed Dollar Life annuity is correct?

Insurer assumes the investment risk

A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured died, the cash value was $15,000 and the total premiums-paid equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for federal income tax purposes?

$0

A $50,000 Whole Life policy is surrendered by the policyowner for the full cash value amount of $15,000. The policyowner had paid a total of $10,000 in premiums while the policy was active. How much of the cash value is taxable?

$5,000. In this situation, the amount of cash value that's taxable is $5,000 because it's the net difference between the surrender value and total premiums paid into the policy

A man dies and is insured by a Whole Life insurance policy of $50,000 which has a cash value of $15,000. The primary beneficiary will receive how much?

$50,000

Repeatedly violating laws related to the Indiana Unfair Competition Law could result in a

$50,000 fine

How many days must an insured notify the insurer of a claim under the Notice of Claim provision?

20 days

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

What is required for a Producer to be in compliance with Rule 13, Life Insurance Advertising?

A potential Applicant must be told that Life Insurance is the exclusive subject of the sale

Life insurance that allows the face amount to be modified is known as

Adjustable Life

In order for a lapsed Whole Life policy to be reinstated, what must occur?

All back premiums paid with interest; reinstatement occurs within 3 years of policy lapse; and proof of good health is required

Which would be described as a beneficiary designation by class?

Children of the insured

Which report contains information regarding an individual's general reputation and credit standing?

Consumer report