Which of the following is not expected from a producer as part of the field underwriting?
c. The producer should note how many children the applicant has in the house.
All of the following exchanges would qualify under Section 1035 of the Internal Revenue code, EXCEPT:
c. Vacant land for another piece of vacant land
Which of the following statements is true about the return of premium rider?
The correct answer is: It is an increasing term rider that matches the total premium input.
Which of the following is true concerning the conditional receipt?
c. If the applicant is an acceptable risk, the conditional receipt binds the insurance company as of the later of the date of the receipt or the medical exam.
When does the clock start running on the free look provision of a life policy?
The correct answer is: When the policy is delivered to the insured
Janice has received a contract that defines the agreement in explicit terms. Signing the contract will allow her to represent the agency. This is an example of:
b. Express authority
Group policies must include an option to convert from the group policy to an individual policy if:
The correct answer is: Both of the above
Which of the following statements is not true about irrevocable beneficiaries on life insurance policies?
b. The policyowner can borrow cash without consent of the beneficiary.
Which of the following best describes the annuity period?
The correct answer is: It is the period when the cash value is converted to income payments.
Underwriting considerations for group coverage employ which of the following considerations?
The correct answer is: Groups usually do not have a requirement for medical exams.
Which life insurance dividend option does not increase a policy's cash value?
The correct answer is: Cash payment
Which of the following is not a correct statement about equity-indexed annuities?
The correct answer is: A securities license is required to sell EIAs.
Which of the following is a typical characteristic of a whole life insurance policy?
d. All of the above
Which of the following is a use for whole life insurance?
The correct answer is: Cash for emergencies
A health insurance policy that will not pay benefits unless confined to a hospital is known as a:
d. Conditional contract
What insurance would be best for an auto parts business with 3 partners that is incorporated and valued at $600,000?
The correct answer is: The company should buy $200,000 life insurance on each partner and have their attorney draft a buy/sell document.
All of the following are false regarding the tax consequences of Roth IRAs, EXCEPT:
c. Contributions are made with taxed dollars; however, interest grows tax-free.
What is the offense for transacting insurance without a license?
The correct answer is: First-degree misdemeanor
A fixed annuity that provides a guaranteed minimum interest rate is called:
The correct answer is: An equity-indexed annuity
Which of the following is usually the owner of the annuity?
a. The annuitant
How much time does an agent normally have to respond to an inquiry from the Department of Insurance?
c. 21 days
Because Sylvia paid the initial premium when her policy was delivered, in order for the policy to be in effect, the agent is required to obtain:
The correct answer is: A statement of good health
All of the following are required in a legal contract, EXCEPT:
c. Invitation to offer
The payment for fixed annuities is usually stated in terms of the amount of dollars per:
d. $1,000 of accumulated value
Which of the following is not one of the tax benefits of a qualified retirement plan?
The correct answer is: Proceeds of a qualified plan are not taxed.
Which of the following can be included in the expense calculation of premium amounts?
d. All of the above
Carl has a $150,000 whole life policy. He surrenders his policy when the cash value totals $90,000 of which $83,000 Carl has paid in premiums. What portion of Carl's cash surrender is taxable?
The correct answer is: $7,000
All of the following are valid insurable interest scenarios, EXCEPT:
d. A sister and her best friend
An answer an applicant provides on an application is considered a:
The correct answer is: Representation
The children's rider is not:
The correct answer is: A family rider
All of the following are true about Roth IRAs, EXCEPT:
b. Contributions are tax deductible.
An application for insurance is considered to be:
a. A written request by the applicant to an insurer requesting the insurer the issuance of a policy of insurance on the basis of the information provided in the application
Universal life policies allow the policyowner to:
The correct answer is: Both of the above
Which of the following is not a benefit of a whole life policy?
d. The premium payment period could extend beyond the insured's earning years.
Any of the following transactions will be subject to federal income tax consequences in a modified endowment contract (MEC), EXCEPT:
d. Death proceeds
What law requires that an applicant be notified that an insurance underwriter may request a report from an investigative agency?
d. Fair Credit Reporting Act
Which of the following is not an action that only the owner of an annuity can take?
The correct answer is: He/she can make changes during the annuity period.
Which policy would best suit someone who retires with a large amount of cash?
b. Single premium whole life insurance
All of the following are true about market value adjusted annuities, EXCEPT:
The correct answer is: This is not a fixed contract.
Which of the following is true about the waiver of premium rider on an insurance policy?
The correct answer is: All of the above
Which of the following would be a routine exclusion in a life policy?
d. All of the above
Which of the following is not true of the straight life income option for annuities?
The correct answer is: A beneficiary will receive any balance of the annuity upon the annuitant's death.
Field underwriting is helpful with all of the following, EXCEPT:
The correct answer is: Increase the chance of adverse selection
Which of the following is a nonforfeiture option?
The correct answer is: All of the above
Field underwriting is primarily useful to:
a. Make observations that could impact insurability
When does an agent have to inform a proposed insured that a credit report may be pulled?
The correct answer is: The proposed insured should be informed at the time of application.
Which of the following does not fall in the private insurer category?
The correct answer is: Self-insurers
Which of the follow statements concerning the payment from a non-qualified annuity is correct?
The correct answer is: Since this is a non-qualified plan only a portion of the payment will be taxable.
Which of the following is not a reason that the face amount of a life insurance policy may be subject to tax?
c. The policy proceeds are paid out in a lump-sum.
As the owner of a life policy, the insured can expect which of the following?
d. All of the above
Take it or leave it" is the basis for insurance policies. Because of this, they are referred to as:
a. Contracts of Adhesion
Equity indexed universal life works the same way as universal life, EXCEPT:
The correct answer is: The nonguaranteed indexed rate can reach yields of 30% or more.
A couple has created a large estate during their marriage. Their tax attorney has designed a plan that will have no impact when one of the partners dies, but there will be a substantial liability when the second partner dies. An economical solution for fu
The correct answer is: Survivorship life
Which of the following statements is not true about the tax liabilities for individual life insurance policies?
The correct answer is: Policy loans are taxable as income.
Which of the following is not a use of annuities?
The correct answer is: To provide tax-free income
Under what situation will the terms of a policy be honored if fraudulent answers were given to the questions on the application for health insurance?
d. His policy will be cancelled when fraud is discovered.
In what type of life insurance policy will premiums increase each policy anniversary based on current age?
b. Annual renewable term
Which of the following does NOT occur because an insured died during the grace period of a policy?
c. The interest due on the overdue premium is deducted from the benefit.
In life insurance, which of the following is taxable?
a. Interest on life proceeds paid in installments.
Cheryl has a $500,000 permanent life insurance policy. She has paid $200,000 in premiums, and the policy has a cash value of $216,000. If Cheryl dies, her beneficiary will pay taxes on:
The correct answer is: $0
When an insurer is determining how much premium to charge for a life insurance policy, the insurer considers all of the following, EXCEPT:
The correct answer is: Morbidity
What is the test the IRS uses to determine if a policy should be defined as life insurance or as a modified endowment contract (MEC)?
The correct answer is: A seven-pay test
Tax-sheltered annuities (TSA) provide retirement income for employees who work for:
The correct answer is: A nonprofit organization
All of the following are characteristics of a long-term care rider, EXCEPT:
The correct answer is: Prior hospitalization is not required
All of the following statements are true about an annuity certain, EXCEPT:
The correct answer is: If the annuitant dies, the payments cease.
Standard dividend options for a participating policy may be any of the following, EXCEPT:
The correct answer is: Provide guaranteed insurability
All of the following are true statements concerning accelerated living benefit riders , EXCEPT:
The correct answer is: The benefit paid is taxable as normal income
Which of the following is a personal use of annuities?
d. All of the above
Which of the following life insurance policies is not a combination of permanent and term coverage?
b. Current assumption whole life
Any of the following should be considered in a needs approach calculation, EXCEPT:
The correct answer is: Amount needed to retire comfortably
What is the time between when an annuity is purchased and the time when benefits begin?
c. The accumulation period
When does the market value come in to play in a market value adjusted (MVA) annuity?
The correct answer is: When the annuity is surrendered early
All of the following statements are correct, EXCEPT:
The correct answer is: All annuities are qualified.
At what point will the APL (automatic premium loan) provision on a life policy no longer pay premiums?
The correct answer is: It will pay until there is no longer cash value to cover the premium
In a life insurance policy, the entire contract clause provides that all statements made by the insured, in the application are:
The correct answer is: Representations
Which of the following is not true about the accelerated benefit rider?
The correct answer is: Provides a monthly check when you become disabled.
A deferred annuity with a decreasing term life insurance rider is a:
The correct answer is: Retirement income annuity
Which of the following is an option that would help the Olsens to adequately protect their minor child?
a. They could set up a trust.
Which of the following is true about policy loans?
The correct answer is: They are subject to interest.
All of the following correctly describe the law of large numbers, EXCEPT:
d. The law of large numbers provides the best data when groups consist of dissimilar risks.
Replacement is not always the best option for the insured because:
d. All of the above
In determining life premiums, the actuary uses all of the following factors, EXCEPT:
The correct answer is: Morbidity
What type of annuity would someone pay monthly premiums for many years until the payout phase begins?
The correct answer is: Level premium deferred annuity
Which of the following best describes an insurer that is a charitable organization providing insurance only to its members?
The correct answer is: Fraternal benefit society
The producer's responsibilities in field underwriting include all of the following, EXCEPT:
The correct answer is: Produce a consumer report
What type of life policy has premiums paid weekly to an agent who comes to your home to collect?
The correct answer is: An industrial policy
Monica has life insurance on her 10-year-old son. What rider will make sure that in the event she dies or becomes disabled that the policy will remain in force?
a. Payor Rider
John is required to make a $5,000 distribution from his traditional IRA. If he only makes a $3,000 distribution, how much will he be penalized?
The correct answer is: $1,000
All of the following programs quell the fear that some people have of losing their investment if they were to die after only receiving a few payments from their annuity, EXCEPT:
The correct answer is: Deferred annuity
Which of the following is not an assignment whereby someone would transfer legal rights as the policyowner of a life contract?
The correct answer is: Total, complete, unconditional assignment
Life insurance may be included in the insured estate when:
The correct answer is: The insured is also the owner of the policy
The tendency for poorer than average risks to seek out insurance is the definition of:
The correct answer is: Adverse selection
Philip named his wife Mary as the primary beneficiary of his life insurance policy. His children are contingent beneficiaries. Under the Uniform Simultaneous Death Act, who will receive the death benefit if Mary and Philip are in a car accident and there
The correct answer is: Philip's children from his prior marriage
Which of the following is true regarding taxes on nonqualified annuities?
The correct answer is: Premiums are not tax-deductible, but interest is tax-deferred.
What payout option guarantees income that an annuitant cannot outlive?
The correct answer is: Life annuity
An application consists of all of the following, EXCEPT:
The correct answer is: Part IV, the insurer's report
Which of the following is not true regarding the fixed-amount installment life insurance settlement option?
The correct answer is: The larger the payment amount, the longer time period payments will be received.
A hazard is best defined as:
d. Something that increases the chance of loss
All of the following statements are true regarding the IRS early withdrawal penalty for nonqualified annuities, EXCEPT:
The correct answer is: The IRS early withdrawal penalty is 20%.
What is a life insurance settlement option that uses an annuity to pay policy proceeds to the beneficiary for a set number of years?
The correct answer is: Period certain
Which of the following nonforfeiture options permits the policyowner to use the cash values to purchase paid-up term life insurance coverage?
The correct answer is: Extended term
All of the statements are true about universal life policies, EXCEPT:
c. Universal life policies are only subject to the interest rates stated in the contract.
How much withholding tax is assessed when funds from one qualified plan are not deposited into another qualified plan within 60 days?
The correct answer is: 20%
Gregory recently purchased a one-year term insurance policy. At the end of the year, he can purchase an identical policy without having to show proof of insurability. Why type of policy did he purchase?
c. Renewable term
If, after a hearing, the Superintendent finds that an individual has engaged in an unfair practice, what action can the Superintendent take?
d. All of the above
Which of the following is not part of the consideration element of an insurance contract?
d. The applicant's promises
What provides a husband and wife with lifetime income while either spouse is alive?
c. Joint and survivor annuity
All of the following are true about personal contracts, EXCEPT:
The correct answer is: Life insurance contracts cannot be assigned.
All of the following are used for underwriting, EXCEPT:
a. National origin and race
Fraternal benefit societies are described by all of the following, EXCEPT:
d. They include stock and mutual companies.
What type of life insurance program would be a good choice for grandparents to help their grandson in later years?
c. Juvenile Life
Which of the following is a true statement about the waiver of premium rider?
a. The disability must be permanent and total.