End of Chapter Questions 2

Roth IRA

Which type of account allows contributions to continue beyond age 70.5 and does not start distribution to start at age 70.5?

The insurance company

Who bears all the investment risk in a fixed annuity?

Insurer

Who sets premium rates?

0. The policy terminates immediately.

With the cash surrender nonforfeiture option, how long does the policy remain active after the value is paid out?

Cash value

What limits the amount that a policyholder may borrow from a whole life insurance policy?

Profit Sharing Plan

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?

cash option

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

Term

Children's riders attached to whole life policies are usually issued as what type of insurance?

10 days

How long is the right to examine period for new individual annuities issued in this state?

Interest Only

Which settlement option allows the insurer to retain the face amount but pay some income based on gain on the proceeds to the beneficiary at regular intervals?

The insured's premiums will be waived until she is 21

A father owns a life insurance policy on his 15 year old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The beneficiary will only receive the interest earned on the death benefit.

A primary beneficiary discovers upon the death of her uncle that he chose the interest only option. What does this mean?

cost of living rider

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the consumer price index, is called

d. an annually renewable term policy with a cash value account

A universal life insurance policy is best described as... a. a variable life with a cash value account b. whole life policy with two premiums: target and minimum c. flexible premium variable life policy d. an annually renewable term policy with a cash value account

3%

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest rate is 3%. During an economic downswing, the investment only drew 2.5%. What interest rate will the insurer pay to its policyholders?

Adjustment in the amount of death benefit

An insured misstates her age at the time the life insurance application is taken. When a claim is filed upon her death, this misstatement may result in?

Conservative investments like bonds

In reference to fixed annuities, what comprises most of a life insurance company's general account?

Prospective Review

What is the process by which a physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the unsure'd plan and at what rate it will be paid?

Misrepresentation

What is the term for: Making false or misleading statements with the intent to defraud another?

The insurance company's general account

When a fixed annuity owner pays his insurance company a monthly annuity premium, where is the money placed?

purchase a single premium policy for a reduced face amount

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Fixed Amount

When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Income for 2 or more recipients until they die.

The life joint and survivor option guarentees

$2500

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

Automatic premium loan

What protects the insured from an unintentional policy lapse due to nonpayment of premium?