Ohio Life Exam
Which of the following is not an assignment whereby someone would transfer legal rights as the policyowner of a life contract? Select one: a. Collateral, partial, conditional assignment b. Total, complete, unconditional assignment c. Beneficiaries' assignment d. Absolute, voluntary, complete assignment
B
Which of the following statements is not true about irrevocable beneficiaries on life insurance policies? Select one: a. The policy owner is responsible for premium payments b. The policyowner can borrow cash without consent of the beneficiary. c. The policyowner must have consent to cancel the policy d. None of the above
B
Which of the following is a common element, when it occurs, that allows an insurer to charge lower premiums? Select one: a. Only choosing healthy insureds b. Paying less commission to agents c. Higher interest earnings d. Not including overhead expense
C
Which of the following is not a type of whole life policy? Select one: a. Limited-Payment b. Continuous Premium c. Industrial d. Economatic
C
Which of the following is true about the automatic premium loan rider? Select one: a. The rider is quite expensive. b. The insured initiates the process after the grace period. c. The rider gives the company the right to borrow against the policy's cash value. d. The insured does not have to repay the loan.
C
The children's rider is not: Select one: a. A rider to cover only the children b. A form of term insurance c. Part of the life policy of an insured. d. A family rider
D
Which of the following is not a factor in determining the amount of a life insurance policy dividend? Select one: a. Operating expense b. Morbidity c. Mortality d. Assumed interest
B
"Take it or leave it" is the basis for insurance policies. Because of this, they are referred to as: Select one: a. Contracts of Adhesion b. Aleatory Contracts c. Unilateral Contracts d. Contracts
A
All of the following are used for underwriting, EXCEPT: Select one: a. National origin and race b. The agent report and application c. Investigative consumer reports d. Medical examinations and lab tests
A
An application for insurance is considered to be: Select one: a. A written request by the applicant to an insurer requesting the insurer the issuance of a policy of insurance on the basis of the information provided in the application b. A form furnished by the insurance company requesting information to become part of an insurance policy c. An oral request from an agent to issue an insurance policy to an applicant d. A form provided to the agent to bind coverage for the proposed insured
A
An insurance company whose main responsibility is to make money for its policyholders is called a: Select one: a. Mutual insurance company b. Stock insurance company c. Health maintenance organization (HMO) d. Preferred provider organization (PPO)
A
Annuities are taxed on an exclusion ratio in which the portion of annual payment that is principal is tax-free and the portion that is interest is: Select one: a. Taxed as income b. Taxed partially c. Tax deferred d. Tax-free
A
Cheryl has a $500,000 permanent life insurance policy. She has paid $200,000 in premiums, and the policy has a cash value of $216,000. If Cheryl dies, her beneficiary will pay taxes on: Select one: a. $0 b. $16,000 c. $216,000 d. $500,000
A
Field underwriting is primarily useful to: Select one: a. Make observations that could impact insurability b. Get to know the family c. Develop leads d. Correct errors or omissions on the application
A
Insurance uses a pre-existing condition clause to prevent: Select one: a. Adverse selection b. Malingering c. Abusive utilization d. Over insurance
A
Monica has life insurance on her 10-year-old son. What rider will make sure that in the event she dies or becomes disabled that the policy will remain in force? Select one: a. Payor Rider b. Accelerated benefit rider c. Riders covering additional insureds d. Substitute insured rider
A
Waiver of premium differs from the waiver of the cost of insurance in which of the following ways: Select one: a. Waiver of premiums waives the full premium due. Waiver of the cost of insurance will only continue a death benefit feature of the policy. b. Waiver of premium is longer term than waiver of the cost of insurance. c. Waiver of the cost of insurance only requires partial disability. d. Waiver of premium will only pay premiums for 10 years.
A
What business continuation plan would be best for a furniture company owned by five partners? Select one: a. Entity plan b. Cross-purchase plan c. Stock-redemption plan d. Key person
A
What is a life insurance settlement option that uses an annuity to pay policy proceeds to the beneficiary for a set number of years? a. Period certain b. Fixed-amount installment c. Life income d. Interest only
A
When an insurer is determining how much premium to charge for a life insurance policy, the insurer considers all of the following, EXCEPT: Select one: a. Morbidity b. Mortality c. Earnings d. Expenses
A
Which of the following contains elements that are part of every legal contract? Select one: a. Agreement, Consideration, Competent parties, Legal purpose b. Offer and Acceptance, Consideration Competent parties c. Consideration, Competent parties, Legal purpose, Reasonable Expectations d. Agreement, Indemnity, Consideration, Legal purpose
A
Which of the following is an example of a government insurance program? Select one: a. Social Security b. Blue Cross c. Lloyd's Associations d. All of the above
A
Which of the following is not a common use for annuities? Select one: a. Pay legal fees b. Education funds c. Retirement income d. Tax shelters
A
Which of the following is not a correct statement about equity-indexed annuities? Select one: a. A securities license is required to sell EIAs. b. The principal and interest are guaranteed. c. Earnings above the guaranteed rate are linked to the stock market. d. Earnings are also tied to the insurer's overall investment performance.
A
Which of the following is true regarding taxes on nonqualified annuities? Select one: a. Premiums are not tax-deductible, but interest is tax-deferred. b. Premiums are paid with pre-tax dollars and interest is tax-deferred. c. Premiums are not tax-deductible and interest is taxable in the year it is earned. d. Premiums are paid with pre-tax dollars, but interest is taxable in the year it is earned.
A
Which of the following is usually the owner of the annuity? Select one: a. The annuitant b. The insurance company c. The beneficiary d. All of the above
A
Which of the following statements best describes how cash value in a life insurance policy is taxed? Select one: a. If the policy cash value is surrendered, the interest earned on the cash value is taxable as ordinary income. b. Cash value does not earn interest and is, therefore, not taxable. c. Cash value grows tax-free. d. None of the above
A
Which of the following statements is not true about a retirement income annuity? Select one: a. It is an ordinary immediate annuity. b. It has a decreasing term life insurance rider. c. If the annuitant dies before retirement, it pays a death benefit and the value of the annuity. d. The beneficiary can choose the settlement option.
A
Agents who would like to transact annuities must complete a one-time annuity specific continuing education course of how many hours? Select one: a. 2 hours b. 4 hours c. 6 hours d. 8 hours
B
All of the following are true about Roth IRAs, EXCEPT: Select one: a. The contributions are the same as a traditional IRA. b. Contributions are tax deductible. c. The withdrawals are tax-free. d. Contributions are limited to a person with an income less than $105,000 to $120,000.
B
All of the following statements are correct, EXCEPT: Select one: a. All annuities have an annuity period, but may not have an accumulation period. b. All annuities are qualified. c. The fixed period installment annuity makes periodic payments for a set period of time. d. With the cash refund option, the beneficiary receives the balance of premiums plus interest minus benefits paid in a lump-sum.
B
All of the following statements are true about an annuity certain, EXCEPT: Select one: a. It provides income for a guaranteed period of time. b. If the annuitant dies, the payments cease. c. If the annuitant outlives the period certain, the payments cease. d. It does not guarantee lifetime income.
B
An adjustable life policyowner may do any of the following, EXCEPT: Select one: a. Pay varying premiums each year b. The premium will vanish after 7 years c. Pay a minimum amount as long as he funds the mortality cost d. Pay a higher premium if he wants to build cash faster
B
An example of coverage that can be purchased by a husband for his wife along with other dependent family members is: Select one: a. A child term rider b. A family term rider c. An accelerated benefit rider d. A payor rider
B
Because Sylvia paid the initial premium when her policy was delivered, in order for the policy to be in effect, the agent is required to obtain: Select one: a. A binding receipt b. A statement of good health c. An inspection report d. All of the above
B
Collin intentionally surrendered a right on his contract is known as waiver. What prevented him from reclaiming the right? Select one: a. Consideration b. Estoppel c. Misrepresentation d. Concealment
B
Insurance is: Select one: a. Guaranteed payment for losses incurred by the insured b. A transfer of the uncertainty of loss from the insured to the insurance company c. The unintentional decrease in value of an asset d. The rate at which people get sick
B
John is required to make a $5,000 distribution from his traditional IRA. If he only makes a $3,000 distribution, how much will he be penalized? Select one: a. $500 b. $1,000 c. $2,000 d. $5,000
B
The earliest age that distributions from a nonqualified individual annuity may be made without incurring the 10% IRS early withdrawal penalty is: Select one: a. 55 b. 59 1/2 c. 62 d. 65
B
What annuity is characterized by flexible premium payment amounts and frequency, and an annuity period that begins 20 years after the annuity purchase date? Select one: a. SPDA b. FPDA c. SPIA d. Immediate or deferred annuity
B
What life insurance policy provides a blend of the benefits of traditional whole life and universal life? a. Credit life b. Interest-sensitive whole life c. Variable whole life d. Industrial life
B
What requires that an individual have a valid concern for the continuation of the life or well being of the person insured? Select one: a. Insuring Clause b. Insurable interest c. Named insured d. All of the above
B
When an insurance policy is taken out, if the owner of the policy is someone other than the actual insured, the owner must be able to prove: Select one: a. The he/she is related to the insured b. That he/she has an insurable interest c. That he/she is owed money by the insured d. That he/she intends to pay the premiums
B
Which of the follow statements concerning the payment from a non-qualified annuity is correct? Select one: a. Since this is a non-qualified plan, all payments are 100% tax free. b. Since this is a non-qualified plan only a portion of the payment will be taxable. c. Since this is a non-qualified plan all the income received will be taxable. d. If the income is below a certain threshold, Jack is not required to report it.
B
Which of the following best describes the annuity period? a. It is the period when the contract owner pays premiums. b. It is the period when the cash value is converted to income payments. c. Both of the above d. None of the above
B
Which of the following fixed annuities has a minimum rate of return and a current rate of return that is connected to the S&P 500? Select one: a. Market value adjusted annuity b. Equity indexed annuity c. Fixed annuity d. FPDA
B
Which of the following is not a case in which life insurance proceeds would be included in the deceased's estate? Select one: a. The deceased was the policyowner. b. The deceased's wife was the beneficiary. c. The estate was the named beneficiary. d. The policy was transferred to another person within 3 years of the deceased's death.
B
Which of the following statements regarding policy loans from personal life insurance policies is not true? Select one: a. Loans may be taken against personal life insurance policies that build cash value. b. When a personal life insurance policy endows, the amount of any unpaid loan plus interest is not deducted from the policy proceeds. c. Policy loans are not taxable. d. Interest on policy loans will be charged on loans that remain unpaid.
B
Which policy would best suit someone who retires with a large amount of cash? Select one: a. Level term insurance b. Single premium whole life insurance c. Limited premium whole life insurance d. Continuous premium straight life insurance
B
A temporary insurance agent license can be issued for what maximum period of time? Select one: a. 90 days b. 120 days c. 180 days d. 1 year
C
All of the following are false regarding the tax consequences of Roth IRAs, EXCEPT: Select one: a. Once the plan participant reaches age 59 1/2, taxes on distributions are no longer imposed. b. Contributions are tax-deductible. c. Contributions are made with taxed dollars; however, interest grows tax-free. d. Contributions and interest are tax-free.
C
All of the following are features of variable universal life, EXCEPT: Select one: a. Flexible premiums b. Cash value based on investment in separate account c. Insurer decides where to invest premiums d. Death protection is deducted from cash value
C
All of the following are major factors in the determination of premiums for life insurance, EXCEPT: Select one: a. Interest earnings b. Mortality c. Marital status d. Expenses
C
All of the following are true statements regarding the advertising rules and regulations for life insurance, EXCEPT: Select one: a. Advertisements must be truthful and not misleading b. Advertisements must be complete and clear enough for an average person to understand c. Advertisements must specify the details of the investment and expected profits d. Advertisements shall not have a tendency to deceive.
C
All of the following are types of whole life policies, EXCEPT: Select one: a. Single premium b. Limited pay c. Credit d. Continuous premium
C
All of the following exchanges would qualify under Section 1035 of the Internal Revenue code, EXCEPT: Select one: a. Annuity for another annuity b. Life insurance policy for another life insurance policy c. Vacant land for another piece of vacant land d. Endowment for another endowment
C
An answer an applicant provides on an application is considered a: Select one: a. Warranty b. Fraud c. Representation d. Concealment
C
An applicant for insurance may pay an initial premium with the application and receive a document called: Select one: a. Notice of execution b. Notice of inspection c. Conditional Receipt d. Notice of representation
C
Field underwriting is done by the agent/producer when he/she is face-to-face with the applicant, completing the application. The application contains three main parts: Select one: a. General information, statement of good health, producer's report b. General information, premium payment, agent's statement c. General information, medical information, producer's report d. General information, statement of good health, premium payment
C
Gregory recently purchased a one-year term insurance policy. At the end of the year, he can purchase an identical policy without having to show proof of insurability. Why type of policy did he purchase? Select one: a. Decreasing term b. Increasing term c. Renewable term d. Level premium term
C
In Ohio, how many hours of continuing education are producers required to complete during each compliance period? Select one: a. 12 hours b. 20 hours c. 24 hours d. 36 hours
C
Mrs. Conroe's policy lapsed. Her agent, Mrs. Acker, accepted her past due premiums and re-instated her policy. Since agents cannot usually reinstate policies, why it was allowed in this case? Select one: a. Mrs. Acker is a top agent. b. Mrs. Conroe was truly sorry that she had let the policy lapse. c. Mrs. Acker was allowed to accept late premiums in the past to reinstate policies. d. All of the above
C
The clause that prevents an insurer from denying a claim, except for nonpayment of premiums, after the policy has been in force for over 2 years is called the: Select one: a. Execution clause b. Suicide clause c. Incontestability clause d. Insuring clause
C
Universal life policies allow the policyowner to: Select one: a. Take out a policy loan b. Withdraw cash c. Both of the above d. None of the above
C
What guarantee states that if the policyholder discontinues payment of premiums, the policyholder can have access to the cash value of the policy? Select one: a. Policy loan provision b. Conversion option c. Nonforfeiture provision d. Settlement option
C
What plan would likely meet the needs of 2 partners who want to create a buy/sell agreement and an inexpensive and simple funding plan? Select one: a. An individual whole life policies that each purchase with their private funds b. A second to die plan which is less expensive c. A joint life plan, which will provide the survivor money to buy out the deceased partner's heirs. d. They can just pay the survivors heirs out of company earnings later.
C
What provides a husband and wife with lifetime income while either spouse is alive? Select one: a. Life annuity with period certain b. Refund life annuity c. Joint and survivor annuity d. Life income certain
C
What rider can decrease the death benefit when utilized? Select one: a. Payor rider b. Waiver of premium rider c. Long-term care rider d. Cost of living rider
C
Which dividend option may offset some or all of the benefit reduction caused by loans from a participating whole life plan? Select one: a. Paid up additions b. Accumulate at interest c. One-year term option d. Reduction of his loan
C
A settlement option that would leave the proceeds of the insurance policy with the insurer and the insurer would pay interest to the beneficiary on an installment basis is known as a: Select one: a. Withdrawal provision b. Fixed period option c. Life income option d. Interest only option
D
All of the following are commonly used when investigating the insurability of an applicant, EXCEPT: Select one: a. An attending physician's statement b. A credit report c. Contacting the Medical Information Bureau (MIB) d. Talking to the neighborhood watch
D
All of the following are elements of insurable risks, EXCEPT: Select one: a. Loss must occur by chance or accident b. Large number of homogenous units c. Loss must be predictable d. Loss must be catastrophic
D
All of the following are federal income tax free transactions for a life insurance policy, EXCEPT: Select one: a. Death proceeds b. Premiums paid that build cash value c. Dividend payments d. Gain on policy surrender value
D
All of the following are true about market value adjusted annuities, EXCEPT: Select one: a. Values are guaranteed for a specific period of time. b. Surrender fees apply if the annuity is surrendered prior to annuitization. c. Adjustments made upon surrender are based on market value. d. This is not a fixed contract.
D
All of the following are true about personal contracts, EXCEPT: Select one: a. A personal contract is between the individual and the insurer. b. Personal contracts cannot be transferred without written consent of the insurer. c. Life insurance is not a personal contract because a policyowner has no stake in the risk. d. Life insurance contracts cannot be assigned.
D
All of the following are valid insurable interest scenarios, EXCEPT: Select one: a. A husband and wife b. A father and a child c. An employer and a key employee d. A sister and her best friend
D
All of the following correctly describe the law of large numbers, EXCEPT: Select one: a. Insurance companies use the law of large numbers to estimate how many losses will occur in a certain group of people over a certain period of time. b. The law of large numbers states that larger groups provide better loss predictions. c. Groups must consist of a large number of similar individuals in order to provide accurate mortality or morbidity rates. d. The law of large numbers provides the best data when groups consist of dissimilar risks.
D
All of the following statements are true regarding the IRS early withdrawal penalty for nonqualified annuities, EXCEPT: Select one: a. The penalty applies to withdrawals made prior to age 59 1/2. b. Early withdrawals are subject to the IRS early withdrawal penalty. c. If an early withdrawal is made, the penalty applies in addition to ordinary taxes on the taxable portion of the withdrawal. d. The IRS early withdrawal penalty is 20%.
D
An annuity contract provides for all of the following, EXCEPT: Select one: a. Safe retirement income tool b. Forced savings account c. Payments for a fixed period or a lifetime d. A health plan
D
An annuity that will not only provide benefits for the life of a husband, but also the wife if she outlives the husband is called: Select one: a. Temporary annuity certain b. Life annuity certain c. Joint life annuity d. Joint life and survivorship annuity
D
An underwriter will consider which of the following conditions in making their decision to approve an application for insurance? Select one: a. A condition that is contracted after the first premium is paid b. A condition that occurs after the policy is issued c. A minor childhood sickness d. A condition that occurs prior to making an application for insurance
D
If, after a hearing, the Superintendent finds that an individual has engaged in an unfair practice, the Superintendent can take all the following actions, EXCEPT: Select one: a. Suspend the individual's license b. Revoke the individual's license c. Assess a civil penalty d. Jail the individual
D
Life insurance dividends are: Select one: a. Taxable only if received as cash b. Tax-deferred until withdrawn c. Taxable d. Not taxable
D
Mark names his wife and children as beneficiaries on his life policy. They would not be considered: a. Irrevocable beneficiaries b. Contingent beneficiaries c. Primary beneficiaries d. Other insureds
D
Philip named his wife Mary as the primary beneficiary of his life insurance policy. His children are contingent beneficiaries. Under the Uniform Simultaneous Death Act, who will receive the death benefit if Mary and Philip are in a car accident and there is no evidence of who died first? Select one: a. Mary's estate b. Philip's estate c. Mary's children from her prior marriage d. Philip's children from his prior marriage
D
Standard dividend options for a participating policy may be any of the following, EXCEPT: Select one: a. Accumulate at interest b. Purchase paid up additions c. Reduce premiums d. Provide guaranteed insurability
D
Under what situation will the terms of a policy be honored if fraudulent answers were given to the questions on the application for health insurance? Select one: a. He must keep the policy until the time for certain defenses expires. b. He will only be covered for accidents. c. His agent can rewrite the policy once the company discovers the fraudulent information. d. His policy will be cancelled when fraud is discovered.
D
Underwriting considerations for group coverage employ which of the following considerations? Select one: a. Groups are rated based on the oldest insured in the group. b. Groups are rated without consideration of the number of men versus women. c. Groups that are large pay higher premiums. d. Groups usually do not have a requirement for medical exams.
D
Using an insurance license to sell mainly to relatives is referred to as: Select one: a. A familial business b. An incestuous business c. A paternal business d. A controlled business
D
What law requires that an applicant be notified that an insurance underwriter may request a report from an investigative agency? a. Freedom of information Act b. Medical Information Bureau Disclosure Act c. Uniform Provision Law d. Fair Credit Reporting Act
D
When does the clock start running on the free look provision of a life policy? Select one: a. When the application is taken b. When the underwriting is approved c. When the policy is released for delivery d. When the policy is delivered to the insured
D
Which of the following is NOT a right of the owner of a life insurance policy? Select one: a. Changing the irrevocable beneficiary b. Implementing a verbally agreed change c. Borrowing funds before cash value exists d. All of the above
D
Which of the following is a difference between a limited-pay whole life policy and a straight life policy? Select one: a. The face amount and and premiums are level. b. The insurer guarantees the cash value. c. The insurer guarantees the face amount. d. The premiums are higher
D
Which of the following is a typical characteristic of a whole life insurance policy? Select one: a. The premiums remain level for the entire period that the policy is in force. b. Whole life policies have a guaranteed cash value. c. The face amount of the policy does not change while the policy is in force. d. All of the above
D
Which of the following is an effective and legal way to deliver a policy? Select one: a. Personal delivery by an agent b. Mailing the policy to the policyowner c. Giving the policy to an agent of the policyowner d. All of the above
D
Which of the following is not true about the accelerated benefit rider? Select one: a. The insured must have a terminal illness to receive the benefit. b. Confinement in a nursing home sometimes suffices for payments to be made. c. The benefit is not subject to tax. d. Provides a monthly check when you become disabled.
D
Which of the following is true about immediate annuities? Select one: a. They cannot be purchased with one payment. b. They can begin payouts within two years of the first premium payment. c. They have annuity periods that are sometime (defined in the contract) in the future d. They do not have an accumulation period.
D
Which of the following is true about the waiver of premium rider on an insurance policy? Select one: a. The premiums are waived during the period of the disability b. There is usually a waiting period for the benefit to kick in. c. There is an additional premium charged for this coverage. d. All of the above
D
Which of the following pertains to Modified Endowment Contracts (MECs)? Select one: a. Once a MEC, always a MEC. b. Funds withdrawn are subject to LIFO (Last in first out) tax treatment. c. Any policy exchanged for an MEC is automatically classified as an MEC. d. All of the above
D
Which of the following premium methods will most likely cause the insured to pay the most premium over the life of their policy? Select one: a. Net single premium b. Annual premium c. Quarterly premium d. Monthly premium
D