Life Insurance
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a) survivor protection b) life planning c) survivorship insurance d) juvenile protection provision
A
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) insured's current and future income c) insured's annual expenses d) effect of inflation on income over time
A
what type of annuity activity will cause immediate taxation of the interest earned? a) surrendering the annuity for cash b) using the contract as collateral for a loan c) changing a settlement option d) failing to make a planned contribution
A
Which of the following statements about group life is correct? a) the cost of coverage is based on the ratio of men and women in the group b) the premiums are higher than in an individual policy because there is no medical exam c) the group sponsor receives a Certificate of Insurance d) the policy can be converted to an individual term insurance policy
A
an applicant who wants to buy a policy that has a cash value element. Which type should she buy? a) permanent b) stock c) investment d) term
A
Children's riders attached to whole life policies are usually issued as what type of insurance? a) adjustable life b) whole life c) term d) variable life
C
An insured committed suicide one year after his life insurance policy was issued. The insurer will a) pay the policy's cash value b) pay the full death benefit to the beneficiary c) pay nothing d) refund the premiums paid
D
which of the following is an example of liquidity in a life insurance contract? a) the money in a savings account b) the cash value available to the policyowner c) the death benefit paid to the beneficiary d) the flexible premium
B
The Commissioner investigates claims filed against a licensee and finds that the licensee has chronically violated several insurance regulations. The Commissioner decides to hold a hearing. What is the minimum amount of notice that the licensee must be given for the hearing? a) 15 days b) 20 days c) 30 days d) 10 days
C
which of the following would not be considered grounds for the Commissioner to suspend an insurance producer's license? a) producer ignored a subpoena order from the Commissioner b) producer is found guilty of a misdemeanor c) producer misrepresented information on his application for licensure d) producer had his license revoked in a neighboring state
B
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a) $100 per violation b) revocation of license c) $2,500 d) $1,000
C
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will a) be level thereafter b) continue to increase c) return to the initial premium amount d) decrease again
A
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? a) pay a reduced death benefit b) pay the full death benefit c) pay nothing; there was a misrepresentation on the application d) pay the full death benefit and refund excess premium
A
Annuity contracts grow tax deferred. That means that a) there is no current income taxation upon the growth in the annuity b) the annuitant's contributions are not taxed until the annuity is surrendered c) as the annuity grows, only the interest is taxed d) upon surrender, all the benefits are received tax free
A
the policyowner 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 policyowner choose? a) interest only option b) life income with period certain c) joint and survivor d) fixed amount option
A
the purpose of insurance regulation is to a) promote the public welfare b) keep producers honest c) make insurance statutes uniform among states d) make insurance companies pay taxes
A
when would a 20-pay whole life policy endow? a) when the insured reaches age 100 b) in 20 years c) when the insured reaches age 20
A
Annuities can be used to fund which of the following a) estate creation b) retirement plans c) variable life insurance d) group life insurance
B
For a retirement plan to be qualified, it must be designed for the benefit of a) IRS b) employees c) key employee d) employer
B
What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary? a) capital gains tax on distributions plus 10% penalty b) income tax on distributions and no penalty c) income tax on distributions plus 10% penalty d) capital gains tax on distributions and no penalty
B
Which of the following is true regarding taxation of dividends in participating policies? a) dividends are taxable in some life insurance policies and nontaxable in others b) dividends are considered income for tax purposes c) dividends are not taxable d) dividends are taxable only after a certain amount is accumulated annually
C
a Canadian insurer would like to do business in Connecticut. What must the insurer first obtain? a) alien insurer license b) insurer appointment c) certificate of authority d) nonresident business entity license
C
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a)no payments b) annuity dividends c) full premium refund without any charges d) guaranteed surrender value
D
Which of the following is the closest term to an authorized insurer? a) certified b) licensed c) legal d) admitted
D
which of the following would provide an underwriter with information concerning an applicant's health history? a) a medical examination b) the agent's report c) the inspection report d) the medical information bureau
D
which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) variable life b) decreasing term c) straight whole life d) universal life
D
who can make changes to the policy once it is in effect? a) the insured b) the policyowner c) the agent d) an executive officer of the insurer
D
Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages? a) 10 b) 3 c) 5 d) 7
B
life insurance death proceeds are a) taxed as ordinary income b) generally not taxed as income c) taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income
B
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of a) defamation b) twisting c) coercion d) loading
C
During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes a) coercion b) misrepresentation c) defamation d) twisting
B
During partial withdrawal from a universal life policy, which portion will be taxed? a) loan b) interest c) cash value d) principal
B
The policyowner 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 policyowner choose? a) interest only option b) life income with period certain c) joint and survivor d) fixed amount option
A
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) consideration b) legal purpose c) contract of adhesion d) acceptance
A
the regulation of the insurance industry primarily rests with a) the State b) the NAIC c) Private insurers d) the federal government
A
SIMPLE Plans require all of the following EXCEPT a) employees must receive a minimum of $5,000 in annual compensation b) at least 1,000 employees c) no other qualified plan can be used d) no more that 100 employees
B
When the commissioner requires that advertising material be submitted and approved by the Department, how many days in advance must it be reviewed prior to using the materials? a) 15 days b) 30 days c) 45 days d) 60 days
B
an insurance producer who by contract is bound to write insurance for only one company is classified as a/an a) independent producer b) captive agent c) solicitor
B
what describes the specific information about a policy? a) producer's report b) policy summary c) illustrations d) buyer's guide
B
what type of insurance would be used for a Return of Premium rider? a) annually renewable term b) increasing term c) level term d) decreasing term
B
An applicant wants to buy a policy that has a cash value element. Which type should she buy? a) investment b) term c) permanent d) stock
C
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? a) reduction of premium b) accumulation at interest c) paid-up option d) one-year term
C
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? a) agent's report b) underwriter's report c) inspection report d) medical information bureau's report
C
which of the following best describes annually renewable term insurance? a) neither the premium nor the death benefit is affected by the insured's age b) it provides an annually increasing death benefit c) it is level term insurance d) it requires proof of insurability at each renewal
C
which of the following best describes the MIB? a) it is a member organization that protects insured against insolvent insurers b) it is a rating organization for health insurance c) it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance d) it is a government agency that collects medical information on the insured from the insurance companies
C
all of the following are true statements regarding the accumulation at interest option except a) the annual dividend is retained by the company b) the interest is credited at a rate specified by the policy c) the policyholder has the right to withdraw the accumulations at any time d) the interest is not taxable since it remains inside the insurance policy
D
equity indexed annuities a) are more risky than variable annuities b) are security instruments c) invest conservatively d) seek higher returns
D
insurance producers act of behalf of a) the client b) themselves c) the Department of Insurance d) the insurer
D
which of the following is not the consideration in a policy? a) the application given to a prospective insured b) something of value exchanged between parties c) the premium amount paid at the time of application d) the promise to pay covered losses
A
All advertisements are the responsibility of the a) soliciting agent b) advertising agency c) department of insurance d) insurer
D
which is true about the cash surrender nonforfeiture option? a) funds exceeding the premium paid are taxable as ordinary income b) after the cash surrender, the insured is covered for a grace period of 1 month c) the policy remains active for some time after the policyholder opts for cash surrender d) the policyholder receives the original cash value of the policy
A
which of the following is true regarding the annuity period? a) it may last for the lifetime of the annuitant b) during this period of time the annuity payments
A
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? a) when the agent submits the application to the company and the company issues a conditional receipt b) when the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health c) on the designated effective date d) on the application date
B
An annuitant wants to buy a life insurance policy in which he can count of receiving the same benefits as stated in his contract. Which type should he buy? a) any type of annuity b) fixed c) permanent d) variable
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) the death benefit is $0 at the end of the policy 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
A
Applicants for a license must furnish satisfactory evidence of all of the following to the Commissioner except a) state residency b) good moral character c) financial responsibility d) trustworthiness and competence
A
In forming an insurance contract, when does acceptance usually occur? a) when an insurer's underwriter approves coverage b) when an insurer delivers the policy c) when an insurer receives an application d) when an insured submits an application
A
The causes of loss insured against in an insurance policy are known as a) perils b) losses c) risks d) hazards
A
The premium of a survivorship life policy compared with that of a joint life policy would be a) lower b) higher c) half the amount
A
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 b) no change c) automatic lapse d) recession of the policy
A
if a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? a) jumping juvenile policy b) limited pay whole life policy c) modified life insurance policy d) single premium policy
A
the Commissioner suspects a producer of chronically misleading prospective applicants. Before a cease and desist order is issued, what must happen? a) a legal hearing will be held b) the license will be put on probation for 90 days c) the State must covertly monitor the producer for 90 days d) the State must issue a warrant for the producer's arrest
A
All of the following are true of the federal tax advantages of a qualified plan except a) employee and employer contributions are not counted as income to the employee for income tax purposes b) at distribution, all amounts received by the employee are tax free c) employer contributions are tax deductible as ordinary business expense d) funds accumulate on a tax-deferred basis
B
An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? a) insurance telemarketing b) direct response marketing c) independent agency marketing d) illegal
B
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? a) assumed b) apparent c) express d) implied
B
During partial withdrawal from a universal life policy, which portion will be taxed? a) loan b) interest c) cash value d) principal
B
within how many days after the receipt of the proceeds may the owner rescind the life settlement contract? a) 10 days b) 15 days c) 30 days d) 60 days
B
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as a) the next month's premium is sufficient to cover both the current premium amount and the skipped amount b) the policy contains sufficient cash value to cover the cost of insurance c) the previous premium payments were high enough to create an excess of premium d) the policyowner cannot skip premiums without the policy lapsing
B
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a) statewide predetermined annual interest rate b) insurer's guaranteed minimum rate of interest c) investment performance of the company d) investment performance of the insured
B
Why should the producer personally deliver the policy when the first premium has already been paid? a) to make sure the policy is not stolen or lost b) to help the insured understand all aspects of the contract c) to ensure the producer gets paid commission d) to find out how the family has been doing since the initial presentation
B
all of the following would be different between qualified and nonqualified retirement plans except a) IRS approval requirements b) taxation on accumulation c) taxation of withdrawals d) taxation of contributions
B
in the Executive Bonus plan, who is the owner of the policy and who pays the premium? a) company is the owner and the company pays the premium b) executive is the owner and the executive pays the premium c) company is the owner but the executive pays the premium d) board of directors is the owner, and the board of directors pays the premium
B
when is the earliest a policy may go into effect? a) after the underwriter reviews the policy b) when the application is signed and a check is given to the agent c) when the first premium is paid and the policy has been delivered d) when the insurer approves the application
B
which of the following life insurance policies would be considered interest sensitive? a) increasing term b) universal life c) adjustable life d) whole life
B
All of the following statements concerning the use of life insurance as an Executive Bonus are correct except a) the employer pays a bonus to a selected employee to fund the policy b) it is considered a nonqualified employee benefit c) the policy is owned by the company d) any type of insurance policy may be used
C
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? a) securities b) stock c) variable d) term
C
Annuity contracts grow tax deferred. That means that a) as the annuity grows, only the interest is taxed b) upon surrender, all the benefits are received tax free c) there is no current income taxation upon the annuity
C
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? a) implied b) assumed c) apparent d) express
C
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report a) must be advised that a copy of the report is available to anyone who requests it b) may sue the reporting agency in order to get inaccurate data corrected c) must be informed of the source of the report d) are entitled to obtain a copy of the report from the party who ordered it
C
What is the purpose of a conditional receipt? a) it serves as proof that the applicant has been determined insurable b) it is given only to applicants who fully prepay the premium c) it is intended to provide coverage on a date prior to the policy issue d) it guarantees that a policy will be issued in the amount applied for
C
Which of the following is not true of Section 1035 Policy Exchanges? a) it is an IRS Code which permits like kind exchanges of property b) it is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy c) any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days d) it requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy
C
Which of the following is true of a qualified plan? a) it may discriminate in favor of highly paid employees b) it may allow unlimited contributions c) it has a tax benefit for both employer and employees d) it does not need to have a vesting schedule
C
all of the following are true statements regarding the accumulation at interest option except a) the interest is credited at a rate specified by the policy b) the policyholder has the right to withdraw the accumulations at any time c) the interest is not taxable since it remains inside the insurance policy d) the annual dividend is retained by the company
C
the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a) waiver of cost of insurance b) payor benefit c) waiver of premium d) guaranteed insurability
C
which of the following is not a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach? a) mortgages b) expenses c) estimated longevity d) outstanding debt
C
which type of life insurance policy generates immediate cash value? a) decreasing term b) continuous premium c) single premium d) level term
C
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur? a) the interest will become immediately taxable b) the premiums will increase c) the premiums will decrease d) the interest will continue to accumulate tax deferred
D
An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) reduction of premium b) annual dividend provision c) accumulation at interest d) cash option
D
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? a) it is impossible to transfer a policy b) the insured would have to surrender his policy to the insurer, and his friend could then ask to buy it c) the insured can transfer the policy to his friend and then notify the insurer of the change d) the insured will need a written consent of the insurer
D
Death benefits payable to a beneficiary under a life insurance policy are generally a) subject to income taxation by the federal government b) exempt from income taxation if under $10,000 c) exempt from income taxation is over $10,000 d) not subject to income taxation by the federal government
D
What type of insurance would be used for a Return of Premium rider? a) level term b) decreasing term c) annually renewable term d) increasing term
D
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will a) negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved b) return the premium to Y's estate, since it has no obligation to pay the death claim c) keep the premium and reject the risk on the basis that the applicant died before the policy could be issued d) issue the policy anyway and pay the face value to the beneficiary
D
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? a) stop-loss b) consideration c) reasonable expectations d) indemnity
D
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) secondary beneficiary b) contingent beneficiary c) irrevocable beneficiary d) revocable beneficiary
D
all of the following are characteristics of a group life insurance plan except a) the participants receive a Certificate of Insurance as their proof of insurance b) a minimum number of participants is required in order to underwrite the plan c) the cost of the plan is determined by the average age of the group d) there is a requirement to prove insurability on the part of the participants
D
all of the following statements are true regarding tax-qualified annuities execpt a) annuity earnings are tax deferred b) they must be approved by the IRS c) withdrawals are taxed d) employer contributions are not tax deductible
D
what is the waiting period on a Waiver of Premium rider in life insurance policies? a) 30 days b) 3 months c) 5 months d) 6 months
D
which of the following insurance options would be considered a risk-sharing arrangement? a) stock b) mutual c) surplus lines d) reciprocal
D
which of the following is an example of a producer being involved in an unfair trade practice of rebating? a) inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest b) charging a client a higher premium for the same policy as another client in the same insuring class c) making deceptive statements about a competitor d) telling a client that his first premium will be waived if he purchases the insurance policy today
D
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a) settlement option b) nontaxable exchange c) nonforfeiture option d) rollover
A
In order to get a nonresident license in Connecticut, a producer must do which of the following? a) apply and pay a fee to a nonresident state that reciprocates b) pass the nonresident state exam and satisfy their continuing education requirements c) represent an agency located in Connecticut d) surrender their license in their state of residence
A
a 35-year-old spouse of the insured collects early distributions from her husband's retirement plan as a result of a divorce settlement. What penalties, if any, will she have to pay? a) no penalties b) 10% penalty tax c) 15% penalty tax d) age-based penalty stipulated in the contract
A
basic policy illustration formats must include all of the following except a) the event of premium overpayments reimbursement must be identified by the name given in the policy b) the guaranteed death benefits upon surrender must be clearly labeled guaranteed c) the accumulation value of a policy must be identified by the name given in the policy d) the value upon surrender must be identified by the name given in the policy
A
What happens if a deferred annuity is surrendered before the annuitization period? a) deferred annuities cannot be surrendered prior to the annuitization period b) the owner will receive the surrender value of the annuity c) the owner will only receive a refund of premium d) the insurer can only apply the surrender value toward another annuity
B
Where would the underwriter find relevant information not presented by the applicant but communicated by the producer? a) policy summary b) application c) statement of Continued Good Health d) conditional receipt
B
Which nonforfeiture option provides coverage for the longest period of time? a) accumulated at interest b) reduced paid-up c) extended term d) paid-up option
B
Which of the following is true regarding market value adjusted annuity? a) it provides a level benefit payment b) the owner is guaranteed a fixed interest rate for a specific period of time c) the insurer bears all the market risk of changing interest rates d) there are no penalties for a premature surrender of the annuity
B
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a) Consumer privacy act b) the fair credit reporting act c) unfair trade practices law d) the guaranty association
B
Which of the following types of agent authority is also called "perceived authority"? a) fiduciary b) apparent c) express d) implied
B
which of the following are generally not considered when underwriting group insurance? a) the size of the group b) the insured's medical history c) the nature of the group d) the group's past claim experience
B
In insurance, an offer is usually made when a) the agent hands the policy to the policyholder b) an agent explains a policy to a potential applicant c) an applicant submits an application to the insurer d) the insurer approves the application and receives the initial premium
C
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? a) taxes are deferred on withdrawn amounts, but a flat penalty is charged b)taxes are deferred on withdrawn amounts c) withdrawn amounts are taxed on a last in, first out basis d) withdrawn amounts are taxed on a first in, last out basis
C
An agent uses an insurer's illustration. He obtains proper approval and does not change the illustration in any way. The illustration involves projected amounts, and the agent stipulates that the amount would not be guaranteed. Which of the following is true? a) it is illegal to include a non-guaranteed amount in an illustration b) the agent needs to change the illustration to include guaranteed amounts only c) the illustration is fine the way it is d) the agent must stipulate that the illustration is not part of the contract
D
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? a) interviews b) state records c) medical records d) application
D
Which of the following is not true regarding the accumulation period of an annuity? a) it is the period during which the annuity payments earn interest b) it is the period over which the owner makes payments into an annuity c) it is also known as the pay-in period d) it would not occur in a deferred annuity
D
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a) reinstatement rule b) conversion rule c) disclosure rule d) replacement rule
D
adverse selection is a concept best described as a) underwriters slanting the odds in favor of the company b) poor choices of applicants to be covered c) only offering coverage to good risks d) risks with higher probability of loss seeking insurance more often than other risks
D
an employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is incorrect? a) the insured would not need to prove insurability for a conversion policy b) the insured may convert coverage to an to an individual policy within 31 days c) the premium for individual coverage will be based upon the insured's attained age d) the insured may choose to convert to term or permanent individual coverage
D
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a) the death benefit can be increased by providing evidence of insurability b) the death benefit cannot be increased c) the death benefit can be increased only when the policy has developed a cash value d) the death benefit can be increased only by exchanging the existing policy for a new one
A
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is incorrect? a) employer contributions are not included in the employee's gross income b) SEPs are suitable for large companies c) SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income d) SEPs have a higher tax deductible contribution limit than an IRA
B
Who can make a fully deductible contribution to a traditional IRA? a) a person whose contributions are funded by a return on investment b) an individual not covered by an employer-sponsored plan who has earned income c) anybody: all IRA contributions are fully deductible regardless of income level d) someone making contributions to an educational IRA
B
a 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a) the amount distributed is subject to ordinary income tax b) the amount of the distribution is reduced by the amount of a 20% withholding tax c) no taxes are due since the plan participant is over age 59 1/2. d) there is a 10% early withdrawal penalty
B
all of the following are true statements regarding the accumulation at interest option except a) the policyholder has the right to withdraw the accumulations at any time b) the interest is not taxable since it remains inside the insurance policy c) the annual dividend is retained by the company d) the interest is credited at a rate specified by the policy
B
all of the following statements concerning the use of life insurance as an executive bonus are correct except a) the employer pays a bonus to a selected employee to fund the policy b) it can protect the policy proceeds from creditors of the beneficiary c) it allows the beneficiary to select a different settlement option d) it is only used when the beneficiary is a minor
B
an adjustable life insurance policyowner can change which of the following policy features? a) the insured b) the coverage period c) the mortality expense d) the investment account
B
the medical information bureau (MIB) was created to protect a) medical examiners that perform insurance physical examinations b) insurance companies from adverse selection by high risk persons c) insurance departments from lawsuits by policyowners d) insureds from unreasonable underwriting requirements by the insurance companies
B
which of the following is true regarding a market value adjusted annuity? a) it provides a level benefit payment b) the owner is guaranteed a fixed interest rate for a specific period of time c) the insurer bears all the market risk of changing interest rates d) there are no penalties for a premature surrender of the annuity
B
B just bought a new car, which he anticipates will be paid for 4 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 following types of policies would be best for B? a) limited pay b) interest-sensitive whole life c) modified life d) limited term
C
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 a) cost of living provision b) nonforfeiture option c) guaranteed insurability rider d) paid-up additions option
C
If a retirement plan or annuity is "qualified", this means a) it accepts after-tax contributions b) it is noncancellable c) it is approved by the IRS d) it has a penalty for early withdrawal
C
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a) waiver of cost of insurance b) payor benefit c) waiver of premium d) guaranteed insurability
C
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a) payment of premium b) delivery receipt c) signed waiver of premium d) statement of good health
C
Which of the following statements about a suicide clause in a life insurance policy is true? a) suicide is covered as long as the policy is in force b) suicide is excluded as long as the policy is in force c) suicide is excluded for a specific period of years and covered thereafter d) suicide is covered for a specific period of years and excluded thereafter
C
a universal life insurance policy has two types of interest rates that are called a) fixed and variable b) minimum and target c) guaranteed and current d) option A and option B
C
all of the following could be considered rebates if offered to an insured in the sale of insurance except a) stocks, securities, or bonds b) an offer to share in commissions generated by the sale c) dividends from a mutual insurer d) an offer of employment
C
all of the following statements concerning the use of life insurance as an executive bonus are correct except a) the employer pays a bonus to a selected employee to fund the policy b) it is considered a nonqualified employee benefit c) the policy is owned by the company d) any type of insurance policy may be used
C
an insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? a) reduction of premium b) accumulation at interest c) paid-up option d) one-year term
C
if an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to a) lower its insurability standards b) refuse to issue the policy c) charge a higher premium d) require a yearly medical examination
C
what is the penalty for IRA distributions that are below the required minimum for the year? a) 10% b) 25% c) 50% d) 60%
C
which of the following is a feature of a variable annuity? a) interest rate is guaranteed b) securities license is not required c) benefit payment amounts are not guaranteed d) payments into the annuity are kept in the company's general account
C
which of the following is not an example of insurable interest? a) employer in employee b) child in parent c) debtor in creditor d) business partners in each other
C
which of the following is not true about a joint and survivor annuity benefit option? a) this option guarantees income for two or more recipients b) the surviving annuitant may receive reduced payments c) payments stop after the first death among the annuitants d) a period certain option may be included
C
Which of the following statements is an accurate comparison between private and government insurers? a) insurance provided by the government is called federal insurance b) private insurers offer fewer lines of insurance than government insurers c) private insurers provide insurance in areas where the government will not d) private insurers may be authorized to transact insurance by state insurance departments
D
another name for a substandard risk classification is a) controlled b) declined c) elevated d) rated
D
when an individual purchases insurance, what risk management technique is he or she practicing? a) avoidance b) sharing c) retention d) transfer
D
Under an extended term nonforfeiture option, the policy cash value is converted to a) the same face amount as in the whole life policy b) the cash value of the whole life policy
A
in a survivorship life policy, when does the insurer pay the death benefit? a) half at the first death, and half at the second death b) if the insured survives to age 100 c) upon the last death
C
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT a) other insurance coverages b) family health history c) alcohol and tobacco consumption d) recent surgeries
A
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a) the death benefit can be increased by providing evidence of insurability b) the death benefit cannot be increased c) the death benefit can be increased only when the policy has developed a cash value
A
What type of annuity activity will cause immediate taxation of the interest earned? a) surrendering the annuity for cash b) using the contract as collateral for a loan c) changing a settlement option d) failing to make a planned contribution
A
Which of the following best describes fixed-period settlement option? a) both the principal and interest will be liquidated over a selected period of time b) only the principal amount will be paid out within a specified period of time c) the death benefit must be paid out in a lump sum within a certain time period d) income is guaranteed for the life of the beneficiary
A
Which of the following documents must be provided to the policyowner or applicant during policy replacement? a) Notice Regarding Replacement b) Disclosure Authorization Form c) Buyer's Guide and Policy Summary d) Policy illustrations
A
Which of the following is not true regarding a nonqualified retirement plan? a) it needs IRS approval b) contributions are not currently tax deductible c) it can discriminate in benefits and selecting participants d) earnings grow tax deferred
A
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? a) AM Best b) NAIC c) Consumer's guide d) SEC
A
Which of the following is true regarding the spendthrift clause in life insurance policies? a) it is the same as irrevocable settlement clause b) it can protect the policy proceeds from creditors of the beneficiary c) it allows the beneficiary to select a different settlement option d) it is only used when the beneficiary is a minor
B
which of the following will be included in a policy summary? a) comparisons with similar policies b) primary and secondary beneficiary designations c) premium amounts and surrender values d) copies of illustrations and application
C
which of the following would be a lawful reason for the Commissioner to suspend a producer's license? a) producer was convicted of a misdemeanor b) producer did not transact any insurance for a year c) producer failed to pay child support d) producer received a speeding ticket
C
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? a) no penalties, since the owner is older than 59 1/2 b) 10% for early withdrawal c) 15% for early withdrawal d) 50% tax on the amount not distributed as required
D
Who makes up the Medical Information Bureau? a) hospitals b) former insured c) physicians and paramedics d) insurers
D
