Life insurance mastery

the penalty for early withdrawals from an IRA or other qualified retirement plan is

10% of the withdrawn amount

a whole life insurance policy is returned to the issuing insurer 9 days after delivery by the agent. what portion of the premium will be refunded to the policy owner?

100% of the amount paid to the insurer

which of the following allows employees to elect to reduce their current salaries by deferring amounts into a retirement plan

401K

all of the following types of plans are reserved for smaller employees except

401k's

what retirement plan could a sole proprietor pay into as long as all full time employees are also covered

Keogoh

contributions to which of the following qualified retirement plans are not tax deductible

Roth IRA

the conversion of a cash value life insurance policy into an annuity in a nontaxable transaction is generally known as

a 1035 exchange

annuity that guarantees a minimum rate of return is

a fixed annuity

all of the following statements regarding specialized forms of life insurance are correct except

a joint life insurance policy is a form of term life insurance that covers 2 individuals and pays the death benefit when the first insured dies

the type of policy that is paid up after a specifies period of years and endows at age 100 is

a limited pay policy

all of the following should be eligible to establish a Keogh retirement plan except

a major stockholder employee in a family corporation

jill is interested in buying an annuity but is not sure how she wants to find it or when she wants to start receiving annuity payments. which of the following is not available under any circumstances

a periodic premium immediate annuity

any life insurance transaction in which it is known that a policy will be lapsed to surrendered or reissued with decrease in cash value is considered to be

a replacement transaction

a keogh would be appropriate for which of the following

a self employed person and her employees

Liz purchases an immediate annuity. the annuity contract must be

a single premium annuity

if the initial premium is not paid until the policy is delivered, what must the agent obtain?

a statement of good health

a voluntary relinquishment of a known right is called

a waiver

transferring total ownership of a life insurance policy may be accomplished in which of the following ways

absolute assignment

the time during which she funds are being paid into an annuity is called the

accumulation period

all of the following statements are true regarding modified endowment contracts except

an MEC may be exchanged for another policy that is not an MEC

an insurer incorporated in canada but doing business in california would be

an alien insurer

what type of contract is designed to first accumulate and the distribute funds over a period of time

an annuity policy

an example of unfair discrimination is best demonstrated by which of the following situations

an insurer assigns a premium rating to an applicant because of studies that suggest members of the applicants race

Which of the following situations describes an instance of unfair discrimination

an insurer refuses to issue a policy to male applicant who works in the theater industry because he is assumed to be at a higher risk for HIV

which of the following statements concerning federal income taxation of annuities is correct?

annuity death benefits in whole or in part are taxable to the beneficiary

conservation is

any attempt by an insurer or an agent to discourage a client from replacing current coverage

a policy may be issued in all of the following ways except

as an exchange policy covering someone other than the original applicant

a universal life policy may be surrendered for its cash value

at any time

when must the buyers guide to life insurance be provided to an applicant

at the time the policy is delivered

insurable interest in a life policy must exist

at the time the policy is written, but not at the time of death

to prevent the lapse of a whole life insurance policy at the end of the grace period, cash value will be used by the insurer to pay the premium. this is called

automatic premium loan

funds held by an insurance producer in a fiduciary capacity

cannot be converted to an individuals or firms own use

carol wants her annuity settlement to guarantee that the entire annuity principal amount will be paid out. what should she choose?

cash refund annuity

long life insurance company insures substandard risks. which of the following will it employ to compensate for the higher death rates it expects

charge increased premiums for substandard risks

an agent license is renewed by paying the applicable renewal fee and completing

continuing education

which rider provides for an automatic increase in benefits to offset the effects of inflation

cost of living adjustment

which of the folioing may an insurer require AIDS testing during underwriting

coverage amounts

which of the following factors my an insurer consider when deciding whether to require AIDS testing during underwriting

coverage amounts

which of the following would not be part oft he duties of the state insurance commissioner

create new insurance laws

which of the following contracts would not be subject to the life insurance replacement laws?

credit life insurance

an individual who wants to insure a home mortgage with life insurance in the most economical means possible would be best served with which of the following types of life insurance

decreasing term

circulation of a maliciously critical statement about an insurer's financial condition to damage the insurers reputation or business is

defamation

for the insurance company to pay the accidental death benefit, most companies require that the insured

die within 90 days of the accident

all of the following statements are true regarding policy dividends except

dividends paid to policy owners are excluded from the insurers annual statement

which of the following statements about contributions to qualified plan is correct?

employees have 100% vested interest in benefits made from their own contributions

which of the following statements about qualifies retirement plans is not correct?

employer contributions are taxable to the employee in the year of contribution

life insurance contracts insuring clause

expresses the insurers intent to pay for covered losses in exchange for payment of premium and compliance with policy terms

what term best describes a representation that does not correspond to the facts

false

what type of annuity offers a guaranteed interest rate during accumulation and guaranteed payments after annuitization

fixed annuity

each of the following is a personal use of life insurance proceeds except

funding a buy-sell agreement

which of the following characteristics is not considered by underwriters when underwriting group insurance

individual medical histories

controlled business refers to

insurance business written by an agent on himself or a family member

which provision includes the insurance company's promise to pay the claim

insuring agreement

which settlement option allows only the earnings on the death benefit to be paid to a beneficiary

interest only

a cease and desist order

is issued by the insurance commissioner when it appears an unfair trade practice has occurred

which of the following statements about an equity indexed annuity is correct?

its interest is tied to a stock market related index

renewable term life insurance may be described as

level death benefit, increasing premium

a principal function of annuities is to

liquidate a principal sum

in the absence of any other election, the automatic settlement option in a life insurance policy is

lump sum in cash

which of the following premium payment modes is the most expensive

monthly

life insurance replacement regulations apply to which of the following kinds of insurance

most individual life insurance policies and annuities

which of the following statements is true regarding life policy dividends

mutual insurance companies issue participating policies that may pay an annual dividend

what is the usual federal income tax treatment of individual life insurance

non deductibility of premiums, non taxable death benefits

non qualified annuity benefits are a combination of principal and interest. what is the tax status of the portion of the benefit payments that represents a return of principal

not taxable

the fair credit reporting act

obligates insurers that use a third party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source

suitability is

obtaining information from the applicant to determine whether an insurance or annuity product is appropriate

which of the following statements is true regarding life policy replacement?

patterns of improper replacement may subject an insurer to disciplinary action

the underwriting classification which is most favorable to an insured is

preferred

with respect to a 10 year level term policy all of the following statements are correct except

premium payments increase gradually over the term

at all times, agents must uphold their fiduciary duty. the best example of this is

promptly submitting an insured's premium to the home office

Guaranty associations have been created for the purpose of

protecting insureds in the event of a member insurance company's insolvency

if a producer offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy, the producer is committing the unfair practice known as

rebating

what nonforfeiture option allows a whole life policy owner to convert their insurance to a paid up policy with a lower face amount that the original policy

reduced paid up insurance

which standard nonforfeiture option would use a whole life policy's surrender value to purchase a paid up policy with a smaller face amount of insurance that the original policy

reduced paid-up insurance

all of the following are considered unfair trade practices except

replacement

all statements and descriptions in any application for an insurance policy by an insured are deemed to be

representations not warranties

funds set aside by an insurer to pay future claims are called

reserves

all of the following retirement plans offer tax deductible contributions except

roth IRA

all of the following are required to sign an application for life insurance except

the beneficiary

all of the following are basic premium factors except

the insured's annual income

Who is the responsible for controlling the content form and distribution of insurance policy advertisements

the insurer

in life insurance, the entire contract is considered to be

the policy and application

which of the following is a term life insurance policy

the policy has a face amount of 100,000, every 5 years the premium increases and at the end of 20 years the policy terminates with no cash value

which of the following individuals must have an insurable interest in the insured

the policyowner

significant feature of adjustable life insurance is that

the premiums may be increased or decreased from time to time by the policy owner

with a conditional life insurance receipt, coverage may become effective as early as the date

the receipt is given to the applicant if the applicant is approved as a standard risk

which of the following best describes the annuity period

the time during which payments are made to the annuitant

all of the following are reasons for insurance and annuity replacement laws except

to protect insurers and agents against dishonest applicants

which of the following requires a min required distribution at age 70.5?

traditional IRAs

devine Twisting

twisting is when the producer makes an unfair politic comparison in order to get the insured to lapse 1 policy and purchase a new policy with another insurer

paul owns an adjustable life policy. which of the following statements about his policy are true

upon showing evidence of insurability, paul can increase the face amount of his policy

which of the following products pays based on units

variable annuity

which of the following types of life insurance policy was designed to combine the protection features of traditional life insurance with the cash value growth potential of securities

variable life

which of the following riders requires the insured to be totally disabled before it becomes effective

waver of premium rider

which of the following affects the deductibility

whether or not the ITA owner participates in a qualified employer plan