Life Insurance 2.0
A temporary license in this state is valid for a maximum of
180 days.
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed as required
If a licensee does not earn 24 hours of Continuing Education by the license review date, the license will be suspended for up to how many days?
90 days
Which of the following provisions would not be allowed as a part of a life insurance policy issued in Michigan?
A provision that allows the effective date of the policy to be backdated up to 8 months in order to effect a lower premium rate for the insured
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
Employer contributions made to a qualified plan
Are subject to vesting requirements.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
Automatic premium loan
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
Which of the following is TRUE about credit life insurance?
Creditor is the policyowner.
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death.
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?
Distributions are taxable.
What provision in a life insurance policy would allow the insurer, after the death of the insured, to pay benefits to a person not named in the policy as beneficiary?
Facility of payment clause
What provision in an insurance policy extends coverage beyond the premium due date?
Grace period
The death benefit under the Universal Life Option B
Gradually increases each year by the amount that the cash value increases.
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
The Commissioner may waive prelicensing requirements or examinations for someone who has been a licensed insurance producer
In the preceding 12 months.
Annually renewable term policies provide a level death benefit for a premium that
Increases annually.
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
Interest only
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. Which settlement option should the policyowner choose?
Interest only option
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue.
In Modified Life policies, what happens to the premium?
It is level at the beginning and increases after the first few years.
Which of the following best describes annually renewable term insurance?
It is level term insurance.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium.
Which of the following is usually true of a participating life insurance policy?
It may pay dividends to policyowners.
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor.
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
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
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay a reduced death benefit
Which of the following will be included in a policy summary?
Premium amounts and surrender values
All of the following are examples of risk retention EXCEPT
Premiums.
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it's in the best interest of the client.
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as
Rebating.
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
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy?
Return of premium
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
Revocable beneficiary.
All of the following are beneficiary designations EXCEPT
Specified.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on accumulation
The initial amount of credit life insurance may NOT exceed
The amount to be repaid under the contract.
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
Which of the following individuals could qualify for a temporary insurance license?
The designee of a producer that is called to active service with the Navy
Which of the following describes the tax advantage of a qualified retirement plan?
The earnings in the plan accumulate tax deferred.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy.
Which of the following is true regarding a market value adjusted annuity?
The owner is guaranteed a fixed interest rate for a specific period of time.
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life policy.
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
The Waiver of Cost of Insurance rider is found in what type of insurance?
Universal Life
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
When would a 20-pay whole life policy endow?
When the insured reaches age 100