Primerica

Which of the following taxation principles applies to annuities?

Tax-deferred accumulation

The license that allows a surviving spouse to enter into a contract to maintain the business of a producer who has died or is unable to perform his duties is called a

Temporary insurance producer license.

Every insurer must file all rates, rating plans, and modifications to its plans with the Commissioner at least how many days prior to the effective date of use?

15 days

Who is considered a nonresident agent?

An agent who resides in another state, but is licensed to write insurance in this state.

Which of the following terms is used to name the nontaxable return of unused premiums?

Dividend

An annuity begins payments to the annuitant one month after it is purchased. What type is it?

Single premium immediate annuity

Which of the following is NOT a characteristic of a SIMPLE plan?

The employer makes a matching contribution dollar for dollar up to 50% of the employee's annual compensation.

A fixed annuity provides all of the following features EXCEPT

Protection against the loss of purchasing power due to inflation.

For a retirement plan to be qualified, it must be designed for the benefit of

Employees

If $100,000 of life insurance proceeds were used in a settlement option which paid $13,000 per year for 10 years, which of the following amounts would be taxable annually?

$3,000

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

Profit-sharing plan

If a producer is found guilty of a violation which has caused a claimant to suffer actual economic damages, a court may award punitive damages in addition to the amount of the claim. This amount cannot exceed what percentage of the claim?

25%

Which of the following is a continuing education requirement in this state?

45 hours every 3 years

What qualifies an individual to contribute to an IRA?

Earned income

Which of the following is an IRS qualified retirement program for the self-employed?

Keogh/HR-10

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of the policy to an annuity. This nontaxable transaction is called a

1035 exchange.

Insurance producers must report their change of business or residence address within

30 days

Which of the following premiums or payments for policies or retirement funds may be deductible for federal income tax purposes?

A contribution for an individual retirement account

Which of the following entities is responsible for paying the producer's appointment renewal fee?

Appointing insurer

Dividends paid to participating policyowners are not taxable as income. With that in mind, which of the following dividend options would be subject to federal taxation?

Accumulation at interest

What is the primary purpose of a 401(k) plan?

Accumulation of retirement income

A producer's license must be renewed

Every 3 years.

Which of the following would be most likely to start a tax-sheltered annuity?

Public school teachers

All other factor being equal, which of the following types of annuities will provide the highest monthly income?

Straight life

The IRS early withdrawal penalty for premature distributions from an IRA may be waived for special hardships for all of the following reasons EXCEPT

The participant is 50 years old and has been making catch up contributions.

Excess contributions to a Roth IRA are subject to what tax penalty

6%

When an annuity is written, whose life expectancy is taken into consideration?

Annuitant

All of the following persons who do not have an employer sponsored retirement plan would be eligible to set up contributions to a Traditional IRA EXCEPT

Arlene, age 72, a nurse.

Avoiding tax consequences when transferring assets from one IRA to another can be accomplished by which of the following?

Direct rollover from one plan to the other

All else being equal, which of the following will NOT be considered unfair discrimination by an insurer?

Discriminating in benefits based on the insured's habits and lifestyle

Which of the following is TRUE about the surrender charge for an annuity?

It discourages the owner from prematurely surrendering the annuity.

A producer receives a premium from his client, but fails to pay the premium collected to the company after the insurer makes a written demand upon him. Upon conviction, the agent may be found guilty of

Larceny

Which type of annuity settlements stops when the annuitant dies?

Life annuity

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

When a beneficiary in a life insurance policy receives payments consisting of both principal and interest portions, what will be taxed as income?

Principal only

Which of the following best describes the annuity period?

The period of time during which accumulated money is converted into income payments.

If a company has a simplified employee pension (SEP) plan, what type of plan is it?

A defined contribution plan for a small business

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are free of taxes.

Which of the following payout options pays a specified amount to the annuitant with no residual value payable to a beneficiary?

Life only

In life insurance policies, cash value increases are

Tax deferred.

Which method is used to determine the taxable portion of each annuity payment?

The exclusion ratio

Annuities can be used for all of the following reasons EXCEPT

To create an estate.

When Barrett started work for the Ace Company, he was told he could participate in a Simplified Employee Pension Plan. This plan is

The same as an IRA but with larger contribution limits.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

According to the specified characteristics, if a retirement plan or annuity is classified as being "qualified,"

It satisfies the requirements of the Internal Revenue Service for favorable tax treatment.

What does an annuity protect the contract owner against?

Living longer than expected

An individual buys a flexible premium deferred annuity with 20-year period certain. What will the beneficiary receive if the owner dies 5 years after the beginning of the annuity?

Payments for 15 years

Variable insurance and variable annuities are regulated by

SEC, FINRA, and Departments of Insurance

Which of the following is NOT true regarding an annuity certain?

Benefits stop at the annuitant's death.

The Commissioner of Insurance can do all of the following EXCEPT

Change the laws to better ensure that the companies remain solvent and conduct business in compliance with all state laws.

In a traditional IRA plan, at what age may the plan owner begin withdrawing funds without incurring a penalty?

59 1⁄2

Which of the following actions would be considered rebating?

The producer offering the prospective client something of value in exchange for purchasing a life insurance policy.

Which of the following is NOT a requirement of a qualified plan?

It must be temporary.

Lori is an executive at XYZ Software. She contributes to a retirement plan that her employer provides that is only for the officers at the company. Her contributions are taken from her salary after taxes. What type of plan is this?

Nonqualified plan

What are the tax implications for policy proceeds that are paid out in a settlement option other than a lump sum, regardless of the option chosen?

Only the interest element of each individual payment is taxable to the beneficiary as income.

All of the following actions by a producer may be grounds for a nonrenewal or revocation of license EXCEPT

Replacing a client's existing life insurance policy with a new policy.

Who bears the investment risk in a fixed annuity?

The insurance company

An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet this need?

Deferred

A policy that is classified as a Modified Endowment Contract has all of the following qualities EXCEPT

It can revert back to an endowment policy if it passes the seven-pay test in the future.

If the Commissioner issues a cease and desist order, that means the insurer must

Stop committing a particular violation