Life Exam

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 Tradition IRA, how much will she revive from the plan administrator and how long does she have to complete the tax-free rollover?

$8,000 60 days

A straight life policy has what type of premium?

A level annual premium for the life of the insured.

What is the minimum age for obtaining an insurance life license in the state of ohio?

18

An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 3%. During an economic downsizing, the investments only drew 2.5%. What interest rate will the insurer pay to its policyholders?

3%

An individual insurance agent may operate as a viatical settlement broker without obtaining a seperate license if the viatical settlement broker activites are incidental to the agent's business transaction, and if the agent has been licensed for life insurance for at least what time period?

5 years

An IRa uses immdiate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of panelty would IRA owner pay?

50% tax on the amount not distributed as required

Which of the following provisions in annuity contracts allow the owner t surrender the annuity if interest rates drop to a specific level?

Bail-out

Which of the following best describes fixed-period settlement option?

Both the premium and interest will be liquidated over a selected period of time.

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy.

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate on the insured. This indicates that the life insurance policy had what provision?

Common Diaster

In reference to fixed annuities, what comprises most of a life insurance company's general account?

Conservative investments like bonds

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that competitively priced?

Cost comparison methods

An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act?

Direct response marketing

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusion Clause

An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?

Fixed

In life insurance policies, cash value increase

Grow tax deferred

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includeds a

Guaranteed insurability rider

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

An Insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

Pay a reduced death benefit

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disable?

Payor Benefit

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?

Permanent

An insurer suspects an agent of fraud and cancels his appointment. Which authority, if any, should be notified?

The Superintendent

In which of the following examples would a contract between an insurer and prospective insured be legal?

The applicant has a prior felony conviction.

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy?

The full benefit

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

What must happen when an individual policy or annuity has been personally delivered to the policy owner?

The policyowner must sign a delivery receipt

Which of the following Life Insurance policies would be considered interest sensitive?

Universal Life

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon coversion, the death benefit of the permanent policy will be reduced by 50%.

When will fraud be considered a felony?

When the amount of the claim is above $1,000

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?

Attending Physician Statement

Units with the same or similar exposure to loss are referred to as

Homogeneous

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 approach

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

A situation in which a person can only lose or have no change represents

Pure Risk

an insured owns a term policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurablity and qualifies for a discounted premium rate. Which option best describes this scenario?

Re-entry

Which of the following is true regarding a wavier 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.

Twin brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar life styles and are in good health. Which of the following is true with respect to their monthly annuity payments?

The man's payment will be larger

A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforteiture value of the annuity?

The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.

Which of the following is not TRUE regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities.

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is avaible to all insured with no additional premium.

Which is TRUE about the cash surrender nonforfieture option?

Funds exceeding the premium paid are taxable as ordinary income.

Life insurance death proceeds are

Generally not taxed as income.

What required provision protects against unintentional lapse of the policy?

Grace Period

An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments?

It is used to lower premiums

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

Joint life annuity

For an individual who is not covered by an employer-sponsored plan, IRA contributions are

Tax deductible

During the accumulation period in a nonqualifed 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

J transferred his life insurance policy to his son two years before his death. Which of the following is true?

The entire face value of the policy will be included in J's taxable estate.

Which of the following is the best reason to purchase life insurance rather than annuities?

To create an estate

The rider in a whole life policy that allows the company to forgo collecting the premiums if the insured is disabled is called

Waiver of premium