Life Stimulate test ???
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out direcqtly 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?
$8,000, 60 days 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.
The Washington Insurance Code regulation regarding policy replacement applies to which of the following types of transactions?
Credit life insurance Credit life insurance, group contracts, and policies issued and replaced by the same insurer are exempt from replacement regulations.
How often must an authorized insurer be examined?
Every 5 years Authorized insurers must be examined at least every 5 years.
In which of the following cases will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to age 100 Whole life insurance provides protection for the entire lifetime of the insured. If the insured lives to the age of 100, the company pays the face amount of the policy to the policyowner (usually the insured).
Which of the following policy components contains the company's promise to pay?
Insuring clause The insuring clause contains the company's promise to pay.
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 With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.
All of the following are true regarding the guaranteed insurability rider EXCEPT
It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.
Which of the following best describes annually renewable term insurance? .
It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term A 20-year term policy is written to provide a level death benefit for 20 years.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the .
Other-insured rider. The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance
All of the following are true regarding insurance policy loans EXCEPT
Policyowners can borrow up to the full amount of their whole life policy's cash value. The policy loan option is only found in policies that contain cash value.
An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?
Reinstatement provision A lapsed policy may be reinstated within three years by paying back premiums, with interest, and proving insurability.
An insurer is helping a married couple determine their children's needs, assets, and liabilities, in the event that one or both of the spouses should die. What is the term most closely associated with this?
Survivor protection The death of a primary wage earner(s) in a family can be devastating. Survivor Protection planning helps to assess the needs, assets, and liabilities of the survivors in order to determine how to best care for them in the event of the primary wage earner's death.
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?
Term rider Term riders may be used to customize a permanent life insurance policy to meet the needs of the policyowner.
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT
The plan is a legal method of accumulating money for retirement needs. Employers do not receive a current tax deduction for any contributions made to a nonqualified plan. The plans are legal; however, they do not qualify for any favorable tax treatment under the IRS rules.
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years If the master contract is terminated, every individual who has been on the plan for at least 5 years will be allowed to convert to individual insurance of the same coverage.
Which of the following products requires a securities license?
Variable annuity A variable annuity is considered to be a security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations. For that reason, a person must hold a securities license in addition to a life agent's license in order to sell variable annuities.
The term "illustration" in a life insurance policy refers to .
a) A presentation of nonguaranteed elements of a policy. The term "illustration" means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years
Which of the following best describes the MIB?
c) It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. The Medical Information Bureau (MIB) is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.
When an individual life insurance policy is being replaced by an insurer using an agent, the policyowner must be given an unconditional right to a full refund of premiums if the policy is returned within
20 days. The replacing insurer must provide in its policy, or in a separate written notice delivered with the policy, that the applicant has a right to an unconditional refund of all premiums paid, which may be exercised within a period of 20 days from the date the policy is delivered.
23. In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? .
5 If the master contract is terminated, every individual who has been on the plan for at least 5 years will be allowed to convert to individual insurance of the same coverage
Which of the following qualifications is required for producers who want to sell annuities in this state?
An annuities license and continuing education hours related to annuities every 2 years A producer may sell, solicit, or negotiate the sale of annuity contracts
Which of the following would be required to be licensed as an insurance producer?
An insurance company director who performs executive, administrative and managerial duties A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required
Which of the following statements concerning buy-sell agreements is true?
Buy-sell agreements are normally funded with a life insurance policy. A buy-sell agreement is simply a contract that establishes what will be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option The cash option allows an insurer to send the policyholder an annual,
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender Once the cash surrender value is paid, the contract is over.
An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called
Consideration. "Consideration" is the value offered by the insured to the insurer, and vice versa. The insured makes accurate statements in the application and remits premium payments. In exchange, the insurer provides benefits as stipulated in the contract.
10. According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application An insurance contract must contain a copy of the original application
The term "conservation effort" deals with
Discouraging policyholders from dropping existing policies. The act of trying to discourage a policyholder from dropping his/her existing policy is called "conservation effort
Which of the following statements is correct regarding the separate account for collected premiums established and maintained by a producer?
The account may be interest bearing. The separate account may be interest-bearing, and interest earned on the deposits held in the separate account may be retained by the producer and used to offset bank charges, establish reserves, pay return premiums, or for any of the purposes permitted by the Insurance Code.
All of the following are characteristics of a Universal Life policy EXCEPT
The planned premium pays for mortality charges and expenses and any excess is returned to the policyowner. Any premium amounts not required to pay for mortality and expenses, create the cash account
Which is true about the cash surrender nonforfeiture option?
a) Funds exceeding the premium paid are taxable as ordinary income. The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. Once the policyholder opts for cash surrender, the policy is immediately inactive.
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount
Equal to the original policy for as long a period of time that the cash values will purchase. With this option, the cash value is used as a single premium to purchase the SAME face amount as the original policy for as long a period of time as the cash will buy at the insured's current age.
All of the following are true regarding the convertibility option under a term life insurance policy EXCEPT
Evidence of insurability is not required. Convertible term insurance is convertible without proof of insurability up to the full term death benefit. However, upon conversion, the premium for the permanent policy will be based on the insured's attained age.
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions clause. Exclusions are restrictions of coverage as stated in the policy. Exclusions clause
What does "level" refer to in level term insurance?
Face amount Level term policies maintain level death benefit (or face amount) throughout the term of the policy. In level term insurance, the premium also remains consistent over the years, unlike the premiums of many policies, which increase as the policyholder
Which of the following is correct regarding the premium funds received by a producer in the fiduciary capacity? business funds.
Funds may be kept in a separate account. All funds representing premiums received by a producer in his or her fiduciary capacity must be accounted for and maintained in a separate account (may be interest-bearing) from all other business and personal funds. Commingling of funds is not allowed.
What required provision protects against unintentional lapse of the policy?
Grace period The grace period is 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). The purpose of the grace period provision is to protect the policyholder against an unintentional lapse of the policy.
What is the advantage of reinstating a policy instead of applying for a new one?
The cash values have gained interest while the policy was lapsed The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.
All of the following are true regarding the guaranteed insurability rider EXCEPT
The insured may purchase additional insurance up to the amount specified in the base policy. The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.
All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT
The plan is not approved for favorable tax treatment by the IRS. Employers do not receive a current tax deduction for any contributions made to a nonqualified plan. The plans are legal; however, they do not qualify for any favorable tax treatment under the IRS rules.
Which is the correct comparison between survivorship life and a joint life policy?
A joint life policy has a lower premium than a survivorship life policy. The main difference between joint and survivorship life policies concerns the payment of the death benefit. Whereas traditional joint life policies pay after the first death, survivorship life policies pay after the second death. Both types of policies' premiums are determined by a joint age. Because the benefits of a survivorship life policy are not paid until after the last death, the joint age is considered to be extended, thus lowering the premium
Which of the following is NOT true regarding Equity Indexed Annuities?
The insurance company keeps a percentage of the returns. Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities.
How many hours of continuing education is each producer required to complete during each 2-year licensing period?
24 hours Beginning January 1, 2006, each producer is required to complete 24 hours of continuing education during each 2-year licensing period. Three of the 24 hours must be in Ethics. The Commissioner prescribes the content of the course and approves each course in advance
If a change needs to be made to the application, it should be accomplished by any of the following methods EXCEPT
Draw a line through the first answer and record the correct answer; have both the applicant and proposed insured initial the change. An agent should not use white-out, erase or obliterate any answers given to a question on an application. It could prevent an insurer from contesting the application, should it be necessary.