simulation 3
How are contributions to a tax-sheltered annuity treated with regards to taxation? a) They are taxed as income for the employee. b) They are taxed as income for the employee, but are tax free upon withdrawal. c) They are not included as income for the employee, but are taxable upon distribution. d) They are never taxed.
c
How soon must the insurer pay a death benefit claim after receiving the proof of death? a) 30 days b) 1 year c) 6 months d) 2 months
d
Which of the following is TRUE regarding the accumulation period of an annuity? a) It is also referred to as 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.
d
Which of the following is a feature of a variable annuity? a) Payments into the annuity are kept in the company's general account. b) Interest rate is guaranteed. c) Securities license is not required. d) Benefit payment amounts are not guaranteed.
d
Which two terms are associated directly with the premium? a) Fixed or variable b) Term or permanent c) Renewable or convertible d) Level or flexible
d
A Return of Premium term life policy is written as what type of term coverage? a) Increasing b) Decreasing c) Renewable d) Level
a
A corporation, association, or partnership is best defined as a) The NAIC. b) A Business Entity. c) An Insurer. d) An Insurance Producer.
b
In forming an insurance contract, when does acceptance usually occur? a) When an insured submits an application b) When an insurer's underwriter approves coverage c) When an insurer delivers the policy d) When an insurer receives an application
b
What is the benefit of choosing extended term as a nonforfeiture option? a) It can be converted to a fixed annuity. b) It has the highest amount of insurance protection. c) It matures at age 100. d) It allows for coverage to continue beyond maturity date.
b
What provision in an insurance policy extends coverage beyond the premium due date? a) Waiver of premium b) Grace period c) Free look d) Automatic premium loan
b
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? a) Additional insured rider b) Family term rider c) Spouse rider d) Children's rider
b
Annually renewable term policies provide a level death benefit for a premium that a) Remains level. b) Fluctuates. c) Increases annually. d) Decreases annually.
c
The protocol for replacement does not apply to which of the following situations? a) The existing and replacing insurer are the same. b) The transaction involves credit life insurance. c) The original policy is allowed to lapse. d) A & B
d
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 a) In lesser amounts for the remaining policy term of age 100. b) Equal to the cash value surrendered from the policy. c) The same as the original policy minus the cash value. d) Equal to the original policy for as long a period of time that the cash values will purchase
d
How is it determined whether an insurer is allowed to write business in a state? a) The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien. b) The insurer's domicile will determine whether an insurance company is domestic, foreign, or alien. c) The insurer's location of incorporation will determine whether a company is domestic, foreign, or alien. d) The insurer's net income will determine whether a company will be allowed to write business in a state.
a
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 a) Incontestability clause. b) Reinstatement clause. c) Insuring clause. d) Misstatement of Age clause.
a
Which of the following best describes an insurance company that has been formed under the laws of this state? a) Domestic b) Sovereign c) Alien d) Foreign
a
Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive? a) 10% federal death benefit income tax, plus the amount of the accelerated benefit b) Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit c) There are no deductions taken from death benefits. d) Penalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income
b
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) Illegal until endorsed by the Guaranty Association b) Legal, provided that the other insurers are paid royalties for the usage of their names c) Illegal under any circumstances d) Legal, provided that the information can be verified
c
Within how many days must insurance producers reports changes of address to the Commissioner? a) 10 days b) 14 days c) 30 days d) 90 days
c
Which of the following is TRUE regarding the premium in term policies? a) The premium is level. b) Only level term policy has a level premium. c) The premium in term policies is not based on the insured's age. d) Decreasing term policy will have a decreasing premium.
a
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the a) Primary beneficiary. b) Irrevocable beneficiary. c) Revocable beneficiary. d) Secondary beneficiary.
b
All of the following are true regarding a decreasing term policy EXCEPT a) The payable premium amount steadily declines throughout the duration of the contract. b) It has a lower premium than level term. c) The contract pays only in the event of death during the term and there is no cash value. d) The face amount steadily declines throughout the duration of the contract.
b
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? a) Ordinary life policy b) Limited pay whole life c) Level term d) Term to specified age
c
Which of the following is the closest term to an authorized insurer? a) Licensed b) Legal c) Admitted d) Certified
c
The death protection component of Universal Life Insurance is always a) Increasing Term b) Annually Renewable Term c) Whole Life d) Adjustable Life
b
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 can be increased
b
All of the following are examples of third-party ownership of a life insurance policy EXCEPT a) An insured couple purchases a life insurance policy insuring the life of their grandson. b) A company purchases a life insurance policy on their manager, who is an important part of the operation. c) When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. d) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
d
What is the purpose of a free-look period in insurance policies? a) It allows the insured 10 days to pay the initial premium. b) It allows the insurer to temporarily suspend coverage after an insured's disability. c) It allows the insurer to cancel coverage if a misrepresentation is discovered. d) It allows the insured to reject the policy with a full refund.
d
What is the term for how frequently a policyowner is required to pay the policy premium? a) Schedule b) Grace period c) Consideration d) Mode
d
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a) Mutual b) Reciprocal c) Nonprofit service organization d) Stock
a
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for 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) The beneficiary's life expectancy. b) Projected interest rates. c) Face amount of the policy. d) The insured's age at death.
a
Which of the following information will be stated in the consideration clause of a life insurance policy? a) The conditions for insurability b) The amount of premium payment c) The parties to the contract d) The time period allowed for the payment of premium
a
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? a) The insured may renew the policy for another 10 years at the same premium rate. b) The insured may renew the policy for another 10 years, but at a higher premium rate. c) The insured must provide evidence of insurability to renew the policy. d) The insured may only convert the policy to another term policy.
b
Assuming that a policy does not contain an unconditional refund provision of at least 10 days, when must a Buyer's Guide and policy summary be provided? a) At the time of application b) Before accepting the initial premium c) At the time of policy delivery d) Within 30 days of policy delivery
b
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy a) Decreased death benefit at each renewal. b) Required a premium increase each renewal. c) Built cash values. d) Required proof of insurability every year.
d
According to the Entire Contract provision, a policy must contain a) A declarations page with a summary of insureds. 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.
d
