Life Insurance Exam

After a hearing, civil penalties imposed by the Commissioner for each unfair method of competition may not exceed A) $1,500 B) $5,000 C) $500 D) $1,000

$1,000

What is the maximum aggregate civil penalty that may be imposed by the commissioner for violations of alws of fair trade practices A) $2,000 B) $5,000 C) $10,000 D) $12,000

$10,000

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000.. At policy surrender, the cash surrender value was $18,000. What part if the surrender value would be income taxable? A) $50,000 B) $18,000 C) $15,000 D) $3,000

$3,000

An insured owns a $50,000 whole life policy. At the age of 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

$50,000

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) $10,000, 60 days B) $10,000, 30 days C) $8,000, 60 days D) $8,000, 30 days

$8,000, 60 days

Commissioner's powers and duties

-Enforce the insurance laws, make reasonable rules and regulations to help carry out the provisions of the Insurance Code -Control and supervise all insurance business transacted in this state: *Issue licenses and certificates of authority for transact insurance business *Conduct examinations and investigations of insurers * Supervise all transactions relating to organization, reorganization, liquidation, and dissolution of domestic insurance corporations *Issue orders and notices regarding insurance matters *Maintain all books and records relating to the insurance business in state -approve policy and contract forms -collect required fees -provide annual reports to the governor regarding the general conduct and condition of all life insurance companies doing business in state

If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death A) 25% B) 10 % C) 0% D) 50%

0%

nonprofit industrial association

1,000+ insured

elements of a legal contract

1. Agreement 2. Consideration 3. Competent parties 4. Legal purpose

What percentage of a company's employees must take part in a noncontributory group life plan? A) 0% B) 25% C) 75% D) 100%

100%

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is correct? A) Premiums are determined by age, occupation, and individual underwriting B) 100%participation of members in required in noncontributory plans C) Each member covered receives a policy D) Coverage cannot be converted when an individual leaves the group

100% participation of members is required in noncontributory plans

What is the maximum amount of time that a person can have a temporary producer's permit? A) 180 days B) 1 year C) 90 days D) 3 months

180 days

A producer must complete a new set of continuing education hours every A) 2 years B) 3 years C) 4 years D) 5 years

3 years

After moving, licensees must inform the commissioner of a change of address within A) 10 days B) 30 days C) 60 days D) 90 days

30 days

grace period

31 days to pay premium

How many continuing education crdit hours must be completed during each licensing period? A) 20 B) 25 C) 36 D) 15

36

How long is a Commissioner's term? A) 2 years B) 4 years C) 5 years D) 10 years

4 years

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A) 7 days B) 10 days C) 3 days D) 5 days

5 days

The Commission may examine an insurer as often as he/she deems necessary, but domestic insurers must be examined at least once every A) 5 years B) 2 years C) 3 years D) 4 years

5 years

According to the Entire Contract Provision, a policy must contain A) A declarations page with a summary of insured B) Buyer's guide to life insurance C) Listing of the insured's former insurer(s) for incontestability provisions D) A copy of the original application for insurance

A copy of the original application for insurance

Which of the following named beneficiaries would not be able to receive the death benefit directly from the insured in the event of the insureds' death A) A business partner of the insured B) The wife of the deceased insured C) The former wife of the deceased insured D) A minor son of the insured

A minor son of the insured

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is A) A miltiplactive policy B) A modified endowment contract C) An accelerated policy D) an endownment

A modified endowment contract

The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax dollars, and it does not meet government approval standards. This annuity plan is A) Subject to government standards B) illegal C) A nonqualified annuity plan D) An executive annuity plan

A nonqualified annuity plan

Which of the following individuals engaged in the business of insurance would not be required to be licensed? A) A salaried employee of an insurer who does not receive commissions, but solicits applications and quotes rates for insurance B) A director of an employee trust plan who is compensated indirectly by the insurer C) A person who secures information for enrolling individual into a group insurance D) A salaried officer of an insurance agency who does not solicit insurance personally, but who shares in the commissions

A person who secures information for enrolling individual into a group insurance

Who is a third party owner? A) An employee in a group policy B) An irrevocable beneficiary C) A policyowner who is not the insured D) An insurer who issues a policy for two people

A policyowner who is not the insured

In which of the following circumstances is an active producer license NOT required? A) A retiree receives renewal commission for policies written when he was an active producer B) A salesperson sells auto policies through a car dealership C) An individual presents and sells a life insurance policy D) An individual operates an agency for a nonlicensed producer

A retiree receives renewal commission for policies written when he was an active producer

Which of the following would be required to obtain a producer's license in this state? A) A clerical employee that is only indirectly involved in the sale and solicitation of insurance and who is paid a fixed salary B) A person acting as a special agent who assists insurance producers by providing technical advice and assistance C) A person who underwrites application for insurance for the insurer D) A trustee of an employee trust plan that is compensated indirectly by the company issuing the contract

A trustee of an employee trust plan that is compensated indirectly by the company issuing the contract

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in A) Adjustment in the amount of death benefit B) No change whatsoever C) Automatic lapse D) Recession of the policy

Adjustment in the amount of death benefit

When transacting business in this state an insurer formed under the laws of another country is known as a/an A) Admitted insurer B) Alien insurer C) Domestic insurer D) Foreign insurer

Alien insurer

Rebating is an unfair trade practice an is regulated by law. All of the following would be considered to be rebating except A) An agent offers the use of his lake house to a person as an inducement to buy B) An agent offers to share his commission with a policyholder C) An agent offers tickets to a baseball game as an inducement to buy insurance D) An agent misrepresents policy benefits to convince a policyowner to replace policies

An agent misrepresents policy benefits to convince a policyowner to replace policies

Who can make a fully deductible contribution to a traditional IRA? A) Someone making contributions to an educational IRA B) A person whose contributions are funded by a return on investment C) An individual not covered by an employer-sponsored plan who has earned income D) Anybody: all IRA contributions are fully deductible regardless of income level

An individual not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level

All of the following are examples of third-party ownership of a life insurance policy except A) A company purchases a life insurance policy on their manager, who is an important part of the operations B) When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company C) An insured borrows money from bank and makes a collateral assignment of a part of the death benefit to secure the loan D) An insured couple purchases a life insurance policy insuring the life of their grandson

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

What is a foreign insurer? A) An insurer with licensed agents doing business in other countries B) An insurer with licensed agents who are citizens in more than one country C) An insurer with a home office in another state D) An insurer with a home office in another country

An insurer with a home office in another state

The Life and Health Guaranty Association maintains all of the following accounts except A) an unallocated annuity contract account B) An unallocated life insurance accoujnt C) A health insurance account D) An annuity account

An unallocated life insurance account

Partners in a business enter into a buy-sell agreement to purchase life insurance, which state that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner, What type of insurance policy may be used to fund this agreement? A) Term insurance only B) Permanent insurance only C) Universal life insurance only D) Any form of life insurance

Any form of life insurance

The Commissioner regulated insurance rates through detailed rate reviews. The Commissioner will prohibit insurance rates that are A) Excessive B) Inadequate C) Unfairly discriminatory D) Any of the above

Any of the above

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be A) Certified B) Qualified C) Approved D) Authorized

Authorized

Which of the following would not be considered a misrepresentation on the part of the insurer? A) Implying that term insurance has cash value B) Embellishing the benefits provided in the policy C) Overstating returns on policy dividends D) Backdating policies to secure a lower premium for the insured

Backdating policies to secure a lower premium for the insured

Which of the following is a feature of a variable annuity? A) Securities license is not required B) Benefit payment amounts are not guaranteed C) payments into the annuity are kept in the company's general account D) interest rate is guarnanteed

Benefit payment amounts are not guaranteed

During partial withdrawal from a universal life policy, which portion will be taxed? A) Principal B) Loan C) Interest D) cash value

C) interest

Which of the following must an insurer obtain in order to transact insurance within a given state A) Business entity license B) Insurer's license C) Certificate of authority D) Producer;s certificate

Certificate of authority

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of A) Loading B) Defamation C) Twisting D) Coercion

Coercion

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined A) Rebating B) Misleading advertising C) Defamation D) Coercion

Coercion

It is suspected that a producer is consistently violating insurance laws. Which of the following entities is responsible for making sure that the producer stops committing these violations? A) NAIC B) Federal Insurance Regulation Bureau C) The State Insurance Board D) Commissioner

Commissioner

A temporary producer's license may be used for which of the following? A) Completing the affairs of an insurance producer B) Continuing a producer's business C) Transacting new business D) All of the above

Completing the affairs of an insurance producer

Which of the following includes information regarding a person's credit, character, reputation, and habits? A) Insurability report B) Agent's report C) Consumer report D) Consumer history

Consumer report

Which of the following is not an essential element of an insurance contract A) Consideration B) Agreement C) Legal Purpose D) Counteroffer

Counteroffer

Which of the following will not be considered unfair discrimination by insurers A) Cancelling individual coverage based on the insured's marital status B) Assigning different risk classification to applicants based on gender identity C) Discriminating in benefits and coverages based on the insured's habits and lifestyle D) Charging applicants with similar health histories different premiums based on their ethnicity

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? A) Adverse selection B) Discrimination C) Law of large numbers D) Misrepresentation

Discrimination

When twin brother applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. because of this, the company charged him a higher rate for his insurance/ this practice is considered A) Discrimination B) Twisting C) Controlled business D) Adverse selection

Discrimination

All of the following statements concerning dividends are true except A) favorable investments results generate higher dividends B) Dividend amounts are guaranteed in the policy C) Lower insurance company costs generate higher dividends D) They stem from from favorable underwriting experience

Dividend amounts are guaranteed in the policy

For a retirement plan to be qualified, it must be designed for the benefit of A) Employer B) IRS C) Employees D) Key employee

Employees

effect on death benefit

Face Amount -Amount withdrawn -Earnings lost by insurer in interest =Payable death benefit

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A) Unfair claims B) Twisting C) Defamation D) False advertising

False advertising

If a beneficiary wants a guarantee that benefits paid from the principal and interest would be paid for period of 10 years before being exhausted, what settlement option should the beneficiary select A) life with period certain B) Fixed amount C) Interest only D) Fixed period

Fixed period

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid A) Until the policyowner's age 65 B) for 20 years C) Until the policyowner's age 100, when the policy matures D) For 20 years or until death, whichever occurs first

For 20 years or until death, whichever occurs first

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A) Alien B) Domestic C) Unauthorized D) Foreign

Foreign

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? A) Fraternal benefit society B) Mutual company C) Stock company D) Reciprocal association

Fraternal benefit society

The Commissioner is appointed by which of the following authorities? A) State Insurance Board B) Federal Association of Insurers C) Iowa Guaranty Association D) Governor

Governor

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A) Defamination B) Illegal C) A legal advertising strategy D) Unfair Discrimination

Illegal

Which of the following would be considered false advertising? A) Stating that a policy has limitations and exclusions B) Failing to include premiums in sales materials C) Implying that the agent is the insurer D) Stating the differences in benefits between Whole Life Insurance and Term Life Insurance

Implying that the agent is the insurer

suicide provision

Insurer will only pay the death benefit if after 2 years of policy effective date, otherwise just a refund of premium

Which of the following is true of a qualified plan? A) it may allow unlimited contributions B) It has a tax benefit for both employer and emloyee C) It does not need to have a vesting schedule D) it may discriminate in favor of highly paid employees

It has a tax benefit for both employer and employee

Which of the following is not true regarding a Certificate of Authority? A) It is issued to group insurance participants B) It may be necessary for transacting business in a specific state C) It is equivalent to an insurance license D) It is issued by the state of department of insurance

It is issued to group insurance participants

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? A) Mortality rate B) Risk exposure C) Morbidity D) Life expectancy

Life expectancy

Which of the following best describes the unfair trade practice of defamination? A) Refusing to deal with other insurers B) Making derogatory oral statements about another insurer's financial condition C) Assuming the name and identity of another person D) Issuing false advertising material

Making derogatory oral statements about another insurer's financial condition

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes A) Coercion B) Misrepresentation C) Defamination D) Twisting

Misrepresentation

NAIC

National Association of Insurance Commissioners, an organization composed of insurance Commissioners from all states and jurisdictions formed to resolve insurance regulatory matters

Part 2 of the application for life insurance provides questions regarding all of the following except A) Alcohol and tobacco consumption B) recent surgeries C) other insurance coverages D) family health history

Other insurance coverages

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled A) Waiver of Premium B) Payor Benefit C) Jumping Juvenile D) Juvenile Premium Provision

Payor Benefit

All of the following are characteristics of group life insurance except A) Amount of coverage is determined according to nondiscriminatory rules B) Individuals covered under the policy receive a certificate of insurance C) Certificate holders may convert coverage to an individual policy without evidence of insurability D) Premiums are determined by the age, sex and occupation of each individual certificate holder

Premiums are determined by the age, sex and occupation of each individual certificate holder

In which of the following instances would the premium be tax deductible? A) Premiums paid by an employer on the life of a key person? B) Premiums paid by an employer on a $30,000 group term life insurance plan for employees C) Premiums paid by an individual on his/her own life insurance D) Premiums paid by a mother on her son's policy

Premiums paid by an employer on a $30,000 group term life insurance plan for employees

If an insurer becomes insolvent, the Iowa Life and Health Guaranty Association will do all of the following except A) Provide money to claimants B) Assume payment of the insurer's contractual obligations C) Purchase all existing contracts issued under the insurer D) Reinsure the policies of the insolvent insurer

Purchase all existing contracts issued under the insurer

group underwriting characteristics

Purpose of the group Size of the group Turnover of the group Financial strength of the group

All of the following are true regarding rebates except A) Rebates are allowed if it's in the best interest of the client B) Rebates are only allowed if specifically stated in the policy C) Rebating can be anything of economic value, given as an inducement to buy D) Dividends are not considered to be rebates

Rebates are allows if it is in the best interest of the client

Paul is a producer in Kansas and wants to become a producer in Iowa. The Department will waive certain examination requirements, provided that Kansas would waive these same requirements if the Iowa producer sought licensure in Kansas. What term is used to describe this phenomenon? A) Equanimity B) Reciprocity C) Equality D) Fair Exchange

Reciprocity

When the insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached to the policy? A) return of premium B) Cost of living C) Decreasing term D) Premature death

Return of premium

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? A) Se will still be covered under the group plan but will have to pay an individual policy premium B) She can only convert her coverage without proof of insurability if she has the master policy C) She must apply for a new policy, which required her to provide proof of insurability D) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

SIMPLE Plan (Savings Incentive Match Plan for Employers)

Small business that employ no more than 100 employees who receive at least $5,000 in compensation from employer during previous year

The premiums paid by the employer in a business life insurance policy are A) Always taxable to the employee B) Never taxable to the employee C) Tax deductible by the employer D) Tax deductible by the employee

Tax deductible by the employer

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A) Inducing the insured to drop a policy in favor of another one when its not in the insured's best interest B) Charging a client a higher premium for the same policy as another client in the same insuring class C) Making deceptive statements about a competitor D) Telling a client that his first premium will be waived if he purchased the insurance policy today

Telling a client that his first premium will be waived if he purchased the insurance policy today

The Commissioner has scheduled a hearing for a producer who is implicated in engaging in an unfair method of competition. The notice of hearing must be delivered to the producer no later than how many days prior to the hearing? A) Three B) Ten C) Fifteen D) Twenty

Ten

In a life settlement contract, whom does the life settlement broker represent? A) The insurer B) The beneficiary C) The life settlement intermediary D) The owner

The Owner

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then A) The benefit is received tax free B) The benefit is subject to the exclusionary rule C) IRS has no jurisidiction D) The benefit is received as taxable income

The benefit is received tax free

Which of the following is an example of liquidity in a life insurance contract? A) The flexible premium B) The money in a savings account C) The cash value available to the policyowner D) The death benefit paid to the beneficiary

The cash value available to the policyowner

Which of the following describes the tax advantage of a qualified retirement plan? A) Employer contributions are not taxed when paid out to the employee B) The earnings in the plan accumulate tax deferred C) Distributions prior to age 59 1/2 are tax deductible D) Employer contributions are deductible as a business expense when the employee receives benefits

The earnings in the plan accumulate tax deferred

Which of the following is incorrect concerning a noncontributory group plan? A) They help to reduce adverse selection against the insurer B) They require 100% employee participation C) The employer pays 100% of the premiums D) The employees receive individual policies

The employees receive individual policies

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for the life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following except A) Face amount of the policy B) The insured's age at death C) The beneficiary's life expectancy D) Projected interest rates

The insured's age at death

An employee quits his job on May 15 and does not convert his group life policy to an individual policy for two weeks. He dies in a freak accident on June 1. Which of the following statements best describe what will happen? A) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one B) The insurer will pay the full death benefit from the group policy to the beneficiary C) The insurer will pay a reduced death benefit to the beneficiary D) The insurer will pay the death benefit minus one month's premium

The insurer will pay the full death benefit from the group policy to the beneficiary

What is the advantage of reinstating a policy instead of applying for a new one? A) The cash values have gained interest while the policy was lapsed B) The original age is used for premium determination C) Proof of insurability is not required D) The face amount is increased

The original age is used for premium determination

In a life settlement contract, whom does the life settlement broker represent? A) The insurer B) The beneficiary C) The life settlement intermediary D) The owner

The owner

All of the following statements concerning the use of life insurance as an executive bonus are correct except A) The employer pays a bonus to a selected employee to fund the policy B) It is considered a nonqualified employee benefit C) The policy is owned by the company D) Any type of insurance policy may be used

The policy is owned by the company

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be true? A) The insurer may deny coverage later, because of the information missing on the application B) The policy will be interpreted as the insurer waived its right to have an answer on the application C) The policy will be interpreted as if the insurer did not have an answer to the question D) the policy will be void

The policy will be interpreted as if the insurer waived its right to have an answer on the application

A nonresident Iowa producer moves to Iowa and becomes an Iowa resident. Which of the following is true? A) If the other state would allow former Iowa residents to maintain their resident license after moving to the other state, then Iowa will do the same B) The producer must surrender his/her producer's license from the other state C) The producer may maintain the licenses held in both states D) The producer must appeal to the Commissioner for a special dual-state license

The producer must surrender his/her producer's license from the other state

Which of the following is not true of life settlements? A) They could be sold for an amount greater than the current cash value B) They involve insurance policies with large face amounts C) The seller must be terminally ill D) They could be used for a key person coverage?

The seller must be terminally ill

Which of the following is not true of life settlements? A) They could be used for a key person coverage B) They could be sold for an amount greater than the current cash value C) They involve insurance policies with large face amounts D) The seller must be terminally ill

The seller must be terminally ill

Which of the following is the best reason to purchase life insurance rather than annuities? A) To create regular income payments B) To liquidate a sum of money over a lifetime C) To create an estate D) To liquidate a sum of money over a period of years

To create an estate

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? A) Unidirectional B) Aleatory C) Conditional D) Unilateral

Unilateral

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? A) Estate Liquidation B) Nonpayment of premium C) Change of beneficiary D) Viatical settlement

Viatical settlement

What is the name of the insured who enters into a viatical settlement? A) Viaical broker B) Viator C) Third party D) contingent

Viator

What is the name of the insured who enters into a viatical settlement? A) third party B) Contingent C) Viatical broker D) Biator

Viator

Debtor

a borrower of money

small employer

a business that employed between 2 to 50 full-time employees during at least 50% of the preceding year's working days

insurance policy

a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or beneficiary for loss caused by specific events

statute

a formal written law enacted by legislature; insurance statutes can by found in the state Insurance Code

agent/producer

a legal representative of an insurance company

creditor

a lender of money

direct-response solicitation

a marketing system used by insurers to advertise and solicit their products through the mail, internet, or any other mass marketing source (no agents involved)

life settlement providers

a person (other than the owner) who enters into a life settlement contract with the owner

provider

a person (other than the owner) who enters into a life settlement contract with the owner

applicant or proposed insured

a person applying for insurance

life settlement broker

a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Represent only the policyowners

Activities of daily living (ADLs)

a person's essential activities that include bathing, dressing, eating, transferring, toileting, continence

gross income

a person's income before taxes or other deductions

Indemnity

a principle of reimbursement on which insurance is based; in the event of loss, an insurer reimburses the insureds or beneficiaries for the loss

suitability

a requirement to determine if an insurance product or an investment is appropriate for a particular customer

Common Disaster Clause

addresses the problem as to who would obtain the death benefit if the insured and primary beneficiary died at approximately the same time from a common accident with no clear evidence as to who died first

viatical settlements

allow someone living with a life-threatening condition to sell their existing life insurance policy and use the proceeds when they are most needed before their death

Reinstatement

allows a lapsed policy to be put back in force. Max time limit for reinstatement is 3 years after lapsed policy POLICY THAT HAS BEEN SURRENDERED CANNOT BE REINSTATED

individual retirement account (IRA)

allows individuals to make tax deductible contributions until the age 70 1/2. Allowed to contribute up to a certain dollar amount

children's term rider

allows the children of the insured to be added to coverage for a limiter period of time for a specified amount

accelerated (living) benefits and long-term care riders

allows the early payment of a portion of the death benefit if the insured is disabled

guaranteed insurability

allows the insured to purchase additional coverage at specified future dates or events without evidence of insurability, for an additional premium

flexible premium

allows the policyowner to increase or decrease the premium during the policy period

executive bonus

an arrangement where the employer offers to give the employee a wage increase in the amount of the premium on a new life insurance policy on the employee

eligible employee

an employee who works on a full-time basis with a normal work week of 30 hours or more; including sole proprietors, partners of partnerships, independent contractors

inducement

an offer that attempts to influence the other party

Nonprofit organization

an organization that uses its surplus to fulfill its purpose instead of distributing the surplus to its owners or members

business of life settlement

any activity relating to the solicitation and sale of life settlement contract to a third party

life settlement

any financial transaction in which the owner of a life insurance policy sells a life insurance policy to a third party for some form of compensation

modified endowment contracts

any life insurance policy that fails a 7-pay test

replacement

any transaction in which new life insurance or new annuity is purchase and the existing life insurance or annuity was lasped, forfeited, surrendered, converted, amended, or used in a financial purpose

qualified retirement lan

approved by the IRS

Uniform Simultaneous Death Law

assumed that the primary beneficiary died first in a common disaster. Proceeds to be provided to contingent beneficiary or insured's estate

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A) Experience Rating B) Group Rate C) Insurer's scheduled rate D) Attained age

attained age

An employee quits his job and converts his group policy to an individual policy; the premium for the individual will be based on his A) Experience rating B) Group rate C) Insurer's scheduled rate D) Attained Age

attained age

buyers guide

basic generic information about life insuranc epolicies

chronically ill

being unable to perform at least two activities of daily living, such as eating, toileting, transferring, bathing, dressing, or continence or conditions requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment

Minor beneficiary

benefits designated to a minor will either be paid to the minor's guardian, or paid to the trustee of the minor if the trust is the named beneficiary, or paid as directed by a court.

Nonforfeiture values

benefits in a life insurance policy that a policyowner cannot lsoe

nonforfeiture values

benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

life expectancy

calculation based on the average number of months the insured is projected to live due to medical history and mortality factors IMPORTANT CONCEPT IN LIFE SETTLEMENT CONTRACTS

cash value accumulations

can be borrowed against by the policyowner, or may be paid upon to the policyowner upon surrender of the policy. cash values grow tax deferred.

policy loans

can be repaid by: -by the owner while the policy is in force -at policy surrender or maturity, subtracted from the cash value -at the insured's death, subtracted from the death benefit

What does "liquidity" refer to in a life insurance policy? A) The policyowner receives dividend checks each year B) The insured is receiving payments each month in retirement C) Cash values can be borrowed at any time D) The death benefit replaces the assets that would have accumulated if the insured had not died

cash values can be borrowed at any time

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements except: A) legal purpose B) offer and acceptance C) conditions D) consideration

conditions

third party ownership

contract owned by someone other than the insured

pretax contribution

contribution made before federal and/or state taxes are deducted from earnings

liqiudation of an estate

converting a person;s net worth into a cash flow

According to the entire contract provision, what document must be made part of the insurance policy? A) Agent's report B) outline of coverage C) Copy of the original application D) Buyer's guide

copy of the original application

trustee group

cover at least 100 at time of date issued

life insurance

coverage on human lives

hazardous occupations or hobbies exclusion

death that results from hazardous occupation or hobby will be excluded from coverage, can also be charged a higher premium for insuring these risks

Social Security (OASDI, Old Age survivors disability insurance)

designed to provide protection for eligible workers and tehir dependents against financial loss due to old age, disability, or death

7-pay test

determines if insurance policy is overfunded

surrender

early termination of a policy by the policyowner

Life settlement contract

established the terms under which the life settlement provider will pay compensation to the policy owner, in return for the assignment, transfer, sale, or release of any portion to the death benefit, policy ownership, beneficial interest, or interest in a trust or entity that owns the policy

Aleatory contract

exchange of unequal amounts

aviation exclusion

exclude coverage for noncommercial pilots, or require additional premium for the coverage

status clause

excludes all causes of death while the insured is on active duty in military

Revocable designation

exercise all rights to the policy without the beneficiary's knowledge

what does "level" refer to in level term insurance? A) Cash values B) interest rate C) face amount D) premium

face amount

primary beneficiary

first claim to the policy following the death of the insured.

fixed amount settlement

fixed specified amount in installments until the proceeds are exhausted

403b Tax sheltered annuities

for nonprofit organizations and public school systems

coercion

forceful act or threat aimed to influence a person to act against his or her will

If an insured worker has earned 40 quarters of coverage, the worker's status under social security disability A) Correctly insured B) Permanently insured C) Fully insured D) Partially insured

fully insured

Life insurance death proceeds are A) Generally not taxed as income B) Taxable to the extent that they exceed 7.5% of the beneficiaries adjusted gross income C) Taxed as capital gain D) Taxed as ordinary income

generally not taxed as income

In life insurance policies, cash value increases A) Are only taxed when the owner reaches 65 B) Grow tax deferred C) Are income taxable immediately D) Are taxed annually

grow tax deferred

Nonforfeiture

guarantees built into the policy cannot be forfeited by the policy owner

contingent beneficiary

has second claim in the event that the primary beneficiary dies before the insured. Do not receive anything if primary beneficiary is still living at time of insured's death

Which of the following is an eligibility requirement for all social security disability income benefits? A) Be at least age 50 B) have attained fully insured status C) Be disabled for at least 1 year D) Have permanent kidney failure

have attained fully insured status

terminally ill

having an illness or sickness that can reasonably expected to result in death in 24 months or less

pure death protection

if the insured dies during this term, the policy pays the death benefit to the beneficiary; if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the terms; there is no cash value or other living benefits

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A) Legal, provided that the other insurers are paid royalties for the usage of their names B) Illegal under any circumstances C) Legal, provided that the information can be verified D) Illegal until endorsed by the Guaranty Association

illegal under any circumstances

return of premium

implemented by using increasing term insurance when added to a whole life policy. Provides that at death prior to a given age, original face amount and amount equal to all premiums previously paid is payable to the beneficiary.

policy maturity

in life policies, the time when the face value is paid out

insurability

in which the insurer established the conditions, if any, under which a person eligible for insurance is required to furnish evidence of individual insurability

producer

includes agents and brokers

life income joint and survivor settlement

income for two or more recipients for as long as they live

family term rider

incorporates the spouse term rider with the children's term rider.

roth IRA

individual retirement account funded with after-tax contributions

interest only settlement

insurance company retains the policy proceeds and pays interest on the proceeds to the beneficiary

nonfamily insured

insure somebody who is not a family member of the insured's family OFTEN USED BY BUSINESSES

No beneficiary

insured's estate will automatically receive the proceeds of life insureance policy

misstatement of age and gender

insurer can adjust policy benefits at anytime due to misstatement of age or gender

Domestic insurer

insurer incorporated in this state

extended term

insurer uses the policy cash value to convert to term insurance for the same face value as the former permanent policy automatically implemented in event of termination of original policy

authorized insurer

insurer who has received a Certificate of Authority from the department of insurance to transact insurance in this state

home office

insurer's headquarter, principal place of business

All of the following are Nonforfeiture options except A) Cash surrender B) Extended term C) reduced paid-up D) interest only

interest only

Collateral Assignment

involves a transfer of PARTIAL RIGHTS to another person. It is usually done in order to secure a loan or some other transaction. A collateral assignment is a partial and temporary assignment of some of the policy rights. Once the debt or loan is repaid, the assigned rights are returned to the policyowner

absolute assignment

involves transferring ALL RIGHTS of ownership to another person or entity. This is a permanent and total transfer of all the policy rights. New policyowner does not need to have an insurable interest in the insured

Hearings

issue a statement of charges and listen to aggrieved party's cause on why disciplinary actions may not apply

group life insurance

issued to sponsoring organization, and covers more than one individual member of that group. Usually written as annually renewable term u=insurance USUALLY employee-employer groups

buy-sell (business continuation) agreement

legal contract the determines what will be done with a business in the event that an owner dies or becomes disabled

life income with period certain option settlement

life income but with a period, benefiticiary would receive the remaining income if the insured were to die within the period

amount received by beneficiary

life insurance proceeds paid to named beneficiary are generally free of federal taxation if taken as lump sum

war or military service exemption

limit the death benefit if the insured dies as a result of war, or while serving in the military

automatic premium loan

loan that prevents the unintentional lapse of a policy due to nonpayment of premium

policy endowment

maturity date

Irrevocable designation

may not be changed without the written consent of the beneficiary. Irrevocable beneficiaries had a vested interest in the policy. Policyowner cannot borrow against the policy's cash value or assign the policy to another person without the beneficiary's agreement

Owner's rights

naming and changing the beneficiary, receiving the policy's living benefits, selecting a benefit payment options, and assigning the policy, responsibility to pay premium and have insurable interest in the insured

debtor groups

new entrants rate of 100+ annually

exempt

not subject to an obligation

non qualified plans

not subject to the requirements regarding participation, discrimination, and vesting. require no government approval

options

offer insurers and insured ways to invest or distribute a sum of money available in a life polocy

results clause

only excluded the death benefit if the insured is killed as a result of an act of war (declared or undeclared)

policy loan

only in policies that contain cash value. can borrow an equal amount to available cash value

Unilateral contract

only one of the parties is legally bound to do anything

owner

owner of the life insurance policy who seeks to enter into a life settlement contract

Lump sum

payment of the entire benefit in one sum

commission

payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

waiver of monthly deductions

pays all monthly deductions while the insured is disabled, after a 6 month waiting period. ONLY PAYS MONTHLY DEDUCTIONS NOT FULL PREMIUM

accidental death rider

pays some multiple of the face amount if the death is the result of an accident within 90 days of accident

accidental death and dismemberment rider (AD&D)

pays the principal for the accidental death, and pays a percentage of that amount for accidental dismemberment

accumulation period

period of time over which owner makes payments into annuitity

Minor

person under the legal age

employee group

policies issued to an employer to insure employees are subject to requirements

entire contract

policy and copy of the application

reduced paid up insurance

policy cash value is used by the insurer as a single premium to purchase a completely paid up- permanent policy that has a reduced face amount from that of a former policy

liquidity

policy cash values can be borrowed against at any time and used for immediate needs

nonguaranteed elements

policy components that are not guaranteed in the contract or that may fluctuate (e.g. dividends, interest)

lapse

policy termination due to nonpayment of premium

Profit sharing and 401k

portion of company profits is contributed to the plan and shared with employees. employer must be systematic and substantial

level premium

premium remains the same throughout the duration of the contract

periodic payment annuity

premiums are paid in installments over a period of time

contributory plan

premiums are shared between employer and employees

Incontestability claim

prevents insurer from denying a claim due to statements in application after policy has been in force for 2 years.

payor benefit

primarily used with juvenile policies, functions like the waiver of premium

LIFO (Last In, First Out)

principle applied to asset management in life insurance products, under which it is assumed that the funds paid into the policy last will be paid out first

FIFO (First In, First Out)

principle under which it is assumed that the funds paid into the policy first will be paid out first

disability riders

provide benefits in the event of an insured's disability or partial payment of death benefit before death,

long term care (LTC)

provide for the payment of part of the death benefit in order to take care of the insured's health care expenses often purchased as a separate policy

other insured rider

provides coverage for one or more family members other than the insured. Usually level term insurance

living needs rider

provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years

survivor protection

provides funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of insured's death

life income settlement

provides the insured with an income the they cannot outlive. I

free look

provision that allows a policyowner 10 days from receipt to look over the policy and return it for full refund of premium if dissatisfied. Starts when policyowner receives the policy

SEP

qualified plan for a small employer or self employed

A producer in another state wants to become a producer in Iowa. The other state gives the same privileges to Iowa producers wanting to be licensed in that state as it does its own producers. Iowa therefore extends the privileges of its producers to the prospective producer of the other state. What is this called? A) Fair exchange B) Equanimity C) Equal privilege D) Reciprocity

reciprocity

An insured committed suicide one year after his life insurance policy was issued. The insurer will A) pay nothing B) refund the premiums paid C) pay the policy's cash value D) Pay the full death benefit to the beneficiary

refund the premiums paid

labor union group

requires at least 10 members atdate of issue

dividend

return of unused premiums

Disclosure

revealed information to help someone make an intelligent and educated decision

earned income

salary, wages, or commissions; but not income from investments, unemployed benefits, and similar sources of income

HR-10 or Keogh

self-employed persons to be covered under an IRS qualified retirement lan

insuring clause

sets forth basic agreement between the insurer and the insured. Located on the policy face page, defines the parties, premium, and how long the coverage is, and death benefit

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) rollover B) Settlement option C) Nontaxable exchange D) Nonforfeiture option

settlement option

spouse term rider

similar to other insured rider but specifically for the spouse of insured

An IRA purchased by a small employer to cover employees is known as a A) Simplified Employee Pension plan B) 401k plan C) Defined contribution plan D) 403b plan

simplified employee pension plan

Consideration

something of value that each party gives to the other (binding force in contract)

fixed period settlement

specified period of years is selected and equal installments are paid to beneficiary

misstatement of age

specifying an equitable adjustment of premiums or benefits to be made if the insured's age was originally misstated

testimonials

statements or endorsements made by clients based on their experience with products or services

certificate

stating that the insurer will issue to the policyholder for delivery to each insured an individual certificate stating the insurance coverage

incontestability

stating that the validity of the policy cannot be challenged(except for nonpayment of premiums) after it has been in force for 2 years

payment of benefits

stating the any sum that comes due at the insured's death will be payable to the designated beneficiary

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as A) Survivorship insurance B) Juvenile protection provision C) Survivorship protection D) Life planning

survivorship protection

direct transfer

tax-free transfer of funds from one retirement program to a traditional IRA or a transfer of interest in a traditional IRA from one trustee directly to another

face amount

the amount of benefit stated in the life insurance policy

death benefit

the amount paid upon the death of the insured in a life insurance policy

endow

the cash value of a whole life policy has reached the contractual face amount

replacing insurer

the company that issues the new policy

existing insurer

the company whose policy is being replaced

Principal

the face value of the policy; the original amount invested before the earnings

commissioner

the head of the State Department of Insurance

premium mode

the manner or frequency that a policyowner pays the policy premium

Grace period

the period of time after the premium due date that the policyowner has to pay the premium before the policy lapses (usually 30 or 31 days)

All of the following are true of key person insurance except A) The plan is funded by permanent insurance only B) There is no limitation on the number of key employee plans in force at any one time C) The employer is the owner, payor and beneficiary of the policy D) The key employee is the insured

the plan is funded by permanent insurance only

vesting

the right of a participant in a retirement plan to retain part or all of the benefits

Which of the following insurance agreements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? A) A buy-sell agreement B) Family term rider C) Third-party ownership D) an irrevocable beneficiary

third party ownership

triple indemnity

three times the face amount

promulgate

to make public, to put into action (e.g. laws, court decrees, and similar)

Cease and desist

to stop or discontinue

An absolute assignment is a A) Transfer of some ownership rights in a policy B) change of beneficiary C) Change of insurer D) transfer of all ownership rights in a policy

transfer of all ownership rights in a policy

Assignment

transfer of rights of policy ownership

double indemnity

two times the face amount

exclusions

types of risks the policy will not cover

insolvent

unable to meet financial obligations

misrepresentations

untrue statements on the application

stock purchase

use by privately owned corporations when each stockholder buys a policy on each of the others

cross purchase

used in several partnerships when each partner buys a policy on the other

stock redemption

used when the corporation buys one policy on each shareholder

entity purchase

used when the partnership buys the policies on the partners

waiver of premium

waives the premium for the policy if the insured becomes totally disabled. Coverage remains in force until the insured is able to return to work

All of the following benefits are available under Social Security except A) old-age and retirement benefits B) disability benefits C) death benefits D) welfare benefits

welfare benefits

noncontributory plan

when employer plays all premiums

rollover

withdrawal of the money from one qualified plan and placing it into another plan

Which of the following statements regarding the taxation of Modified Endowment Contracts is false? A) Policy loans are taxable distributions B) Accumulations are tax deferred C) Withdrawals are not taxable D) Distributions before age 59 1/2 incur a 10% penalty on policy gains

withdrawals are not taxable

Policy riders

written modifications attached to a policy that provide benefits not found in original policy. Riders require additional premium, but help tailor a policy to specific needs

An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? A) medical records B) application C) interviews D) state records

application

fixed life insurance

contracts that offer guaranteed minimum or fixed benefits

An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds and objectionable provision and wants to negotiate it with the insurer but is not allows to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? A) Personal B) Adhesion C) Unilateral D) Conditional

Adhesion

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? A) Adhesion B) Conditional C) Aleatory D) Good health

Aleatory

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 A) Deferred interest annuitty B) Immediate annuity C) Variable Annuity D) Flexible payment annuity

Immediate annuity

Which of the following best details the underwriting process for life insurance? A) Selection, classification, and rating of risks B) Solicitation, negotiation, and sale of policies C) Issuance of Policies D) reporting and rejecting of risks

Selection, classification, and rating of risks

Which of the following is called a "second-to-die" policy A) Surviviorship life B) Family income C) Juvenile Life Joint Life

Surviviorship

All of the following entities regulate variable life policies except A) The Guaranty Association B) Federal government C) the SEC D) The insurance Department

The Guaranty Association

Who bears all the investment risk in a fixed annuity A) The insurance company B) The owner C) The beneficiary D) the annuitant

The insurance company

which of the following is true for both equity indexed annuities and fixed annuities? A) Both are considered to be more risky than variable annuities B) they invest on a conservative basis C) They have a guaranteed minimum interest rate D) They are both tied to an equity index

They both have a guaranteed minimum interest rate

variable annuity

Underlying investment: the payments that the annuitant makes into the variable annuity are invested in the insurer's separate account, not their general account. The separate account is not part of the insurance company; own investment portfolio, and is not subject to the restrictions that are applicable to the insurer's own general account Interest rate: issuing insurance company does not guarantee a minimum interest rate License requirements: a variable annuity is considered a security and is regulated by the SEC in addition to state insurance regulations. An agent selling variable annuitites must hold a securities license in addition to a life insurance license. Agents or companies that sell variable annuities must also be properly registered with FINRA

beneficiary

a person who receives the benefits of an insurance policy

cash value

a policy's savings element or living benefit

material misrepresentations

an untrue statement that would alter the underwriting process decision of the insurance company

riders

are added to a policy to modify provisions that already exist

annuitiy

contract that provides income for a specified period of years

variable life insurance

contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

Provisions

define the characteristics of an insurance contract and are fairly universal in form

Contract of adhesion

drawn up by insurer and accepted or rejected by insured

securities

financial isntruments that may trade for values (for example, stocks, bonds, options)

indexedannuities

fixed annuities that invest on a relatively aggressive basis to aim for higher returns

fixed annuity

guaranteed minimum rate of interest to be credited to the purchase payments income (annuity) payments that do not vary from one payment to the next insurance company guarantees the specified dollar amount for each payment and the length of the period of payments as determined by the settlement option chosen by the annuitant

Which of the following is true regarding the accumulation period of an annuity A) it is also referred to an the annuity period B) it is a period of time during which the beneficiary receives income C) it is limited to 10 years D) it is a period during which the payments into the annuity grow tax deferred

it is a period during which the payments into the annuity grow tax deferred

face amount changes during term insurance

level increasing decreasing

Variable life insurance is based on what kind of premium A) Increasing B) Decreasing C) Graded D) Level fixed

level fixed

single premium annuity

one lump sum payment

A prospective insured receives an conditional receipt but dies before the policy is issued. The insurer will A) pay the policy proceeds only if it would have issued the polucy B) pay the policy proceeds up to an established limit C) not pay the policy proceeds under any circumstances D) automatically pay the policy proceeds

pay the policy proceeds only if it would have issued the policy

convertible provision

policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability

term insurance

provides coverage for a specific period of time.

immediate income payment

purchased with a single premium income payment start within 12 months from the date of purchase

deferred income payments

purchases with either a lump sum or periodic payments premium benefits start sometime after 1 year from the date of purchase (often used to accumulate funds for retirement)

accumulation units

represent ownership interest in the seperate account.

survivorship life

same as joint life. pays on second death

conditional receipt

says that coverage will be effective either on the date of the application or on the date of the medical exam

Equity indexed annuities A) Are more risky than variable annuities B) Are security instruments C) Invest conservatively D) Seek higher returns

seek higher returns

Equity indexed annuities A) are security investments B) invest conservatively C) seek higher returns D) are more risky than variable annuitites

seek higher returns

premium

the money paid to the insurance company for the insurance policy

policy owner

the person entitled to exercise the rights and privileges in the policy

insurable interest

the possibility of losing money, or something of value in the event of loss

level premium

the premium does not change throughout the life of the policy

annuitzation period

time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant

insurance

transfer of risk from an individual or business entity to an insurance company

premium receipt

when the agent collects premiums this will be issued

If an applicant for a life insurance policy and a person to be insured by the policy are two different people, the underwriter would be concerned about A) the gender of the applicant B) the type of policy requested C) which individual will pay the premium D) whether an insurable interest exists between the individuals

whether an insurable interest exists between the individuals

deferred

withheld or postponed until a specified time or event in the future

policy summary

written statement describing the features and elements of the policy being issued

periodic payments of accumulated funds best describes A) a survivorship life policy B) a universal life policy C) a group policy D) an annuity

An annuity

What is the purpose of a conditional receipt A) It is intended to provide coverage on a date earlier than the date of the insurance of the policy B) It guarantees the applicant that the policy will be issued in the amount applied for the application C) It serves as proof that the agent has determined the applicant to be fully insurable for the coverage by the insurance company D) It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue

It is intended to provide coverage on a date earlier than the date of the issuance of the policy

suitability

a requirement to determine if an insurance product is appropriate for a customer

qualified plan

a retirement plan that meets IRS guideline for receiving favorable tax treatments

warranty

absolutely true statement that the validity of insurance policy stands

annuity units

acculmulation units converted and annuitization

agent

agents of the insurer

delivery receipt

insurer relinquishes control of policy

adverse selection

insuring of risks that are more prone to losses than the average risk

insured

person covered by the insurance policy; may or may not be policyowner

replacement

practice of terminating an existing policy or letting it lapse, and obtaining a new one

types of risk

preferred standard substandard

conditional contract

requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed

underwriting

risk selection process

joint life

single policy that is designed to insure two or more lives. pays on first death

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? A) On the designated effective date B) On the application date C) When the agents submits the application to the company and the company issues a conditional receipt D) When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

Which type of life insurance policy generates immediate cash value? A) single premium B) level term C) decreasing term D) continuous premium

single premium

consideration

something of value that each part gives to the other

representations

statements believed to be true to the best of one's knowledge

All of the following statements about equity indexed annuities are correct except A) the annuitant receives a fixed amount return B) the have a guaranteed minimum interest rate C) the interest rate is tied to an index such as the Standard &Poor's 500 D) They invest on a more aggressive basis aiming for higher returns

the annuitant receives a fixed amount of return

insurer (principal)

the company who issues an insurance policy

attained age

the insured's age at the time the policy is issued or renewed

living benefits

the premium the policyowner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered. The cash value, also called noforfeiture value, does not usually accumulate until the third policy year and it grows tax deferred