Life Insurance

What are the dividends in life insurance policies not taxable?

Dividends are not considered income for tax purposes, they are a return of unused premiums

All of the following are dividend options EXCEPT

Fixed period installments

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

What type of insurance would be used for a Return of Premium rider?

Increasing term

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

What is true about a spouse term rider

The rider is usually level term insurance

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal Life

When must Montana insurers provide life insurance buyer's guide and policy summary to prospective insureds?

before accepting any premium

What best describes annually renewable term insurance?

level term insurance

If a settlement is not chosen by policyowner or beneficiary, which settlement option will be used?

lump sum

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

purchase a single premium policy for a reduced face amount

Which nonforfeiture option provides coverage for the longest period of time?

reduced paid up

Which of the following are true about Nonforfeiture values?

required by state law to be included in the policy

All of the following are true regarding a decreasing term policy except

the payable premium amount steadily declines throughout the duration of the contract

A close friend of the deceased paid 1,000 for the burial. How much will the insurer pay?

$500

Group Life Insurance is a single policy written to provide coverage to members of a group. Which of the following concerning Group Life are correct?

100% participation of members is required in noncontributory plans

The insured under a 100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. Death must not be contributed in any manor by the Insured. What will the policy beneficiary receive?

100,000, the death benefit amount

Upon termination of a group life insurance policy, how soon must the group insurer provide the terminated employee with a notice, explaining right to convert into a individual policy?

15 days before the expiration date

What is the penalty for excessive contributions to a traditional IRA?

6%

The death protection component of Universal Life Insurance is always

Annually Renewable Term

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

replacement rule

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

revocable beneficiary

How should guaranteed and non guaranteed benefits be shown in a life insurance policy?

separately

A viatical settlement is arranged between a viatical company and

terminally ill insured

Which of the following information will be stated in the consideration clause of the life insurance policy?

the amount of premium payment

What is the purpose in establishing the target premium for a universal life policy?

to keep the policy in force

An insured committed suicide one year after his life insurance policy was issued. The insurer will

refund policy premiums

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends plus interest and the policy cash value to pay up early?

paid up option

An individual is purchasing a permanent life insurance policy with a face value of 25,000. While this is all the insurance he can afford at the time, he wants to make sure he has additional coverage options in the future. What options should be included in the policy?

Guaranteed Insurability

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

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate

Which is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all premiums paid. What rider is this?

Return of Premium

Which type of retirement account does not require the owner to start taking distributions at age 72?

Roth IRA

Which type of life insurance policy generates immediate cash value?

Single Premium

In the Executive Bonus plan, who is the owner of the policy and who pays the premium/.

The Executive is the owner and the executive pays the premiumG

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years but at a higher premium rate.

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

accumulation at interest

The interest is taxable.

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

The policyowner

All of the following ae true about variable products EXCEPT

The premiums are invested in the Insurer's general account

Which of the following policies would have an IRS required gap between the cash value and the death benefit?

Universal life- Option A

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Viatical Settlement

What is the name of the insured who enters into a viatical settlement?

Viator

All of the following are examples of a third party ownership of a life insurance policy EXCEPT

an Insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

When a policyholder is receiving long term care benefits funded through acceleration of the death benefit, a monthly report must be provided with all of the following except

an explanation of death benefits on the original policy

Annually renewable term policies provide a level death benefit for a premium that

increases annually

In a life insurance replacement transaction, any reference to policy dividends

must state that they are not guaranteed

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

obtain a list of life policies that will be replaced