Pre-Licensing Education Insurance & Annuities

An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowance?

$2,500

K pays on a $20,000 20-year endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000

An individual has a major medical policy with a $5,000 deductible and an 80/20 coinsurance clause. How much will the INSURED have to pay if a total in $15, 000 in covered medical expenses are incurred?

$7,000

The Commission of Insurance must give __ days notice before holding a hearing regarding a producer's unfair practice.

10

Premature IRA distributions are assessed a penalty tax of

10%

A policyowner would like to change the beneficiary on a life insurance policy and make the change permanent. What type of designation would fulfill this need?

Irrevocable

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?

Irrevocable beneficiary

What type of policy covers two people and pays upon the death of the last insured?

Joint

Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?

Joint Life

With whom may a producer share commissions with?

Licensed producer

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 20 years.What type of annuity is this?

Life Annuity with Period Certain

Which settlement option pays a stated amount to an annuitant, but no residual value to a benefiiary?

Life Income

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?

Life settlement contract

Nursing home benefits must be provided for 12 consecutive months in which of the following types of policies?

Long-Term Care

Which of the following health insurance policies is BEST suited for meeting the needs of catastrophic illness?

Major Medical

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for

Modified Whole Life

Which of the following is TRUE about a qualified retirement that is "Top heavy?"

More than 60% of plan assets are in key employee accounts

P and Q are married and have 3 children. P is the primary beneficiary on Q's Accidental Death & Dismemberment (AD&D) Policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The accidental death benefit will be paid to

P Only

What does Medicare Parts A and B cover?

Part A covers hospitalization; Part B covers doctors' services

Which of these is considered a mandatory provision?

Payment of Claims

Which of the following best describes a contingent beneficiary?

Person designated by the insured to receive policy proceds in the event that the primary beneficiary dies before the insured

On a life insurance policy, who is qualified to change the beneficiary designation?

Policyowner

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

Which of the following statements regarding a Tax-Sheltered Annuity (TSA) is INCORRECT?

The income from the TSA is received income tax-free

Which statement regarding the Change of Beneficiary provision is true?

The policyowner can change the beneficiary

How does a typical Variable Life Policy account grow?

Through mutual funds, stocks and bonds

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are true to the best of the applicant's knowledge

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors?

Universal Life

Which of the following phrases refers to the fees charged by a healthcare professional?

Usual, customary, and reasonable expenses

Which of these types of life insurance allows the policyholder to have level premiums and to also choose from a selection of investment options?

Variable Life

A producer MUST deliver a Notice to Applicant Regarding Replacement of health insurance at which of the following times?

When the application is taken

ABC Insurance Company is replacing an existing life policy from XYZ Incurance Company. ABC Insurance Company must provide which of the following documents to XYZ Insurance Company?

a policy summary

Group life insurance policies are generally written as

annually renewable term

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance

A person who is insured within a group contract will be given a

certificate

What type of group insurance plan involves employees sharing the cost?

contributory plan

Acme Insurance Company conducts business in Mississippi and was incorporated in Mississippi. This company is considered to be a(n)

domestic insurer

Under a trustee group life policy, who would be eligible for a certificate of coverage?

employee

The life insurance and annuity replacement regulation defines replacement as

exchanging an existing policy for a new policy

Long Term Care policies in Mississippi must contain all of the following EXCEPT

guarantee of issue at age 65

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

How would a contingent beneficiary receive the policy proceeds in an Accidental Death & Dismemberment (AD&D) Policy?

if the primary beneficiary dies before the insured

When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is

income

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable life policy?

increase face amount

Which of these actions should a producer take when submitting an insurance application to an insurer?

inform insurer of relevant information not included on the application

The phrase "This policy will only pay for a semi-private room" is an example of a(n)

internal limit

The Accidental Death & Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured

is blinded in an acident

T aplies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or the medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?

Conditional receipt

Which of the following consists of an offer, acceptance, and consideration?

Contract

Which provision allows a policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

In a Disability Income policy, which of these clauses acts as a deductible?

Elimination period

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?

Entire cash surrender value is taxable

Long term care policies will usually pay for benefits using which of the following methods?

Expense incurred

E and F are business partners. Each takes out $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminat their business, and 4 months later E dies. Although E was married with 3 children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policy's cash value

Which health policy clause specifies the amount of benefits to be paid?

Insuring

A level premium indicates:

the premium is fixed for the entire duration of the contract

A producer must notify the Commission of Insurance within __ days of an address change.

30

What kind of life insurance product covers children under their parent's policy?

A Term Rider

Which provision is NOT a requirement in a group life policy?

Accident

Which of the following actions must be taken by an insurance company that wants to conduct business in Mississippi?

Acquire a certificate of authority

Which of the following statements is CORRECT regarding the taxt treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

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

Who would be given an exemption from licensing requirements in Mississippi?

An employee of a licensed producer who only answers phones and schedules appointments

Which premium schedule results in the lowest cost to the policy owner?

Annual

Which type of contract liquidates an estate through recurrent payments?

Annuity

When a policyowner cash surrenders a Universal Life policy in its early years, this may be considered a red flag for a(n)

Anti-Money Laundering Violation

S has a whole life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Automatic Policy Loan

G is an accountant who has 10 employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is

Business Overhead Expense

Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deductible?

Carryover provision

An example of Life insurance policy replacement would be which of the following?

Cash surrender an existing life policy and purchasing a new life policy

Which of the following BEST defines unfair discrimination?

Charging different rates for individuals in the same risk class

P is a Major Medical policyowner who is hospitalized as a result of injuries sutained from participating in a carjacking. How will the insurer most likely handle this claim?

Claim will be denied

A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The original neck injury was never disclosed to the insurer at the time of the application. How will the insurer handle this claim?

Claim will be paid and coverage will remain in force

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance Policy

S, while in the process of converting her group life insurance policy to an individual policy, dies. What happens to the claim her beneficiary submits?

Full benefits are payable under the master contract

A medical care provider which typically delivers health services at its own local medical facility is known as a

Health Maintenance Organization

S wants to open a tax-exempt Health Savins Account. To qualify for this type of account, Federal Law dictates that S must be enrolled in a

High-deductible health plan

Under federal tax laws, what is thetax treatment for an employer providing $50,000 of a contibutory group Term Life plan to all its eligible employees?

Portions of the premiums paid for by the employer may be a tax deduction

A policyowner is able to choose the frequency of premium payments through what policy feature?

Premium Mode

Which of the following statements is correct regarding the premium payment schedule for whole life policies?

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

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies?

Proceeds will go to the contingent beneficiary

A Disability Income policyowner suffers a disability that was due to the same cause as a previous disability. Both disabilities occurred within a five-month period. The insurer may cover the second disability without a new elimination period under the:

Recurrent disability provision

J is a producer who is recommending that an insured surrender an existing life insurance policy and purchase a new one. Which provision would this producer be subject to?

Replacement

T is coverd by an Accidental Death & Dismemberment (AD&D) policy that has an Irrevocable Beneficiary. What action will the insurance company take if T tries to change his named beneficiary?

Request of the change will be refused

J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?

Revocable

What does a 401(k) plan generally provide its participants?

Salary-deferral contributions

Which of the following statements about the classification of applicants is INCORRECT?

Substandard applicants are never declined by underwriters

A policy of adhesion can only be modified by whom?

Th insurance company

On delivery of a policy, a signed statement of good health is generall required if

The application was submited without the initial premium

The Common Disaster clause provides that if both the insured and the sole named beneficiary were to die in a common acident, which of the following is true?

The clause provides the payment of proceeds to the insured's estate

An insurance producer is guilty of twisting if the producer

misrepresents a policy to induce a policyowner to surrender an existing policy

Life insurance replacement regulation is designed to protect the interests of the

policyowner

A producer has returned part of his commission to the insured as an inducement to purchase the insurance. This illegal action is called

rebating

Upon delivery of a rated life insurance policy, the producer must obtain each of the following, EXCEPT

signed HIPAA disclosure

The investment gains from a Universal Life Policy usually go towards:

the cash value

T is a producer who forgot to renew her license. She may reapply for a license without an examination

within one year after no renewal