Life Insurance

Group life insurance policies are generally written as

A term Rider Annually Renewable Term Increasing term Group Whole Life Annually Renewable Term

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?

Flexible installment Deferred

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract (MEC)

Which is true concerning a variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a: a. Rollover plan b. 403(b) plan c. Profit-sharing plan d. Salary reduction plan

Profit-sharing plan

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? a. Face amount plus the policy's cash value b. Face amount plus the ploicy's dividends c. The greater amount of the policy's death benefit or the cash value d. Face amount plus total premium paid throughout the life of the policy

a. Face amount plus the policy's cash value

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? a. Level term policy b. Whole life policy c. Limited-pay policy d. Decreasing term policy

d. decreasing term policy

Which of the following Nonforfeiture options offers the highest death benefit?

Extended Term

If a corporation pays the premium on a group life policy for its employees, the corporation is required to report how much additional taxable income for each employee?

Nothing

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor Benefit Rided

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? a. Subrogation b. Unenforceable c. Adhesion d. Unilateral

Unilateral

K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.

Universal life policy

All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT: a. Income derived from the TSA is received income tax-free b. TSA's are available to public school employees c. Contributions to the TSA are tax-deductible d. Interest earned by TSA is tax deferred

a. Income derived from the TSA is received income tax-free

How are policyowner dividends treated in regards to income tax? a. Dividends are not taxable b. Interest on accumulations is taxed c. Taxed as ordinary income d. Taxed as capital gains

b. Interest on accumulations is taxed

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? a. Universal life b. Variable life c. Fixed Annuity d. Modified Endowment Contract

b. Variable Life

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will: a. pay the death benefit in full b. adjust the death benefit to an increased amount c. adjust the death benefit to a reduced amount d. deny the claim

b. adjust the death benefit to an increased amount

What is the maximum number of employees (Earning at least $5,000) than an employer can have in order to start a SIMPLE retirement plan? a. 25 b. 50 c. 100 d. 250

c. 100

Which of the following Nonforfeiture options offers the highest death benefit? a. Cash surrender b. Reduced Paid-Up c. Extended term d. Dividend

c. Extended term

All of these statements about Equity Indexed Life Insurance are correct EXCEPT a. Cash Value has a minimum rate of accumulation b. If the gain on the index goes beyond the plicy's minimum rate of return, the cash value will mirror that of the index c. The premiums can be lowered or raised, based on investment performance d. Tied to an equity index such as the S&P 500

c. The premiums can be lowered or raised, based on investment performance.

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? a. When the policy is issued b. The date of policy delivery c. When the conditions of the receipt are met d. The date the sales appointment was set

c. When the conditions of the receipt are met

The ______ is authorized to assign a Life Insurance policy as collateral for a loan. a. beneficiary b. insured c. policy owner d. lender

c. policy owner

In an individual retirement account (IRA), rollover contributions are

not limited by dollar amount