Pmc exam overview
Life insurance can provide A)survivor protection B)protection against outliving ones assets C) creation of a future liability D)Liquidation of ones estate
A) survivor protection
If an insurer terminates a producer, the Commissioner must be notified. How many days of this notification must the producer be sent a copy.
15 days
If an insurer terminates a producer, the insurer must notify the commissioner within how many days?
30 days
What is the penalty if I already distributions that are below required minimum for the year
50%
What is the maximum civil fine and guilty party may pay for single violation of the insurance code
5k
Which type of authority is found in the agents contract
Express
Hey situation in which a person can only lose or have no change represents
Pure risk
Part two of the application for life insurance provides questions regarding all of the following except
Other insurance coverages
If an applicant submits the initial premium with an application which action constitutes acceptance
The underwriters approve the application
All of the following statements about mutual insurance companies are correct except A) policy dividends issued by the mutual companies are guaranteed and not taxable B)Dividends allow policyholders to share any mutual companies divisible surplus C) dividends or a return of unused premiums D) Mutual companies issue policies referred to as participating
A) Policy Dividends issued by mutual companies are guaranteed and not taxable
Based on human life value approach which of the following is not used to calculate an individual's life value A) predicted needs of the family after the insured's death B)Insureds current and future income C)Insureds annual expenses D) effect of inflation or income overtime
A) predicted needs of the family after the insureds stuff
Which of the following would not be eligible for coverage under key person.
owner of a shop, owner is the principal, not a key person
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should it be?
permanent
What is the max civil fine a guilty party may pay for a single violation of the insurance code
$5,000
Our policy loans calculated
Policies cash value minus unpaid loans in accrued interest
Who is the annuity owner
The person who purchases the annuity
What type of interest rate is guaranteed in universal life policies
contract interest rate
What type of an interest rate is guaranteed in universal life policies.
Adjustable interest rate
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company
Aleatory
When an annuity is written whose life expectancy is taking into account
Annuant
Which of the following would not be eligible for coverage under key person. A) The pharmacist in a drugstore B) The manager of a small store C) The owner of a shop D) The executive officer of a company
B)The manager of a small store
Which of the following would not trigger The payment of accelerated death benefits
Being permanently disabled
used when a Corp association partnership or limited liability partnership acts as a producer?
Business entity
And insured received an annual life insurance dividend check what time best describes this arrangement
Cash option
All the following statements are true regarding tax qualified annuities except. A) Annuity earnings or tax deferred B) They must be approved by the IRS C) Withdrawls or taxed D) employer contributions are not tax deductible
D) employer contributions are not tax deductible
The death benefit under the universal life option
Gradually increases each year by the amount that the cash value increases
Under which conditions would life insurance proceeds be taxable by the federal government.
If there's a transfer for calue
Which type of retirement account does not require the owner to start taking distributions at age 72
Roth IRA
What is the exclusion ratio used to determine
The annuity benefit to be excluded from taxes
INFORMING AN INSURANCE CONTRACT WHEN DOES ACCEPTANCE USUALLY OCCUR
When insurers underwriter approves coverage
When are distributions from an IRA taxed?
When received
Which of the following is not a standard exclusion in life insurance policies
disability
Which of the following is true regarding a single life settlement option
it provides income the beneficiary cannot outlive
The family term rider incorporates
Spouse term and children's term
Guaranteeing future Dividends is considered to be unfair or deceptive act known as
Misrepresentation
life insurance death proceeds are... A) taxable to the extent that they exceed 7.5% of the beneficiaries adjusted gross income. B) taxed as a capital gain C)Taxed as ordinary income D)Generally not taxed as income
D) generally not taxed as income
Upon the surrender of a life insurance policy any cash value accumulated in excess of premium payment is
Text as ordinary income
How long will the beneficiary receive payments under the single life settlement option
until the beneficiary's death
In annuity has accumulated the cash value of 70,000 of which is 30,000 is from premium payments to anyone dies during the accumulation phase the beneficiary will receive
$70,000 (if the annuants death occurs during the accumulation. The beneficiary will receive the amount of premiums paid into the plan or the cash value which ever is greater in this case the beneficiary would receive $70,000)
How many days is the free look period
10 days
Max fine for submitting a false or fraud claim to the insurer
1k
An insurance company that is owned by the policyholder is called a...
Mutual insurer
Death benefits payable to the beneficiary under a life insurance policy are generally
Not subject to income taxation by the Federal Government
Which of the following best defines But unfair trade practices of rebating
Offering an inducement or something of value not specified in the policy
Which statement best describes agreement as it relates to insurance contracts
One party excepts the exact terms of the other parties offer
April SPECT of insured received a conditional receipt but dies before the policy is insurerthe issue will...
Pay the policy proceeds only if it would have issued the policy
If a life insurance company uses HIV testing as a part of underwriting when must an applicant be notified of the procedure
Prior to performance of the test
What effect will the long term care rider have on the death benefit of a life insurance policy If LTC benefits were paid to the insured
Reduce the death benefit
Which insurance policies provide pure life insurance protection without a savings element
Term
Which type Insurance policies provides pure life insurance protection without a savings element
Term
If anyone does before the annuity start date...
The interest is taxable
According to the life insurance replace me regulations which of the following would be an example of policy replacement
A policy is re-issued with a reduction in Cash Value
According to the life insurance replacement regulations which of the following would be an example of policy replacement
A policy is reissued with a reduction in cash value (
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages years until retirement and inflation
Human life values approach
If a loan request is for payment of due premiums on the policy how soon must the insurer issue a loan
Immediately
For a contract to be enforceable by law, the purpose of the contract must be
Legal and not against public policyholders
Witchu Life Insurance itell me option guarantees payments for the lifetime of the recipient but also specifies a guarantee. During which if the original resident dies the payments will continue to a designated beneficiary
Life income with period certain
Your client wants both protection and savings from the insurance and is willing to pay premiums until the retirement at age 65 what with the right policy for this client Be
Limited pay whole life
If an insurer terminates a producer, the Commissioner must be notified. Within how many days of this notification must the producer be sent a copy
15 days
What concept is associated with the exclusion ratio
Annuities payments
All the following statements about mutual insurance companies are correct except. A) policy dividends issued by mutual companies are guaranteed and not taxable B) dividends allow policyholders to share a mutual companies divisible surplus C) dividends are return of unused premiums D) mutual companies issue policies referred to as participating.
A
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 of the following are true of annually renewable term insurance except... A)The policy must be renewed no matter what happens to one's health B) Proof of insurability must be provided at each renewal C)The premium increase is each year D) The death benefit remains level
Proof of insurability must be provided at each renewal
What affect will The long-term care rider have on the death benefit of the life insurance policy if LTC benefits were paid to the insured
Reduce death benefit
A form of an individual retirement account funded with after-tax contributions. Roth Ira raise grow tax-free as long as the account is open for at least five years
Roth IRA
An agent tells and ensure that if he replaces his current insurance policy with a new one his dividends will be higher and his premiums will be slightly lower the policy however would not offer either one of those things what type of misrepresentation is being committed
Twisting
When would life insurance death benefits be tax free?
If paid as lump sum to beneficiary
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage which of the following dividend options is being used
Paid up additions (used to purchase more paid up insurance each year thereby increasing the death benefit)
In life insurance underwriting all of the following are true regarding HIV test except
Person may be denied coverage based solely on the presence of HIV
In participating and non-participating policies which of the following is not true? A) non-participating parties issue dividends to policy owners B) they are sometimes referred to as par and non-par C) participating policies allow the policy owner to share any mutual companies the visible surplus in the form of dividends D) non-participating policies issue dividends to shareholders
A) Non-participating policies issue dividends to police the owners
All of the following are requirements for life insurance illustrations except A) they must be part of the contract B) they must differentiate between guaranteed and projected amounts C) they may only be used as approved D) they must identify non-guaranteed values
A)Must be part of the contract
During policy solicitation an insurer exaggerate the financial condition of the one of its competitors and makes it sounds and make it worse than it is this is an example of an unfair trade practices known as
Defamation
Which of the following best describes annually renewable term insurance
It is level term insurance
If an immediate annuity is purchased with the face amount of death or with the cash value of surrender this would be considered a
Settlement option
For retirement plan to be qualified it must be designed for benefit of
employees
Which of the following is true of level term? A) The policy and those at age 100 B) The policy offer is not for future values C) it is temporary protection D) The premium will increase or decrease based on the current interest rate
C)It is temporary protection
All of the following are true of a non qualified deferred compensation plan except. A) It is a contractual agreement when by the employees agrees to defer receipt of a portion of his compensation until retirement disabled or death. B)does not require irs approval C) can be discretionary D) contributions are tax deductible
D) contributions are tax deductible
How is a licensees date of continuing education credit review determined
by the month and date of birth
Children's riders attached to whole life policies are usually issued as what type of insurance
Term
An insured and his spouse recently had a child. Which riders would allow the couple to insure the child for a limited period of time at a specified amount?
Children's term riders
Which rider allows children to be added to coverage for a limited period of time for a specified amount
Childrens rider
During policy solicitation and insurer exaggerates the financial condition of one of its competitors and makes it sound worse than it is this is an example of an unfair trade practices of
Defamation
An annuitant pays the annuity premium on the 14th of each month which of the following best describes the arrangement
Level
And Ani want pays the annuity premium on the 14th of each month which of the following best describes the arrangement
Level
And and you weren't pays the annuity premium on the 14th of each month which of the following best describes this arrangement
Level
What is the cost of coverage based on for group life insurance
The average age and the ratio of men to women
In a group life insurance policy the employer may select all of the following except
The beneficiary
The annuity owner does well the annuity is still in the accumulation stage which of the following is true
The beneficiary will receive the grader of money paid into the annuity or the cash value
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 loss is covered by the policy what contract element does this describe
Unilateral
If an insured purchases an insurance policy with a large deductible what risk management technique is the insured exercising
Retention
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 (during an IRA direct transfer or direct rollover the full amount gets reinvested from one place to another)
Policy owner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity what is this non-taxable transaction is called?
1035 exchange
If a statement of policy information i not furnished to the applicant at the time of the application how much time do we have to deliver it to the applicant
15 days
The commissioner has determined that the producer is ineligible for appointment by an insurer The commissioner must notify the insurer within
5 days
An I already use his immediate annuity's to pay out benefits I already owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed as required
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed as required (when immediate annuities are used to pay IRA benefits distributions must begin no later than 70 1/2 in order for the annuitant to avoid penalties the penalty is 50% of the shortfall from the required annual amount)
An insured owns a $50,000 whole life policy. At age 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?
50,000
Licensees who are currently licensed and have recently become residents of the state of Michigan may not have to complete any prelicensing education. To qualify for this exemption they must apply to become resident licensees within a few days of establishing a legal residence within how many days.
90 days
An individual is purchasing a permanent life insurance policy with a face value of $25,000 while this is all of the insurance he can afford at this time, he wants to be sure that additional coverage will be available in the future which one is best for him? A) Guaranteed insurability B)dividend options C) guaranteed renewable options D)nonforfeiture options
A
According to the entire contract revision a policy must contain
A copy of the original application for insurance
All of the following statements are true regarding tax qualified annuities except? A) withdrawls or taxed B) employer contributions are not tax-deductible C) annuity earnings or tax deferred D) they must be approved by the IRS
B)Employer contributions are not tax-deductible
Which of the following could be true of both the fix. And fix them out settlement options
Both guarantee that the principal and interest will be fully paid out
All of the following are true of annually renewable term insurance except A) The death benefit remains level B) The policy must be renewed no matter what happens to one's health C) Proof of insurability must be provided at each renewal D)The premium increase is each year
C) proof of insurability must be provided at each renewal
What happens when a policy is surrender for its cash value
Coverage ends in the policy cannot be reinstated
All of the following could be considered rebates if offered to an insured in the sale of insurance except? A) An offer of employment B) Stocks, securities, or bonds C) An offer to share in commissions generated by the sale D) dividends from a mutual insurer
D) Dividends from a mutual insurer (Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid)
If a insured purchases an insurance policy with the large deductible what risk management technique is insert exercising
Retention
A 60-year-old participant in a 401(k) plan takes a distribution and rules it over to an IRA within 60 days. Which of the following is true? A) no taxes are due since the plan participant is over age 59 1/2 B) there is a 10% early withdrawal penalty C) The amount distributed is subject to ordinary income tax D) The amount of the distribution is reduced by the amount of 20% withholding tax
D) The amount of the distribution is reduced by the amount of 20% withholding tax. (Since this client actually took a distribution instead of making a trustee to trustee roll over the distribution is subject to 20% withholding tax)
The commissioner has determined that a producer is in eligible for appointment by an insurer the commissioner must notify the insure within
Five days
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
Fixed amount
The policy owner 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 policy owner choose?
Interest only option
An insurance agent visit a potential client and explain various types of policies. The customer displays a lack of interest so the agent guarantees higher dividends than he knows would be possible which term describes what the agent has done.
Misrepresentation
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation (to make any false or misleading statements regarding the dividends to be received on any insurance policy)
What part of internal revenue code allows an owner of a life insurance policy or annuity to change or replace their current contract with another contract without creating adverse tax consequences?
Section 1035 policy exchange
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Set premium rates
What does the application of contract of adhesion mean
Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured
Which type of life insurance policy generates immediate cash value
Single Premium
In contrast thinks that insures with mutual insurance which statement is true
Stock answers are owned by the shareholders and issue non-participating policies
Upon the surrender of a life insurance policy and cash value accumulated in excess of the premium payment is
Taxed as ordinary income
Upon the surrender of a life insurance policy any cash value accumulated in excess of the premium payments is
Taxed as ordinary income
Variable life insurance is regulated by all of the following except
The US Department of treasury
An annuitant dies before the effective date of a purchased annuity assuming that anyone's wife is the beneficiary what will occur?
The interest will continue to accumulate taxed deferred (if the contract holder dies before the annuity starting date the contracts interest becomes taxable. if the beneficiary of the annuity is a spouse the tax can continue to be deferred)
All the following are true regarding the waiver of cost of insurance rider except A) The rider cannot waive the cost of premiums that accumulate cash value B) rider expires when the insured reaches 60 C ) The rider waves insurance costs in the event the insured becomes disabled D) The rider is only applicable to universal life policies
The rider expires when the insured reaches 16
Under a extended term no forfeiture option the policy cash value is converted to?
The same face amount as in the whole life policy
When contributions to an immediate annuity are made with before tax dollars which of the following is true of the distributions
Distributions are taxable
Who is responsible for the content in form of insurance advertisements
The whose policies are being advertised
The paid up addition option uses the dividends
To purchase a smaller amount of the same type of insurance as the original policy
Agents who persuade insureds to cancel a policy in favor of another when it might not be in the insureds best interest are guilty of_____?
Twisting
An insurance company receives an application with some information missing and issues the policy anyway. What's this called?
Waiver
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than?
With the policy
Annuities is for retirement income that___?
You cannot outlive
Restoring and insured financially after a claim is known as
Indemnity (under indemnity and insured or a beneficiary is permitted to collect only to the extent of financial loss)
The medical information bureau was created to protect
Insurance companies from adverse selection by high risk persons.
A married couple purchases a life insurance policy on their newborn baby. They are concerned about what would happen to the policy of they were unable to make premium payments due to death or disability which rider should you recommend?
Payor benefit (It provides protection to insured minors. if the life Insurance is for a child and the parent paying premium dies or becomes disabled the insurance company will waive the premium until the child reaches a predetermined age such as 18 or 21)
Among people in the same class in life expectancy which of the following factors can be used to influence premium rates
occupation
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in business of insurance? A) defamation B) slandering C)undercutting D) twisting
Defamation
When an insurance when you listed an advertising brochure it emphasizes the companies financial stability and sound business practices in reality it's financial health is terrible, and the company will soon have to file for bankruptcy what describes this?
False financial statement
When a beneficiary receives payments consisting of both principal and interest portion which part are taxable as income
Interest only
All of the following statements about mutual insurance companies are correct except
Policy dividends issued by me two companies are guaranteed and not taxable
Which of the following could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination? A)smoker B)born in another country C)legally blind D)victim of domestic abuse
A
Traditional IRA contributions are tax deductible based on what?
Owners income
An insured and his spouse recently had a child which of the following riders would allow the couple to insure the child for a limited period of time at a specific amount
Children's term rider (Lost children to be added to coverage for a limited period of time for a specific amount)
When both parties for a contract must perform certain duties and follow rules of conduct to make the contract enforceable the contract is
Conditional
I insured devices in intimidation strategy in order to corner a large portion of the insurance market which of the following best describes the practice
Illegal
B just bought a new car which he anticipates will be paid for four years from now he also wants to buy a life insurance policy but is financially limited until the car is paid off which of the type of policies would be best for B
Modified life
True or false? Rebates are allowed if it's in the best interest of the client
False
When a whole life policy is surrendered for it's nonforfeiture value what is the.automatic options
Extended term
The automatic nonforfeiture option is
Extended term
A licensee Fails to earn the required CE credits by the expiration of the 90 day grace. The license has been terminated for education how much time does the licensee have to meet the CE requirement to be considered for license reinstatement
1 year
A licensee fails to earn the required CE credits by the expiration of the 90-day grace period and the license has been terminated for education how much time does the licensee have to meet the CE requirements to be considered for license reinstatement?
1 year
Iwonder who conditions approval of a loan on the condition that the borrower purchased insurance from the lender may be guilty of
Coerion
A 60-year-old participant in a 401K plan take the distribution and rolled it over to and I already within 60 days what is true? A) no taxes are due since the plan participant is over 59 1/2 B) there is a 10% early withdrawal penalty C) The amount distributed is subject to ordinary income tax D) The amount of the distribution is reduced by the amount of the 20% withholding tax
D) The amount of the distribution is reduced by the amount of the 20% withholding tax
The owner of a life insurance policy wishes to name to beneficiaries for the policy proceeds what will the soliciting insurance producer say
The policy owner can specify The way proceeds are split in the policy
Who is responsible for the content and form of insurance advertisements
The insurer whose policies are being advertised
Agent authority "perceived authority" is?
Apparent
Which of the following documents must be provided to the policy owner during policy replacement? A)policy illustrations B)notice regarding replacement C)disclosure authorization form D) buyers guide and summary form
B
The waiver of cost of insurance rider is found in what type of insurance
Universal life
Which of the following are generally not considered when underwriting group insurance
The insured's medical history
Following a career change and insured is no longer required to perform mini physical activities so he has implemented a program where he walks and jogs for 45 minutes each morning the insured has also eliminated most fatty foods from his diet which method does this describe
Reduction
If a statement of policy information is not furnished to the applicants at the time of application how soon must the form be delivered to the applicant
15 days
If an insurer wants to appoint a producer it might file a notice of appointment within how many days of the date that the contract is
15 days
Which of the following is not true regarding policy loans? A) policy loans can be repaid at death B) an insurer can charge interest on outstanding policy loans C) policy loan maybe we paid after the policy surrender D) money borrowed from the cash value is taxable
D) Money borrowed from the cash value is taxable
Which of the following terms of use the name than nine tax return money was premiums
Dividend
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
Settlement option
Events in which a person has both the chance of winning or losing are classified as
Speculative risk
In contrasting stock insurers with mutual insurers which statement is true.
Stock insurer are owned by the shareholders and issue nonparticipating policies
Which of the following best describes taxation during the accumulation period of an annuity?
Taxes are deferred
