PASS focused Exam 1
Who can make changes to the policy once it is in effect ?
An executive officer of the insurer
Which entities regulates variable life policies ?
Both State government and the Insurance department
Which of the following is true regarding the annuity period ?
It may last for the lifetime of the annuitant
Which of the following are true regarding the annuity period ?
It may last for the time of the annuitant
Paul is the policy owner of a life insurance policy which will increase significantly in face amount (death benefit) when the insured reaches an age specified in the policy. This policy is referred to as a:
Jumping Juvenile Policy
A women divorces her husband at age 35 and collects distributions on her retirement plan as a results. What penalties will she have to pay ?
None
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments ?
Spendthrift Provision
A 403(b) plan, commonly referred to as a TSA, is available to used by
Teachers and not for profit organizations
Which of the following is true regarding a waiver of a surrender charge on an annuity contract ?
The charge may be waived if the annuitant is confined to a long term care facility for at east 30 days.
Which of the following is true regarding a waiver of a surrender charge on an annuity contract ?
The charge may be waived if the annuitant is confined to a long term care facility for at least 30 days.
Who is the owner of the policy and who pays the premium in an Executive Bonus Plan ?
Executive is the owner , and the executive pays the premium
All of the following are true regarding a decreasing term policy EXCEPT ?
The payable premium amount steadly declines throughout the duration of the contract.
All of the following are general requirements of a qualified plan EXCEPT
The plan must provide an offset for social security benefits .
Which of the following statements is true concerning a 403(b) plan (tsa) ?
An arrangement made with certain tax-exempt "502c(3)" organizations and public schools under which employees may set aside amounts of income for retirement purposes
Which concept is associated with "EXCLUSION RADIO"
Annuities payment
Albert and Bryan are partners in business . They purchase a BUY-SELL agreement , which states that should done of them die prematurely, the other would be financially able to buy the interest of the deceased partner . What type of life insurance policy may be used to fund this agreement ?
Any life insurance policy
Which type of authority is bases on the actions and words of the agent ?
Apparent
Which of the following provision in annuity contract allow the owner to surrender the annuity if interest rates drop to a specified level ?
Bail-out
What limits the amount that a policy owner may borrow from a whole life insurance policy ?
CASH VALUE
What limits the amount that a policy owner may borrow from a whole life insurance policy ?
Cash Value
An insured is driving north and his wife, who is also policy beneficiary , is driving south on the same highway. They have a head-on collision. The husband dies instantly , and the wife dies 15 days later. The company pays the death benefit to the state insured. This indicates that the life insurance policy had a :
Common Disaster Provision
In reference to fixed annuities, what compromises most of a life insurance company generals account ?
Conservative investments like bonds
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the ?
Insuring clause
What is the purpose of a seven-pay Test ?
It determines if the insurance policy is an MEC (modified Endowment Contract )
Which of the following in NOT true regarding policy loans ?
Money borrowed from the cash value in taxable
Which of the following is NOT true regarding policy loans ?
Money borrowed from the cash value is not taxable
If an insurer continually uses the automatic premium loan option to pay the policy premium?
The policy will terminate when the cash value is reduced to nothing.
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 she will receive from the plan administrator and how long does she have to complete the tax free rollover ?
$8000 in 60 days
Which of the following is an example of a non-qualified retirement plan ?
Executive Bonus Plan
Which of the following must an agent receive in order to sell variable life insurance policies ?
FINRA registration
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurablity
Who may contribute to an HR-10 plan ?
Self Employed Plumber
What method is used to determined the taxable portion of each annuity payment ?
The exclusion ration
Under a SIMPLE plan, which of the following is true regarding taxation on both contribution and earning ?
They are tax deferred til withdrawn
Which of the following statements regarding deferred compensation funds is incorrect ?
They are usually qualified plans
A producer licensed lapsed. How soon after this lapse can his license be reinstated ?
1 year
An insurer has filed a new rate with the Commissioner, and is waiting for a reply. The commissioner hasn't responded yet. After how many days can the insurer apply the new rate :
10 days
How many days does an insurer have to file a notice of appointment for a producer ?
15 days
Which authority in NOT stated in an agent's contract but is required for the agent to conduct business ?
IMPLIED IMPLIED IMLIED IMPLIED
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is knows as the
Incontestability Clause
An employer provides a group life plan for its employees; it is $50,000 of term to age 65. When one of the employees was hired 10 years ago, he missatated his age and told the employer he was 50, when in fact he was 56 years old. The insured employee died last week, his beneficiary will receive ?
Nothing due to the insured's reaching maximum age
Paul is a producer in Nevada and wants to become a producer in UTAH. The department will waive certain examination requirements , provided that Nevada would waive these same requirements if a UTAH producer sought licensure in Nevada. What is the term to describe this phenomenon ?
Reciprocity
An applicant buy a nonqualified, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable ?
Spouse
During the accumulation period in a non-qualified annuity, what are the tax consequences of a withdrawal ?
Taxable interest will be withdrawn first and the 10 % penalty will be imposed if under age 59 1/2.
Who can make a fully deductible contribution to a traditional IRA ?
An individual not covered by an employer sponsored plan who has earned income
Which of the following in true regarding dividend - related taxation :
Dividends are not Taxable
Which of the following best describes a bail-out provision ?
It allows the owner to surrender the annuity with out a charge
A producer in another state wants to become a producer in UTAH. The other states gives privileges of its producer to the prospective producer of the other state. What is this called ?
Reciprocity
The advantage of qualified plans to employers is
Tax deductible contributions
An employee quit her job where she has a balance 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. I f she decides to rollover her plan to a Traditional IRA how much she will receive from the plan administrator and how long does she have to complete the tax-free rollover ?
$8000 60 days
Which of the following protects the insured from an intentional policy lapse due to a non payment of premium ?
Automatic premium loan
Which of the following is NOT true regarding the accumulation period of an annuity ?
It would not occur in a deferred annuity
Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all the rights of ownership. Bonnie should have her husband name as the
Revocable beneficary
I f a life insurance policy has an irrevocable beneficiary designation ,
The beneficiary ca only be changed with written permission of the beneficiary
Which of the following is true regarding a waiver of a surrender charge on an annuity contract ?
The charge may be waived if the annuitant is confined to a long term facility for at least 30 days
If an insurer wants to raise its premium rates, the new rates must be submitted to the commissioner for the review and will take how many days to go into effect ??
30
An insurance company must notify the commissioner whenever it terminates an agent's appointment within how many days of termination ?
30 Days
Which of the following are generally NOT considered when underwriting group insurance ?
The groups medical history
Under SIMPLE plans participating employee may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent the employee's annual wages ?
3
All of the following are true of the federal tax advantages of a qualified plan EXECEPT :
At distributions. all amounts received by the employee are free of taxes.
A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision ?
Automatic Premium Loan
A man wants to buy a life insurance policy in which he can count on guaranteed minimum benefits. Which type should he buy ?
Fixed
When an annuity in written, whose life expectancy is taken into account ?
The annuitant
How are funds contributed to a tax-sheltered annuity treated for taxation ?
The contributions are not included as income for the employee, but are taxable upon distribution.
In comparison to consumer reports which of the following describes a unique characteristic of investigative consumer report ?
The customer associates, friends and neighbors provide the reports data
A life insurance policy does not have a war clause. If the insured is killed during a time if war, what will the beneficiary receive from the policy ?
The full death benefit
Which of the following are generally NOT considered when underwriting group insurance ?
The group medical History
Life insurance benefits fr minors must be placed in the hands of either a guardian or trustee. Which of the following is true ?
The guardian may or may not be accountable for assets
What is the advantage of reinstating a policy instead of applying for a new one ?
The original one is used for premium determination
In a life settlement contract whom does the life settlement broker represents ?
The owner
An insured buys a 5-year level premium term policy with a face amount of 100,000. The policy also contains renewability and convertibility options . When the insured renews the policy in 5 years.
The premium will increase because the insured will be 5 years older than when the policy was originally purchased .
For an individual who is NOT covered by an employer- sponsored plan IRA contrubutions
Will be tax deductible
Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest drop to a specified level ?
Bail-out
An agent accepts a payment after 35 days it is due , telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority ?
Apparent Apparent
What required provision protects against unintentional lapse of the policy ?
Grace Period
Which of the following is not true regarding policy loans ?
Money borrowed from the cash value is taxable
Which of the following statements concerning a simplified employee pension plan (SEP) is INCORRECT ?
SEPs limit participation to members of closely held corporations
Under the 401K bonus or thrift plan, the employer will contribute ?
An undetermined percentage for each dollar contributed by the employee.
During the accumulation period in a non-qualified annuity, what are the tax consequences of a withdrawal ?
Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2
Which of the following best describes taxation during the accumulation period of an annuity ?
Taxes are deferred
Which of the following is NOT the consideration in a policy ?
The application given to a prospective insured
How are funds contributed to a tax-sheltered annuity treated taxation ?
The contributions are not included as income for the employee, but are taxable upon distribution
Twin Brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred starting the business . What type of insurance would be the most affordable and still provide a death benefit should one of them die.?
Join Life Policy
Which of the following best defines the "owner" as it pertains to life settlement contracts ?
The policy owner of the life insurance policy
Which of the following term means as a result of calculation based on the average number of months the insured is projected to live due to the medical history and mortality factors ?
Life Expectancy
All of the following are characteristics of a group life insurance EXCEPT ?
Premiums are determined by the age, sex and occupation of each individual certificate holder
If a life insurance policy is deemed to be modified endowment contract, the policy loans:
Will be taxed on a last-in-first -out basis
Which of the below statements is FALSE concerning MEC ?
The policy holder can receive distributions at any time without being penalized
Which of the following is NOT consideration on the part of an insured ?
Promise to submit timely claims
Which of the following will NOT be an appropriate used of a deferred annuity ?
Creating an eState
Which authority is NOT stated in an agents contract but is required for the agent to conduct business ?
Implied
All of the following types of distributions are considered exceptions to the early rule ans therefore are not subject to the penalty tax EXCEPT
Participants Debt
Which of the following is usually true of a participating life insurance policy ?
Pays dividends to the policy owners.
All of the following are characteristics of group life insurance EXCEPT ?
Premium are determined by the age,sex and occupation of each individual holder.
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will take place?
3
How many days does an insurer have to file a notice of appointment for a producer ?
15 Days
An agent must do all of the following actions when delivering a policy EXCEPT ?
Notify the client about commissions earned from the sale of the policy
Which of the following are generally not considered when underwriting insurance ?
The groups medical history
Which of the following is usually true of a participating life insurance policy ?
Pay dividends to policy owner
Which of the following statement concerning Simplified Employee Pension plan (SEP) is INCORRECT ?
SEP's limits participation to members closely held corporations
All of the following are true of a key person insurance EXCEPT
The plan is funded by permanent insurance only
An insurer has a level term life insurance policy that guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insurer to renew the policy and
Pay a lower renewal premium by providing insurability
The Primary purpose of Licensing is to
Ensure high standard to the insuring publicity
Ted and Fred are attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose
HR-10 (Keogh Plan) Plans specifically for self employee and their employees
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have ?
Universal Life
