Final Exam-Life Insurance

_____ of personal life insurance premiums is Sally deductible for federal income tax purposes.

0%

Premature IRA distributions are assessed a penalty tax of:

10%

a life policy loan in Florida cannot charge a fixed rate of interest higher than _____

10%

The minimum age at which a person can sign a life insurance application is

15 years

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

The USA Patriot Act was enacted in:

2001

A life insurance policy's grace period entitles the insured a period of no less than ____ days to make the premium payment?

30

Within how many days must a licensee notify the DFS of a change in address?

30

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which should N purchase?

30 pay life

how many days does an insurance company have to reject a reinstatement application before it is automatically reinstated?

45

An insurer may normally delay the payment of a cash value loan or surrender value for up to___

6 months

According to Florida Law, an additional lapse notice must be issued after the standard grace period has expired for policy owners age_____

64 years or older

Which is an element of a Variable Life policy?

A fixed, level premium

what is Florida's definition of Life insurance replacement?

A transaction in which a new policy is bought and an old policy is terminated.

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion

which of the following situations does not apply to the Florida Replacement Rule?

An existing policyholder purchases an additional policy from the same insurer

Group life insurance policies are generally written as:

Annually renewable term

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

Any occupation

Which of the following is the best description of 'insurer'?

Any person, corporation, association, or society that writes insurance contracts.

Any changes made on an insurance application requires the initials of whom?

Applicant

What is the initial source of underwriting for an insurance policy?

Application containing statements from the insured

Traditional individual retirement annuity (IRA) distributions must start by:

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

All of the following are Nonforfeiture Options EXCEPT:

Automatic Premium Loan Option

A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n)

Aviation Exclusion

a life insurance application must be signed by all of these, EXCEPT:

Beneficiary

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT:

Beneficiary's age

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

All individuals covered under a group contract with receive a(n):

Certificate

An individual covered under a Group Life insurance policy is considered to be a(n)

Certificate holder

J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?

Coercion

Which of the following is an example of an Unfair Trade Practice?

Coercion

Which of the following areas of state regulation is NOT protected by the savings clause in ERISA?

Commerce

The policy summary contains specific information on all of the following, EXCEPT:

Commission

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

$2,500

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000

An applicant who pays the initial premium at the time of application is typically given a_____ reciept

Conditional receipt

What consists of an offer, acceptance, and consideration?

Contract

if its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

Contributory

An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be:

Converted to an individual permanent policy at an individual rate.

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term

A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the____

Cost of insurance

In Florida, which agency is responsible for the rehabilitation or liquidation of insurers?

DFS

Florida's 14-day free look period for life insurance policies begins at the:

Date of delivery

The combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy.

Decreasing

P, age 50, purchased an annuity that P will fund with $500/month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

Deferred

Any violations of the Florida financial institutions code may be investigated by the _____

Department of Financial Services (DFS)

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

Distribution is subject to federal income tax withholding

A variable insurance policy:

Does not guarantee a return on its investment accounts

Undera trustee group life policy, who would be eligible for a certificate of coverage?

Employee

In Florida, which employee is eligible for an employer's group term life plan?

Employee who works more than 40 hours per week

What provision in a life insurance policy states that the application is considered part of the contract?

Entire contract provision

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract.

Term insurance has which of the following characteristics?

Expires at the end of the policy period

An example of an unfair claims practice would be_____

Failing to effectuate prompt, fair, and equitable settlements of a claim

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit reporting Act

The act of an insurance company publishing misleading information about its policy's provisions is called

False advertising

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

What kind of insurance policy pays a specified monthly income to a beneficiary for 30 years and the pays a lump sum benefit at the end of that 30 years?

Family maintenance policy

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed deffered

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible Installment Deferred

In Florida, an insurer licensed to conduct business in Florida, but domiciled in New Jersey, is called a(n):

Foreign company

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

How does an indexed annuity differ from a fixed annuity?

Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index.

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n):

Installment Refund Annuity

Controlled business

Insurance business that is written on the agent's own life, property, or interests

Which of the following situations are NOT subject to Florida life insurance laws?

Insurance companies' day to day operations

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

B receives yearly dividends and interest from a participating life insurance policy.Which of these should B include as gross income for federal income tax purposes?

Interest only

A license may be denied, suspended, or revoked if the licensee

Is found guilt of misrepresentation

According to Florida Law, which of the following statements accurately describes an admitted mail order insurance company?

It may solicit insurance business by mail without the assistance of a licensed agent

The entity who sole purpose is sharing medical data among its member companies is called the ______

Medical Information Bureau (MIB)

Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock?

Misrepresentation

What are adjustable rates for life policy loans in Florida based on?

Moody's corporate bond index

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

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

Under which circumstance may a licensed agent in Florida represent an unauthorized entity?

Never

According to Florida law, a group life insurance policy requires a minimum of how many insureds?

No minimum

which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

Notice to existing and replacing insurers of intention to replace

P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?

P will still receive declared dividends

Whole Life insurance policies are contractually guaranteed to provide each of the following, EXCEPT:

Partial withdrawal features beyond a surrender charge period

K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take?

Pay monetary restitution to the client

Which of these statements concerning an Individual Straight Life annuity is accurate?

Payments are made to an annuitant for life

The underwriting process involves all of these, EXCEPT for:

Policy Loan

A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the:

Policy Loan Provision

Which of these Nonforfeiture Options continue a build-up of cash value?

Reduced Paid-Up

I is covered by an Accidental Death and Dismemberment policy that has an irrevocable beneficiary. What action will the insurance company take it T requests a change of beneficiary?

Request of the change will be refused

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to the insurance company, and send the new check out tp the insurance company

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions

What is Old Age and Survivors Health Insurance (OASDHI) also known as?

Social Security

Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?

Split-dollar plan

a mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?

Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

The annuity that represents the largest possible monthly payment to an individual annuitant is a:

Straight Life Annuity

What type of life policy covers two people and pays upon the death of the last insured?

Survivorship

The premiums paid by an employer for his employee's group life insurance are usually considered to be:

Tax-deductible to the employer

T would liked to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten-Year Endowment

a(n) _____ rider may be used to include coverage for children under their parents' life insurance policy.

Term

Which of the following statements is CORRECT about an agent who is taking an insurance application?

The agent should have the applicant initial any changes made on the application.

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee.

The investment gains from a Universal Life Policy usually go toward:

The cash value

A contract owner terminates an annuity before the income payment period begins. The owner will then receive:

The current contract surrender value

An agent who makes misleading statements that lead to the termination of an existing insurance policy so that a new policy with another insurer can be taken out has committed

Twisting

which of the following is considered an element of a Variable Life Policy?

Underlying equity investment

A Variable Annuity has which of the following characteristics?

Underlying equity investments

which of the following Life insurance policies combine term insurance with an investment element?

Universal Life

what type of annuity has a cash value that is based upon the performance of its underlying investment funds?

Variable

Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?

Variable Universal Life

The part of a life insurance policy guaranteed to be true is called a:

Warranty

Which of these is considered a statement that is assured to be true in every respect?

Warranty

When is the face amount of a Whole Life policy paid?

When the insured dies or at the policy's maturity date, whichever happens first

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10- year term coverage for his wife on the same policy. Which polices did Y purchase?

Whole life policy with an Other Insured Rider

A policy that becomes a Modified Endowment Contract (MEC)

Will lose many of its tax advantages

B recently died and was insured with a life insurance policy for over five years. During the claims, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will ____

pay the amount that the premium would have purchases at the correct age

a Term Life rider offers the insured_____

additional life coverage

A qualified profit-sharing plan is designed to:

allow employees to participate in the profits of the company

All of the following entires are classified under the four principal area of Florida insurance law EXCEPT:

an agent's commission

Which of the following acts is an agent NOT authorized to do on behalf of an insurer?

authorize claim payments

P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?

beneficiary will be paid the death benefit

An example of sliding would be

charging for an additional product without the applicant's consent

which of these statements is incorrect regarding the federal income tax treatment of life insurance?

entire cash surrender value is taxable

The financial services commission may hold hearings____

for any reason deemed necessary

Typically a life insurance death benefit is paid by a lump-sum payment. A(n) _____ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.

settlement

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and _____

the initial premium

Group Life policies in Florida are required to contain a conversion privilege that allows for conversion

to an individual policy for a stated period of time

Which of the following activities will NOT result in the suspension of an agent's license?

working for a foreign insurer

Which provision is NOT a requirement in a group life policy?

Accidental

P is blinded in a industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment clause

The option that provides additional death benefit for a limited amount of time at the lowest possible cost is called a(n):

Accidental Death and dismemberment rider

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

Additional Whole Life coverage at specified times

Which of the following employer tasks does a Professional Employer Organization normally handle?

Administration Tasks

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

Aleatory

J owns a business and has a Group Life policy covering her employees. J decides to cancel the policy by letting it lapse on the renewal date. What action must be taken?

All of the employees must be notified of the cancellation either by the insurance company or through J

Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax free in the year they are received

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

The amount of monthly disability benefits payable under Social Security is affected by which of the following factors?

Amount of the benefits available from other sources

Non profit life insurance providers that are covered by a special section in the Florida Insurance code are called____

Fraternal life insurance organizations

S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?

Full benefits are payable under the Master contract.

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

Fund a buy-sell agreement

Which of these is NOT a reason for purchasing life insurance on the life of a minor?

If both parents were to die, it would provide death benefits to the child

K's whole life insurance policy lapsed two months ago due to nonpayment. She would now life to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT:

K will forfeit the right to use the automatic loan provision upon reinstatement

A sole proprietor may use this plan ONLY if the employees of this business are included.

Keogh Pension Plan

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key Person Life policy

Stranger Originated Life Insurance has been found to be in violation of which of the following contractual elements?

Legal Purpose (insurable interest)

which is not an example of a Nonforfeiture option?

Life Income

rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:

Marital deduction

Which of the following information is NOT required to be included in a Whole Life policy?

Policy's guaranteed dividend table

On a life insurance policy, who is qualified to change the beneficiary designation?

Policyowner

The ______ is authorized to assign a Life Insurance policy as collateral for a loan.

Policyowner

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life Plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction.

A policyowner is able to choose the frequency of premium payments through what policy feature?

Premium Mode

A Limited-Pay Life policy has:

Premium payments limited to a specified number of years

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force.

Which statement is correct regarding the premium payment schedule for who life policies?

Premiums are payable through the insured's lifetime/ coverage lasts until death of the insured

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:

Probability of making timely premium payments

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

A noncontributory group term life plan is characterized by:

The entire cost of the plan is paid for by the employer

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

if Tom's employment is terminated, 20% of the funds would be forfeited.

When is the face amount paid under a Joint Life and Survivor policy?

Upon death of the last insured

Before a life policy is issued, which of these contract elements is necessary?

A signed application by the prospect

Which statement about a whole life policy is true?

Cash value may be borrowed against

All of these are characteristics of an Adjustable Life policy, EXCEPT:

Face amount can be adjusted using policy dividends.

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n):

Insuring Agreement

Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?

Irrevocable beneficiary

An insured's inability to perform two or more activities of daily living may trigger which type of life policy rider?

Long Term Care

which of these is not a type of agent authority?

Principal

The fundamental reason for regulation of insurance is to:

Protect consumers

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

Which statement regarding the change of Beneficiary provision is true?

The policy owner can change the beneficiary.

If a 10-year Term Life policy contains a Renewability provision, the policy will renew ______

Without evidence of insurability

Which of the following types of Term Life policies most likely contains a Renewability feature?

10 Year Convertible Term

An example of an unfair trade practice is____

An agent making a material misrepresentation to the insured

P is a forty year old woman and would life to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she not buy?

An immediate annuity

Variable Whole Life Insurance can be described as:

Both an insurance & securities product

Which of these is NOT considered to be a cost connected with an individual's death?

Business expenses

A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT _____

Change the policy's interest rate

one definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is....

Closely regulated and requires full disclosure

omitting information that affects the insurance or the rate of an insurance contracts is called:

Concealment

According to Florida Law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?

Marital Status

During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of__________

Misrepresentation

Which of these is NOT considered to be an element of an insurance contract?

Negotiating

K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?

Straight life

K is an agent who takes an applications for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured.

The Consideration clause in a life insurance policy indicates that a policy owner's consideration consists of a completed application and _____

The initial premium

When replacing or exchanging an annuity, the agent must disclose to the annuitant____

The possible tax ramifications as a result of the transaction

Under a Graded Premium Whole Life policy,

The premium increases each year during the early years of the contract and remains the same after that time

W gave W's age as 50 when W purchases a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?

The proceeds would be reduced based on whatever the premium would have been if purchases at age 59.

Under a Renewable Term policy,

The renewal premium is calculated on the basis of the insured's attained age

The Consideration clause of an insurance contract includes:

The schedule and amount of premium payments.

Who owns a stock company?

The stockholders.

T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert

To a individual policy upon employment termination

Life insurance ponies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation?

USA Patriot Act

A(n) ______ annuity pays benefits based on units rather than stated dollar amounts.

Variable

An agent that sells ______ Life insurance MUST be registered with the FINRA.

Variable

In order to sell a(n) _______ Life Policy, a producer is required to register with the FINRA.

Variable

Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options?

Variable Life

A life insurance policy owner may sell their policy to a _____ in order to receive a percentage of the policy's face value.

Viatical settlement provider