Insurance test 3

funds exceeding the premium paid are taxable as ordinary income

Which is TRUE about the cash surrender nonforfeiture option? - the policy remains active for some time after the policyholder opts for cash surrender - the policyholder receives the original cash value of the policy - funds exceeding the premium paid are taxable as ordinary income - after the cash surrender, the insured is covered for a grace period of one month

return the application to the applicant for completion

Which is the appropriate action b the insurer if a prospective insured submitted an incomplete application? - issue a policy anyway since the application has been submitted - ask the producer who solicited the policy to complete and resign the application - fill in the blanks to the best of the insurer's knowledge - return the application to the applicant for completion

standard

Which of the following is a risk classification used by underwriters for life insurance? - excellent - standard -poor - normal

it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? - each child covered must show evidence of insurability - it is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age - it is permanent insurance - the policy covers only the natural children of the insured

straight life

Which of the following policies would be classified as a traditional level premium contract? - variable universal life - straight life - adjustable life - universal life

universal life

Which of the following types of policies allow the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? - variable life - adjustable life - universal life - flexible life

if the father is disabled for more than 6 months

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? - if the father is disabled for at least a year - if the daughter is disabled for more than 3 months - if the daughter is disabled for any length of time - if the father is disabled for more than 6 months

profit sharing plan

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? - HR 10 plan - Profit sharing plan - 401(k) plan - tax-sheltered account plan

$100,000

An individual purchased a $100,000 Joint life policy on himself and his wife. 8 years later, he died in an automobile accident. How much will his wife receive from the policy? - nothing - $50,000 -$100,000 -$200,000

conditional

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? - aleatory - unilateral - conditional - contingent

lump sum

If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? - fixed amount - lump sum - life income - fixed period

settlement option

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a - nonforfeiture option - rollover - settlement option - nontaxable exchange

it is only taxable if the cash value exceeds the amount paid for premiums

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? - it is only taxable if the cash value exceeds the amount paid for premiums - it is not considered to be taxable - it is taxable only if it exceeds the amount paid for premiums by 50% - it is automatically taxable

income for 2 or more recipients until they die

Life income joint and survivor settlement option guarantees - payment of interest on death proceeds - payout of the entire death benefit - equal payments to all recipients - income for 2 or more recipients until they die

Settlement options

Methods used to pay the death benefits to a beneficiary upon the insured's death are called - Beneficiary provisions - Death benefit options - Settlement options - Designation options

premium receipt

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a - warranty - premium receipt - statement of good health - backdated receipt

$100,000

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? - $0 -$50,000 (50% of the policy value) - $100,000 -$300,000 (triple the amount of policy value)

pure life

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? - life with guaranteed minimum - installment refund - joint and survivor - pure life

Depreciation period

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? - pay-out period - liquidation period - depreciation period - annuitization period

Option B

Which option for Universal life allows the beneficiary to collet both the death benefit and cash value upon the death of the insured? - Corridor option - Variable option - Option A - Option B