Chapter 12, 13, 14, 26, and 27 Quizzes

All of the following types of plans are reserved for small employers EXCEPT a.) 401(k)s b.) SARSEPs c.) SIMPLE IRAs d.) SIMPLE 401(k)

a.)

All of the following statements are correct about group life insurance EXCEPT a.) a member can assign his or her incidents of ownership b.) certificate holders need not be notified if the policy expires c.) rate are typically more favorable than individual policies d.) it is generally written as a one-year renewable term plan

b.)

A partnership owns, pays for and is the beneficiary of the life insurance policies on the lives of its individual partners. This is known as a(n) a.) entity buy-sell plan b.) stock redemption plan c.) cross-purchase plan d.) Keogh plan

a.)

All of the following apply under the federal ERISA law EXCEPT a.) the Florida law on retirement plans supersedes ERISA b.) qualified pension plans receive favorable tax treatment c.) fiduciary responsibility is required d.) funding, participation and vesting are addressed

a.)

Jan, a single, working mother, dies at age 40. Dave, her only son, would receive a one-time lump-sum benefit of a.) $255 b.) $500 c.) $1,000 d.) $2.555

a.)

Under group life insurance, which of the following statements is CORRECT? a.) if cancelled, the members must be notified b.) there must be at least 25 lives in the group c.) a group member cannot name a beneficiary d.) any group of individuals is eligible for group life

a.)

Violation of the controlled business statute occurs if an agent sells most of his/her business to a.) employees of a business owned by his/her father b.) members of his/her civic club c.) city and county employees d.) members of the local medical society

a.)

In determining Social Security retirement benefits, which of the following statements is CORRECT? a.) average monthly wages (AMW) are adjusted for inflation b.) the primary insurance amount (PIA) determines the worker's average indexed monthly earnings (AIME) c.) the PIA is a determination of the amount equal to the worker's full retirement benefit at his or her full retirement age d.) workers retiring past age 59 1/2 can receive 100% of their PIA

c.)

Which of the following statements about key-person insurance is CORRECT? a.) the key employee's family is the beneficiary of the policy b.) the death proceeds are taxable c.) the business may take a tax deduction for premiums paid d.) because the business has complete control over the policy, it can be considered a business asset

d.)

All of the following statements are correct about a participating policy EXCEPT a.) dividends are not considered in comparison in nonparticipating policies b.) dividends are paid to the policy owner c.) dividends may be used to pay premiums d.) dividends may be left with the insurer to accumulate interest

a.)

All of the following statements correctly describe the purpose of Social Security EXCEPT a.) it provides a source of income for a meaningful standard of living during retirement b.) it provides basic protection against financial problems accompanying death, disability and retirement c.) it augments a sound personal insurance plan d.) it provides retirement and survivor benefits to a worker and his or her family

a.)

All of the following statements regarding survivor financial needs are correct EXCEPT a.) the term "dependency period" refers to the 20-year period immediately following the insured's death during which the widowed spouse must depend on Social Security b.) the period for which there are no Social Security benefits for the surviving spouse is known as the blackout period c.) a final expense fund addresses a deceased breadwinner's last illness and funeral costs, death taxes, outstanding debts and more d.) a housing fund addresses a family's rental or home mortgage needs

a.)

Of the following terms, which best describes the act of replacing existing life insurance with a new life insurance policy based upon incomplete or incorrect representation? a.) twisting b.) rebating c.) embezzlement d.) concealment

a.)

The major areas of regulation by the Office of Insurance Regulation include which of the following? a.) policing against unauthorized insurance activities b.) proposing legislation to regulate the insurance industry c.) enacting new insurance laws d.) issuing certificates of authority to insurers

a.)

Which of the following is a requirement that a professional association must meet to obtain group insurance? a.) it must have been in existence for at least two years b.) it must have at least 100 members that participate c.) it must be formed for the sole purpose of purchasing insurance d.) its members must contribute premiums on a strictly voluntary basis

a.)

Which of the following is correct about the Department of Financial Services' right to examine an agent's records? a.) an examination can be conducted at any time to discover any unfair trade practices b.) an agent's records involving a premium transaction are confidential and not subject to examination c.) the Chief Financial Officer may examine an agent's records only once per year, unless good cause is shown for more frequent examinations d.) the statutes do not give the Department an absolute right to examine the affairs of insurance licensees to discover unfair trade practices

a.)

Which of the following statements is correct about group life insurance? a.) it is written with a master policy for members of qualified groups b.) a group member is prohibited from assigning incidents of ownership c.) group life rates are generally higher than those for individual policies d.) only the group member can pay the premiums for the group policy

a.)

All of the following activities could result in the suspension of an agent's license EXCEPT a.) misrepresenting the financial condition of an insurance company b.) selling any replacement policy that causes an insured to lapse an existing policy c.) attaining a license for the sole purpose of handling controlled business d.) demonstrating incompetency to transact business as an insurance agent

b.)

All of the following apply to a universal life insurance policy EXCEPT a.) the coverage includes an annual renewable term policy b.) there are no restrictions on it as far as receiving favorable tax treatment c.) there can be a flexible premium and an adjustable benefit d.) the accumulations in the policy grow on a tax-sheltered basis

b.)

All of the following statements about life insurance benefits are correct EXCEPT a.) benefits designated for a named beneficiary are protected from the insured's b.) benefits payable to the insured's estate are protected from the creditors c.) the cash surrender value of a life insurance policy is subject to garnishment if the policy was taken out for the creditor's benefit d.) benefits designated for a named beneficiary are protected from the beneficiary's creditors

b.)

During what period is a new life insurance policy owner entitled to review a policy and return it for a full refund? a.) during the 14 days prior to its effective date b.) within 14 days after delivery of the policy c.) within 30 days of purchase d.) after receipt, but only with the prior approval of the agent

b.)

If an agent changes his or her residence address, he or she must notify the Department of Financial Services within a.) 15 days b.) 30 days c.) 60 days d.) a change of residence address does not require notification

b.)

In a typical family policy, coverage on the children is usually provided by which of the following? a.) whole life b.) term life c.) endowment plan d.) fixed annuity

b.)

In insurance regulatory language, which of the following properly identifies a "foreign" insurance company? a.) an insurance company whose home office is in another country b.) an insurance company whose home office is in another state c.) insurance company that has no local representative d.) insurance company whose policies are in a foreign language

b.)

Rolland is 45 years old and married. He has a son, age 19, a freshman at a local university and a daughter, age 8. Decreasing term insurance would be recommended for Rolland in order to accomplish which of the following reasons? a.) supplement retirement income b.) guarantee a college education for the son c.) provide a payment protection d.) provide a college education fund for the daughter

b.)

Transacting insurance business does NOT include which of the following activities? a.) soliciting the purchase of insurance b.) negotiating an agent contract with an insurance company c.) negotiating an insurance contract d.) recommending specific types of insurance based on a policy owner's needs

b.)

What two authorities can impose penalties for violation of state insurance laws? a.) Chief Financial Officer and the legislature b.) Chief Financial Officer and the courts c.) legislature and the courts d.) courts and the National Association of Insurance Commissioners

b.)

Which of the following applies when an insured wishes to convert industrial insurance policies for an ordinary policy? a.) this is not permitted under Florida law b.) it is possible to convert $3,000 or more of industrial insurance c.) any such conversion requires a physical examination d.) the multiple policies can only be reissued as one industrial policy

b.)

Which of the following is NOT considered to be an element of replacement? a.) the agent knows a new policy will take the place of an existing policy b.) an existing policy is subjected to a loan of 10% of its value c.) an existing policy is allowed to lapse d.) an existing policy is reissued with a reduced cash value

b.)

Which of the following is NOT required when a group life insurance policy is canceled? a.) the insurance company must notify the group policy owner b.) the policy owner must notify the department of the cancellation c.) the insurance company must notify the group members (but request this to be done by the policy owner) d.) the policy owner must notify the group members

b.)

Which of the following statements applies to the rights of a surviving spouse under a group insurance policy? a.) coverage continues at the same rate and premium b.) conversion privileges must be provided for dependents c.) conversion privileges extend to the spouse, but not the children d.) conversion rights of the surviving spouse are less than those which the insured employee possessed

b.)

Which of the following statements correctly describes the tax advantage of a qualified retirement plan? a.) employer contributions are not taxed when they are paid out to the employee b.) earnings of the plan are taxable to the employee only when he or she receives the benefit c.) earnings of the plan are only taxable if the employee voluntarily terminates participation in the plan d.) employer contributions are deductible business expenses when the employee receives the benefits

b.)

Which of the following statements regarding Social Security survivor benefits is NOT correct? a.) a surviving widow, age 66, will be entitled to a life income equal to her husband's PIA. b.) A healthy dependent child of a deceased widow will be entitled to an income benefit until age 18, or to age 22, if he or she attends college. c.) a surviving widower, age 47, has a 13-year old child who was also a dependent of the deceased worker. The widower is entitled to monthly income until the child becomes 16, at which time benefits will cease to the widower until he reaches at least age 60. d.) a deceased covered worker was providing one half of the support for a 62 year old parent who is confined to a nursing home. The parent is entitled to a survivor's benefit.

b.)

Which three partners in a business, how many life insurance policies would be required to insure a cross-purchase buy-sell plan? a.) 3 b.) 6 c.) 9 d.) 12

b.)

All of the following activities violate the Florida Insurance Code EXCEPT a.) dividing commission on a life insurance policy with any licensed agent b.) dividing commission on a life insurance policy with a licensed health agent c.) dividing commission on a life insurance policy with another agent who is licensed and appointed to sell the same line of insurance d.) dividing commission on a life insurance with a licensed life insurance broker who regularly transacts life insurance

c.)

All of the following are correct about a family plan policy EXCEPT a.) term insurance is provided for children b.) the named insured has a whole life policy c.) only children living when the policy is issued are covered d.) the coverage for the spouse may be term or whole life

c.)

All of the following are reasons the insurance industry is subject to governmental regulation EXCEPT the a.) public trust aspect of the business b.) financial impact of the business on the economy c.) need to monitor the premium payment practices of the public d.) duty to protect the public due to the technical nature of insurance contracts

c.)

All of the following employed persons who have no employee-sponsored retirement plan would be eligible to set up and contribute to a traditional IRA EXCEPT a.) Miriam, age 26, secretary b.) Brent, age 40, medical technician c.) Edna, age 72, nurse d.) Jack, age 60, plumber

c.)

All of the following statements about SIMPLE plans are correct EXCEPT a.) an employer may establish a SIMPLE plan if another qualified plan is not already in place b.) they can be structured as an IRA or as a 401(k) cash or deferred arrangement c.) an employer must make a nonelective contribution of 2 percent of compensation on behalf of each eligible employee d.) only employers with no more than 100 employees can establish SIMPLE plans

c.)

All of the following statements are correct about the law for conversion (change of plan) EXCEPT a.) it applies to the conversion of industrial life insurance policies b.) conversion is permitted without evidence of insurability c.) the maximum amount of face value that can be converted to $2,000 d.) an insured can convert several industrial life insurance policies into one ordinary life insurance policy

c.)

All of the following statements regarding Roth IRAs are true EXCEPT a.) they provide for tax-free accumulation of funds b.) they limit contributions each year c.) they mandate distributions no later than age 70 1/2 d.) they are not available to those in the upper-income tax brackets

c.)

An insurance company can be any of the following EXCEPT a.) domestic and admitted b.) foreign and nonadmitted c.) domestic and alien d.) alien and nonadmitted

c.)

An insurance policy dividend can be all of the following EXCEPT a.) paid as a return of premium b.) paid as a division of surplus c.) paid by a nonparticipating policy d.) applied to pay premium

c.)

Bob, age 43, owns a traditional IRA and a Roth IRA. What is the maximum amount that he can contribute to both accounts in 2013 without being penalized? a.) $2,000 b.) $4,000 c.) $5,500 d.) $6,000

c.)

In which of the following ways is a beneficiary protected from the creditors of the deceased insured? a.) the proceeds of an insurance policy can always be claimed by the deceased insured's creditors b.) when the policy is made payable to the estate, the proceeds are protected from the creditors c.) if the policy is made payable to a named beneficiary, then the creditors can make no claim to the proceeds d.) the cash surrender value of a life insurance policy can be attached by an ordinary creditor

c.)

Robert and his employer agree on the purchase of split-dollar life insurance policy and the usual split-dollar approach to premium payments. Each year, the employer will contribute to the premium an amount equal to a.) one-half premium b.) the annual dividend c.) the increase in the policy's cash value d.) two-thirds of the premium

c.)

Rudy is eligible for full death, retirement and disability benefits under Social Security. His worker status is a.) completely insured b.) currently insured c.) fully insured d.) partially insured

c.)

The definition of "transacting insurance" includes all of the following EXCEPT a.) soliciting a contract of insurance b.) negotiating a contract of insurance c.) underwriting a contract of insurance d.) effectuating a contract of insurance

c.)

The general powers and duties of the Office of Insurance Regulation include all of the following EXCEPT a.) enforce the Florida Insurance Code b.) determine if an insurance company has violated the Insurance Code c.) enact statutes to govern the insurance industry d.) disseminate information regarding its activities

c.)

Three business partners individually agree to acquire the interest of a deceased partner and own life insurance on each of the other partners in the amount of his or her share of the business's buyout value. What is described here is a(n) a.) entity buy-sell plan b.) stock redemption buy-sell plan c.) cross-purchase buy-sell plan d.) 401(k) plan

c.)

Which of the following activities is NOT a violation of the Insurance Code? a.) charging a fee that is more than the premium stated in the policy b.) collecting premiums and depositing them in the agent's personal account c.) writing as much non-controlled insurance business as controlled business d.) offering a premium rebate if the insured contracts for other insurance business

c.)

Which of the following examples pertaining to Social Security benefits is CORRECT a.) Simon has a Social Security PIA of $700 at the time of his death. His surviving spouse will receive a lump-sum death benefit of $2,250 b.) Lola, age 30, has a daughter, age 10. Her husband, who is covered under Social Security, died last month following surgery. Both Lola and her daughter are entitled to receive monthly survivor benefits until her daughter reaches age 18 c.) Mason, who is married with one son, age 16, is a fully insured retired worker receiving Social Security benefits. In addition, his spouse is eligible for benefits at age 62 and his son, normally, is eligible for benefits until he is 18 years old d.) Arlene, the 20 year old daughter of a fully insured retired worker, becomes totally and permanently disabled from a car accident. Because her disability occurred after age 16, Arlene is not eligible for her father's Social Security benefits

c.)

Which of the following is a requirement for a participating life insurance policy? a.) pays dividends to stockholders b.) assesses premiums against stockholders c.) pays dividends to policy holders d.) may be converted to a term life policy

c.)

Which of the following is correct about the replacement rule? a.) the replacement rule applies only to health insurance policies b.) the agent has 90 days from the effective date to deliver a Buyer's Guide c.) instructions regarding the rule are available from appointed life insurers d.) up to 30 days is allowed for a full refund of premium

c.)

Which of the following rules would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a.) conversion rule b.) disclosure rule c.) replacement rule d.) reinstatement rule

c.)

Which of the following scenarios pertaining to IRAs is not CORRECT? a.) June has accumulated $30,000 in her IRA. At age 53 she withdraws $2,500 to take a vacation. She will have to include the $2,500 in her taxable income for the year and pay a $250 penalty. b.) Bradley, age 72, is covered by an employer-sponsored retirement plan. He cannot establish a traditional IRA. c.) Peter inherits $15,000 in IRA benefits from his father, who died in 2008. Peter can set up a tax-favored rollover IRA with the money and defer current income tax on the benefits received. d.) Walter is age 60. He may take his distribution from his IRA without having to worry about an early withdrawal penalty.

c.)

Which of the following statements regarding deferred compensation plans is CORRECT? a.) a deferred compensation plan must always be designed as a qualified plan b.) life insurance is not a permissible funding vehicle, but annuities are. c.) they permit a business to provide extra benefits to officers, executives and other highly paid employees d.) a deferred compensation plan must be available to all employees who at least 21 years old and have one year of service to the business

c.)

Which of the following would be considered an unfair claim practice? a.) implementing standards for proper investigation b.) denying a claim after reasonable investigation of the facts c.) misrepresenting insurance policy provisions affecting a loss d.) acting promptly on claims communication

c.)

A distribution received from an employer-sponsored retirement plan or from an IRA is eligible for a tax-free rollover if it is reinvested in an IRA within how many days after the distribution? a.) 20 b.) 30 c.) 45 d.) 60

d.)

A fraternal life insurance organization can operate as any of the following EXCEPT a.) corporation b.) society c.) association d.) charitable trust

d.)

A trusteeship group insurance policy a.) covers all full time employees of a single employer b.) insures the debtors of one lender c.) covers students participating in sports d.) insures employees of two or more employers

d.)

All of the following are correct about the policy loan interest rate EXCEPT a.) an adjustable rate of interest can be charged b.) an insurance company can charge a fixed rate of up to 10% c.) adjustable interest rates are based on a published index d.) there are no restrictions or limitations on policy loan interest rates

d.)

All of the following are eligible groups under Florida law EXCEPT a.) associations of licensed professionals b.) debtors of a single creditor c.) members of a credit union d.) groups established to buy insurance

d.)

All of the following groups are eligible for group life insurance EXCEPT a.) employer and employee groups b.) labor unions c.) trustee groups d.) social clubs

d.)

All of the following should be eligible to establish a Keough retirement plan EXCEPT a.) a dentist in a private practice b.) partners in a furniture store c.) a sole proprietor of a jewelry store d.) a major stockholder-employee in a family corporation

d.)

All of the following statements about a participating policy are correct EXCEPT a.) premiums may be higher than those for a nonparticipating policy b.) the surrender values are generally the same as a nonparticipating policy c.) policy dividends may be paid in cash d.) policy dividends paid in cash are taxable

d.)

All of the following statements are correct about policy loan interest rates EXCEPT a.) an insurance company can charge a fixed rate of interest up to a maximum of 10%, with some restrictions b.) an adjustable interest rate can be used if the insurance company follows a national corporate bond index c.) an adjustable interest rate can be used if the limit is based on the average monthly published interest rate set by Moody's d.) policy loan interest rates were set by the Office of Insurance Regulation in 1933 and may not be changed

d.)

Bill is self-employed. The FICA tax rate for Bill is a.) 6.2% b.) 7.65% c.) 15% d.) 15.3%

d.)

Ellen works part time to supplement her family's income. Last year, she earned $6,500 and worked at least part of every month. With how many quarters of coverage will she be credited? a.) one b.) two c.) three d.) four

d.)

Herbert and Olga, both age 48, have been married for 10 years. They have no children, and each has a well paying job. However, neither is covered by an employer retirement plan. What is the maximum amount they may set aside together in tax-deductible, traditional IRA funds in 2013? a.) $4,000 b.) $5,000 c.) $8,000 d.) $11,000

d.)

If David sets up a traditional IRA, what is the maximum contribution he can make and deduct from taxes in 2013? a.) $1,000 b.) $3,000 c.) $4,000 d.) $5,500

d.)

Sliding consists of all the following activities EXCEPT a.) telling an applicant that certain ancillary coverage is required by law when it is not b.) advising a client that certain ancillary coverage is included at no additional charge when such a charge is required c.) charging an applicant for ancillary coverage over the cost of coverage applied for without the applicant's consent d.) recommending that a client take cash value from one policy to make other investments

d.)

Variable life insurance policies involve all of the following EXCEPT a.) an approach to counter the effects of inflation b.) compliance with the Securities and Exchange Commission c.) benefits that vary with investment experience d.) a traditional approach to term life insurance

d.)

Which of the following applies to retirement plans in Florida? a.) they are regulated by the Chief Financial Officer b.) no plan may qualify for favorable tax treatment c.) only funding and participation methods are regulated d.) federal ERISA regulations override Florida law

d.)

Which of the following phrases best describes vesting? a.) the time at which the worker meets the eligibility requirements for plan participation b.) the age at which an employee must begin to make withdrawals from retirements plans c.) the right of a worker's spouse to be considered in retirement income needs d.) the employee's right to funds or benefits, contributed by the employer, should he or she leave that employer

d.)

Which of the following statements about 401(k) plans is CORRECT? a.) all of a company's employees must participate in the plan b.) an employee's deferred contributions become nonforfeitable according to the plan's vesting schedule c.) employer contributions are included in the employee's income for the year d.) there is a limit on employee benefits

d.)

Which of the following statements regarding key-person insurance is NOT correct? a.) key-person life insurance indemnifies a business for financial loss caused by the death of a key employee or employee executive b.) the business may borrow from the cash value of a permanent key-person life insurance policy c.) the policy's death proceeds received by the business are not taxable d.) premiums for a key-person life insurance policy are a tax-deductible expense to the business

d.)

All of the following are characteristics of a mutual insurance company EXCEPT a.) management elects the board of directors b.) the policy owners are the owners of the company c.) dividends, if any, are paid to policy owners d.) it must be incorporated in order to operate

a.)

Which of the following concepts regarding ways to determine the proper amount of life insurance is CORRECT a.) the most popular method today for determining the proper amount of life insurance is the human life approach b.) when using the needs approach to determine the proper amount of life insurance to purchase, non-insurance-type assets, such as pension benefits and personal savings, are not factors in the calculation c.) the needs approach considers only the most immediate financial concerns, without regard for family financial goals such as college education for children or retirement income for a surviving spouse d.) there are two basic approaches to determining the amount of life insurance that is needed: the human life value approach and the needs approach

d.)

Which of the following is the correct number of lives required in Florida for a group life insurance policy? a.) eight b.) three c.) ten d.) no minimum

d.)

Which of the following penalties imposed upon the agent by the Chief Financial Officer does NOT match the offense? a.) failure to answer a subpeona can result in $1,000 fine b.) violation of the Insurance Code can result in suspension of license c.) a fraudulent act can result in prosecution by the Attorney General d.) violation of a cease-and-desist order can result in a fine of no more than $2,500

d.)