NYL STUDY GUIDE
Speculative Risk
Involves the opportunity for either loss or gain. An example of speculative risk is gambling. These types of risks are not insurable.
Insurer
Is the principal
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is an MEC.
What would be an advantage to naming a contingent beneficiary in a life insurance policy
It determines who receives policy benefits if the primary beneficiary is deceased
If a retirement plan or annuity is "qualified", this means
It is approved by IRS
Which of the following best describes annually renewable term insurance
It is level term insurance
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits.
An applicant for insurance misstates her age at the time her Life Insurance application is taken. This misstatement may result in
Adjustment in the death benefit
which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years.
What is the purpose of a fixed period settlement option
To provide a guaranteed income for a certain amount of time.
The Waiver of Cost of Insurance rider is found in what type of insurance?
Universal Life
During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT
Value Funds
All of the following benefits are available under social security except
Welfare Benefits
Which of the following is NOT a factor in determining qualifications for Social Security disability benefits?
Workers Occupation
Insurance Policy
a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
for 20 years or until the insured deaths whichever occurs first.
an insured has the right to return the new insurance policy for a full refund during the
free look period
if an insured worker has earned 40 quarters of coverage, the worker's status under social security disability is
fully insured
Fixed annuities provide all of the following EXCEPT
hedge against inflation
which of the following insureds has a right to cancel an individual life policy within 30 days
insured 60 days or older
Insurer
is the company who issues a policy of insurance
Which of the following is not true regarding the accumulation period of annuity
it would not occur in a deffered annuity
What is the term used when a person sells his assets as a way to gain money
liquidation
Attempting to determine how much insurance an individual would require based upon their financial objectives is known as
needs approach
During replacement of life insurance, a replacing insurer must do which of the following?
obtain a list of all life insurance policies that will be replaced
Which of the following allows the insurer to relieve a minor insured from premium payments if the minors parents have died or become disabled
payor beneifit
beneficary
person who receives benefits from insurance policy
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
Pure Risk
refers to situations that can only result in a loss or no change. There is no opportunity for financial gain. Pure Risks is the only type of risk that insurance companies are willing to accept
What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences?
section 1035 policy exchange
a straight life policy has what type of premium
A level annual premium for the life of the insured
Who is a third-party owner?
A policyowner who is not the insured
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable
$3000
what is the minimum free-look period for newly issued life insurance policies in this state
10 days
The notice to senior consumers regarding their right to cancel a policy must be printed on the cover or policy jacket in at least what type of print?
12 point bold point
Within how many days of termination of employment must an employer give notice of the employees right to convert the group policy to an individual policy
15 days
What is the limiting age for dependent children of the insured employee in a group life plan (other that disabled children)?
26
All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least
30 days
During the cancellation period, an insurer must refund any premiums and policy fees within how many days of written cancellation notice by the insured?
30 days
Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees?
30 days
What is the number of credits required for fully insured status for social security disability benefits
40
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?
6 credits
What is the minimum number credits you need for social security disability benefits
6 credits
which of the following is the required number of participants in a contributor group plan?
75%
All of the following could own group life insurance except
A group needing low cost life insurance
STOLI POLICY
An investor buys a life insurance policy on an elderly person in order to sell it for a life settlement.. what is this an example of?
which concept is associated with exclusion ratio
Annuities payments
Employer contributions made to a qualified plan
Are subject to vesting requirements
All of the following are true regarding a qualified annuity EXCEPT
At distribution, all amounts received by the employee are tax free.
Graded Premium Whole Life policy premiums are typically lower initalliy but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will
Be level thereafter
Social Security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are again available for the spouse after reaching age 60. What is the time period called during which the surviving spouse does not receive benefits?
Blackout Period
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision making process
Buyers Guide
An insured receives an annual life insurance dividend check. What term best describes this arrangement
Cash Option
What is the clause that describes the method of paying the death benefit in the event that the insured and the beneficiary are both killed in the same accident
Common Disaster Clause
All the following are features and requirements of the Living Needs Rider EXCEPT
Diagnosis must indicate that death is expected within 3 years -
All of the following statements concerning dividends are true EXCEPT
Dividend amounts are not guaranteed in the policy
Which of the following is true regarding taxation of dividends in participating policies?
Dividends are not taxable
If the annuitant dies before the annuitization period starts, what will the beneficiary receive?
Either the amount paid into the annuity or the cash value, whichever is greater
Selection of coverage in employee benefits plans refers to
Employee Choosing Benefits
For a retirement plan to be qualified, it must be designed for whose benefit?
Employees
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusion Clause
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits?
Have accumulated 6 work credits in the past 3 years
Payor Benefit
If the --------- (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premium until the minor reaches a certain age, such as 21.
An individual works for a manufacturing company. If he decides to fund a retirement plan for himself, for which of the following plans could he qualify?
Individual Retirement Account
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and Survivor
Kayla's husband died in a plane crash. She needs a new source of funding that will help put her child through daycare. Which of the following would be the best source? a. estate conservation b. life insurance proceeds c. state education waiver d. viatical settlement
Life insurance proceeds
There are many legitimate needs based expenses that can be paid by ———— from groceries to retirement income. Day care is considered to be among these expenses.
Life insurance proceeds
Bill just bought a new car,which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for Bill?
Modified Life
if a life insurance policy develops cash value faster than a seven-pay whole life contract, it is
Modified endowment contract
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government.
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement
An insured committed suicide one year after his life insurance policy was issued. The insurer will
Refund the premium paid
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
Which settlement option provides a single beneficiary with income for the rest of his or her life
Single Life
The advantage of qualified plans to employers is
Tax-deductible contributions
During the accumulation period in a non-qualified annuity, what are the tax consequences of a withdrawal ?
Taxable interest will be withdrawn first and the 10 % penalty will be imposed if under age 59 1/2.
n individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step?
The agent must provide a replacement notice to the applicant
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
The cost of coverage is a deductible expense by the employer.
WHICH OF THE FOLLOWING ARE GENERALLY NOT CONSIDERED WHEN UNDERWRITING GROUP INSURANCE
The groups medical history
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years but at a higher premium rate
After the employee was laid off he was informed of the right to convert the group coverage to an individual party with in 31 days 20 days into the conversation. The employee suffered a heart attack and died before he could obtain individual coverage what is the group policy insurer required to do
The insurer must pay the death benefit under the former group coverage
Policyowner
The person who is entitled to exercise the rights and privileges in the policy. This person may or may not be the insured.
Agency Contract
a contract that is held between an insurer and an agent/producer, containing the expressed authority given to the agent/producer, and the duties and responsibilities to the principal. An agent who is in violation of the agency contract may be held personally liable to the insurer.
Life Insurance
a coverage upon a person's life, and granting, purchasing or disposing of annuities
Needs Approach
a method of determining how much life insurance you need based on funds your family would require to maintain their lifestyle after your death
Applicant or proposed insured
a person applying for insurance or seeks insurance from insurer.
Agent/Producer
a person who acts for another person or entity with regard to contractual arrangements wit third parties.
The classification of producer usually involves
agents and brokers
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
cash surrender
which of the following is NOT a term for period of time during which the annuitant or the beneficiary receives income?
depreciation period
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?
family term rider
Both Universal Life and Variable Universal Life have a
flexible premium
Death Benefit
the amount paid when a claim is issued against a policy of insurance
which of the following is incorrect concerning a noncontributory group plan?
the employees receive individual policies
Agents are the agents of
the insurer
premium
the money paid to the insurance company for the policy of insurance.
what happens if a deferred annuity is surrendered before the annuization period
the owner will receive the surrender value of the annuity
which of the following best describes what the annuity period is
the period of time during which accumulated money is converted into income payments
Insured
the person covered by the policy of insurance who may or may not be the applicant or policyowner