Maria's exam for Licensed Healthcare Agent

Who can request changes in premium payments, face value, loans, and policy plans?

Policy owner

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

The amount of premium payment

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment

which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policy owner?

third-party ownership

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

According to the Entire Contract provision, a policy must contain

a copy of the original application for insurance

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is

a modified endowment contract

who can make a fully deductible contribution to a traditional IRA

an individual not covered by an employer-sponsored plan who has earned income

All other factors being equal, the least expensive first-year premium payment is found in

annually renewable term

A Universal life Insurance policy is best described as a/an

annually renewable term policy with a cash value account

A key person insurance policy can pay for which of the following?

Costs of training a replacement

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Which of the following products will protect an individual from outliving his or her money?

annuity

Which of the following is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

An individual has just borrowed $10,000 from his bank on a 5 year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Decreasing term

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period

All of the following statements concerning dividends are true EXCEPTS

Dividend amounts are guaranteed in the policy

The accelerated benefits provision will provide for an early payment of the death benefit when the insured

becomes terminally ill

All of the following are personal uses of life insurance EXCEPT

buy-sell agreement

a life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a

buy-sell agreement

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection

which of the following terms is used to name the nontaxed return of unused premiums?

dividend

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?

A minor son of the insured

what percentage of a company's employees must take part in a noncontributory group life plan?

100%

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?

Premiums are not tax deductible as a business expense.

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

Reduced paid-up

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 unsurability is provided. Which policy provision allows this?

Reinstatement provision

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

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

for 20 years or until death, whichever occurs first

in a direct rollover, how is the money transferred from one plan to the new one?

from trustee to trustee

The automatic premium loan provision is activated at the end of the

grace period

Which of the following is another term for the accumulation period of an annuity?

pay-in period

All of the following are true regarding insurance policy loans except

policy loans can be made on policies that do not accumulate cash value

which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage one the plan is terminated?

those who have been insured under the plan for at least 5 years

which of the following is the best reason to purchase life insurance rather than annuities?

to create an estate

what is the purpose of key person insurance?

to lessen the risk of financial loss because of the death of a key employee

Which of the following products requires a securities license?

variable annuity

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

10,000 no tax consequence

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?

100% participation of members is required in noncontributory plans

what is the number of credits required for fully insured status for social security disability benefits?

40

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

A straight life policy has what type of premium?

A level annual premium for the life of the insured

The equity in an equity index annuity is linked to

An index like Standard & Poor's 500

All of the following are examples of 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 benfit to secure the loan.

Under which of the following circumstances would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for her medical treatment

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250, 000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase

Equity Indexed Annuity

An agent selling variable annuities must be registered with

FINRA

When the policy owner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount

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

viator

which of the following types of insurance policies would perform the function of cash accumulation?

whole life

which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?

withdrawals are not taxable

Life income joint and survivor settlement option guarantees

Income for 2 or more recipients until they die

The life insurance policy clasue that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause

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

Increasing term

Which of the following is true about the mandatory free look in a Life Insurance policy?

It commences when the policy is delivered

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

Lump sum

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

The policy owner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for the next premium. What option would allow her to do this?

Reduction of premium

Nonforfeiture values guarantee which of the following for the policy owner?

That the cash value will not be lost

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?

The employer is the owner and beneficiary.

all of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits

The paid-up addition option used the dividend

To purchase a smaller amount of the same type of insurance as the original policy

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

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

a SEC registration

Who is a third-party owner?

a policy owner who is not the insured

who is a third-party owner?

a policy owner who is not the insured

Which of the following premium payment modes will incur the lowest overall payment?

annual

what does "liquidity" refer to in a life insurance policy?

cash values can be borrowed at any time

a tax-sheltered annuity is a special tax-favored retirement plan available to

certain groups of employees only

A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a

cross-purchase plan

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

death benefit

which of the following is true regarding taxation of dividends in participating policies?

dividends are not taxable

when an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a/n

executive bonus

in the executive bonus plan, who is the owner of the policy, and who pays the premium?

executive is the owner, and the executive pays the premium

if an insured worker has earned 40 quarters of coverage, the worker's status under social security is

fully insured

all of the following are business uses of life insurance EXCEPT

funding against general company financial loss

What required provision protects against unintentional lapse of the policy?

grace period

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

All of the following are Nonforfeiture options EXCEPT

interest only

what is the main purpose of the seven-pay test?

it determines if the insurance policy is an MEC

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?

life expectancy

What is the official name for the social security program?

old age survivors disability insurance

in which of the following instances would the premium be tax deductible?

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

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

refund the premiums paid

What is the primary purpose of a 401k plan?

retirement

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?

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

which of the following would be considered a nonqualified retirement plan

split-dollar plan

for an individual who is NOT covered by an employer sponsored plan, IRA contributions are

tax deductible

the premiums paid by the employer in a business life insurance policy are

tax deductible by the employer

a 60-year old participant in a 401k plan takes a distribution and rolls it over to an IRA within 60 days. which of the following is true?

the amount of the distribution is reduced by the amount of a 20% withholding tax

which of the following is incorrect concerning a noncontributory group plan?

the employees receive individual policies

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

the full death benefit

an employee is insured under her employer's group life plan. if she terminated her group coverage, which of the following statements is INCORRECT?

the insured may choose to covert to term or permanent individual coverage.

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

In a life settlement contract, whom does the life settlement broker represent?

the owner

All of the following are true of an annuity owner EXCEPT

the owner must be the party to receive benefits

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

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

which of the following is true regarding health insurance underwriting for a person with HIV

the person may not be declined for medical coverage solely based on HIV status

all of the following are true of key person insurance EXCEPT

the plan is funded by permanent insurance only

which of the following best defines the owner as it pertains to life settlement contracts?

the policy owner of the life insurance policy

If an insured continually uses the automatic premium loan option to pay the policy premium loan option to pay the policy premium,

the policy will terminate when the cash value is reduced to nothing

which of the following is NOT true of life settlements?

the seller must be terminally ill

under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?

they are tax deferred until withdrawn

which of the following is NOT an example of a business use of Life Insurance?

workers compensation

What is the purpose of a free-look period in insurance policies?

it allows the insured to reject the policy with a full refund

Which of the following is TRUE of a qualified plan?

it has a tax benefit for both employer and employee

Which of the following factors determines the amount of each installment paid in a Life Income Option arrangement?

recipient's life expectancy and amount of principal

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

survivor protection

The interest earned on policy dividend is

taxable

The interest earned on policy dividends is

taxable

All of the following entities regulate variable life policies EXCEPT

the Guaranty Association

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

the annuitant must be a natural person

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

it has a guaranteed minimum interest rate

What is the benefit of choosing extended term as a nonforfeiture option?

it has the highest amount of insurance protection

Which of the following is TRUE regarding the annuity period?

it may last for the lifetime of the annuitant

Which two terms are associated directly with the premium?

level or flexible

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

lower

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy be

the benefit is received tax free

which of the following is an example of liquidity in a life insurance contract?

the cash value available to the policy owner

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

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability

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

Guaranteed insurability option

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceases the insured

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit