Which of these must be disclosed in a universal life policy?
The surrender charges
Which of these is NOT considered to be a cost connected with an individual's death?
Business expenses
Which of these describe a participating life insurance policy?
Policy owners are entitled to receive dividends
Which of these factors does NOT influence an applicant's need for life insurance?
Self-maintenance expenses
Which of these is NOT relevant when determining the amount of personal life insurance needed?
Local unemployment rate
Dividends from a stock company are paid to stockholders, whereas in a mutual company, dividends are
Paid to the policyowners
Dividends from a mutual insurance company are paid to whom?
Policyowners
Who normally pays the premiums for group credit life insurance?
Borrower
Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?
The account can be rolled into the surviving spouse's IRA
What type of premiums are associated with individual mortgage protection life insurance policies?
Level premiums
What kind of life insurance policy allows the policyowner the choice of investments along with adjustable premiums?
Variable universal life
Premature IRA distributions are assessed a penalty tax of
10%
Which statement concerning adjustable life insurance is accurate?
The face amount and premiums can be changed simultaneously by the policyowner
According to the law of large numbers, how would losses be affected if the number of similar insured units increases?
Losses would be better predicted
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty tax on $30,000
For insurance purposes, similar objects which are exposed to the same perils are referred to as
Homogeneous exposure units
In an individual retirement account (IRA), rollover contributions are
Not limited by dollar amount
Which is an accurate description of the premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years then levels off for the remainder of the contract
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Ordinary income tax and a 10% tax penalty for early withdrawal
All of these are considered features of whole life insurance EXCEPT
Initial premium is lower than for an equivalent amount of term insurance
How long does an individual have to "rollover" funds from an IRA or qualified plan?
60 days
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment paid-up at 70
Rick recently died and left behind an individual IRA account in his name. His widow transferred these funds to her own individual IRA account. What did Rick's widow qualify for?
Section 1035 exchange
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
The employee
How long is a person covered for under a limited pay whole life policy?
Until age 100
When does an insured stop making payments under a thirty-payment whole life policy?
When the insured dies or 30 years from the policy's inception, whichever comes first
What is the cash value of a straight whole life insurance policy when the insured turns 65 years old?
Less than the policy's face amount
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
When does interest income in a deferred annuity get reported for federal income taxes?
When the distributions are received
Which statement regarding the cash value of a whole life insurance policy is correct?
Payable to the policy owner when policy has been surrendered
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT
Make multiple premium payments
A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?
If the interest rate falls below a certain level, the surrender charge is waived
In what way are insurance policies said to be aleatory?
Involves the potential for the unequal exchange of value
When compared to a fixed annuity, a variable annuity has what distinguishing feature?
Investment risk is assumed by the policyowner
Insurable interest involves what assumption?
One person benefits from the continuation of another's life
What happens when an initial offer is answered with a counteroffer?
Initial offer is void
An insurance company can be liable for a producer's unauthorized acts
When the agency contract is vague concerning the authority given
When does the owner's contractual rights begin under an individual annuity contract?
Purchase date
When a large sum of money is used to structure monthly payments, which product is typically used?
An immediate annuity
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 feder
$0
Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)?
Annual investment gains are included in participant's gross income
Which of these occurrences could justify an insurer to reduce premiums?
Interest factor increase
Which tax is normally associated with death?
Federal estate tax
The interest rate on a fixed annuity does not fall below the
Guaranteed contract rate
When dealing with single-life annuities, there is only one
Annuitant
Which life insurance settlement option pays lifetime benefits to two or more people?
Joint and survivor
What is the term used for an insurance policy that covers individuals of a specific organization?
Group insurance
Which statement most accurately describes a single premium whole life policy?
Paid-up policy that offers lifetime protection
John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract?
Mary
What type of policy can group term life insurance normally be converted to?
An individual permanent policy
The policy provision that permits an employee to change from a group plan to an individual plan is called the
Conversion provision
During the early years of a whole life insurance policy, the cash value will normally be
Less than the total premiums paid
An employer has a group life insurance plan in place for his employees. How would an employee with health problems be treated in this situation?
Eligible for standard coverage on this plan
The highest mortality rate belongs to which group?
Age 70 males
Which of these is an accurate statement regarding a fixed period settlement option on a life insurance policy?
A portion of the payments paid to the beneficiary stems from interest generated from the proceeds
Which report contains information regarding an individual's general reputation and credit standing?
Consumer report
When an annuity contract has been surrendered, how will the surrender charges affect the final contract settlement?
Settlement will be reduced
During the underwriting process, all of these may be utilized to help determine a life insurance applicant's insurability EXCEPT a(n)
Eye examination
A signed good health statement would be collected by a life producer at the time of
Policy delivery
Which of these is NOT considered the responsibility of a producer in the underwriting process?
Choosing the final approval date
An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?
Applicant has a right to receive a copy of the report
The Medical Information Bureau consists of members from which group?
Insurance companies
All of these are duties of a producer when delivering an insurance policy EXCEPT
Leave a conditional receipt with client
How is a collateral assignment used in a life insurance contract?
Assigns specific ownership rights to a creditor
Which life insurance clause disallows an insurance company from challenging the validity of the contract after a stated period of time has passed?
Incontestable
A source of retirement income for a life insurance policyowner can be derived from the
Cash value
How long can an insurer normally postpone paying the cash value of a surrendered life insurance policy?
6 months
What happens to the death benefit of a life insurance policy if the insured accepts a payment from the accelerated (living) benefit provision?
Reduced
Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?
Allows a policyowner to take out a policy loan to cover premium payments in the event of total disability
A life insurance policy that includes a return of premium rider will pay how much upon the insured's death?
Face amount plus total premiums paid
What could be the potential result of taking out a cash value loan on a life insurance policy?
Cash surrender value will be reduced if policy is forfeited
Which of these is NOT a typical life insurance nonforfeiture option?
Life-income settlement option
John has a criminal record in which he was convicted of a felony that involved dishonesty. Under Federal law, how would John be able to engage in insurance transactions?
Given written consent by the state insurance regulatory agency
Security laws passed by Congress are enforced by which Federal agency
Security and Exchange Commission (SEC)
The Commissioner may suspend a producer's license when the producer
Rebates a portion of the commission to the insured
A producer who makes an agreement that unreasonably restrains the business of insurance may have violated regulations against
Boycott, coercion and intimidation
Splitting the commission with the buyer on a sale of insurance is known as
Rebating
In accordance with federal fraud and false statements regulation, a prohibited person cannot transact insurance business without
The written consent of the Commissioner
Which term refers to insurance written on the interests of the licensee, the licensee's employer, or the licensee's immediate family?
Controlled business
If a person was to misstate his age on an application for an insurance policy which of the following would the company do?
Adjust the benefit to what it would have purchased at the correct age
Annuity premiums are determined by all of the following factors EXCEPT?
Participation
A Back-End load in a Universal Life policy represents which of the following?
Surrender charge imposed during the first 10 years of policy's life
In all insurance, the ideal risk is which of the following?
Many exposure units and minimal events
A Whole Life policy will lapse upon which of the following?
When the policy loan plus interest owed exceeds the cash value
Assignment involves all of the following parties EXCEPT?
Beneficiary
An insured owns a $100,000 whole life policy which has $18,000 in cash value and carries a $4,000 loan. If she were to elect a Reduced Paid-up Option, which of the following is correct?
She purchased Permanent coverage with a single premium of $14,000
In an analysis of an individual's life insurance needs, the producer who focuses on anticipated costs of burial and final expenses and income necessary to support the survivors to maintain the family's standard of living, including projected college costs
The needs approach
Collateral for policy loans is based upon which of the following?
Cash value accumulation
Under Kentucky Code 304.9, the Commissioner may impose a civil penalty for violations as follows?
Insurer violation up to $10,000 per violation
On an application for insurance, all statements are?
No statements are warrantees
An owner's transfer of a life insurance policy could result in which of the following?
Immediate gift tax
All of the following are true about term life insurance EXCEPT
Term insurance is one of the least expensive forms of protection for older individuals
Which of the following applies to the Free Look Provision?
It permits the insured to reject the policy with a full refund
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following statements is true?
She will not need to provide proof of insurability
An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
If the primary beneficiary predeceased the insured
Underwriters are concerned with something known as adverse selection, which means:
The greater tendency of poorer risks to apply for and obtain insurance
Where an Interim Insuring Agreement is not present, coverage begins on which of the following dates?
Date of policy delivery and collection of premium due
If a 45 year old purchased an annuity designed to provide income for life, which of the following did the annuitant buy?
Immediate Annuity
J has $200,000 of Group Life Insurance. J just terminated his employment. J has how many days in which to convert his group coverage to individual coverage?
31