Life and Health, missed questions
Which of the following is TRUE about credit life insurance? a) Debtor is the policy beneficiary. b) Creditor is the policyowner. c) Debtor is the annuitant. d) Creditor is the insured.
b In credit life insurance, the creditor is the policyowner and the beneficiary; the debtor is the insured
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary? a) Income tax on distributions plus 10% penalty. b) Capital gains tax on distributions and no penalty. c) Capital gains tax on distributions plus 10% penalty. d) Income tax on distributions and no penalty.
d If the beneficiary chooses to leave the money in the tax-deferred account until the calendar year in which the owner would have attained age 70½, the distributions would be subject to income taxation at the rate at the time of withdrawal
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a) Nonforfeiture option. b) Guaranteed insurability rider. c) Paid-up additions option. d) Cost of living provision.
b The Guaranteed Insurability rider allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a) Statewide predetermined annual interest rate b) Insurer's guaranteed minimum rate of interest c) Investment performance of the company d) Investment performance of the insured
b With fixed annuities, the company is required to pay at least a guaranteed minimum rate of interest to the owners. If the company investments perform well, the company will pay a higher interest rate, but since the interest rate can never fall below the guaranteed minimum, that's what ultimately determines what the company will pay.
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? a) $8,000, 30 days b) $10,000, 60 days c) $10,000, 30 days d) $8,000, 60 days
d Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a) Settlement option. b) Nontaxable exchange. c) Nonforfeiture option. d) Rollover.
a A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.
To avoid violating the state Insurance Code regarding unfair claims settlement practices, insurers must pay a claim within how many days of the final agreement to the settlement? a) 5 days b) 10 days c) 30 days d) 90 days
a Claims must be paid within 5 days of the final agreement to the settlement.
In insurance, an offer is usually made when a) The completed application is submitted. b) The insurer approves the application and receives the initial premium. c) The agent hands the policy to the policyholder. d) An agent explains a policy to a potential applicant
a In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy
An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments? a) It is used to lower premiums. b) It is paid out as dividends. c) It is used to fund executive bonuses d) It is used to increase the death benefit.
a Because insurers receive premiums before they must pay out benefits, they can invest the premium money and use the interest to lower premium amounts charged to insureds.
The hearing for a cease and desist order must occur within how many days of the order date? a) 15 b) 30 c) 45 d) 60
a A cease and desist order will set a date for a hearing, which must be within 15 days of the order date, to decide whether the order will be continued or revoked. The Superintendent will issue a final order continuing or revoking the cease and desist order within 15 days after receiving objections to the hearing officer's report. The Superintendent's final order is appealable
An insurer suspects an agent of fraud and cancels his appointment. Which authority, if any, should be notified? a) The Superintendent b) NAIC c) None d) Federal Insurance Regulation Board
a If an insurer cancels the appointment of an agent due to suspected fraud, misrepresentation, theft, conversion, or any other misappropriation, the insurer will promptly notify the Superintendent. The notice should include a complete statement of the facts and the reasons for the cancellation
All of the following are true of an annuity owner EXCEPT a) The owner must be the party to receive benefits. b) The owner pays the premiums on the annuity. c) The owner has the right to name the beneficiary. d) The owner is the party who may surrender the annuity.
a The "owner" is the person who purchases the contract and has all of the rights such as naming the beneficiary and surrendering the annuity. The owner, however, does not have to be the one who receives the benefits; it could be the annuitant (if different from the owner) or the beneficiary
Which of the following authorities is responsible for assessing the financial ability of insurers? a) Superintendent b) Financial Industry Regulatory Authority c) National Association of Insurance Commissioners d) Guaranty Association
a The Ohio Insurance Department is headed by the Superintendent of Insurance, who is empowered to make and enforce rules and regulations that implement the insurance laws of Ohio. Among these responsibilities is making sure that insurers are financially stable
All of the following information about a customer must be used in determining annuity suitability EXCEPT a) Beneficiary's age. b) Tax status. c) Financial experience. d) Annual income.
a To ensure suitability of annuity products, producers must obtain relevant information about the consumer's age, income, financial status, tax status, financial experience and objectives. Beneficiary's age is not a suitability factor.
In forming an insurance contract, when does acceptance usually occur? a) When an insured submits an application b) When an insurer's underwriter approves coverage c) When an insurer delivers the policy d) When an insurer receives an application
b In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy
Insurers may only use a buyer's guide that has been approved by the NAIC no longer than what time period before use? a) 1 year b) 6 months c) 90 days d) 30 days
b Insurers must use the most current buyer's guide, approved by the National Association of Insurance Commissioners (NAIC) no later than 6 months prior to use
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? a) Whole Life b) Ordinary Life c) Joint Life d) Decreasing Term
c A Joint Life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death
How many days does the viator have to rescind a contract after receiving the viatical settlement proceeds? a) 3 business days b) 10 calendar days c) 15 calendar days d) Viatical settlement contracts cannot be rescinded
c Each viatical settlement contract must provide the viator with an unconditional right to rescind the contract for at least 15 calendar days after receipt of the viatical settlement proceeds
All of the following could own group life insurance EXCEPT a) An alumni group b) A debtor group c) A group needing low-cost life insurance d) A group sponsored by an employer
c Groups purchasing group life insurance must be formed for a reason other than purchasing insurance
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? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.
c The face of the term policy would be the same as the face amount provided under the whole life policy
What must happen when an individual policy or annuity has been personally delivered to the policyowner? a) The producer must go over the policy with the policyowner. b) A notary public must witness the exchange. c) The policyowner must sign a delivery receipt. d) The policyowner must pay the annual premium in full
c When an individual policy or annuity is delivered by hand to the policyowner, a delivery receipt must be signed. The receipt will be in duplicate and state the date the contract was received
If a settlement option is not chosen by the beneficiary or policyowner, which option will be used? a) Life income b) Fixed period c) Fixed amount d) Lump sum
d Upon the death of the insured, or endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unless the recipient chooses an optional mode of settlement
