Life Insurance
Mortality -Interest +Expense=
Gross Premium
What is the advantage of reinstating a policy instead of applying for a new one?
*The original age is used for premium determination *Policy is restored to its original status HOWEVER, proof of insurability may be required
In order to qualify for small group insurance, ___________.
.....a group must be formed for a purpose other than attaining life insurance
If the commissioner finds that a licensee is using unfair methods of competition, the Commissioner may issue a Cease and Desist order against the person and fine of how much?
$1,000 per violation (if found that the person knew the act was a violation may be increased to as much as $25000)
A licensed life producer has completed 12 of his CE hours for this period. How many more will he have to finish?
12 more. -24 hours of CE is required every 2 years
In reference to fixed annuities, what comprises most of a life insurance company's general account?
Conservative investments like bonds
Which component increases in the increasing term insurance?
Death Benefit
Who is eligible for 403(b) plans (tax-sheltered annuities/TSAs)?
Employees of public education and employees of charitable organizations
T/F. An SEC registration is required to sell variable life insurance policies
FALSE. FINRA registration, securities license, & life license
Both Universal Life & Variable Universal Life have a
Flexible Premium -that can be increased or decreased as the policyowner chooses as long as there is enough value in the policy to fund the death benefit
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any cirumstances. This is considered to be defamation
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of report is that?
Inspection Report -usually supplied by PI's and credit agencies
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest (that is earned on the cash value)
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
If a life insurance policy increases significantly in face amount when the insured reaches a specified age, what type of policy is this?
Jumping juvenile policy -usually increases 5 times initial amount when the insured reaches a specified age (usually 21)
Which option is being utilized when dividends are used to buy additional policies that increase the face amount of the original policy?
Paid-Up Additions
Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay up the policy early?
Paid-Up Option
A specific risk or cause of loss insured in an insurance policy are known as
Perils
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up, protects until age 100
What is consideration?
Something of value that is transferred between two parties
T/F. Straight life policies have the lowest premium of the three types of whole life policies
TRUE
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risk on invsetment
If a life insurance policy as an irrevocable beneficiary designation,
The beneficiary can only be changed with written permission of the beneficiary
Do equity indexed annuities earn more or less interest than fixed annuities?
The earn lower interest rates thatn fixed annuities
J transferred his life insurance policy to his son two years before his death. Which of the following is true?
The entire face value of the policy will be included in J's taxable estate. (If a policyowner transfers or gives away a life insurance policy within 3 years prior to his/her death, the entire face amount of the policy will be included in his or her taxable estate.)
What happens if the insured commits suicide within 2 years following the policy effective date?
The insurer is only liable to refund the premium
With regards to a Payor Benefit rider, what happens if the payor becomes disabled for at least 6 months or dies?
The insurer will waive the premiums until the minor reaches a certain age as such as 21
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
The policy is owned by the company
A temporary license may be issued without examination to all of the following except
The spouse of a retired producer
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been under the plan for at least 5 yrs
T/F. Standard risk is representative of majority of people
True
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
When would a 20-pay whole life policy endow?
When the insured reaches age 100 ** will be paid off in 20 yrs
Life insurance death proceeds are:
generally not taxed as income
what type of annuity can be purchased with a single premium and provides benefit payments immediately
immediate
The re-entry provision would allow the insured to renew the policy and
pay a lower renewal premium by proving insurability
What is proof of insurability?
the documentation of the good health condition of the beneficiary and his/her dependent's health in order to be approved for coverage.
Which rider annually adjusts the policy's face value in accordance with the national rate of inflation or deflation?
Cost of Living Rider -this is so that the initial value of the policy is constant over time
When must an IRA be completely paid out when a beneficiary is not named?
December 31st of the year that contains the fifth anniversary of the owner's death