Life Insurance
All of the following are non-forfeiture options, except:
1 year term
"Preliminary term for interim coverage" policies have a maximum benefit period of
11 months
What are the number of employees needed by a corporation to set up a group variable annuity?
25
Gretta purchased a fixed annuity for $15,000 that has an expected return of $20,000. It will have an exclusion ratio of:
75%
An individual accidental death and dismemberment policy will pay benefits if an insured dies from:
A head injury resulting from an auto accident
A deferred compensation plan is which of the following?
A non-descriminatory plan
Ordinary Life policies must include the following provisions except:
Accidental Death Rider
From the annuity contract issue to the start of payments is called:
Accumulation period
All of the following can be used to determine group benefits, except:
Age
Alphonse is the owner of a business, he has a group insurance plan with ABC Insurance Company. He is going to let the coverage terminate. Which of the following is correct?
Alphonse must notify his employees
What portion, if any, of a fixed dollar life annuity payable to a retired worker is not taxable?
An amount determined by the exclusion ratio
What type of insurance is most frequently used in group life plans?
Annual renewable term
Which of the following types of agent authority is granted when the company supplies forms and brochures to the agent?
Apparent
The main difference between traditional life insurance and variable life is:
Cash values
Whitmore is 44 years old and decides to start receiving payments from his annuity, how can he avoid paying a penalty for early withdrawal?
Chooses life income option
Mr. Roberts assigns a $100,000 policy and has a $50,000 mortgage. Mortgagee and assignee receive a check payable jointly. What type of agreement is
Collateral assignmen
An agent who solicits to sell to an individual who has difficulty understanding the agent violates which essential element of the contract?
Competent parties
Endowment proceeds even though left with the company at maturity under an interest only option, will be partially taxable under:
Constructive receipt rule
Keoghs are similar to what type of retirement plan?
Corporate plans
In which business plan do the partners agree to buy the interest of the deceased partner?
Cross purchase
Which retirement plans are deemed qualified?
Defined contribution plans Defined benefit plans
Samantha bought a policy at age 30 and was told that she had to pay premiums for 20 years. At the end of 20 years she received an amount equal to the face amount. What type of policy is this?
Endowment
A cost involved in determining premium rates is called the loading charge. This is also known as:
Expense factor
All of the following are dividend options except:
Extended term insurance
Churning is defined as the practice by which policy values from an existing life insurance policy are used to purchase another policy from a different company where the change is not beneficial for the policy holder.
False
A money purchase plan provides for
Fixed contributions/undefined benefits
Where are franchise life plans commonly used?
For groups smaller than the minimum number required by state law to cover a group of persons that does not qualify for true group insurance.
According to the needs approach, when selling insurance which factor is not considered important?
Future income
A Roth IRA participant must take distribution by what point in his/her life?
He/she is not required to take the distribution
The estimation of life insurance needed as a dollar valuation by discounting net future earnings at a reasonable rate of interest is known as:
Human life value approach
Which of the following statements is true about life insurance settlement options?
If the owner did not specify a settlement option, the beneficiary may still elect any options.
Which category of authority is the one which gives the agent the right to operate in a business manner doing the things typical of any business?
Implied
An annuity contract provides?
Income for life
If insured purchases a 10-year plan and dies after 6 years, how will a family income plan pay compared to a family maintenance plan?
Income plan will pay 4-years and maintenance will pay 10-years
Life insurance that is characterized by comparatively small issue amounts, and frequent premium payments is called:
Industrial life
"Subject to the provisions on the following pages of this contract, the insurance company will pay the death benefit to the named beneficiary. The death benefit will be paid on receipt of due proof of death of the insured and surrender of this policy." The provision quoted above is an example of:
Insuring clause
Other uses of life insurance can include?
Investment Charitable contributions Provide gifts to minors Investment management
The incontestable clause is two years from what point in time?
Issue date
Which is true concerning a variable life insurance policy
It provides a guaranteed minimum death benefit.
In what respect do limited pay life policies differ from straight whole life policies?
Limited pay life policies have a shorter premium-paying period.
Zeke has decided he needs permanent life insurance but doesn't want to pay premiums for a long period of years. What kind of insurance would be a correct choice?
Limited pay whole life
An Annuitant receives monthly payments from a variable annuity under a Joint and 2/3 Survivor option. If the primary annuitant dies, what will the surviving annuitant receive?
Monthly payments for life of a dollar value of two thirds of the annuity units that were previously being distributed.
Regarding taxation of life insurance, all are true except:
No current taxation as cash value builds each year
Which feature in a life insurance policy allows an insured to stop paying premiums and take a paid-up policy with a face amount less than that of the original policy?
Non forfeiture option
Explain the difference between what a General Agent does as compared to a PPGA?
PPGA's primarily sell, General Agents recruit, train, manage, etc
Mutual companies usually sell:
Participating policies
The policyowner has only a limited period of time after discontinuing premiums in which to reinstate a lapsed policy. Other requirements that may be requested are:
Pay all back premiums Pay interest on past-due premium Prove insurability Pay any outstanding loans back
All of the following will determine the dollar value of variable annuity units except:
Performance of the stock market
Which of the following is not usually offered as a dividend option?
Policy loan
Before replacing insurance, an agent must give a copy of a comparison and summary statement to the policyowner upon the request of:
Policyholder
Which of the following are Defined Contribution plans?
Profit sharing plans Money purchase plans Stock bonus plans
Under what rule are endowment policies taxable after 60 days of maturation date?
Rule of constructive receipt
Who regulates variable annuities?
SEC and state insurance department
Which clause protects proceeds from creditors of the beneficiary?
Spendthrift trust clause
A modified whole life policy:
Starts with lower premium that increases over life of policy.
What type of policy has premiums paid to age 100, and upon age 100 pays the face amount as an endowment?
Straight whole life
What's the special class of retirement plan available to employees of certain nonprofit charitable organizations?
Tax-deferred annuity
Under a family plan policy, the child rider is usually what type of insurance?
Term
A policy owner commits suicide 2 1/2 years after the policy is issued. What will the company pay?
The face amount
What is also known as the American Agency System?
The same as the Independent Agency System
What factors determine the amount an annuitant receives at retirement?
Total capital Interest rate Payout option selected
Level term remains at a level face amount with increasing premiums at renewal.
True
The code of ethics of the NAIC is incorporated into state law.
True
Hernando has a policy in which the cash values increased to a point where the corridor was utilized. What type of policy does he have?
Universal life Option 1
The amount an employee can contribute to a SEP is:
Up to a maximum of 25% of compensation with a maximum cap
Which of the following is the voluntary relinquishment of a given right?
Waiver
Which of the following is/are a common life insurance exclusion
War
In which cases would the purchase of new life insurance be considered replacement?
When existing life insurance is surrendered When existing life insurance is reduced in face amount When existing life insurance is continued as extended term
When does a tertiary beneficiary collect?
When the primary and secondary pre-decease the insured
The nonforfeiture options include all of the following except:
an advance on the next dividend.
The benefit paying period of an annuity is called:
annuity period
Before Variable Annuity benefits can be paid out, accumulation units must be converted into:
annuity units.
A plan, usually funded by life insurance, to purchase a deceased partner's share of a business is known as a:
buy and sell agreement.
An agent who converts premium he collects for his personal use is guilty of
embezzlement
Calculating the tax-free portion of each annuity payment utilizes the:
exclusion ratio
Under a group permanent plan, the employer pays for the cash value segment of the policy and the employee purchases the insurance portion.
false
A policy that is sold in proportioned units to cover an insured, spouse and children is called a:
family plan.
If the only difference in life insurance premiums for men and women is based on the fact that women are expected to live longer, then the premium for men's life insurance should be:
higher
When someone other than the insured is the owner of a life insurance policy, the owner may do all of the following without the insured's consent except:
increase the amount of insurance.
The life insurance Waiver of Premium:
is an option that may be rated or denied.
All the below are true about an endowment policy except:
it is a form of whole life insurance.
All the following are available settlement options except:
joint and survivor.
Most business assignments of life insurance policies are made in order to protect the:
lenders financial interest in the insured
An immediate annuity is purchased:
lump sum.
All electricians in Austin are eligible for group life. This type of group is called a(an):
multiple employer trust
Industrial life insurance permits conversion:
of two or more policies into a single ordinary pol
Insurance would be unenforceable and considered a wager if the following does not have an insurable interest:
owner
The annuity option which will not cover life's contingencies is called:
period certain
The operating objective of a stock insurance company is:
profit for stockholders
When a plan meets requirements for the federal government in order to receive favorable tax treatment it is called a _________ plan.
qualified
Which of the following best describes self insurance?
risk retention
Protection against the unintentional lapse of a policy may be afforded by:
the automatic premium loan provision.
The human life value approach states:
the value is determined by discounting estimated future income.
Under a group permanent plan, the employer pays for the cash value segment of the policy and the employee purchases the insurance portion.
true
An agent replacing an existing policy from another company with one from his own company which is of no financial advantage to the insured is guilty of:
twisting.
In the insurance field, risk can best be defined as:
uncertainty regarding a financial loss
The option that one party can set aside a contract refers to the:
voidable concept unilateral concept.
The rejected business rule is:
where the agent's company refuses to sell the policy.