which of the following statements is correct if a group offers non-contributory group life insurance?
The plan must cover 100 percent of eligible group members
Diane invested $6,000 two years ago in a section 529 college savings plan for her daughter, Cathleen, age 5. The account earned $400 the first year and $450 the second year. Which of the following statements is correct?
No income tax must be paid on the earnings this year.
Derek buys an individual life insurance policy after he loses his job and is no longer covered by his former employer's group plan. However, he dies during the conversion period and before the policy takes effect. Which of the following statements is true
A death benefit will be paid under the group plan.
which statement about life insurance beneficiary designations is not correct?
legal entities, such as trusts and corporations, cannot be beneficiaries of individual life
a currently insured worker is eligible for which of the following social security benefits?
survivor death benefits only
social security benefits are most directly based on which one of the following?
average indexed monthly earnings
which of the following is the main appeal of joint life insurance compared to two separate policies?
lower cost
which one of the following statements about term life insurance and permanent insurance is most correct?
when issued, the level term policy will be less expensive than the permanent policy of the same face amount
which of the following risk management techniques best describes the role of insurance?
risk transfer
which of the following statements about children's term riders is Correct?
the same premium applies to all of the insured's children, no matter how many are covered
which of the following provisions allows part of a life insurance policy's death benefit to be paid while the policy owner is still living if he or she suffers from terminal illness?
accelerated benefits provision
phil has selected the paid-up insurance dividend option with his participating whole life insurance policy. which of the following best describes the purpose for this type of dividend option?
pay up the whole life insurance policy several years early
sandra and davis orally agree that sandra will pay david $25000 to set fire to he ex-husbran's house and the house burns to the ground. which of the following statements is correct?
the contract cannot be enforced because its purpose is illegal
jonah took a $25000 loan from his variable life insurance policy and died one month later without paying it back. what impact will the outstanding loan have on the death benefit?
the outstanding loan amount will be deducted from the proceeds
kevin owns a whole life insurance policy, issued on a standard basis, that has lapsed for nonpayment of the premium. if Kevin has not chosen a non forfeiture option, which of the following actions will the insurer most likely take?
automatically apply the extended term option
which type of group would typically not be eligible for group life insurance?
neighborhood group
terry is licensed in ohio as a life and health insurance agent. to maintain his license, how many hours of continuing education must be complete every two?
24
Frank intends to use his life insurance to make the down payement on a vacation home. In so doing, Frank is using which of the following?
living benefits
when do funds in a deferred annuity become the owners property?
they always belong to the contract owner
the payor benefit rider for a juvenile insured sets the terms for when and how long the premium waiver stays in effect. IF the payor becomes totally disabled or dies before the specified age, which of the following happens?
the waiver usually stays in effect until the payor recovers or the child reaches a certain age
all of the following must sign life insurance applications except
the beneficiary
brittney wants to renew her insurance agent's license in Ohio. She must do all of the following except
provide records of her insurance sales
when comparing her insurance companys policies to those of Zenith insurance, melanie makes misleading statement to convinve an insurance prospect to terminate a policy with Zenith and buy one from Melanies company. What is melanie engaged in?
twisting
to qualify for an insurance license, a person must have all of the following except
a college degree
which of the following statements best describes the purposes that annuities serve?
annuities accumulate and or distribute sums of money
which of the following contract characteristics is unique to insurance contracts but not all contracts?
Unilateral
Which of the following best typifies the use of a structured settlement annuity?
shirley was paralyzed in a car accident, and a jury awarded her $2 million which much be paid to her over 20 years
what is the term for voluntarily giving up a known right?
waiver
a two-tiered fixed annuity will pay a higher level of interest than the standard declared rate fixed annuity under which of the following conditions?
only if the annuity owner annuitizes the contract
the contract between the producer and the insurer, setting forth certain acts and duties the producer is specifically authorized to perform, is an example of
express authority
any after-tax contributions Tom makes toward the cost of his group life coverage are treated in which of the following ways?
they are subtracted from his imputed income on the employers contributions on a dollar-for-dollar basis
the main purpose for errors and omissions (E&O) is to
cover damages that arise due to services a producer non-willfully failed to render
the insurance company function that is responsible for calculating company mortality and morbidity rates, and calculating dividends on participating life insurance policies, is the
actuarial division
elizabeth owns a universal life insurance policy with a $100,000 cash value. She pays a $1400 premium for the coverage. If she loses her job and decides not to make a premium payement, which one of the following is most likely to occus assuming Elizabeth
The policy will stay in force as long as the cash value will cover the monthly deductions and charges
which of the following statements about mortality charge for universal life policies is correct?
it increases over time
what is the only restriction on naming an annuitant?
the annuitant must be a natural person
Alice's annuity imposes a declining surrender charge that begins at 7 percent during the first year of the contract and declines 1 percentage point each year. What would the surrender charge rate be for a full withdrawal in the third year of the same cont
5 percent
which of the following pieces of information about a proposed life insurance policy is not contained in the policy summary given to a buyer?
appropriate amount of insurance
the suicide exclusion provision of a typical life insurance policy excludes coverage if death is the result of suicide within
2 years following policy issue
ella and her husband mick bought an annuity years ago and have chosen a settlement option that will provide them with an income stream for as long as they live. The income stream will be higher while both are alive and will be reduced after one of them di
joint and survivor option
proceeds from a life insurance policy can be paid out in a variety of ways. which one of the following most correctly describes the two general categories of life insurance settlement options?
those without a life contingency and those with a life contingency
in which of the following relationships would and insurable interest not exist?
two neighbors
Group life insurance policies must include a grace period of how many days for paying any premium except the first?
31
in cases where an existing life insurance policy is going to be replaced by new life insurance policy, the producer must do all of the following except
require the applicant to sign a waiver exempting the producer from any liability associated with the replacement
which of the following is not an unfair claims settlement practice if committed by and insurance company in ohio?
failing to promptly settle a claim for which liability is uncertain
to boost her insurance sales at the end of the year, trudy started offering potential clients $250 cash gift cards in exchange for purchasing a life insurance policy. Which ethical sales practice has Trudy violated?
rebating
which statement about group insurance is not true?
employee contributions are disallowed
all of the following statements about long-term care riders and long-term care policies under health insurance portability and accountability act (hipaa) of 1996 are correct, except
the insured must spend time in a hospital before payement
which of the following documents must and agent deliver to a policyowner who buys a life insurance policy that replaces another?
notice regarding replacement
samantha was laid off from her job at xyz computers on may 1 and wants to convert her group life insurance coverage to an individual policy. within how many days must she submit an application for an individual policy and pay the first premium
31
the insurance company can require a medical exam or lab tests based on information found in the application. the insurance company may request a medical exam based on any of the following criteria, except
the sex of the applicant
the amount a market value adjusted annuity (MVA) owner receives at withdrawal goes up or down depending on which of the following
the current interest rate at the time of the withdrawl
abc life insurance co. just sold alex a new life insurance policy that will replace his existing policy. alex may examine the policy and return it within how many days if he is not satisfied for any reason?
30
wilson buys life insurance but commits suicide three years later. wilson's beneficiary will get which of the following from the insurer?
the full death benefit
which statement about cash value withdrawls from a universal life insurance policy is not correct?
withdrawals incur interest charges
the superintendent of insurance can examine the business transactions, accounts, and records of insurers as often as necessary but must do so at least once every how many years?
three
brian earned $100,000 this year and contributed $10,000 to his 401(k) plan account. his employer contributed an additional $2,000 on his behalf. All of the following statements regarding this are correct, EXCEPT
brian's taxable income will be reduced by that amount that both he and his employer contributed to his 401(k) plan account.
the fair credit reporting act (fcra) generally requires insurers that seek a credit report to notify the applicant of the request within
3 days of requesting the report
under a policy's facility of payment provision, what does an insurer do with the death benefit?
the insurer names a blood relative or someone with a valid claims as the new beneficiary
acme insurance and apogee insurance agree to offer different premium rates for persons of equal risk within a particular class. they also agree to limit benefits paid to insureds within this class if the insureds live in certain counties of ohio. what are
unfair and prohibited business practices
agent edwards helped his client wilma enter into a viatical settlement with acme insurers. which of the following parties will receive the life insurance proceeds at wilmas death?
acme insurers
andrea bought a $300,000 term-to-55 policy. which of the following statements about the policy is not correct?
the policy will pay the entire death benefit only if andrea reaches age 55
which of the following types of qualified retirement plan is permitted to include life insurance in the plan funding?
412(i) plan
what is the name of one of the first systems developed for determining how much life insurance is necessary, based on the economic value of human life?
human life value apporach
a life insurer is permitted to employ which of the following persons to administer funds held in the insurer's separate account
a person convicted of moving traffic violations
once insured in ohio, an agent's license is valid for how long?
two years
what is the name of the period during which premium funds are paid into an annuity contract?
the accumulation period
all of the following statements regarding the extended term nonforfeiture option are correct except
the extended term option is available whether the original policy was issued on a standard or sunbstandard (rated) basis
under a joint life insurance policy, when does the insurer pay the death benefit?
when the first insured dies
life insurance applies to business arrangement in all of the following ways, except
life insurance is used to make up for the financial losses that might occur when an important customer dies
madison is the owner and annuitant of a deferred variable annuity. when she annuitizes the contract, the insurance company guarantees to make payment for as long as she lives or 20 years if she dies earlier. which annuitization option did madison select?
life annuity with period certain
all of the following statements about the regulation of the sale of variable products are correct, except:
agents who only sell variable life products and do not sell fixed life products are not required to hold a life insurance license
all of the following are characteristics of a stock insurance company except
they are owned by policy owners
before selling annuity, an agent must make reasonable efforts to obtain information about the prospect with regard to all of the following except:
marital status
which of the following is an insurance risk?
the possibility of becoming disable and unable to earn income
what rule lets a policyowner return a policy for a refund of premiums paid for a certain period of time after after the policy is issued?
right to examine (free look)
what is the consideration that an applicant gives an insurance company when buying life insurance?
the application and the first premium
which statement about binding receipts is not correct?
a binding receipt guarantees coverage from the times the applicant completes the application (or the insured completes the medical exam). this does not hold true if the insured is later found to be uninsurable
grace owns a fixed annuity and wants to exchange it for a variable annuity. what must she use to be sure no taxes are imposed?
section 1035 exchange
which of the following best describes a "level premium" payment plant?
the policyowner pays the same amount each time the premium is due for the full duration of the premium-paying period.
carl is owner and insured of a life insurance policy. if he were to dies without having selected a settlemt option, which of the following option(s) is available to the beneficiary?
the beneficiary may choose from all the settlement options that would have been available to carl.
premium rates will vary depending on the insurer's actual experience in which of the following types of whole life insurance?
current assumption whole life
all of the following statements about ordinary whole life insurance are correct except
the death benefit increases during the early policy years and then levels off.
who normally owns life insurance used to meet business insurance needs?
the business
what is the type of insurance used most often in group life insurance plans?
annually renewable term
once annuitized income payments begin, what are they generally considered?
irrevocable
which annuity settlement option guarantees that income is paid for the length of the annuitant's life, but no less than a specified number of years?
life income with period certain
if a person buys a new life insurance policy to replace an existing one, the agent must give the applicant the notice regarding replacement form no later than when?
the application is takes
for which of the following purposes are annuities most often used?
retirement planning
from an insurance perspective, underwriting is best defined as
the process of determining if an applicant is an insurable risk
to receive favorable tax benefits, a life insurance policy must meet the definition of life insurance as defined in section 7702 of the tax code. when was this section added to the code?
after flexible premium payment policies were introduced
all of the following statements about the taxation of annuities are correct except
qualifies annuities-those used in qualified plans- are taxed according to the rules that apply to life insurance.
jason is a newly licensed solicitor in ohio. for which of the following parties may he solicit insurance contracts?
a licensed agent
hannah participates in her company's retirement plan, which provides for 100 percent vesting after four years with no vesting prior to that. what is the type of vesting schedule called?
cliff vesting
which statement about corporate-owned life insurance (COLI) plans is not correct?
the employees own the policies
endowment contracts issued today no longer qualify as life insurance (for tax purposes), but those issued before what date were grandfathered and still retain favorable life insurance taxation?
1986
all of the following statements about participating policies are correct except
the owner can only take the dividends as cash
Lisa, age 35, takes a $9,000 distribution from her traditional IRA to use as a down payment on her first home. What penalty tax must Lisa pay?
$0
Brian is a 35-year-old who own a $200,000 whole life policy. He realizes that he may not need this same life insurance protection when he's 65. at 65, his main financial concern will be retirement income. if brian surrenders his policy then, how can he us
he can use the cash value to buy an annuity