Life Insurance

Question 1

A corporation is the owner and the beneficiary of the key person life policy. If the corp collects the policy benefit, then..

Answer 1

The benefit is received tax free

Question 2

When an annuity is written, whose life expectancy is taken into account?

Answer 2

Annuitant

Question 3

What does NOT happen in equity index annuities?

Answer 3

The annuitant receives a fixed amount of return.

Question 4

An IRA purchased by a small employer to cover employees is known as a..

Answer 4

Simplified Employee Plan (SEP)

Question 5

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?

Answer 5

Pay reduced death benefit.

Question 6

What rider would NOT cause the Death benefit to increase?

Answer 6

Payor Benefit Rider

Question 7

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

Answer 7

$50,000

Question 8

What is correct regarding a whole life policy?

Answer 8

The policy owner is entitled to policy loans.

Question 9

What is another name for interest-sensitive whole life insurance?

Answer 9

Current assumption life

Question 10

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?

Answer 10

Term

Question 11

Who bears all of the investment risk in a fixed annuity?

Answer 11

The insurance company

Question 12

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay for benefits?

Answer 12

Fixed amount

Question 13

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?

Answer 13

Conditional

Question 14

What is true about nonforfeiture values?

Answer 14

They are required by state law to be included in the policy.

Question 15

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?

Answer 15

Interest only option

Question 16

What is the purpose of the buyer’s guide?

Answer 16

To allow the consumer to compare the costs of different policies

Question 17

What is incorrect regarding a $100,000 20-year level term policy?

Answer 17

At the end of the 20 years, the policy’s cash value will equal 100,000

Question 18

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

Answer 18

$2500

Question 19

What will be stated in the consideration clause of a life insurance policy?

Answer 19

The amount of premium payment

Question 20

An insurance policy has a legal purpose if both of these elements exist.

Answer 20

Insurable interest and consent

Question 21

What document includes information about the premium amounts, cash values, surrender values and death benefits for specific policy years?

Answer 21

A policy summary

Question 22

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Answer 22

Option A

Question 23

The LEAST expensive first-year premium is found in which policy?

Answer 23

Annually Renewable Term

Question 24

What is a definition of a unilateral contract?

Answer 24

One-sided: only one party makes an enforceable promise.

Question 25

if an annuitant dies before annuitization occurs, what will the beneficiary receive?

Answer 25

Either the amount paid into the plan or the cash value of the plan, whichever is greater.

Question 26

What does “level” refer to in level term insurance?

Answer 26

Face Amount

Question 27

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?

Answer 27

Fixed period

Question 28

who can make a fully deductible contribution to a traditional IRA?

Answer 28

An individual not covered by an employer-sponsored plan who has earned income

Question 29

Traditional IRA contributions are tax deductible based on

Answer 29

Owners Income

Question 30

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..

Answer 30

Respond to the consumer’s complaint.