Northwestern Life Insurance

Coverage amounts

A factor an insurer may consider when deciding whether to require AIDS testing during underwriting?

Shouldn't be eligible to establish a Keogh retirement plan

A major stockholder-employee in a family

the policy has been is in force less than 1 year

A misrepresentation or false warranty by an insured will NOT void th policy unless

Important Notice Regarding Replacement of Life Insurance

A producer must present this to an applicant at the time of application when a life insurance policy is to be replaced?

within 30 days of an interest payment

A uinversal life policy may be surrendered for its cash value

100% of the amount paid to the insurer

A whole life insurance poilcy is returned to the issuing insurer 9 days after delivery by the agent. What portion of the premuim will be refunded to the poilcyowner?

It will be entirely tax free.

Karl, age 61, has owned a Roth IRA for 6 years. He has decided to take a large distribution form it to purchase a boat. what will be the tax consequnce of this distribution?

Immediate and fixed

Ben invests in an annuity that begins making payments of $2500 a month for as long as Ben lives. Ben's annuity is

Roth IRA

Contributions to which of the following qualified retirement plans are NOT tax deductible?

Roth IRA

Does not offer tax-deductible contributions

cannot be converted to an individual's or firm's own use

Funds held by an insurance producer in a fiduciary capacity

protecting insureds in the event of a memeber insurance company's insolvency

Guaranty associations have been created for the purpose of

return of premium term

If a poilcyowner receives back all the money paid for a life insurance poilcy at the end of the policy term in 20 years, they purchased a

Statement of good health

If the intitial premium is not paid until the policy is deilivered, what must the agent obtain?

the policy and application

In life insurance, the enitre contract is considered to be

Incontestable

In life insurance, the insurer is prevented from rescinding the contract more than 2 years from its effective date for almost all reasons. The policy has become

lump sum in cash

In the absence of any other election, the automatic settelment option in life insurance policy is

at the time the policy is written, but not at the time of death

Insurable interest in a life poilcy must exist

offering payment of approved claims within 30 days after affirming liability

Is not an unfair claims practice by an insurance company

Most individual life insurance policies and annuities

Life insurance replacement regulations apply to which of the following kinds of insurance?

Twisting

Misrepresenting, in a replacment sale, any of the terms, advantages, or dividneds of an insurance contract is an unfair trade practice known as

may be subject to unfavorable tax rules

Money taken out of a modified endowment contract (MEC)

the insured's annual income

NOT a basic premium factor

At all times, agents must uphold their fiduciary duty. Best example?

Promptly submitting an insureds premium to the home office.

59 1/2

Qualified retired plan distributuions are said to be premature if made before the participant attainds age

Employer contributions are taxable to the employee in the year of contribution

Qualified retirement plan that is NOT correct?

level death benefit, increasing premium

Renewable life insurance may be described as

Authority

States give an insurer permission to transact insurance with a certificate of

accumulation and annuitization

The 2 major phases of an annuity are

Fixed Amount

The beneficiary of a life poilcy is recieving monthly income at the rate of $3000 per month until principal and interest are exhausted. What settlement option was selected?

A 1035 exchange

The conversion of cash value life insurance policy into an annuity in a nontaxable transaction is generally known as

The Law of Large Numbers

The large the number of the individual risks combined into one group, the more accurate the prediction of the amount of loss in any given period

the Spendthrift clause

The law that shields death benefit proceeds from attachment by the creditors of a deceased insured or their beneficiary may be described in the policy as

Policyowners

The owners of a mutual insurance comapany

Term life insurance policy

The policy has a face amount of $100,000, every 5 years the premium increases, and at the end of 20 years the policy terminates with no cash value

Demutualization

The process by which a mutual insurer is transformed into a stock insurer is known as

Annuity period

The time during which pahyments are made to the anniutant

substandard

The underwriting classification that will have the highest premium is

Preferred

The underwriting classification which is the most favorable to an insured is

Pure risks

Type of risk that is insurable

Ethical conduct

Using simple, laymans language while discussing insurance concepts, refraining from making inaccurate remarks about the other agents or insurers, and placing customer interests above ones own are all examples of an agents

Cheryl purchased an annuity 5 years ago. She makes annual after-tax contributions of $4000 per year and plans to retire at age 66. In order to determine the value of her annuity today, the agent tells her to multiply the number of accumulation units in her seperate account by the NAV of the subaccount. What type does Cheryl own?

Variable annuity

A refund of divisible surplus to owners of participating poilicies

What is the best description of dividends in a life insurance policy?

Non-deductibility of premiums, non-taxable death benefits

What is the usual federal income tax treatment of individual life insurance

Reduced paid up insurance

What nonforfeiture option allows a whole life policyowner to convert their insurance to a paid up poicy with a lower face amount than the original policy?

Keogh

What retirement pan could a sole proprietor pay into as long as full time employees are also covered?

False

What term best desribes a representation that does NOT correspond to the facts?

An annuity policy

What type of contract is designed to first accumulate and then distribute funds overa period of time?

Decreasing term

What type of insurance would a person select as the most efficient method of paying the outstanding debt on their home in the event of death?

Unlawful discrimination

When an insurer changes a higher rate for insurance based on an insureds race, religion, or national origin, it is considered

$30,000

When she was 40 years old, Diane bought a $30,000 life paid-up at age 70 policy. The policy had a $21,000 cash value when she died at age 75. The amount paid to her beneficairy was

underwriting may require additional information to assess the risk

When the answer to a typical medical history quwestion in a life insurance application is "Yes", the usual result is

Variable annuity

Which of the following products pays based on units?

Guaranteed insurability/future option

Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?

Annuity death benefits, in whole or in part, are taxable to the beneficiary

Which of the following statements concering fedral income taxation of annuities is correct?

Limited pay policy

the type of policy that is paid up after a specified period of years and endows at age 100

Life Income

what annuity settlement option would have no residual benefit to the beneficiary after the annuitant dies

Twisting

when the producer makes an unfair policy comparison in order to get the insured to lapse 1 policy and purchase a new policy with another insurer

purchase of a vacation home

All of the following are allowable reasons to take an early withdrawl from an IRA and not pay a tax penalty EXCEPT

to protect insurers and agents against dishonest applicants

All of the following are reasons for insurance and annuity replacement laws EXCEPT

a minimum rate of interest is guaranteed to be credited to the annuity values

All of the following statements regarding variable annuities are corect EXCEPT

representations and not warranties

All statements and descriptions in any application for an insurance poilcy by an insured are deemed to be

An insurer assigns a premium to an applicant because of the studies that suggest members of the applicants race have a shorter-than-average life expectancy

An example of unfair discrimination is best demonstrated by which of the following situations

Howard's policy will have a higher face amount than Angelo's, but Angelo's face amount will increase at each renewal.

Angelo and Howard each appy for life insurance with an annual premuim of $500. Both are standard risks. Angelo buys a 10 year renewable term poilcy, and Howard buys whole life. what is not true?

Exclusion ratio

Annuity payment are taxable to the extent that they represent interest earned rather that capital returned, Which method is used to determine the tax-free portion of each annuity payment?

A replacement transaction

Any life transaction in which it is known that a policy will be lapsed or surrendered or reissued with a decrease in cash value is considered to be

Payments begin at the next payment cycle

Which of the following statements is CORRECT about an immediate annuity?

Monthly

Which premium payment mode is the most expensive?

Interest Only

Which settlement option allows only the earnings on the death benefit to be paid to the beneficiary?

They are not taxable and are not guaranteed

Which statement is an accurate description of life insurance policy dividends?

Unilateral

Which type of contract iso nly one party's promises enforced

An ordinary life insurance policy

Which type of policy typically only covers 1 life?

premium payments increase gradually over the term

With respect to a 10 year level term poilcy

twisting

a form of misrepresnetation where an agent unfarily compares poilicies in order to persuade a prospective insured to lapse his current plan best describes

Controlled Business

a producer who writes a majority of his insurance business on the employees and officers of a restaurant owned by his wife is transacting