Life and Health Insurance Exam
Allison has a guaranteed insurability rider attached to her permanent policy. Which of the specified intervals can she purchase additional life insurance without having to provide evidence of insurability?
3-year intervals
Eligible employees of a contributory or noncontributory plan have how many days after the probationary period to sign up for their group insurance?
31 days
Kurt is a high school teacher at the local public school. Which of the following plans would he most likely invest in?
403(b) plan
Most state laws allow life insurance application to be backdated up to
6 months
The term "vesting" determines when employees own the money in their plan. For employer contributions, employees are generally 100% vested after
6 years
Leah owned a life insurance policy, and she decided that she wanted to transfer that policy to her son when he turned age 18. Which of the following assignments did Leah choose?
Absolute assignment
Which of the following movements of cash value under a Section 1035 has tax consequences?
Annuity contract to a life insurance policy
Which of the following is NOT a common underwriting consideration in group insurance?
Average age of the group
Joe's Print Shop has 50 employees, and he offers a retirement plan that allows employees to defer a portion of their compensation into the plan. The plan also requires the employer to match 1% and up to 3% of the employee's compensation into the plan. Which of the following plans does Joe's Print Shop offer to their employees?
Savings incentive match plan for employees
Which of the following uses of personal life insurance would meet the need of protecting a spouse or a child who depends on the financial support of a family member?
Survivor protection
The insured and the primary beneficiary are in a horrible car accident, and both die on the scene. Which of the following solves the problem of "Who died first?" assuming that the primary beneficiary died first?
The Uniform Simultaneous Death Act
Which of the following is NOT one of the 3 factors used to determine the minimum length of the payment period with the fixed amount settlement option?
The age of the insured
Which of the following statements about a deferred annuity is NOT true?
The deferred annuity owner must annuitize the contract
When denying or paying a claim, which of the following is what the insurer will look at when making her decision?
The entire contract
If a house burns down in a fire, which of the following is the peril?
The fire
If an insured commits suicide 3 years after the effective date on his policy, how will his life insurance be paid?
The full face amount will be paid
If a beneficiary chooses the lump sum option at the death of the annuity owner, what amount of money is taxable?
The gain
According to the law of large numbers, which of the following is TRUE?
The larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred
All of the following statements about a deferred compensation plan are correct EXCEPT
an employer agrees to pay an employee a stated amount of income now instead of at retirement
A car manufacturer offers insurance to all of its employees. This type of group is called
an employer group
All of the following statements about an irrevocable beneficiary are true EXCEPT
an irrevocable beneficiary can be changed with written consent from the policyowner
In a life insurance contract, insurable interest must exist at the time of
application
The life-only annuity option is also referred to all of the following EXCEPT
life with refund
Charles and Suzanna both agree to pay premiums on their policies for the next 20 years. After that, they will no longer have to pay premiums, but their insurance coverage will continue until they die. Charles and Suzanna have
limited payment whole life policies
The producer's report will be signed by
only the producer
All of the following are possible options for term riders EXCEPT
permanent
A converted policy must be
permanent insurance
All of the following are advantages of whole life insurance EXCEPT
premiums are lower than other types of life insurance policies
All of the following statements regarding income tax treatments of life insurance and annuities are correct EXCEPT
premiums paid for individual life insurance are taxable when the policy is surrendered
All of the following are examples of liquid assets EXCEPT
real estate
Consideration is a legal term meaning
something of value
All of the following statements regarding surplus lines insurers are correct EXCEPT
surplus lines insurance is placed with an admitted carrier by a surplus lines agent
The period between the purchase of an annuity and when the benefits begin is called
the accumulation period
Changes in an insurance application must be initialed by
the applicant
All of the following statements about the convertibility feature in a term policy are correct EXCEPT
the conversion must be made after the policy expires
All of the following are riders that affect that amount of a death benefit EXCEPT
the disability income rider
All of the following are parties to a trust EXCEPT
the insurer
In an insurance contract, the second party is
the insurer
All of the following statements about interest-sensitive whole life are correct EXCEPT
the interest-sensitive policy has an adjustable death benefit
All of the following statements about reinstatements are correct EXCEPT
the premium for the reinstated policy will be more than the original
According to the law of agency, the person on whose behalf the insurance agent is called upon to act is called
the principal
All of the following are elements of insurable risks EXCEPT
the risk must be catastrophic for the insurance company
With a deferred annuity, the amount paid as the death benefit is the greater of the accumulated value of the annuity or
the total premiums paid, minus any withdrawals
With the waiver of premium rider, the insured must be unable to work for a certain period. This is called
the waiting period
All of the following statements about the required minimum distributions (RMDs) of an IRA are correct EXCEPT
there is a 25% penalty on taxes owed if minimum distributions are not taken
All of the following statements about a nonqualified plan are correct EXCEPT
these plans get favorable tax treatment
All of the following statements endorsements are correct EXCEPT
they can be authorized by an agent or producer
At the state level, the government is involved in providing
unemployment insurance
All of the following statements about the annuitization period are correct EXCEPT
when the annuitization period starts, additional premium payments can be made
All of the following statements about withdrawals are true EXCEPT
withdrawals can be repaid
ABC Insurance is licensed to sell insurance in Wisconsin. When a company is licensed in a state, it is considered
admitted
All of the following statements about a modified endowment contract (MEC) are true EXCEPT
an MEC is not considered to be life insurance
If an withdrawal of an annuity is taken before age 59 1/2, there is
an additional 10% penalty on taxable earnings
Insurers cannot discriminate between individuals in all of the following EXCEPT
income
Accelerated death benefits advance the payment of death benefits to a person if she has been diagnosed with a qualifying event that will lead to her death within
24 months
Which of the following annuities has a value that will never be less than the amount paid into the contract?
Fixed annuities
According to the free look provision, how many days does a policyowner have a policy for any reason?
10 days
Which of the following represents a pure risks?
A car accident
Social Security suspends payment during which of the following periods?
Blackout period
What does an individual employee receive for evidence of her insurance coverage in a group policy?
Certificate of Insurance
Which of the following statements about a Roth IRA is INCORRECT
Contributions are never deductible
Which of the following term policies has a level premium throughout the policy and a decreasing death benefit?
Decreasing term
Which of the following is considered to be a return of the portion of the premium paid for the policy?
Dividends
Which of the following is NOT a tax advantage of an employer-sponsored qualified plan?
Employee contributions are taxable as current income to employees
Which of the following levels of agent authority is a written agreement with the insurer?
Express Authority
Emily is 10 years old when her mom passes away. Which of the following distinct income periods is Emily in?
Family dependency period
Which of the following would NOT be included in the second part of an insurance application?
Income
Which of the following settlement options pays a stated amount of interest on the money at regular intervals?
Interest income (only) option
Tim filled out an insurance application stating that he was 40 years old when if fact he was 43 years old. According to the misstatement of age provision, how would his insurance policy be adjusted?
It would be adjusted to a lower face amount
ABC Company is owned and operated by Sam Smith. If Sam were to suddenly die, the business would suffer severe financial harm. Which of the following coverages should ABC Company buy?
Key person coverage
All of the following statements about estate tax treatment are correct EXCEPT
Life insurance death benefits are not counted as value in a deceased insured's estate if they are payable to the estate
Which of the following annuity payout option pays the highest monthly income?
Life-only option
Which of the following maintains underwriting information on applicants?
Medical Information Bureau
The Affordable Care Act(ACA) eliminated pre-existing conditions exclusions for which of the following policies?
Medical expense policies
Which of the following is NOT a common exclusion in life insurance policies?
Natural disasters
Sarah purchases a universal life policy with an increasing death benefit equal to the face value of the policy plus the cash account. Which of the following death benefit options did Sarah choose?
Option B
An applicant's name, address, date of birth, and gender are included in which part of the application?
Part 1
Tina and William have a policy with a death benefit that is distributed equally among all surviving members of their immediate family. Which of the following beneficiary designations did they choose?
Per capita
Which of the following situations in a group life insurance policy is tax deductible?
Premiums paid by an employer in a contributory group insurance plan
Which of the following is a defined contribution plan that does NOT require an employer to make a funding contribution every year?
Profit-sharing plans
Nathan and Cheryl have a combined adjusted gross income that is under the minimum limit. For this reason, what portion of their contribution can be deducted?
Their entire contribution
Which of the following risk management methods is used by insurance companies?
Transfer
Which of the following is designed to deter terrorist activity, both globally and in the United States in particular?
USA PATRIOT Act
Which of the following insurance policies allow for partial surrenders from the cash value?
Universal life
Suzanne and her spouse Bill were unable to make a premium payment in January. How long do they have to make a payment until their coverage will lapse?
Up to 31 days
Which of the following types of life insurance requires a producer to have an insurance license and a securities license?
Variable life insurance
Which of the following statements about variable policies is NOT true?
Variable policies have a guaranteed rate of return
Which of the following policies covers routine eye care and vision correction?
Vision care policies
Josephine sells insurance for one company and is an independent, NOT an employee of the insurer. She is
a captive agent
Susan decides to drive fast in a horrible snowstorm because she knows that if she gets in an accident, her insurance will cover her. This is an example of
a morale hazard
Sam's graphic design and Amy's floral vision join together to form a trust to provide insurance to their employees. This type of group is called
a multiple employer trust
A withdrawal from a life insurance policy is also known as
a partial surrender
A fiduciary is
a person in a position of financial trust
Randy has an IRA in which the money from the original IRA or qualified plan is distributed directly to the new IRA carrier without coming into the owner's possession. This is an example of
a transfer
All of the following are disability riders EXCEPT
accelerated benefits rider
With the life with period certain settlement option, if the beneficiary dies before the end of the selected payout period, payments
continue to another person for the rest of the payout period
When lenders extend credit for a large purchase, they often require the debtor to purchase
credit disability insurance
A bulk-mail insurance advertising brochure sent by the insurer to every home in one zip code is an example of
direct response marketing
All of the following are common health insurance exclusions EXCEPT
dread disease
With group credit life insurance plans, the amount of insurance is
equal to the debt owed