Study set #2

Which of the following is the best reason to purchase life insurance rather than annuities? a)To liquidate a sum of money over a lifetime b)To create an estate c)To liquidate a sum of money over a period of years d)To create regular income payments

b)To create an estate

According to the Virginia rules regulating the advertisement of life insurance, advertisement does NOT include which of the following? a)Material prepared by the insurer for training new agents b)Descriptive literature utilized by an agent in the sales process c)Prepared leaflet given to a prospective client d)Published advertisement in a local newspape

a)Material prepared by the insurer for training new agents

Which of the following is NOT required for a producer to tell a prospect? a)What requirements the producer needed to meet to obtain the insurance license. b)From what outside sources the insurer would seek information regarding the insured c)How the insurer would use any outside information regarding the applicant d)An explanation of products that the insurer is selling

a)What requirements the producer needed to meet to obtain the insurance license.

If an agent's appointment is terminated, suspended or revoked, the agent must cease selling or soliciting on behalf of the insurer within a)15 calendar days. b)30 calendar days. c)5 calendar days. d)10 calendar days.

d)10 calendar days.

Which of the following features is NOT a unique advantage to the Roth IRA? a)Contributions may continue beyond attainment of age 70½. b)Distributions may be deferred beyond the attainment of age 70½. c)Qualified distributions at the time of retirement are not taxed as income. d)Contributions are tax deductible.

d)Contributions are tax deductible.

Which of the following is true regarding taxation of dividends in participating policies? a)Dividends are taxable only after a certain amount is accumulated annually. b)Dividends are taxable in some life insurance policies and nontaxable in others. c)Dividends are considered income for tax purposes. d)Dividends are not taxable.

d)Dividends are not taxable.

When transacting business in this state an insurer formed under the laws of another country is known as a/an a)Alien insurer. b)Domestic insurer. c)Foreign insurer. d)Admitted insurer.

a)Alien insurer.

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a)Automatic premium loan b)Extended term c)Reinstatement d)Reduced paid-up option

a)Automatic premium loan

Which of the following features of the Indexed Whole Life policy is NOT fixed? a)Cash value growth b)Premium c)Death benefit d)Policy period

a)Cash value growth

All of the following are true regarding the guaranteed insurability rider EXCEPT a)The insured may purchase additional coverage at the attained age. b)The insured may purchase additional insurance up to the amount specified in the base policy. c)It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. d)This rider is available to all insureds with no additional premium

d)This rider is available to all insureds with no additional premium

All of the following are characteristics of group life insurance EXCEPT a)Certificate holders may convert coverage to an individual policy without evidence of insurability. b)Premiums are determined by the age, sex and occupation of each individual certificate holder. c)Group life insurance is written as a master policy. d)Individuals covered under the policy receive a certificate of insurance.

b) Premiums are determined by the age, sex and occupation of each individual certificate holder.

How often must continuing education requirements be met?a)Every year b)Every 2 years c)Every 3 years d)Every year for the first 5 years, then every 3 years

b)Every 2 years

How often will the Commissioner examine an insurer's books and records? a)Only upon a request from the insurer or a complaint from a customer b)At least once every 5 years c)Every 3 years d)Annually

b)At least once every 5 years

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Payor rider. b)Other-insured rider. c)Change of insured rider. d)Juvenile rider.

b)Other-insured rider.

Which of the following describes the tax advantage of a qualified retirement plan? a)Employer contributions are not taxed when paid out to the employee. b)The earnings in the plan accumulate tax deferred. c)Distributions prior to age 59½ are tax deductible d)Employer contributions are deductible as a business expense when the employee receives benefits.

b)The earnings in the plan accumulate tax deferred.

Person M and Person N worked on writing an insurance policy for a client. Which of the following statements regarding their possible share of commission is correct? a)Person M is licensed as a health agent. Person N is licensed as a life agent. The policy written was for life insurance. Both individuals may share in the commission for the life policy written. b)Only one person can receive commission; sharing is not allowed. c)As long as M and N are both licensed for the line of insurance written, they may share the commission. d)Person M was not licensed at the time the insurance was written; however, Person N is licensed. Both individuals may share the commission since both worked on the account.

c)As long as M and N are both licensed for the line of insurance written, they may share the commission.

The causes of loss insured against in an insurance policy are known as a)Risks b)Hazards c)Perils d)Losses

c)Perils

In order to receive a nonresident license in Virginia, a producer must be licensed in good standing, apply through the Commission, pay necessary fees, and a)Accrue necessary CE credits for each licensed line of authority. b)Surrender the resident license in his or her home state. c)Reside in a state which reciprocates nonresident licenses. d)Pass the insurance licensing examination.

c)Reside in a state which reciprocates nonresident licenses.

Which of the following is called a "second-to-die" policy? a)Juvenile life b)Joint life c)Survivorship life d)Family income

c)Survivorship life

Which of the following best describes taxation during the accumulation period of an annuity? a)The annuity is subject to both state and federal taxation. b)The growth is subject to immediate taxation. c)Taxes are deferred. d)The annuity is subject to state taxes only.

c)Taxes are deferred.

In a group life insurance policy, the employer may select all of the following EXCEPT a)The amount of insurance. b)The premium payor. c)The beneficiary. d)The type of insurance

c)The beneficiary.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?a)Equity Indexed Universal Life b)Variable Universal Life c)Universal Life - Option A d)Universal Life - Option B

c)Universal Life - Option A

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.

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a a)Joint and survivor annuity. b)Deferred annuity. c)Pure annuity. d)Joint life annuity.

d)Joint life annuity.

When a fixed annuity owner pays pays a monthly annuity premium to the insurance company, where is this money placed?a)Forwarded to an investor b)Each contract's separate account c)The annuity owner's account d)The insurance company's general account

d)The insurance company's general account

All of the following are general requirements of a qualified plan EXCEPT a)The plan must be communicated to all employees. b)The plan must be for the exclusive benefits of the employees and their beneficiaries. c)The plan must be permanent, written and legally binding. d)The plan must provide an offset for social security benefits.

d)The plan must provide an offset for social security benefits.