Questions I got Wrong

What is a synonym for a "minimum deposit plan?"

Financial Plan

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants.

The source of funds from which life insurance policy dividends are paid include all of the following EXCEPT

Loss of insurance

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

Modified Endowment Contract

B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B?

Modified life

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy.

what is the difference between a straight life policy and a 20 pay whole life policy

Premium payment period

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

a fixed amount

a whole life policy is surrendered for a reduced paid up policy. the cash value in the new policy will

continue to increase

when a whole life policy is surrendered for its nonforfieture value, what is the automatic option?

extended term

All other factors being equal, which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

greatest

all of the following information needs to be included on an application for life insurance except

health insurance policies in force

during the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a min, rate as specified in the contract, or the current interest rate. whichever is

higher

which of the following is NOT a component of an insurances policy premium

number of beneficiaries

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family Term Rider

The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the

Spendthrift Clause

which of the followings true about the social security program

it is mandatory for most workers to pay FICA taxes

which of the following riders would NOT cause the death benefit to increase

payor benefit rider

all of the following are true about key persons insurance EXCEPT?

the death benefit is taxable to the business

some deferred annuities include an adjustment that subjects the owner of the annuity to share in all loss or gain due to premature liquidation of bonds. this feature is found in

A market value adjusted annuity

all of the following statements about mutual insurance companies are correct EXCEPT

policy dividends issued by mutual companies are guaranteed and not taxable

an annuity would normally be purchased by an individual who wants to

provide income for retirement

When a closely held corporation enters into an agreement with its stockholders to insure each of them individually for the purpose of buying their stock, should any of them die, it is called

Stock redemption plan

life insurance polices can provide which of the following

survivor protection

Which of the following characteristics applies to defined benefit plans but not defined contribution plans?

the amount of contributions made by the employer is determined by an actuarial formula

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

50% tax on the amount not distributed as required

An insurance producer just sold an insurance policy to his sister. What kind of business is this?

Controlled

ten years ago an insured purchased a life insurance policy designed to pay his family $500 a month for 20 years. last month he was killed in an accident. the insurance company told his widow that she would receive 500 a month for the remaining years of the policy. what policy is this?

Family income policy

A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?

Family maintenance

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

which of the following is NOT a personal use of life insurance

an individual buys insurance to fund a buy-sell agreement

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

life insurance creates an immediate estate. which of the following best explains this statement

The face value of the policy is payable to the beneficiary upon the death of the insured

When making a charitable gift of a life insurance policy, what must the donor do to receive the tax advantages available?

the owner must give all rights of ownership to the charity

What is the purpose of the applicant control clause?

to allow an adult to control the policy until the minor reached the age of majority

which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value

variable whole life

Paid-Up Additions

Additional single-premium Life insurance paid for by policy dividends and added to the face amount. For example, your mutual insurer declares a $100 dividend, which you could have taken as cash. Instead, you ask them to use the money to buy you an additional Whole life policy, which is paid up to age 100. Although this additional policy is small, no physical exam is required, so this option is very popular with clients who have health problems. Over a period of time, you can obtain substantial additional coverage.

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

Respond to the consumer's complaint.

Which of the following best describes gross annual premium?

The annual cost of mortality plus expenses

Partners in a business want to make sure that if one of them dies their surviving family will receive a fair value for their portion in the business. what life insurance arraignment would this be?

buy sell agreement

According to agency law, the agent always represents

insurance company

If an insured purchased an insurance policy with a large deductible, what risk management technique is the insured exercising?

retention

in a defined benefit plan

the benefit is know and the contributions is unknown

Whenever an agent is acting in the scope of his or her authority, the knowledge and acts of that agent are deemed to be those of

the insured

the provision that sets forth the basic agreement between the insurer and the insured and states the insurers promise to pay the death benefit upon the insured's death is called?

insuring clause

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 . The face of the term policy would be the same as the face amount provided under the whole life policy

Which is true about a spouse term rider?

The rider is usually level term insurance

When an annuity is used to provide savings for the education expenses a last in first out (LIFO) arrangement is used. what is the last money to go into an annuity?

interest

Under what type of insurance plan is the cash value of a permanent policy used to pay the policy premiums through policy loans?

minimum deposit