Practice quizzes life insurance

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the commissioner

12 months

If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days of the date that the contract is executed

15 days

If an insurer terminates a producer, the Commissioner must be notified. How many days does the insurer have to deliver this notice?

30 days

Within how many days does a license have to inform the commissioner of a change of address

30 days

What is the penalty for IRA distributions that are below the required minimum for the year

50%

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Which of the following is not an allowable 1035 exchange

A whole life insurance policy is exchanged for a term insurance policy

Which concept is associated with "exclusion ratio"

Annuity payments

Producers are permitted to share or split commissions, providing that

Both are properly licensed for the line of insurance.

An insured receives an annual life insurance dividend check. What term best describes this arrangement?

Cash option

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate Authority

When a policy owner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called

Class designation

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

When must an IRA be completely distributed when a beneficiary is not named?

December 31 of the year that contains the fifth anniversary of the owner's death.

Which of the following will not be considered unfair discrimination by insurers

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Which of the following is true regarding taxation of dividends in participating policies

Dividends are not taxable.

What method is used to determine the taxable portion of each annuity payment

Exclusion ratio

In a direct transfer, how is money transferred from one retirement plan to a traditional IRA

From trustee to trustee

Which is true about the cash surrender nonforfeiture option

Funds exceeding the premium paid are taxable as ordinary income.

Life insurance death proceeds are

Generally not taxed as income

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 circumstances

The commissioner may waive prelicensing requirements or examinations for someone who has been a licensed insurance producer

In preceding 12 months

Who can make a fully deductible contribution to a traditional IRA?

Individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.

Which statement regarding insurance risks is not correct

Insured's cannot be randomly selected

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

Michigan's continuing education requirement has each of the following characteristics except

It allows for up to 15 excess credit hours to be carried forward to the next reporting period

Which of the following is true about the 10-day free look period in a life insurance policy

It begins when the policy is delivered

Which of the following is true of a qualified plan

It has a tax benefit for both employer and employee.

All of the following statements are true regarding installments for a fixed period annuity settlement except

It is a life contingency option

All of the following statements are true regarding installments for a fixed period annuity settlement option except

It is a life contingency option.

In which of the following situations is it legal to limit coverage based on marital status

It is never legal to limit coverage based on marital status

The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of year is called

Life income with period certain

Is an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to

Live at least to his life expectancy

Which of the following is not true regarding policy loans

Money borrowed from the cash value is taxable.

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government

Under a pure life annuity, an income is payable by the company

Only for the life of the annuitant

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

Pay a reduced death benefit

Which of the following best describes a pure life annuity settlement option

Pure life provides payments for as long as the annuitant is alive.

Which type of retirement account does not require the owner to start taking distributions at age 72?

Roth IRA

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option

A licensed counselor MAY NOT perform which of the following duties?

Solicit business as an insurance producer

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend

Straight life

The interest earned on policy dividends is

Taxable. Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.

Which of the following best describes taxation during the accumulation period of annuity

Taxes are deferred

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

The contingent beneficiary

Which of the following individuals could qualify for a temporary insurance license

The designee of a producer that is called to active service with the Navy

Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insured's death

The minor son of the insured

Which of the following is true regarding a market value adjusted annuity

The owner is guaranteed a fixed interest rate for a specific period of time.

What happens if a deferred annuity is surrendered before the annuitization period

The owner will receive the surrender value of the annuity.

All of the following statements are true regarding installments for a fixed amount except

The payments will stop when the annuitant dies.

Which of the following best describes what the annuity period is

The period of time during which accumulated money is converted into income payments

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

Which of the following is not true regarding equity indexed annuities

They earn lower interest rates than fixed annuities.

Which of the following is true for both equity indexed annuities and fixed annuities

They have a guaranteed minimum interest rate.

All of the following are true regarding guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

The two types of assignments are

absolute and collateral

Which of the following is a short term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated

annuity certain

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

discrimination

Which of the following terms is used to name the nontaxed return of unused premiums

dividend

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

false advertising

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

illegal

A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

immediate

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

larger

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

pure life

An insurance company receives an application with some information missing and issues the policy anyway. What is this called

waiver