Missed on Final Prep Exams

What type of employee welfare plans are not subject to ERISA regulations? A. Church plans B. Major medical plans C. Corporate D. Qualified plans

A. Church plans

A producer license may be suspended or revoked if the producer is found to be engaging in A. misrepresentation B. converting a term life policy to a whole life policy C. selling with a nonresident license D. replacement

A. misrepresentation

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called A. representations B. consideration C. warranties D. guarantees

A. representations

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? A. 10% is withheld for income taxes B. 20% is withheld for income taxes C. 30% is withheld for income taxes D. Nothing is withheld

B. 20% withheld for income taxes

Which of the following does Social Security NOT provide benefits for? A. Survivorship B. Dismemberment C. Disability D. Retirement

B. Dismemberment

which of the following is not required to be included in a whole life policy? A. Policy's loan interest rate B. Policy's guaranteed dividend rate C. Policy's premium D. Policy's cash value table

B. Policy's guaranteed dividend rate

Employer noncontributory group life policies must allow for all of the following EXCEPT A. conversion privilege B. insured can determine the benefit amount C. insured can name a beneficiary D. minimum participation requirements

B. insured can determine the benefit amount

At what point does an informal contract become binding? A. When one party makes an invitation and the other makes an offer B. When an offer made by one party and the other party rejects the offer and makes a counteroffer C. When one party makes an offer and the other party accepts that offer D. When one party makes the required payment

C. When one party makes an offer and the other party accepts that offer

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? A. Primary beneficiary's estate B. Primary beneficiary's next of kin C. Insured's Estate D. Insured's contingent beneficiary

D. Insured's contingent beneficiary

J is issued a life insurance policy with a death benefit of 100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains the same at $100,000. Which type of Life Insurance policy is this? A. Endowment B. Graded Premium C. Straight life D. Modified Premium Life

D. Modified Premium Life start with a lower premium than typical whole life during the first few years (typically 5) and then are higher thereafter.

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of A. adherence B. assimilation C. aleatory D. adhesion

D. adhesion

All of the follwoing 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

Which of these retirement plans can be started by an employee, even if another plan is in existence? A. Individual Retirement Account (IRA) B. Defined Plan C. Keogh Plan D. 403(b) plan

A. Individual Retirement Account (IRA)

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value that has been paid. This is called a(n): A. Installment Refund annuity B. Joint Refund Annuity C. Straight Refund Annuity D. Equal Value annuity

A. Installment Refund annuity

Which of these describe a participating life insurance policy? A. Policyowners are entitled to receive dividends B. Policyowners pay assessments for company losses C. Stock companies allow their policyowners to share in any company earnings D. Policyowners are not entitled to vote for members of the board of directors

A. Policyowners are entitled to receive dividends

Which statement is correct regarding the premium payment schedule for whole life policies? A. Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured B. Premiums are payable for a set period/ coverage expires at that point C. Premiums are payable until age 65/ coverage lasts a lifetime D. A single premium is paid at time of application/ coverage lasts until retirement

A. Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? A. Primary Insurance Amount (PIA) B. Total taxes paid into FICA C. Number of dependents D. State of residence

A. Primary Insurance Amount (PIA)

Which of the following is required for a life insurance Lapse Notice? A. Reason stated why the policy will lapse B. Notice mailed to policyowner within 10 days before the effective date of lapse C. Notice mailed to policyowner within 30 days before the effective date of lapse D. Automatic premium loan explanation

A. Reason stated why the policy will lapse

Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary? A. Split-dollar plan B. Employee purchase plan C. Key employee plan D. Deferred compensation plan

A. Split-dollar plan

T purchased a $100,000 single premium, Straight Life Annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company A. does not have to make any further payments B. MUST make full payments to beneficiary C. MUST make half-payments to beneficiary D. has the option to continue making pauyments based on what hsa already been paid oout.

A. does not have to make any further payments

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n) A. extra premium B. Concealment clause C. extended Contestable period D. exclusion for the medical condition

A. extra premium

Which of the following is NOT a problem when existing life insurance is replaced with new coverage? A. The risk that financial loss will occur when values in the existing policy end and new values are built in new coverage. B. Comprehensive coverage may increase under the new policy. C. The new policy may be based on the insured's attained age, with higher premiums than existing coverage. D. The policyowner may pay additional costs for the new policy to issure.

B. Comprehensive coverage may increase under the new policy.

T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? A. Income for a fixed period stated in the contract B. Income that cannot be outlived by the owner C. Inflation protection D. Tax-free income

B. Income that cannot be outlived by the owner

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enable the policyowner to sell policy for more than cash value? A. cash surrender B. Life settlement contract C. Buy-sell agreement D. 1031 exchange

B. Life settlement contract

S,. age 40 is looking to buy a life insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be A. Straight Life B. Universal Life C. An Endowment D. Modified Whole Life

B. Universal Life Universal Life is characterized by flexible premuims and an adjustible death benefit.

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached? A. Accelerated Benefits B. Waiver of Premium C. Cost of Living D. Return of Premium

B. Waiver of Premium

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? A. Term Life B. Whole Life C. Credit Life D. Universal Life

B. Whole Life

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a A. treaty insurer B. risk retention group C. B. risk assumption group D. captive insurer

B. risk retention group

What action can a policyowner take if an application for a bank loan requires collateral? A. Utilize accelerated benefits provision B. Borrow against policy cash value and use as a down payment C. Assign policy ownership to the bank D. Name bank as beneficiary

C. Assign policy ownership to the bank

Which of these is NOT considered to be a cost connected with an individual's death? A. Funeral expenses B. Tax liability C. Business expenses D. Probate costs

C. Business expenses

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? A. Immediate B. Retroactive C. Deferred D. Universal

C. Deferred

Which of these is NOT a source of funding for social security benefits? A. Self employed individuals B. Employees C. Federal government D. Employers

C. Federal government

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own? A. Immediate Fixed B. Quarterly Flexible C. Flexible Installment Deferred D. Adjustable Deferred

C. Flexible Installment Deferred

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? A. Fixed Certain B. Joint and Survivor C. Life Annuity with Period Certain D. Installment refund

C. Life Annuity with Period Certain

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? A. 10% tax penalty for early withdrawal B. Capital gains tax C. Ordinary income tax and a 10% tax penalty for early withdrawal D. Ordinary income tax

C. Ordinary income tax and a 10% tax penalty for early withdrawal

What does a 401(k) plan generally provide its participants? A. Tax-free distributions B. Salary-deferral distributions C. Salary-deferral contributions D. A defined retirement benefit

C. Salary-deferral contributions

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? A. Joint Life B. Adjustable Life C. Variable Universal Life D. Universal Life

C. Variable Universal Life

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

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? A. Agent's report B. MIB report C. inspection report D. Attending physicians report

C. inspection report

Dividends paid from a life insurance policy are A. guaranteed B. non-taxable C. issued by the insurer D. issued by the Department of Insurance

C. issued by the insurer

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the A. cash value B. estate of the insured C. policy proceeds D. nonforfeiture value

C. policy proceeds

The investment gains from a Universal Life Policy usually go toward A. the death benefit B. the dividends C. the cash value D. paying off a policy loan

C. the cash value

When is the face amount paid under a Joint Life and Survivor policy? A. when policy reaches maturation B. upon death of the first insured C. upon death of the last insured D. when one of the insureds becomes disabled and no longer able to make premium payments

C. upon death of the last insured

Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? A. The proceeds which exceed the amount paid in premiums are taxable. B. All proceeds are taxable only if the beneficiary's tax bracket has changed the payout C. All proceeds are taxable income tax free in the year they are received D. All proceeds are income tax free in the year they are received

D. All proceeds are income tax free in the year they are received

The Consideration clause in a life insurance contract contains what pertinent information? A. Summary of benefits B. Offer and acceptance C. Entire Contract D. Amount of premium payments and when they are due

D. Amount of premium payments and when they are due

Traditional Individual Retirement annuity (IRA) distributions must start by: A. age 59 1/2 B. age 65 C. April 1st of the year following the year the participant attains age 59 1/2 D. April 1st of the year following the year the participant attains age 70 1/2

D. April 1st of the year following the year the participant attains age 70 1/2

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? A. Modified Whole Life B. 20-year paid up C. Endowment D. Decreasing term

D. Decreasing term

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

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? A. Distribution is subject to capital gains tax B. Distribution is subject to ordinary income tax C. Distribution is subject to a tax penalty D. Distribution is subject to federal income tax withholding

D. Distribution is subject to federal income tax withholding

Taking Receipt of premium and holding them for the insurance company is an example of A. commingling B. Misappropriation C. Theft D. Fiduciary Responsibility

D. Fiduciary Responsibility

The type of annuity that can be purchased with one monetary deposit is called a(n) A. Single Deposit annuity B. Single Premium annuity C. Fixed annuity D. Immediate annuity

D. Immediate annuity

Which of these statements concerning an Individual Straight Life annuity is accurate? A. Life expectancy of the annuitant is not a factor B. The payments are received tax-free C. Only available to employees of nonprofit charitable, educational, and religious organizations D. Payments are made to an annuitant for life

D. Payments are made to an annuitant for life

Which of these characteristics is consistent with a Straight Life Policy? A. Owner can adjust both premium and death benefit B. Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract C. Owner has the option of converting to term insurance D. Premiums are payable for as long as there is insurance coverage in force

D. Premiums are payable for as long as there is insurance coverage in force

What type of reinsurance contract involves two companies automatically sharing their risk exposure? A. Arbitrage B. Faculatative C. Excess D. Treaty

D. Treaty Under treaty reinsurance, each party automatically accepts specific percentages of the insurer's business.

All of the following penalties apply to anyone giving intentional false testimony during an insurance examination EXEPT A. fine of up to $5,000 B. imprisonment up to three months C. guilty of a misdemeanor D. guilty of a felony

D. guilty of a felony

In a Key Employee life insurance policy, the third-party owner can be all of the following, EXCEPT: A. Applicant B. owner c. payor D. insured

D. insured

In an individual retirement account (IRA), rollover contributions are A. subject to capital gains tax B. subject to ordinary income tax C. partially limited by dollar amount D. not limited by dollar amount

D. not limited by dollar amount

Who elects the governing body of a mutual insurance company? A. chairman of the board B. bondholders C. stockholders D. policyowners

D. policyowners

A term life insurance policy matures: A. upon endowment of the contract B. upon death of the insured C. when the cash value equals the death benefit D. upon the insured's death during the term of the policy.

D. upon the insured's death during the term of the policy.