Exam Missed Questions

Which of these is NOT considered to be an example of misrepresentation?

A producer comparing the benefits of competing insurance policies

What qualifies as acceptance of an insurance contract offer?

An issued policy

Which statement regarding the cash value of a whole life insurance policy is correct?

Available to the policyowner when policy has been surrendered.

What must be given to a life insurance applicant when the agent receives an application and the initial premium?

Conditional receipt

Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions?

Conduit IRA

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

Which statement regarding the joint and survivor life insurance settlement option is NOT true?

The amount of each installment is larger that the single life income option

Which of these is not considered a type of limited payment whole life insurance?

endowment at age 70

Which settlement option makes minimum guaranteed dollar payments over a stated number of years?

fixed-period

A condition that increases the possibility of financial loss is called a

hazard

Group life insurance is typically issued as

level term insurance

Which is an accurate description of the premium is a graded premium life insurance policy?

Annual increases in premium for a stated number of years then remains level

A producer sold a life insurance policy but did not provide the applicant with a basic illustration. In his situation, the insurer is required to provide the applicant with a policy summary no later than?

policy delivery date

Which action will trigger a penalty tax on premature distributions from a modified endowment contract MEC?

policy loans

What typically changes at the re-entry option date found in some term life policies?

premium

Which benefits can be found in an equity indexed annuity, but not in a fixed annuity?

protection against long term inflation

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends

qual the net single premium for the same face amount at the insured's attained age

How are qualified ROTH IRA distributions normally treated for tax purposes?

received income tax-free

What could be the potential result of taking out a cash value loan under a life insurance policy?

reduces the amount receivable upon surrender of the contract

An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this?

reinsurance contract

What kind of arrangement gives the policyowner the right to change the beneficiary? Contestable designation Incontestable designation Irrevocable designation Revocable designation

revocable designation

How are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?

taxed as ordinary income in the year received

A hold-harmless clause is an example of risk

transfer

What would be the disadvantage of naming a trust as beneficiary of a life insurance policy?

trust administration fees would reduce policy proceeds

If an individual retirement account (IRA), rollover contributions are

unlimited by dollar amount

During the application process, a statement made by an applicant that becomes part of the contract is considered to be a?

warranty

Which life insurance policy would be eligible to include an automatic premium loan provison

whole life

The conversion option for group term insurance may be exercised by an employee

within 31 days of terminated employment

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

20% of the funds could be forfeited

An individual working part-time has a gross income of 5k for the year. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

5k

Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?

Date of issuance of the conditional recept

An annuitant is paid $495 per month until the contract value is exhausted at some undetermined date in the future. Which type of annuity payout option is this?

Fixed amount

What is considered a valid reason for small corporations to insure the lives of its major stockholders?

Fund a buy-sell agreement

All of these are considered features of whole life insurance EXCEPT

Initial premium lower than for an equivalent amount of term insurance

Which statement regarding the certificate of insurance is accurate?

It indicated evidence of an employee's insurance coverage

Which of these pays an income to two or more annuitants until the death of the last annuitant?

Joint and survivor annuity

A life insurance beneficiary died after receiving only 6 payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?

Kept by the insurance company

Which element of a contract constitutes a definite and unqualified proposal by one party to another?

Offer

When a deferred annuity is surrendered, who must sign the authorization to do so?

Owner

Which of the following outlines the authority given to the producer on behalf of the insurer?

Producer contract

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?

When the contract has been held for the period specified in the policy

Which statement regarding a single premium life insurance policy is NOT correct?

additional premiums may be required under certain conditions

If replacement was involved in the sale of a life insurance policy, a producer must provide a replacement notice no later than the

application date

In a qualified retirement plan, the yearly contributions to an employee's account

are restricted to maximum limits set by the IRS

Employers often purchase life insurance on a key employee in order to

pay for finding and training a replacement if the employee dies prematurely

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to

periodically purchase additional insurance

A life insurance policy's contingent beneficiary is the

person who receives the death benefits if the primary beneficiary dies before the insured

The death proceeds of a credit life insurance policy are typically paid to the

lender

Which of these occurrences could improve an insurer's ability to reduce premiums?

Rate of earnings on investments increase

How does the cost for a survivorship life policy compare to the cost of combining two separate life insurance policies? Survivorship life policy is lower Survivorship life policy is higher Depends on the investment performance of the underlying accounts Both have the same actuarial costs

Survivorship life policy is lower

Which statement regarding a fixed period settlement option is correct?

The installment payment amount is determined by the total number of installments

Which statement regarding the waiver of premium rider is accurate?

cash payment is not directly provided to the policyowner

Which statement regarding universal life insurance is correct?

cash value accumulations have a guaranteed minimum interest rate

The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n):

conditional contract

The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of

consideration

Which term refers to insurance written on the interests of the licensee, the licensee's employer or the licensee's immediate family?

controlled business

An appointed producer's implied authority is derived from

express authority

How long does one premium payment cover in a single premium whole life policy?

full life of the policy

Insurable interest in one's own life is legally considered as

generally unlimited

A life annuity with period certain is characterized as

guaranteeing benefit payments for stated minimum number of years

With life insurance, the needs approach is used primarily in determining

how much life insurance a client should apply for

An annuity which starts paying monthly benefits within a month after issuance is called a(n)

immediate annuity

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

income tax and penalty tax

When premiums are determined, one factor would be the expenses of the

insurer

When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?

irrevocable beneficiary

Which of the following is associated with an immediate annuity?

lack of an accumulation period