Life insurance

How are surrender charges deducted in a life policy with a rear-end loaded provision?

Deducted when the policy is discontinued

Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance?

Disability income policy premiums are tax-deductible

A characteristic of Preferred Provider Organizations (PPOs) would be:

Discounted fees for the patient

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

Distribution is subject to federal income tax withholding

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

Straight Life annuity

A(n) ____ rider may be used to include coverage for children under their parents' life insurance policy

Term

Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA

The free look provision begins

Upon receipt of the policy by the policyowner

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

None

Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)?

PPO's are NOT a type of managed care systems

K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?

Paid-Up Additional Insurance

Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of

$10,000

All of the following statements about traditional individual retirement accounts are false EXCEPT

10% penalty is applied to withdrawals before age 59 1/2

John recently purchased a Long-Term Care policy in Mississippi. John's policy does NOT need to contain

A guarantee of issue at age 65

ABC Insurance Company is replacing an existing life policy from XYZ Insurance Company. ABC Insurance Company must provide which of the following documents to XYZ Insurance Company?

A policy summary

The amount of monthly benefits payable under Social Security is affected by which of the following factors?

Amount of the benefits available from other sources

What action can a policy owner take if an application for a bank loan requires collateral?

Assign policy ownership to the bank

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT

Bilateral

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

Which of the following Nonforfeiture options offers the highest death benefit?

Extended term

Which of these is NOT a reason for purchasing life insurance on the life of a minor?

If both parents were to die, it would provide death benefits to the child

At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in

Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may not be covered for one year

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)

Insuring agreement

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

Which statements regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT

K will forfeit the right to use the automatic loan provision upon reinstatement

Which provision allows a portion of any used medical benefits to be restored following a particular amount of benefit has been used, or after the policy has been in effect for a particular period of time?

Restoration of used benefit

A Return of Premium life insurance policy is

Whole life and Increasing term

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount

K is an annuitant currently receiving payments. If she were to die before receiving payments equal to the correct value, a beneficiary will continue receiving payments until an amount equal to the contract value has been paid. This is called a(n)

installment refund annuity

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:

marital deduction

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds