Life 8 Flashcards
(38 cards)
Which of the following is the required number of
participants in a contributory group plan?
a) 50%
b) 75%
c) 100%
d) 25%
Under a contributory group plan, an insurer will require
that 75% of eligible employees be included in the plan.
All of the following statements are true regarding tax-
qualified annuities EXCEPT
a) Withdrawals are taxed.
b) Employer contributions are not tax deductible.
c) Annuity earnings are tax deferred.
d) They must be approved by the IRS.
Employer contributions are not tax deductible.
Tax-qualified annuities must be approved by the IRS and
allow for tax deductible employer contributions. All
withdrawals are taxed and earnings grow tax deferred.
Which of the following is another term for an authorized insurer? a) Legal b) Admitted c) Certified d) Licensed
Admitted
Which of the following statements is TRUE about a
policy assignment?
a) It is the same as a beneficiary designation.
b) It permits the beneficiary to designate the person to
receive the benefits.
c) It authorizes an agent to modify the policy.
d) It transfers rights of ownership from the owner to
another person.
d) It transfers rights of ownership from the owner to
another person.
13.
An insured had a $10,000 term life policy. The annual
premium of $200 was due on February 1; however, the
insured failed to pay the premium. He died on February
28. How much would the beneficiary receive from the
policy?
a) $0
b) $200
c) $9,800
d) $10.000
9800
In this scenario, the death occurred within the
mandatory 30-day grace period. Past due premium
would be subtracted from the face amount of the policy.
When a life insurance policy was issued, the
policyowner designated a primary and a contingent
beneficiary. Several years later, both the insured and the
primary beneficiary died in the same car accident, and it
was impossible to determine who died first. Which of
the following would receive the death benefit?
a) The insurance company
b) The insured’s estate
c) The primary beneficiary’s estate
d) The insured’s contingent beneficiary
The insured’s contingent beneficiary
The dividend option in which the policyowner uses
dividends to purchase a term policy for one year is
referred to as the
a) One-year term option.
b) Paid-up option.
c) Accelerated endowment.
d) Paid-up additions.
One-year term option.
The validity of coverage under a life insurance policy
may not be contested, except for nonpayment of
premium, after the policy has been in force for at least
how many years?
a) 1 vear
b) 2 years
c) 5 years
d) 7 years
2 years
The incontestability clause prevents an insurer from
denying a claim due to statements in the application
after the policy has been in force for 2 years, even if
there has been a material misstatement of facts or
concealment of a material fact.
In a survivorship life policy, when does the insurer pay
the death benefit?
a) Half at the first death, and half at the second death
b) If the insured survives to age 100
c) Upon the last death
d) Upon the first death
Upon the last death
Survivorship life pays on the last death rather than upon
the first death.
When the insured selects the extended term
nonforfeiture option, the cash value will be used to
purchase term insurance with what face amount?
a)
The same as the original policy minus the cash value
b) Equal to the original policy for as long as the cash values
will purchase.
c) In lesser amounts for the remaining policy term
of age 100.
d) Equal to the cash value surrendered from the policy
Equal to the original policy for as long as the cash values
will purchase.
Which option is being utilized when the insurer
accumulates dividends at interest and then uses the
accumulated dividends, plus interest, and the policy
cash value to pay the policy up early?
a) Paid-up additions
b) Dividend Accumulation option
c) Paid-up option
d)
Accumulation at Interest
Paid up option
All of the following entities regulate variable life policies EXCEPT a) The Guaranty Association. b) Federal government. c) The SEC. d) The Insurance Department.
The Guaranty Association.
What is the purpose of a suicide provision within a life
insurance policy?
a)
To protect the policyowner
b)
To protect the insurer from persons who purchase life
insurance with the intention of committing suicide
c) To limit the insurer’s liability after the 2 year
waiting period
d) To deter the policyowner from committing suicide
To protect the insurer from persons who purchase life
insurance with the intention of committing suicide
Which of the following is NOT one of the three types of
term coverage based on what happens to the face
amount during the policy term?
a) Decreasing
b) Level
c) Increasing
d) Renewable
Renewable
Under the Fair Credit Reporting Act, individuals rejected
for insurance due to information contained in a
consumer report
a) Must be informed of the source of the report.
b) Are entitled to obtain a copy of the report from the
party who ordered it.
C)
Must be advised that a copy of the report is
available to anyone who requests it.
d) May sue the reporting agency in order to get inaccurate
data corrected.
Must be informed of the source of the report.
Within how many days of requesting an investigative
consumer report must an insurer notify the consumer in
writing that the report will be obtained?
a) 3 days
b) 5 days
c) 10 days
d) 14 days
3 days
Investigative consumer reports cannot be made unless
the consumer is advised in writing about the report
within 3 days of the date the report was requested
The president of a company is starting an annuity and
decides that his corporation will be the annuitant.
Which of the following statements is true?
a) A corporation can be an annuitant as long as
the beneficiary is a natural person.
b) The contract can be issued without an annuitant.
c) The annuitant must be a natural person.
d) A corporation can be an annuitant as long as it is also
the owner.
The annuitant must be a natural person.
Under an extended term nonforfeiture option, the policy
cash value is converted to
A higher face amount than the whole life policy.
b) The same face amount as in the whole life policy.
c) The face amount equal to the cash value.
d) A lower face amount than the whole life policy.
Under this option the insurer uses the policy cash value
to convert to term insurance for the same face amount
as the former permanent policy.
The same face amount as in the whole life policy.
A60-year-old participant in a 401(k) plan takes a
distribution and rolls it over to an IRA within 60 days.
Which of the following is true?
a) The amount distributed is subject to ordinary income
tax.
b) The amount of the distribution is reduced by the
amount of a 20% withholding tax.
c) No taxes are due since the plan participant is
over age 59 1/2.
d) There is a 10% early withdrawal penalty.
The amount of the distribution is reduced by the
amount of a 20% withholding tax.
A Return of Premium term life policy is written as what type of term coverage? a) Renewable b) Level c) Increasing d) Decreasing
Increasing
An individual has been diagnosed with Alzheimer’s
disease. He is insured under a life insurance policy with
the accelerated benefits rider. Which of the following is
true regarding taxation of the accelerated benefits?
a)
A portion of the benefit up to a limit is tax free; the rest
is taxable income.
b) Principal is tax free, but interest is taxed.
c) The entire benefit will be received tax free.
d) The entire living benefit is considered taxable income.
A portion of the benefit up to a limit is tax free; the rest
is taxable income.
All of the following are general requirements of a
qualified plan EXCEPT
a) The plan must be permanent, written and legally
binding.
b) The plan must provide an offset for social security
benefits.
c) The plan must be communicated to all
employees.
d) The plan must be for the exclusive benefits of the
employees and their beneficiaries.
The plan must provide an offset for social security
benefits.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT a) Taxation on accumulation b) Taxation of withdrawals C) Taxation of contributions d) IRS approval requirements
Taxation on accumulation
The insured had his wife named as the beneficiary of his
life insurance policy. To ensure that his wife had income
for life after the insured’s death, he chose the life
income settlement option. The amount of payments will
be determined by taking into account all of the
following EXCEPT
a) Face amount of the policy.
b) The insured’s age at death.
c) The beneficiary’s life expectancy.
d)
Projected interest rates.
The insured’s age at death.
