LIFE EXAM

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incontestability clause

insurer cannot contest a claim based on misrepresentation or concealment by policyowner after the policy has been in force for 2 years

policy summary

insurer must provide a policy summary upon delivery of the policy

fixed annuities

insurer's general account guaranteed minimum interest rate

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

interest only

IIPRC

interstate insurance product regulation compact a single point of filing for the review and approval of certain insurance policy forms

variable annuities

investment in seperate accounts not guarantee of investment performance pays in units

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

joint life annuity

insurance policy

legal and binding contract

which two terms are associated directly with the premium

level or flexible

Adjustable life

level premiums and death benefits tied to the economy

term coverage

level, increasing, or decreasing

Which of the following best describes the difference between Pure Life and Life with Guaranteed Minimum settlement options?

life with guaranteed minimum will pay the remaining principal to the beneficiary

Jumping Juvenille policy

low face amount in early years then increase when the insured reaches a specific age

endowment policy

lowest amount of protection for same premium

misrepresentation

lying

The Interstate Insurance Product Regulation Compact is a contract between

member states and serves the insurers

Fixed annuities provide all of the following

minimum guaranteed rate of interest, future income payments, equal monthly payments for life

Readability standards

minimum score of 40 on Flesch

Life insurance proceeds

proceeds paid to a beneficiary are income tax free

promissory warranty

promise to do something if policy is activated

#80. If an insured continually uses the automatic premium loan option to pay the policy premium

the policy will terminate when the cash value is reduced to nothing

qualified annuity

favorable tax treatment

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

fixed amount

Single premium life insurance

generates immediate cash value

Qualified plan

grow tax deferred but at distribution will be taxed

Qualified plans

have tax benefits for both employer and employee has favorable tax treatment

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

illegal

pure life annuity

income is payable by the company only for the life of the annuitant

Employer contributions to a qualified plan

must have a vesting requirements

annuity period

period of time during which accumulated money is converted into income payments it may last for the lifetime of the annuitant

Permanent Insurance

permanent insurance provides lifetime death protection and a savings or cash value option.

An employer has sponsored a qualified retirements plan for its employees where the employer will contribute money whenever profit is reached

profit sharing plan

annuity

protect an individual from outliving his or her money?

Primary purpose of 401(k)

retirement

Equity indexed annuities

seek higher returns

SIMPLE Plans

small business not more than 100 employees

HR-10 (Keogh plans)

specifically for self-employeed and their employees qualified retirement plan IRS qualified retirement program A person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan.

Straight life annuity payments

stop at death

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend

straight life

The advantage to qualified plans to employers is

tax deductible contributions

Installments for a fixed period

the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be

In a life settlement contract, whom does the life settlement broker represent?

the owner

captive agent

An insurance producer who by contract is bound to write insurance for only one company or group of companies is classified as a/an

Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain?

Individual

A life insurance policy has a legal purpose if both of which of the following elements exist?

Insurable interest and consent

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

Which of the following is NOT true about a group annuity?

It can be owned by individual employees.

Which of the following is true regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred. NOT: It would not occur in a deferred annuity.

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity

Jack and Jill are twins. When their grandfather died, he left each of them $100,000, which they each used to purchase an annuity. When they retire, since each select the life income option, which will receive the larger monthly annuity payment?

Jacks payment will be larger Because Jill's life expectancy is greater, her payments will be less.

Key Person Insurance

Key Person coverage may be funded by any type of life insurance.

Which of the following is true regarding a modified guaranteed annuity?

The owner is guaranteed a fixed interest rate for a specific period of time.

SIMPLE plan

tax defered until withdrawn

morale hazard

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard? A morale hazard is someone who has an indifferent attitude towards an insurance company.

Moral Hazard

Moral hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer. - an individuals tendency to be dishonest

Reinsurance manager

A "reinsurance manager" is any person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer.

A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose?

Joint and Survivor

When an annuity is written, whose life expectancy is taken into account?

annuitant

Defined Benefit Plans

-the amount of contributions made by the employer is determined by an actuarial formula - High-salaried employees with only a few years until retirement receive the highest contribution

After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within

20 days

How many hours of prelicensing education approved by the Commissioner must each applicant complete?

20 hrs

Within how many days of requesting an Investigative Consumer Report must an insurer notify the consumer in writing that the report will be obtained?

3 days

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 3%. During an economic downswing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholders?

3%

All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?

A 60-year-old man Among other factors, the annuity income amount is based upon the annuitant's age and gender. An annuitant whose life expectancy is shorter will have the largest income installments. In this example, an older man will have the shortest life expectancy.

The equity in an equity index annuity is linked to

An index like Standard & Poor's 500.

In a defined contribution plan,

The contribution is known and the benefit is unknown

If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to

$1,000

The owner of a life insurance policy dies, and no beneficiary is named. One of the owner's friends paid for part of the funeral costs. What is the maximum amount of money that the friend could be issued from the insurance policy?

$1,000 dollars

What is the maximum life insurance coverage available to the state residents through the Wisconsin State Life Insurance Fund?

$10,000

License renewal

$35, renewal is the end of the month you were born every 2 years

Life Insurance Tax

premiums not tax deductible cash growth is tax deferred

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?

$8,000, 60 days

Social security

- 40 credits (about 10 working years)

Rebating is an unfair trade practice and is regulated by law. Examples of rebating

- an agent offers the use of his lake house - an agent offers to share his commission - an agent offers tickets to sporting event

SEP - Simplified Employee Pension Plan

- ease of plan administration - limit participation to members - higher tax deductible

All of the following information about a customer must be used in determining annuity suitability

- tax status, financial experience, and annual income

"Free look"

10 days

No individual life insurance policy may be contested after it has been in force for

2 years

Re-Hearings

20 days to request

An intermediary who acts in the procuring of insurance on behalf of an applicant for insurance or an insured

insurance broker

aleatory

An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk. - exchange of unequal values

What is the grace period of a life insurance policy?

31 days

What is the minimum duration of the grace period in a life insurance policy?

31 days

For how many years must an agent keep the original certificates of completion of CE hours?

4 years

In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5 Years

When replacing a policy, an insurer must maintain a file containing copies of all statements for

5 years

adhesion

A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.

All of the following could own group life insurance

A group sponsored by an employer. An alumni group. A debtor group. NOT: a group needing low cost life insurance

Which of the following persons is not required to complete CE?

A limited lines intermediary with 40 years of continuous licensure

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?

A portion of the benefit up to a limit is tax free; the rest is taxable income

Human life approach

A projection of insurance needs that is based upon the capitalization of an applicant's future earnings is

employees that may use a 403(b) plan for their retirement

A school bus driver. A part-time classroom aide. The vice president of a charitable organization. Teachers and not-for-profit organizations.

Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?

Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

third party ownership

An insured couple purchases a life insurance policy insuring the life of their grandson. A company purchases a life insurance policy on their manager, who is an important part of the operation. When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company.

mutual

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Which of the following products will protect an individual from outliving his or her money?

Annuity

annuity certain

Annuity Certain option allows the annuitant to select the time period or the amount for the benefits. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Universal Life

Which of the following statements is true of insurance licensing in the state of Wisconsin?

Applicants must pass a state licensing exam.

needs approach

Attempting to determine how much insurance an individual would require based upon their financial objectives is known as

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed. - the annuitant assumes the risk on investment

Level Term Insurance

Both premium and face amount remains level throughout term of policy term policies do not develop cash values

Universal life

Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value.

immediate annuity

Can be purchased with a single premium and provides benefit payments immediately ex: winning the lottery

Your client owns a Market Value Adjusted Annuity. In order to pay for a series of large, unexpected medical bills, he decides to surrender his policy prematurely. Which of the following will determine the penalty that that annuity owner will have to pay?

Current interest rate at the time of surrender

Notice regarding replacement

During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

Endowment policy: the cash value in an endowment has to build up faster since the funds are intended to be used while the insured is alive

Ann is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

Equity Indexed Annuity.

An agent selling variable annuities must be registered with

FINRA

Pure Risk

I loose or I do not loose

Speculative Risk

I win or I loose, not insurable

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?

Installment for a fixed period

Essentials of an insurance contract

Legal Purpose Acceptance competent parties consideration accepted offer

NAIC

National Association of Insurance Commissioners - make recomendations

A prospective deferred annuity owner is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following?

Nonforfeiture option guarantees that the owner will receive a surrender value of the contract

unilateral contract

One-sided; only one party makes an enforceable promise

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

annuity period

PAYING OUT each payment is partially taxable

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

Permanent Life insurance

Decreasing Term Insurance

Premiums remain level, death benefit decreases

Increasing Term Insurance

Premiums remain level, face amount increases

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitants life and ceases at the annuitants death?

Pure Life

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

Which of the following would help prevent a universal life policy from lapsing?

Target Premium

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner

Annuities differ from life insurance in all of the following ways EXCEPT

The annuitant must be living to collect. There is no stated amount of death benefit. They can be used in a qualified retirement plan. NOT: They are purchased with premiums.

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is true?

The beneficiary will receive the greater of the money paid into the annuity or the cash value

consideration

The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss. ex: Representations on the application Submitting a Statement of Good Health Premium payment paying claims

#95. Which of the following statements about group life is correct?

The cost of coverage is based on the ratio of men and women in the group.

When a fixed annuity owner pays his/her insurance company a monthly annuity premium, where is this money placed?

The insurance company's general account

Transfer

When an individual purchases insurance, what risk management technique is he or she practicing?

When do full Social Security retirement benefits begin?

When the worker reaches age 65 and has earned the required amount of work credits.

Fraternal benefit society

Which of the following entities is not an insurer, but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?

Family Maintenance

Whole life pays a lump sum, and level term pays monthly benefits for the predetermined years of the policy A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?

family income policy

Wilma owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a rider.

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?

Withdrawn amounts are taxed on a last in, first out basis.

Are insurance company underwriters allowed to discriminate? A

Yes, but not unfairly

All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?

a 60 year old man

joint life annuity

a couple receives a set amount of income from their annuity, when the wife dies the husband no longer gets annuity payments

extended term

a nonforfeiture option with the highest amount of insurance protection

reinsurance broker

a person, other than an officer or employee of the ceding insurer, who solicits, negotiates, or places reinsurance cessions on behalf of a ceding insurer?

All of the following benefits are available under Social Security EXCEPT

a) Old-age and retirement benefits. b) Disability benefits. c) Death benefits. welfare benefits

The policyowner of a life insurance policy forgets to pay his monthly premium and then dies 10 days later. Which of the following is true?

a) The policy will pay full death benefits, less the premiums that were due.

Federal tax advantages of a qualified plan

accumulate on a tax deferred basis contributions are not counted as income to employee employer contributions are tax deductible NOT: At distribution, all amounts received by the employee are free of taxes.

Peril

actual cause of loss

authorized insurer

admitted

illustrations

agent and applicant are required to sign

express authority

agents contract with the principal

viatical settlement

allows an insured with a life-threatening condition to sell his/her existing policy in order to receive benefits when they are most needed.

ROTH IRA

allows contributions to continue past 70.5 and does not force distributions to start at age 70.5

guaranteed insurability option

allows the insured to purchase specific amounts of additional insurance at specific times without evidence of insurability

Family Term Rider

an amount of insurance on every family member

A Universal Life Insurance policy is best described as

an annually renewable term policy with a cash value account

Who can make a fully deductible contribution to a traditional IRA?

an individual not sponsored by an employer-sponsored plan

Under the 401(k) bonus or thrift plan, the employer will contribute

an undetermined percentage for each dollar contributed by the employee

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?

annuitant must be a natural person

In an annuity, the accumulated money is converted into a stream of income during which time period?

annuitization period

straight life annuity

annuity payments to the annuitant for as long as she or he lives, payments stop at death

affirmative warranty

answered based on application

Deferred Compensation Funding

any employer retirement, savings, or other deferred compensation plan that is not a qualified retirement plan.

What form of life insurance may be used to fund a buy-sell agreement

any form of life insurance

senior consumer

any person age 65 or older

intermediary

any person who earns a commssion directly or indirectly and solicits, negotiates, advices and places SNAP

Roth IRA

anyone with earned income no age limit contributions are not tax deductible but earnings are tax free

All of the following are true regarding tax-qualified annuities EXCEPT

employer contributions are not tax deductible

The term "fixed" in a fixed annuity refers to all of the following

equal annuity payments, amount and length of payments, guaranteed rate of interest It is NOT a death benefit

What describes a ledger or proposal used to show both guaranteed and non-guaranteed elements of the policy?

basic illustration

Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period. After the increase period, the premiums will

be level thereafter

Single premium immediate annuity

begin receiving income payments no later than 1 year

class designation

beneficiaries are not identified by name

SEP Simplified Employee Pension plan

benefit plan that is designed to be provided by a small employer for the benefit of the employees Larger amounts can be contributed Employer can contribute up to 3% of employees income

Which of the following is NOT true regarding an annuity certain?

benefits stop at an annuitants death

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

c) The benefit is received tax free.

Whole Life

cash accumulation

When Jerry purchased a life insurance policy, the agent dated the application 4 months prior. When asked by Jerry, the agent said he was allowed to backdate policies up to 6 months if it would

cause the insured to pay a lower premium

403(b) plan TSA

certain tax exempt employers that may provide a retirement plan for its employees

when both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

conditional

Annuities

contract between a policy holder and insurer lump sum funding insurer agrees to make periodic payments financial protection against living too long

All are defined benefit plans EXCEPT

contributions are tied to company profits

Qualified Retirement Plans

contributions by employer are tax deductible contributions grow tax deferred

An insurance producer just sold an insurance policy to his sister. What kind of business is this?

controlled

Which of the following will NOT be an appropriate use of a deferred annuity?

creating an estate

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, the report may contain the following:

credit history, habits, and prior insurance it may not include ancestry

Variable Universal Life

death benefit flexible face amount can be increased or decreased flexible premiums

Which of the following are NOT fundable by annuities?

death benefits

The following are considered exceptions to the early distribution rule:

death of the participant, the participant's disability, a divorce decree, as a series of equal payments (at least annually) over the participant's life expectancy, a loan from the plan, as part of a qualified rollover.

accumulation period

deferred annuities only PAYING IN - 10% penalty for pulling before 59.5

pure endowment

designed to payout the cash value like a retirement benefit commonly at age 65

payor benefit rider

determines when the premiums will be waived

10% tax penalty on distributions

distributions are made on a policy before 59.5

When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?

distributions are taxable

Nonqualified retirement plans

do NOT need IRS approval do NOT meet IRS requirements

Accidental Death rider

doubles death benefit accident must occur before specific age

Tax advantage to a qualified retirement plan

earnings in plan accumulate tax defered

tax sheltered annuity

excluded from employees current taxable income, but are taxable upon withdrawl only available to Certain groups of employees only.

Non qualified retirement plan

executive bonus

Nonqualified retirement plan

executive bonus plan

compulsive forfeiture

failure to comply with an insurance commissioner's order up to $5,000 a day

Group Life insurance

flat amount $10,000 employer may deduct premiums death benefits are always income-tax free

Jane is eligible for full death, retirement, and disability benefits under Social Security. Her worker status with Social Security is

fully insured

Multiple employer trust MET

group of groups for sole purpose of buying insurance - band together

Blanket life (group)

group of people during a short period of time

In life insurance policies, cash value increases

grow tax deferred

Fixed annuities

guarantee a minimum amount of interest to be credited to the purchase payment - company makes investments

Option A

has gradually increasing cash value and level death benefit

Installments for a fixed amount

has no life contingencies - a specific amount will be paid until funds are exhausted regardless if the person is dead or alive

straight whole life

have a level guaranteed face amount and a level premium for the life of the insured

qualified and nonqualified retirement plans

have taxation on accumulation

split dollar plans

helps one individual obtain life insurance at a cost lower than what would otherwise be

What is a primary difference between an IRA and an SEP?

much more money can be contributed to a SEP

an agents advertisements

must be approved by the agents boss

buyers guide to annuities

must be given before accepting the initial premium

Fair credit reporting act

must inform applicant within 3 days

#66. Using a class designation for beneficiaries means

naming beneficiaries as a group

To sell variable life insurance

need life insurance license and securities license

A woman divorces her husband at age 35 and collects distributions on her retirement plan as a result. What penalties will she have to pay?

none

Reduced paid-up

nonforfeiture options that provides coverage for the longest period of time

grace period

not less than 31 days

Implied Authority

not stated in the agent's contract but is required for the agent to conduct business

Life Insurance Benefits

not taxable as income to a beneficiary

Life settlements/viatical settlement

owner of a life isurance policy sells the policy for an amount less than the death benefit but greater than the cash surrender

Distributions pulled before 59.5

pay a 10% tax unless of divorce (no tax)

surrendering an annuity

pay current interest rate at time of surrender

A participating insurance policy may do which of the following?

pay dividends to the policy owner

period certain

pay you and your grandparent the same monthly dollar amount

accumulation period of annuity

pay-in-period

Which clause stipulates that life insurance premiums can be paid in advance of policy issuance?

payment of premium clause

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?

payments for 15 years

Payor benefit rider

pays the premium if the insured becomes disabled or dies

What type of beneficiary designation allows the benefit to pass from a deceased primary beneficiary to the beneficiary's heirs, instead of splitting the benefit among surviving primary beneficiaries?

per stirpes

A policy with a cash value element

permanent

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?

permanent insurance

Absolute assignment

permanent transfer of ownership

controlled business

policies written on oneself

Universal Life Insurance

policy owner can determine his or her face amount and frequency of future premium payments

Variable Life Insurance

policyowner takes risk for how the cash value is invested cash value/face amount can increase or decrease

Straight Life

premium is level and payable to age 100

Whole Life Insurance

provides a lifetime of protection (to age 100) if person lives beyond age 100, policy pays face amount (cash value) the policy owner is entitled to policy loans

Term Life Insurance

pure insurance provides protection for a specific period of time or to a specific age option to renew without EOI

IRA Individual Retirement Account

qualified contributions can be made until 70.5 penalty if withdrawn before 59.5

defined benefit plan

qualified employer defines retirement

insurance provider considerded to be risk sharing

recip

insurance provider considered to be risk sharing

reciprocal

loss

reduction, decrease, or disappearance of loss

Person who has the authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer

reinsurance manager

Payor Benefit

releaves a minor from paying premiums if the parents dies

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

producer/agent

represents insurance company

broker

represents the buyer or applicant

Fair Credit Reporting Act 1970

requires fair and accurate reporting

Agent D submitted an application for life insurance on client A. No money was sent with the application. When Agent D attempted to deliver the policy, he discovered that A had suffered a heart attack since the application was taken. The agent should

return the policy to the insurer

All of the following are examples of risk retention

self insurance deductibles co payments

fixed-period installments

settlement option

hazard

situations or factors that may increase the possibility of a loss Events or conditions that increase the chances of an insured loss occurring

consideration provision

something of value

All other factors being equal, which of the following types of annuities will generally provide the highest monthly income?

straight life

An insurer is helping a married couple determine their children's needs, assets, and liabilities, in the event that one or both of the spouses should die. What is the term most closely associated with this?

survivor protection

adhesion

take it or leave it

Section 1035 exchange

tax-free exchange of an existing life insurance, endowment, or annuity contract for an equivalent new contract

accelerated death benefit

terminal illness pays death benefit while still alive

cash value

the amount available to the policy owner for a loan

If a policy is marketed with an illustration, who must sign the illustration?

the applicant and the agent

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?

the change must be reported to the department

The market value adjustment in modified guaranteed annuities refers to which of the following?

the difference between the contract interest rate and the rate at surrender

Under a defined benefit retirement plan, who determines what benefits a retired employee will receieve

the employer

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

the insured would need written consent of the insurer

paid-up option

the insurer can accumulate dividends at interest and then use them, in addition to interest, and the policy's cash value to pay the policy earlier than planned

Which of the following might be considered an advantage of a family life insurance policy that provides coverage for children?

the policy may be converted to permanent insurance for the children without EOI

An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years

the premium will increase because the insured will be 5 years older

What is NOT true of life settlements

the seller must be terminally ill

A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?

the surrender value should be equal to 100% of the premium paid

Social Security is funded by a payroll tax imposed on a percentage of an employee's income. This percentage is called

the taxable wage base

Which of the following is true for both equity indexed annuities and fixed annuities?

they have a guaranteed minimum interest rate

Which of the following is the best reason to purchase life insurance rather than annuities?

to create an estate

What is the purpose of a proposal for a life insurance policy sold in connection with a security?

to provide the policyholder with a clear and accurate description of the policy coverage

collateral assignment

transfer of any cash value ownership

Multiple employer welfare arrangement (MEWA)

unions use to insure

requires a life insurance and securities license

variable annuity

#60. A Buyer's Guide must be presented

when the application is taken

Replacement of policy

within 5 business days, an insurer is required to send a letter informing policyowner must maintain copies prior to completing the application a statement signed both the applicant and producer

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

without receiving written consent from an insurance regulatory authority

#37. Under what circumstances may an irrevocable beneficiary be changed?

written consent of the beneficiary

If the owner prematurely surrenders his deferred annuity before the annuitization period begins, which of the following is most likely to occur?

The owner will receive the premium payments that have been paid into the annuity, plus any interest, minus a surrender charge.

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments It may last for the lifetime of the annuitant.

A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?

The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

the date of medical exam

Life insurance as an executive bonus

the policy is owned by the employee


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