MA STATE FINAL EXAM
a survivorship life insurance policy usually covers how many lives?
2
how many days notice must a producer be given prior to a scheduled hearing?
21 days
Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were
not distributed to life annuitants who died before life expectancy
Where is the difference between a standard risk and a substandard risk reflected?
premium charges
the owner's cost basis for a non-qualified annuity is typically the same as
total premiums paid
which life insurance policy would be eligible to include an automatic premium loan provision?
whole life
the highest morality rate belongs to which group?
Age 70 males
a stock company is owned by its
shareholders
after the first 3 years of licensure, a producer must complete _____ credit hours of continuing education for each licensing period
45 hours
After an applicant reads and signs an insurance application, he/she should be conscious of the fact that
a false statement could lead to loss of coverage
which of these is NOT considered to be an example of misrepresentation?
a producer comparing the benefits of competing insurance policies
a life insurance policy owner has been diagnosed with a terminal illness. which of the following is often payable to a policy owner whose life expectancy is suddenly reduced to 3 years?
accelerated (living benefit)
Which of these is NOT a reason for a business to buy key person life insurance?
an increased pension liability if the key employee dies
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
The free look period provided in a life insurance policy is usually
10 days
nothing
A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured died, the cash value was $15,000 and the total premiums-paid equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for federal income tax purposes?
A single-life annuity only has ONE
Annuitant
How may an insurance company classify an accidental death benefit on a life policy?
As an optional policy rider
which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policyowner when policy has been surrendered
which statement regarding the waiver of premium rider is accurate?
Cash payment is not directly provided to the policyowner
a foreign insurer wishing to conduct business in MA MUST obtain a
Certificate of authority from the Superintendent of insurance
which would be described as a beneficiary designation by class?
Children of the insured
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?
Date of issuance of the conditional receipt
in what way is a life insurance policy affected by an accelerated benefit payment?
Decreases the death benefit
Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?
Fluctuate with changes in the cash account
What is the name of the rider that provides an additional purchase option in a life insurance policy?
Guaranteed insurability rider
all of these are duties that a producer may be required to preform while delivering an insurance policy EXCEPT
Leave a conditional receipt with client
what is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?
Less than the policy's face amount
Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?
Loan amount is increased to reflect the amount of interest due
the beneficiary of a life insurance policy is normally selected by whom?
Policyowner
which of these occurrences could improve an insurer's ability to reduce premiums?
Rate of earnings on investments increase
if the commissioner requests access to a producer's business records, the producer
Records must be produced upon the request of the Commissioner to the producer
What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?
Responsible for acts by the producer that are authority only
How does the cost for a survivorship life policy compare to the cost of combining two separate life insurance policies? Survivorship life policy is lower Survivorship life policy is higher Depends on the investment performance of the underlying accounts Both have the same actuarial costs
Survivorship life policy is lower
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
The participating employee
Taxable income may be the result of all of these modified endowment contract (MEC) transactions EXCEPT for
The policy is surrendered for less than what was paid into it
Which of these is NOT a reason to buy a term life policy?
To accumulate savings
A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?
Total premiums paid plus the policy face amount
which of the following is NOT the responsibility of the insurer?
assuming liability for a producers unauthorized acts
which of these is not considered to be a cost connected with an individual's death?
business expenses
If the superintendent has reason to believe a producer has violated Massachusetts insurance law, the superintend it may issue a
cease and desist order
which report contains information regarding an individual's general reputation and credit standing?
consumer report
an annuity's accumulation period may
continue after the purchase payments stop
which of the following is considered an activity of daily living when determining an accelerated life insurance benefit?
eating
When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT
employee benefits
An annuitant is paid for $494 per month untillnthe contract value is exhausted at some undetermined date in the future. Which type of annuity payout option is this
fixed amount
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate
for federal income tax reasons
With life insurance, the needs approach is used primarily in determining which insurance company to purchase the coverage from how much life insurance a client should apply for the type of life insurance that should be purchased a budget for the surviving dependents to follow in the event of the client's death
how much life insurance a client should apply for
a life insurance policy that contains accelerated (living benefit) rider will provide funds if the
insured is expected to be confined to a nursing home for life
group life insurance is typically issued as
level term insurance, which provides a fixed amount of coverage throughout the terms o the contract
what is another term used for "pure" life annuity?
life income
an insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT
living in a rural area. where an applicant lives does not matter
an insurance contract may be voided if a misrepresentation found on the application is determined to be
material
which statement regarding the insurance premium for a children's rider is true?
premium remains the same no matter how many children
which entity is responsible for regulating claims settlement practices of insurers?
state insurance departments
a notice of information practices must be given to policyholder at LEAST every ______ years.
three years
a "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of
10%
How long do most states allow an insurance company to delay the payment of a cash surrender under the Delayed Payment provision?
6 months
which statement regarding single premium life insurance policy is NOT correct?
Additional premiums may be required under certain conditions
A Massachusetts residential producer has been convicted of a felony. under which circumstance may this producer resume engaging in insurance transactions?
After the commissioner gives written consent.
a policy owner pays the first annual premium for a $50000 life insurance policy and dies one month after the policy effective date. which of these statements is normally true?
Beneficiary receives $50,000 income tax-free
which of the following is NOT an example of risk retention?
Not doing a business deal after deciding it would be too risky
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy
which benefit can be found in an equity indexed annuity, but not in a fixed annuity?
Protection against long-term inflation
Insurance crimes which affect interstate commerce are prosecuted by the
US Attorney General
a life insurance producer is required to give a disclosure notice about information practices to an applicant
prior to or at the time of signing the application
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
producer
the authority for a producer to bind an insurer to an insurance contract is found in the:
producer/employers appointment
a retirement plan that sets aside part of the company's net income for distributors tp qualified employers is called a
profit sharing plann
A life insurance policy's waiver of premium rider has the ability to
relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
a life insurance producers underwriting duties may include
seeking additional information requested by the insurance company