LIFE INSURANCE EXAM PREP

How long does an individual have to "rollover" funds from an IRA or qualified plan? A) 60 days B) 90 days C) 120 days D) No limit

A) 60 days * in IRA's and qualified plans, the time limit for rollover funds is 60 days, or the funds could be subjected to income taxes and a penalty tax

S has a whole life policy with a premium due soon. Which Provision would keep the policy in force if S does not make the required payment and the policy has adjustable cash value from which the premium payment can be made? A) Automatic Policy loan B) Assignment C) Grace Period D) Waiver of premium

A) Automatic Policy loan

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level of risk. Which product would S be advised to purchase? A) Equity index insurance B) Endowment C) Return of premium index D) Return of premium policy

A) Equity index insurance * this yields greater gains than bonds but will still protect the principal with minimum level of risks

Which of these is NOT a reason for purchasing life insurance on the life of a minor ? A) if both parents were to die, it would provide death benefits to the child B) provides funds for final expenses of the child were to die C) provides living benefits for the child's college education D) provides child with insurance now, in case the child becomes uninsurable later

A) If both parents were to die, it would provide death benefits to the child *An insurance policy on a child would not pay any benefits if one or both parents died (All the other choices are valid reasons for buying life insurance on a child)

Which statement is correct regarding the premium payment schedule for whole life policies? A) Premiums are payable throughout the insureds lifetime/coverage lasts until death of the insured B) Premiums are payable for a set period/ coverage expires at that point C) Premiums are payable until age 65/ coverage lasts a lifetime D) A Single premium is paid at time of application/ coverage last until retirement

A) Premiums are payable throughout the insureds lifetime/ coverage lasts until death of insured

What is the suicide provision designed to do? A) decline an applicant who is contemplating suicide B) safeguard the insurer from an applicant who is contemplating suicide C) protect the insurer from ever paying a claim that results from suicide D) allows the insurer the option to pay a death benefit in the event of suicide

A) Safeguard the insurer from an applicant who is contemplating suicide *the purpose of a suicide provision is to protect the insurer against the purchase of a policy in contemplation of suicide

Upon delivery of a rated life insurance policy, the producer must obtain each of the following EXCEPT A) Signed HIPAA disclosure B) Signed amendment C) Signed statement of Good Health D) The required Premium

A) Signed HIPAA disclosure * this document should be taken at the time of sale with the application

Which type of plan allows an employer to give money to an employer for buying a life insurance policy and also permits the employee to select the beneficiary? A) Split-dollar plan B) Employer purchase plan C) key employee plan D) Deferred compensation plan

A) Split- dollar plan * A split-dollar plan is a(n) arrangement where an employer and a(n) employee share in the cost of purchasing a life insurance policy on the employee. The employee is also allowed to name the policy the beneficiary

What would the medical information bureau (MIB) identify A) Testing Positive for marijuana use from a previous screening B) Existing life insurance coverage with other carriers C) Credit Scores D) Primary physician

A) Testing positive for marijuana use from a previous screening

Which of the following statements about non contributory employee group life insurance is FALSE A) a minimum number of employees must be covered B) all eligible employees must be covered C) No evidence of insurability required D) Must have insurability rights

A) a minimum number of employees must be covered

Under federal tax laws, what is the tax treatment for an employer providing 50,000$ of a contributory group term life plan to all its eligible employees? A) portion of the premiums paid for by the employer may be a tax deduction B) portion of the premiums paid for by the employee may be a tax deduction C) portion of the death proceeds are taxable to the beneficiary D) portion of the death proceeds are taxable to the estates

A) portion of the premiums paid for by the employer may be a tax deduction

J is 35 years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? A) Life Paid-up qt age 70 B) 20-pay life C) Straight life D) increasing term to age 65

B) 20-pay life * The shorter the term, the faster the cash value growth

A policy loan is made possible by which of these insurance policy features? A) Extended term provision B) Cash value Provision C) Owners rights Provision D) Consideration Clause

B) Cash Value Provision

Which provision allows the policy owner to change a term life policy to a permanent one without providing proof of good health? A) Modification B) Conversion C) Exchange D) Adjustable

B) Conversion

The underwriting process involves all of these EXCEPT ? A) Credit Report B) Policy loan C) Risk classification D) Application

B) Policy loan * A policy loan is not a factor in the underwriting process

J chooses a monthly premium payment mode on his whole life insurance policy. Which of these statements is correct ? A) The gross premium is higher on a monthly payment mode as compared to being paid annually B) The gross premium is lower on a monthly payment mode as compared to being paid annually C) The Cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual basis D) the face amount on a life policy paid on a monthly basis is higher than the one paid on an annual basis

B) The gross premium is lower on a monthly payment mode as compared to being paid annually

The amount of coverage on a group credit life policy is limited to what? A) Half of the insureds total loan value B) The insureds total loan value C) 75% of the insureds total loan value D) $25,000

B) The insureds total loan value

A 42-year-old executive Wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need? A) Endowment at age 65 B) Universal Life C) Graded benefit whole life D) Modified whole life

B) Universal Life * this policy is characterized by flexible premiums and an adjustable death benefit

The Investment gains from a Universal Life Policy usually go towards what? A) the death benefit B) The dividends C) The cash value D) paying off a policy loan

B) the dividends

On delivery of a policy, a signed statement of good health is typically requested if ? A) a conditional receipt was given to the applicant B) The quarterly premium payment mode was selected C) the policy contains a guaranteed insurability rider D) The application was submitted without the initial premium

D) The application was submitted without the initial premium

T has an annuity that guarantees an income for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this ? A) Fixed Certain B) joint and full survivor C) life annuity with period certain D) installment refund

C) Life annuity with period certain

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? A) 403(b) plan B) deferred premiums C) Single Premium D) Period Certain

C) Single Premium * immediate annuities are purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date

Variable annuities may invest in all of the following EXCEPT? A) common stock B) money market securities C) insurer's cooperate business account D) junk bonds

C) insurers cooperate business account

Which requirement must be met for an association to be eligible for a group life plan? A) group was formed for a purpose other than acquiring insurance B) group must establish a President C) group must have at least 10 members D) group was formed for the purpose of acquiring insurance

D Group was formed for the purpose of acquiring insurance

Which Provision is NOT a requisition in a group life policy? A) Conversion B) Grace Period C) incontestable D) Accidental

D) Accidental * an AD&D Provision is not required in a group life policy

The accelerated death benefit provision in a life insurance policy is also known as a(n) A) 1035-exchange B) inter vivid gift C) Non-forfeiture option D) Living Benefit

D) Living Benefit

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT? A) type of insurance B) S's attained age C) dividend amount used toward purchase D) beneficiary's age

D) beneficiary's age

How are the Roth IRA normally taxed? A) 10% penalty tax is applied B) Taxed as ordinary income C) Capital Gaines tax is applied D) distributions are received tax free

D) distributions are received tax free

Quarterly premium payments increase the annual cost of insurance because A) insurer risk exposure is greater B) interest to the insurer is increased while administration costs are decreased C) mortality costs are greater D) interest to the insurer is decreased while the administrative costs are increased

D) interest to the insurer is decreased while the administrative costs are increased

The common disaster clause Provides that if both the insured and the named beneficiary were to die in a common accident, which of the following is true? A) This clause prevents the payment of proceeds to the insured's estate B) this clause provides the payment of proceeds To the beneficiary's estate C) The estate taxes in the insured's estate may be reduced D) The estate taxes in the beneficiary's estate may be reduced

D) the estate taxes in the beneficiary's estate may be reduced