Exam Missed Questions
Which of these is NOT considered to be an example of misrepresentation?
A producer comparing the benefits of competing insurance policies
What qualifies as acceptance of an insurance contract offer?
An issued policy
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policyowner when policy has been surrendered.
What must be given to a life insurance applicant when the agent receives an application and the initial premium?
Conditional receipt
Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions?
Conduit IRA
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
Which statement regarding the joint and survivor life insurance settlement option is NOT true?
The amount of each installment is larger that the single life income option
Which of these is not considered a type of limited payment whole life insurance?
endowment at age 70
Which settlement option makes minimum guaranteed dollar payments over a stated number of years?
fixed-period
A condition that increases the possibility of financial loss is called a
hazard
Group life insurance is typically issued as
level term insurance
Which is an accurate description of the premium is a graded premium life insurance policy?
Annual increases in premium for a stated number of years then remains level
A producer sold a life insurance policy but did not provide the applicant with a basic illustration. In his situation, the insurer is required to provide the applicant with a policy summary no later than?
policy delivery date
Which action will trigger a penalty tax on premature distributions from a modified endowment contract MEC?
policy loans
What typically changes at the re-entry option date found in some term life policies?
premium
Which benefits can be found in an equity indexed annuity, but not in a fixed annuity?
protection against long term inflation
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends
qual the net single premium for the same face amount at the insured's attained age
How are qualified ROTH IRA distributions normally treated for tax purposes?
received income tax-free
What could be the potential result of taking out a cash value loan under a life insurance policy?
reduces the amount receivable upon surrender of the contract
An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this?
reinsurance contract
What kind of arrangement gives the policyowner the right to change the beneficiary? Contestable designation Incontestable designation Irrevocable designation Revocable designation
revocable designation
How are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?
taxed as ordinary income in the year received
A hold-harmless clause is an example of risk
transfer
What would be the disadvantage of naming a trust as beneficiary of a life insurance policy?
trust administration fees would reduce policy proceeds
If an individual retirement account (IRA), rollover contributions are
unlimited by dollar amount
During the application process, a statement made by an applicant that becomes part of the contract is considered to be a?
warranty
Which life insurance policy would be eligible to include an automatic premium loan provison
whole life
The conversion option for group term insurance may be exercised by an employee
within 31 days of terminated employment
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
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
20% of the funds could be forfeited
An individual working part-time has a gross income of 5k for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?
5k
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?
Date of issuance of the conditional recept
An annuitant is paid $495 per month until the contract value is exhausted at some undetermined date in the future. Which type of annuity payout option is this?
Fixed amount
What is considered a valid reason for small corporations to insure the lives of its major stockholders?
Fund a buy-sell agreement
All of these are considered features of whole life insurance EXCEPT
Initial premium lower than for an equivalent amount of term insurance
Which statement regarding the certificate of insurance is accurate?
It indicated evidence of an employee's insurance coverage
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
A life insurance beneficiary died after receiving only 6 payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?
Kept by the insurance company
Which element of a contract constitutes a definite and unqualified proposal by one party to another?
Offer
When a deferred annuity is surrendered, who must sign the authorization to do so?
Owner
Which of the following outlines the authority given to the producer on behalf of the insurer?
Producer contract
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
When the conditions of the receipt are met
Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?
When the contract has been held for the period specified in the policy
Which statement regarding a single premium life insurance policy is NOT correct?
additional premiums may be required under certain conditions
If replacement was involved in the sale of a life insurance policy, a producer must provide a replacement notice no later than the
application date
In a qualified retirement plan, the yearly contributions to an employee's account
are restricted to maximum limits set by the IRS
Employers often purchase life insurance on a key employee in order to
pay for finding and training a replacement if the employee dies prematurely
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
periodically purchase additional insurance
A life insurance policy's contingent beneficiary is the
person who receives the death benefits if the primary beneficiary dies before the insured
The death proceeds of a credit life insurance policy are typically paid to the
lender
Which of these occurrences could improve an insurer's ability to reduce premiums?
Rate of earnings on investments increase
How does the cost for a survivorship life policy compare to the cost of combining two separate life insurance policies? Survivorship life policy is lower Survivorship life policy is higher Depends on the investment performance of the underlying accounts Both have the same actuarial costs
Survivorship life policy is lower
Which statement regarding a fixed period settlement option is correct?
The installment payment amount is determined by the total number of installments
Which statement regarding the waiver of premium rider is accurate?
cash payment is not directly provided to the policyowner
Which statement regarding universal life insurance is correct?
cash value accumulations have a guaranteed minimum interest rate
The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n):
conditional contract
The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of
consideration
Which term refers to insurance written on the interests of the licensee, the licensee's employer or the licensee's immediate family?
controlled business
An appointed producer's implied authority is derived from
express authority
How long does one premium payment cover in a single premium whole life policy?
full life of the policy
Insurable interest in one's own life is legally considered as
generally unlimited
A life annuity with period certain is characterized as
guaranteeing benefit payments for stated minimum number of years
With life insurance, the needs approach is used primarily in determining
how much life insurance a client should apply for
An annuity which starts paying monthly benefits within a month after issuance is called a(n)
immediate annuity
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
income tax and penalty tax
When premiums are determined, one factor would be the expenses of the
insurer
When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?
irrevocable beneficiary
Which of the following is associated with an immediate annuity?
lack of an accumulation period