Insurance Test

Cost of living rider

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? Value Adjustment Rider Return of Premium Rider Inflation Rider Cost of Living Rider

Guaranteed surrender value

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?

They must be part of the contract

All of the following are requirements for life insurance illustrations EXCEPT

The payments will stop when the annuitant dies

All of the following statements are true regarding installments for a fixed amount EXCEPT

The policy is owned by the company

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

Simplified Employee Pension Plan (SEP)

An IRA purchased by a small employer to cover employees is known as a

FINRA

An agent selling variable annuities must be registered with

Profit sharing plan

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

Decreasing term

An individual just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

They are not included as income for the employee, but are taxable upon distribution

How are contributions to a tax-sheltered annuity treated with regards to taxation?

Unilateral

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Flexible Premium Deferred Annuity

The annuity purchased with multiple payments, whose benefit is paid more than one year after the purchase is known as which type of annuity?

Interest only option

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. What settlement option should the policyowner choose?

The annuitant must be a natural person

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

Insurance

What do individuals use to transfer their risk of loss to a larger group?

Lump sum

What is the other term for the cash payment settlement option?

When the insured reaches age 100

When would a 20-pay whole life policy endow?

Pure life provides payments for as long as the annuitant is alive

Which of the following best describes a pure life annuity settlement option?

Consumer report

Which of the following includes information regarding a person's credit, character, reputation, and habits?

The employees receive individual policies

Which of the following is INCORRECT concerning a noncontributory group plan?

Money borrowed from the cash value is taxable

Which of the following is NOT true regarding policy loans?

Straight life

Which of the following policies would be classified as a traditional level premium contract?

To help the insured understand all aspects of the contract

Why should the producer personally deliver the policy when the first premium has already been paid?