Life Insurance Flashcards
A corporation is the owner and the beneficiary of the key person life policy. If the corp collects the policy benefit, then..
The benefit is received tax free
When an annuity is written, whose life expectancy is taken into account?
Annuitant
What does NOT happen in equity index annuities?
The annuitant receives a fixed amount of return.
An IRA purchased by a small employer to cover employees is known as a..
Simplified Employee Plan (SEP)
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay reduced death benefit.
What rider would NOT cause the Death benefit to increase?
Payor Benefit Rider
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy’s cash value, which is currently $20,000
$50,000
What is correct regarding a whole life policy?
The policy owner is entitled to policy loans.
What is another name for interest-sensitive whole life insurance?
Current assumption life
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited resources?
Term
Who bears all of the investment risk in a fixed annuity?
The insurance company
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay for benefits?
Fixed amount
The proposed insured makes the premium payment on a new life insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. The is an example of what kind of contract?
Conditional
What is true about nonforfeiture values?
They are required by state law to be included in the policy.
the policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
What is the purpose of the buyer’s guide?
To allow the consumer to compare the costs of different policies
What is incorrect regarding a $100,000 20-year level term policy?
At the end of the 20 years, the policy’s cash value will equal 100,000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
$2500
What will be stated in the consideration clause of a life insurance policy?
The amount of premium payment
An insurance policy has a legal purpose if both of these elements exist.
Insurable interest and consent
What document includes information about the premium amounts, cash values, surrender values and death benefits for specific policy years?
A policy summary
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
The LEAST expensive first-year premium is found in which policy?
Annually Renewable Term
What is a definition of a unilateral contract?
One-sided: only one party makes an enforceable promise.
if an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is greater.
What does “level” refer to in level term insurance?
Face Amount
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
Fixed period
who can make a fully deductible contribution to a traditional IRA?
An individual not covered by an employer-sponsored plan who has earned income
Traditional IRA contributions are tax deductible based on
Owners Income
Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must..
Respond to the consumer’s complaint.
