Bonus exam: ODI Life
Which provision in an annuity contract allows the owner to surrender the annuity if interest rates drop to a specified level?
bail-out
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 insurability is provided. Which policy provision allows this?
reinstatement provision
What method do insurers use to protect themselves against catastrophic losses?
reinsurance
During the accumulation period in a nonqualified 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taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 1/2
What happens if a deferred annuity is surrendered before the annuitization period?
the owner will receive the surrender value of the annuity
What is the best reason to purchase life insurance rather than annuities?
to create an estate
Why should the producer personally deliver the policy when the first premium has already been paid?
to help the insured understand all aspects of the contract
The waiver of cost of insurance rider is found in what type of insurance?
universal life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
universal life
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
waiver of premium
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than
with the policy
When would life insurance policy proceeds be included in the insured's taxable estate?
When there are any incidents of ownership at the time of death.
When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?
distributions are taxable
Death benefits payable to a beneficiary under a life insurance policy are generally
not subject to income taxation by the Federal Government
During replacement of life insurance, a replacing insurer must do which of the following?
obtain a list of all life insurance policies to be replaced
A married couple's retirement annuity pays them $250 a month. The husband dies and his wife continues to receive $125.50 a month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
Joint and survivor
The hearing for a cease and desist order must occur within how many days of the order date?
15
For how long is the certificate of pre-licensing course completion valid?
180 calendar days
Each person licensed as an agent or solicitor is required to complete how many hours of approved continuing education instruction every 2 years?
2 years
How many hours of continuing education must be completed in ethics?
3
How many days after being licensed to place business transactions in Ohio must an insurer have an antifraud program in place?
90 days
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 will she receive from the plan administrator and how long does she have to complete the tax-free rollover?
$10K, no tax consequence
Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination? A) an applicant who is a smoker B) an applicant who was born in another country C) an applicant who is legally blind D) an applicant who has been the victim of domestic abuse
A) an applicant who is a smoker
An applicant for insurance misstates her age at the time her life insurance application is taken. This misstatement may result in A)
Adjustment in the death benefit
What is a foreign insurer?
An insurer with a home office in another state
When an annuity is written, whose life expectancy is taken into account?
Annuitant
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?
Apparent
All of the following information about a customer must be used in determining annuity suitability except A) annual income B) beneficiary's age C) tax status D) financial experience
B) beneficiary's age
Which of the following is NOT an example of a valid insurable interest? A) child in parents' lives B) debtor in the life of a creditor C) business partners in each other's lives D) employer in key employee's life
B) debtor in the life of a creditor
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? A) liquidation period B) depreciation period C) annuitization period D) pay out period
B) depreciation period
All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT A) occupation B) education C) age D) gender
B) education
State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT: A) offering benefit certificates or securities in return for purchasing insurance B) inviting prospective clients to the grand opening of the company's new office C) issuing or delivering insurance company stock in return for purchasing insurance D) promising returns and profits from the purchase of insurance
B) inviting prospective clients to the grand opening of the company's new office
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyholder?
Cash surrender
Which of the following best describes annually renewable term insurance? A) it requires proof of insurability at each renewal B) neither the premium nor the death benefit is affected by the insured's age C) it provides an annually increasing death benefit D) it is level term insurance
D) it is level term insurance
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?
Immediately after receiving written proof of loss
An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does he have?
Industrial life
What is the main purpose of the 7 pay test?
It determines if the insurance policy is a MEC.
An insured purchased an individual life insurance policy with a face amount of $15K. He pays the premium each month. What type of policy is this?
Ordinary life
If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?
Return the application to the applicant for a signature.
Which is true about a spouse term rider?
The rider is usually level term insurance. The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.
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 losses covered by the policy. What contract element does this describe?
Unilateral
When may an insurance company use suicide as a defense against paying a death claim?
When death occurs within a specified period of time after the policy was issued
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly
In Ohio, a temporary license may NOT be issued for
agent's retirement
The minimum interest rate on an equity indexed annuity is often based on
an index like Standard & Poors
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?
the interest will continue to accumulate tax deferred
Which term is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract?
viatical settlement provider
What is the name of the owner of a life insurance policy who enters into a viatical settlement contract?
viator
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
$3K
When an employee terminates coverage under a group insurance policy, coverage continues in force...
...for 31 days
Agents who change their state of residence must notify the Superintendent within how many days of any change in address? A 10 B 15 C 20 D 30
30
If a cybersecurity event has occurred, licensees must maintain records of the incident for no less than
5 years
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
Which of the following insurance options would be considered a risk-sharing arrangement? A) reciprocal B) stock C) mutual D) surplus lines
A) reciprocal
A straight life policy has what type of premium?
A level annual premium for the life of the insured
Which of the following is the basis for a claim against an insurance policy? A) loss B) material change C) hazard D) misrepresentation
A) loss
Which of the following statements is TRUE concerning irrevocable beneficiaries? A) they can be changed only with the written consent of that beneficiary B) they may be changed at any time C) they can never be changed D) they may be changed only on the anniversary date of the policy
A) they can be changed only with the written consent of that beneficiary
Who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has an earned income
In an adjustable life policy, all of the following can be changed by the policy owner EXCEPT A) the amount of insurance B) the type of investment C) the length of coverage D) the premium
B) the type of investment
Which of the following is NOT a goal of risk reduction? A) to fund losses that cannot be insured B) to minimize the insured's level of liability in the event of loss C) to reduce expenses and improve cash flow D) to increase control of claim reserving and claim settlements
B) to minimize the insured's level of liability in the event of loss
Which of the following would be sufficient violation to warrant rejection, revocation, or suspension of an insurance agent's license? A) an unintentional misrepresentation of the terms of a contract B) a moving violation ticket C) a denied license in another state D) acting as a fiduciary
C) a denied license in another state
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? A) subrogation B) warranty C) aleatory D) adhesion
C) aleatory
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? A) black out approach B) lump sum approach C) human life value approach D) needs approach
C) human life value approach
Which of the following best describes a bail-out provision? A) it allows the owner to receive a higher interest rate at certain timeframe B) it decreases the annuity surrender value C) it allows the owner to surrender the annuity without a charge D) it waives the surrender charges for the annuitants confined to a long-term care facility
C) it allows the owner to surrender the annuity without a charge
All of the following statements are true regarding installments for a fixed period annuity settlement EXCEPT A) the payments are not guaranteed for life B) the insurer determines the amount for each payment C) it is a life contingency option D) it will pay the benefit only for a designated period of time
C) it is a life contingency option
Which of the following is true regarding the accumulation period of an annuity? A) it is a period of time during which the beneficiary receives income B) it is limited to 10 years C) it is a period of time during which the payments into the annuity grow tax deferred D) it is allow referred to as the annuity period
C) it is a period of time during which the payments into the annuity grow tax deferred
Which of the following policies would be classified as a traditional level premium contract? A) universal life B) variable universal life C) straight life D) adjustable life
C) straight life
Which of the following would help prevent a universal life policy from lapsing? A) adjustable premium B) corridor of insurance C) target premium D) face amount
C) target premium The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime
Which of the following is an example of liquidity in a life insurance contract? A) the flexible premium B) the money in a savings account C) the cash value available to the policyowner D) the death benefit paid to the beneficiary
C) the cash value available to the policyowner
Which of the following are generally NOT considered when underwriting group insurance? A) the group's past claim experience B) the size of the group C) the insured's medical history D) the nature of the group
C) the insured's medical history
Which of the following statements about a suicide clause in a life insurance policy is true? A) suicide is covered for a specific period of years and excluded thereafter B) suicide is covered as long as the policy is in force C) suicide is excluded as long as the policy is in force D) suicide is excluded for a specific period of years and covered thereafter
D) suicide is excluded for a specific period of years and covered thereafter
All of the following are true regarding a decreasing term policy EXCEPT A) the death benefit is $0 at the end of the policy term B) the contract pays only in the event of death during the term and there is no cash value C) the face amount steadily declines throughout the duration of the contract D) the payable premium amount steadily declines throughout the duration of the contract
D) the payable premium amount steadily declines throughout the duration of the contract
Who assumes control over an insurance company's funds and management if they become insolvent?
Department of insurance
Life insurance death proceeds are
Generally not taxed as income
Which settlement option provides a single beneficiary with income for the rest of their life?
Single life
The interest earned on policy dividends is
Taxable. Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.
In a fixed annuity, which is true regarding the guaranteed interest rate on the investment?
The annuitant will receive the higher of either the guaranteed minimum rate or the current rate
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?
The insurance company's general account
To whom does the insurer certify that an appointee is competent, financially responsible, and suitable to represent them?
The superintendent
Which is generally true regarding insureds who have been classified as preferred risks?
Their premiums are lower
The paid up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
Which type of agent authority is also called perceived authority?
apparent
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
authorized
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? A) reinstatement B) reduced paid-up option C) automatic premium loan D) extended term
automatic premium loan
To legally transact insurance in this state, an insurer must obtain which of the following?
certificate of authority
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called:
credit life
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
decreases
Which policy component decreases in decreasing term insurance?
face amount
The automatic premium loan provision is activated at the end of the
grace period
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
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
guaranteed insurability rider
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
incontestability clause
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
Regarding the free-look provision, the insurance company
must allow the policyowner to return the policy for a full refund
When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?
outstanding loans & interest
Pertaining to insurance, what is the definition of fiduciary responsbility?
promptly forwarding premiums to the insurance company
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. What will she need to prove insurability?
proof of insurability is not required