Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Life Insurance > Life Insurance > Flashcards

Life Insurance Flashcards

1
Q

Insurance =

A

transfer of risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Risk =

A

uncertainty

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Speculative risk means possibility of ____ and ____

A

of loss and gain, will not insure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Pure risk means only ____

A

possibility of loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Loss = value ____ minus value ____

A

value before loss minus value after loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Exposure is the risk assumed by the insurer and ____

A

amount they are responsible to pay out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A peril is a _____

A

cause of loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Insurers agree to cover ____ perils

A

specified

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A hazard is anything that ____ a loss will occur

A

increases the chance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The three kinds of hazards are

A
  1. physical, 2. moral and 3. morale
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

____ is another way to think of a moral hazard

A

dishonesty

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

An example of morale hazard is _____

A

leaving the doors unlocked, living carelessly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

STARR is an acronym for handling risk, and means

A

Sharing, Transfer (insurance), Avoidance, Retention, Reduction

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The law of large numbers allows insurers to predict

A

losses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Risks that can be insured have similar characteristics, using the acronym CANHAM meaning

A

Calculable, Affordable, Non-catastrophic, Homogeneous, Accidental, Measurable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Adverse selection is when _____

A

higher-risk individuals get and keep more insurance than average risk people

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

To avoid adverse selection, insurers _____ policies

A

underwrite

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

A ceding insurer is the one ____ reinsurance

A

buying

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

The insurer selling reinsurance is the _____

A

reinsurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Facultative reinsurance is when a reinsurer considers ____ before taking on responsibility

A

considers each risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Treaty reinsurance is when the reinsurer _____

A

accepts all risks of a certain type

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

A stock insurer is a business formed as a public or private corporation and is _____

A

owned by shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Policies issued by stock insurers are called _____

A

non-participating (non-par)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

The board of directors for a stock insurer are chosen by

A

the stockholders/shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Stock insurers may distribute ____

A

dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

A mutual insurer is owned by its ______

A

policy holders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Mutual insurer dividends are considered to be _____

A

non-taxable return of excess premiums

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Policies issued by mutual insurers are called

A

participating (since the policyowners participate in the operating results of the company)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Fraternal benefit societies issue policies called ____

A

certificates, holders are certificate holders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Fraternal benefit society policies are also called

A

open contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Reciprocal insurers are groups of people that agree to pay each other’s losses, members are known as

A

subscribers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

For reciprocal insurers, administration, underwriting, sales promotion, and claims are handled by the

A

attorney-in-fact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

A risk retention group only provides

A

liability insurance to its policyholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Policyholders of a risk retention group must all be members of the same

A

type of business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

LLoyd’s Associations are not insurance companies, they provide a hub for the exchange of information among member underwriters who actually transact the insurance. They underwrite ____ risks

A

unusual (like athlete’s body parts)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Self-insurance is setting aside

A

cash to cover losses on your own (or by a business)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

The residual market is insurance from ___ or ____

A

federal or state government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

A domestic insurer is

A

one that operates in the home state where it is incorporated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

A foreign insurer is

A

one that operates in a state that it is not headquartered in

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

An alien insurer is

A

an insurer formed under the law of any country other than the USA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

A state license to sell insurance for an insurer is called

A

a certificate of authority, you are admitted or authorized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Some states allow companies to sell insurance to certain types of risk (surplus) without a license, they are called

A

nonadmitted, unauthorized, nonapproved

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Surplus lines insurance is for _____ and is placed with ____

A

for exceptionally large or specialized risk, placed with a non-admitted carrier by a surplus lines agent; can’t be sold just for a cheaper rate than licensed/admitted insurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

The ratings agencies for insurers are

A

AM Best, S&P Insurance Rating Services, Moody’s Duff & Phels, and Weiss Ratings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Best ratings for each rating agency

A

A++ = AM Best; AAA = Fitch, Aaa = Moody’s; AAA = S&P

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Exclusive or captive agents only respresent

A

one insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

General agents or managing general agents

A

hire train and supervise other agents with a geographical region

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Direct-writing companies

A

pay salaries to employees who sell the insurance from a company office

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

In direct response marketing, there is no

A

producer or agent, sold directly to public

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Agency is when one person is

A

authorized to represent or act for another person or corporation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Express authority is

A

made explicit in a producer’s written agency agreement with an insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Implied authority is

A

not written in the agency contract, but is assumed to be granted in accordance with general business practices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

Apparent authority is

A

authority that others believe the agent has

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Acronym CLOAC is for elements of a legal contract and means

A

Consideration, Legal Purpose, Offer, Acceptance, Competent Parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Adhesion in a contract means

A

that one party writes the contract and the other has to adhere to them (if any ambiguity, courts will favor the adhering party - the insured)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Aleatory contracts means

A

that the value received from the contract by each party may be unequal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Life and health contracts are not ____, unlike property - casualty contracts

A

are NOT personal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

A misrepresentation is a representation that is actually

A

false

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

For a contract to be void, a misrepresentation has to be

A

material

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Estoppel is a legal doctrine that prevents a party from _____ if it had been accepted previously

A

denying an action

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

Agent/producer is known as the ____ underwriter

A

field underwriter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

Corrections on an application must be accompanied by the insured’s _____

A

initials

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

Most state laws allow life insurance applications to be backdated up to ____

A

6 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

Required signatures on an application are:

A

insured
producer/agent
application/owner (if not insured)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

The producer/agent report includes information on the insured’s

A

financial status, habits, and character

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

The producers report is never seen by the

A

insured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

Applicants must be given advance notice of who is authorized to

A

disclose personal information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

If no first premium is paid, the coverage is ____

A

delayed until the premium is paid for the issued policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

If the insured becomes uninsurable or dies between time with application is submitted and first premium is collected, the policy will

A

not pay a benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

Once first premium is paid, producer must provide the applicant with a _____

A

receipt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

If you send your premium in with your application and die with a conditional receipt, if the insured meets underwriting requirements a death benefit ____

A

will be paid, if not insurable, will not be paid and premium will be sent back to the policyowner or beneficiary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

Conditional receipt means you sent your ____ in with your application

A

first premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

Binding receipts are effective for ___ or ___ days

A

30 or 60 days from the date of the application even if the applicant is found to be uninsurable (rarely used with life insurance, mostly home and auto)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

Life insurance binders are called _____ insurance agreements

A

temporary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

3 parts of an application are information about

A

general info
health info
producer’s report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

An APS is an ____

A

attending physicians statement for health care information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

Who pays for the medical exam for life insurance?

A

the insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

The four classifications of risks are

A

standard
preferred
substandard
declined

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

When a policy is issued, it must be ____ to the policyowner

A

delivered, in some states they require a receipt from the policyowner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

A policyowner must sign a ____ attesting that their health is the same as when they applied (required if no ___ with application)

A

statement of good health, required if no premium was paid with application

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

FCRA stands for the

A

Fair Credit Reporting Act

82
Q

Under the FCRA, a ____ must be issued to all applicants of life or health insurance

A

a notice to applicant - tells you a repot is being ordered

83
Q

Consumer rights under FCRA means that a consumer may _____ incorrect information

A

dispute

84
Q

Penalties under FCRA can be punishable by ____

A

fines and imprisonment

85
Q

False pretense under FCRA is a fine of ____ or ____ or both

A

$5,000, 1 year imprisonment or both

86
Q

Producers may be ____ for their mistakes

A

liable

87
Q

STOLI or IOLI are ___ and ____ and are being banned

A

stranger-owned life insurance or investor-owned life insurance

88
Q

the USA PATRIOT Act is to ____ and covers ____

A

deter terrorism and covers money laundering

89
Q

Third party ownership of a life insurance policy is when someone other than the ____ owns the policy

A

other than the insured

90
Q

To get third party ownership, must have an insurable interest in the insured, which is a significant loss if that person dies, can be:

A

emotion

economic

91
Q

An insurable interest exists between lenders and their ____

A

debtors

92
Q

An insurable interest is only required when you ___ for a life insurance policy

A

apply

93
Q

Life insurance can be used to make sure an estate is _____

A

conserved

94
Q

Liquidity refers to how easily an asset can be turned into cash without ____

A

loss of value

95
Q

Cash value in a permanent life insurance policy is also known as the _____ benefit

A

living

96
Q

Human life value =

A

individual’s annual income x number of years until retirement

97
Q

Needs approach to valuing insurance coverage is more ___ than the human life value and falls into two categories:

A

more accurate, two categories are:

cash needs and income needs

98
Q

Cash needs in the needs approach can be met with a lump sum, includes:

A

final expenses
debt payoff
children’s education
emergency fund

99
Q

Income needs in the needs approach fall into three specific periods:

A

family dependency - kids too young to support themselves
preretirement - surviving spouse not yet retirement age
retirement - surviving spouse needs income

100
Q

Two types of buy/sell agreements:

A

entity, and cross-purchase

101
Q

Companies usually buy ___ to protect against liabilities related to deferred compensation plans

A

life insurance (company is owner, premium payer, and beneficiary - employee is the insured)

102
Q

The preretirement period in cash needs analysis is also known as the -____ period

A

blackout

103
Q

Industrial insurance is small amounts, face amounts are usually $2,000 or less to cover burial expense, and premiums are due ____ and collected ____

A

due weekly, collected in-person

104
Q

Home service policies are like ____ policies, usually bigger face amounts and monthly bank drafts for premiums

A

like industrial policies

105
Q

Three elements into calculating insurance premiums:

A

mortality, interest, expense (expense load)

106
Q

Net premium =

A

mortality - interest

107
Q

Gross premium =

A

mortality - interest + expenses

108
Q

Which is not a party to a third party owned insurance policy?

A

the beneficiary

109
Q

Decreasing term policies are appropriate for coverage of financial obligations that decrease steadily over time, like:

Premiums will _____

A

mortgages, bank loans, obligations with periodic payments

premiums will stay the same

110
Q

Increasing term policies are appropriate for coverage of financial obligations that increase steadily over time, like:

Premiums will ____

A

health insurance, inflating cost of living expenses

increase

111
Q

A return of premium term policy:

A

returns your premiums at end of term if you’re still alive (higher % return means higher premiums)

112
Q

Renewable term policies guarantee that the policy will renew at end of term until a specific age, but the premiums will

A

increase, called step-rate premiums

113
Q

Convertibility on a term policy allows the owner to -___

A

convert term to a permanent policy without evidence of insurability and no application

114
Q

Premiums for a converted term policy to permanent insurance will be based on one of two options:

A

attained age at time of conversion, original age when term policy was written

115
Q

Whole life policy premiums never _____

A

increase

116
Q

If premiums on a whole life policy aren’t paid, the policy will ____

A

lapse

117
Q

The death benefit on a whole life policy is fixed and level, meaning

A

it won’t change

118
Q

Cash value in a whole life policy reflects the ___ necessary to assure payment of the guaranteed death benefit

A

reserves

119
Q

The guaranteed interest crediting in a whole life policy means the cash value

A

increases over time at a guaranteed level of interest

120
Q

IF you die with a loan out on the cash value of your whole life policy, the amount borrowed plus interest is _____

A

deducted from the death benefit

121
Q

at endowment of a whole life policy, the policyowner pays income tax on any

A

taxable gain

122
Q

Continuous premium whole life is also referred to as straight life or

A

ordinary life

123
Q

THe lowest initial premium for a whole life policy is with a _____

A

graded premium

124
Q

Universal life is a form of _____ life insurance

A

flexible - can be like term or whole

125
Q

Option B in a universal life policy is the ___ death benefit

A

increasing - cash value does not increase as quickly

126
Q

Option A in a universal life policy is the ____ death benefit

A

level - cash value increases quicker

127
Q

Withdrawals from universal life are ____ tax-free up to the ____, above that they are taxed as ordinary income. They also reduce the ___ and ___ by the amount of the withdrawal

A

are federal income tax-free up to cost basis (premiums paid) and reduce cash value and death benefit by amount of withdrawal

128
Q

Variable universal life is also known as ____ premium variable life

A

flexible

129
Q

Joint life policies are also called ____ policies

A

first-to-die

130
Q

Survivorship life policies will pay when the ____ dies

A

last insured dies, also known as second-to-die or last-to-die

131
Q

Juvenile policies are mostly ____ life insurance

A

permanent

132
Q

Jumping juvenile policies increase the ____ at a certain age

A

increase the face amount

133
Q

Waiver of premium rider will ____

A

pay the premiums so the policyholder can continue to have coverage for duration of policy if they become disabled

134
Q

The waiting period on a waiver of premium rider is usually ___ to ___ days to see if the insured is still disabled

A

90 to 180 days

135
Q

For a flexible premiums policy, the waiver of premiums is called _____ or ____

A

waiver of monthly deductions or waiver of cost of insurance

136
Q

Disability income rider typically provides a disability benefit in the amount of ____% of face value

A

1%

137
Q

Payor benefit rider is usually found with ____ policies and waives premiums is policyholder becomes disabled until minor reaches age ___ or ___

A

juvenile policies, until they reach age 18 or 21

138
Q

Accelerated death benefit riders are triggered by medical circumstances, including:

A

terminal illness, death within 24 months
serious illness with reduced life expectancy
long-term care due to inability to perform ADLs
hospice admittance
catastrophic illness, such as need for organ transplant

139
Q

The Other (Additional) insured rider provides _____ term insurance for a spouse or immediate family member of the primary insured

A

convertible term insurance

140
Q

the Exchange privilege rider or substitute insured rider is used to ____ the insured person

A

change the insured person to a different person

141
Q

The three types of term insurance riders are

A

level, decreasing, increasing

142
Q

The return of premium rider is an increasing term rider and the death benefit equals the ____

A

total of premiums paid for the rider and the underlying permanent policy

143
Q

The Accidental death benefit rider (ADB) pays an extra benefit if the insured dies in an

A

accident

144
Q

For the ADB to pay out, the insured must die within ___ of the accident

A

90 days

145
Q

The accidental death and dismemberment (AD&D) pays out the principal sum if ____ and capital sum if ___

A

principal = death, capital = dismemberment (legs, arms, feet or hands, loss of sight, loss of hearing, paralysis)

146
Q

The guaranteed insurability rider (GIR) also known as GIO and GIB, and allows owner to purchase additional life insurance at specified ____

A

intervals in the future for certain amounts without evidence of insurability (certain ages 25 through 40; also certain life events marriage, birth, adoption)

147
Q

Interest only settlement option = insurer retains death benefit and pays __

A

stated amount of interest, death benefit paid at a later date

148
Q

Fixed period settlement option =

A

get paid principal and interest over a stated period of time

149
Q

fixed amount settlement option =

A

choose a fixed amount each period to be paid out until principal and interest are completely paid out to beneficiary

150
Q

the life with refund settlement option pays income for as long as beneficiary is alive and guarantees that total payments will be at least _____

A

amount of the death benefit

151
Q

Participating policy dividends area refund of ____

A

a portion of the premiums –> not taxable

152
Q

Participating policy dividend options are CARPPO:

A 
cash
accumulation of interest (dividend not taxable but interest is)
reduced premium
paid up additions
paid up insurance
one-year term insurance
153
Q

The free look provision gives the policyowner a period of time to return a policy for any reason within ____ days of delivery and receive all premiums paid

A

10 days

154
Q

The insuring clause or insuring agreements sets forth the insurer’s promise to ____

A

pay benefits upon insured’s death

155
Q

Assignment is a transfer of the ____ rights to another individual or entity

A

owner’s rights

156
Q

Partial assignment is the temporary assignment of a policy but does not change the ownership of the policy. Usually for a ____

A

loan

157
Q

Absolute or permanent assignment is a total transfer of

A

owners rights to another person or entity

158
Q

The entire contract is three things:

A

policy
copy of application
any riders or amendments

159
Q

Endorsements are changes to a contract, must be in writing, and must be signed by

A

an executive officer of the company - cannot be agent/producer

160
Q

Grace periods for premium payments are for a period up to ___ days

A

31 days

161
Q

Reinstatement, always permitted with permanent insurance, requires three things from the insured if their policy lapses:

A

submit application for reinstatement within three years of lapse
pay all past due premiums plus interest
provide satisfactory evidence of insurability

162
Q

Incontestability provision is to protect insured, says that insurer cannot contest application was made to defraud insurer after ___ years

A

two

163
Q

Payment of claims provision says the insurer will pay claims promptly, generally within ____ days. If not, interest is due

A

60 days

164
Q

If benes are irrevocable, need ____ permission for policy loans or withdrawals

A

bene

165
Q

If an irrevocable bene dies, benes become ____

A

revocable

166
Q

The facility of payment provision allows the insurer to pay part of the policy’s death benefit to someone other than a designated bene if:

A
  • bene is a minor, deceased, or cannot be found

- someone other than bene incurred the insured’s final medical or funeral expenses

167
Q

The Uniform Simultaneous Death Act states that if the insured and primary bene die in same accident, ____ is assumed to have died first

A

primary bene –> proceeds go to contingent bene

168
Q

Group life insurance is limited to the following group types:

A 
employer group plans
METs (multiple employer trusts)
labor unions
association group plans
group credit life insurance (insurance cannot exceed debt owed)
169
Q

An individual employee of a group plan does not receive a master policy, instead they get a ____

A

certificate of insurance

170
Q

In a contributory group plan, employees

A

pay a part of the premium, in non-contributory they don’t

171
Q

At least ___% of eligible employees must participate in a contributory group plan

A

75%

172
Q

____% of employees must contribute in a noncontributory group plan

A

100%

173
Q

In underwriting of a group plan, some underwriting considerations are :

A

stability of the group
persistency of the group (change insurers every year)
existence of the group (can’t just be applying for coverage as reason for group to exist)

174
Q

Are medical questions part of a group policy underwriting?

A

usually not

175
Q

The two most common classifications for employees in determining eligibility under a group plan are:

A

full time vs part time

years of service

176
Q

Probationary periods for new employees under a group plan usually last ____ to ___ months

A

one to twelve

177
Q

The enrollment period in a group plan follows the probationary period, usually last ____ days, and no ____

A

31 days, no medical questions (if you apply after enrollment period, might be medical questions)

178
Q

Must have a conversion privilege with a group plan, some requirements are:

A 
conversion done within 31 days
must convert to permanent insurance
same coverage amount
premiums based on attained age at conversion
no proof of insurability required
179
Q

Can an annuitant be a corporation or a trust?

A

NO, must be a natural person

180
Q

Can an annuitant make withdrawals, deposits, change names of parties to an annuity agreement or terminate the contract?

A

NO - unless they are also the contract owner (which is often the case)

181
Q

A life annuity payout option can also be called:

A

straight life, pure life, life - no refund

182
Q

Fixed annuities are supported by the insurer’s ____ account

A

general

183
Q

Variable annuities are kept in a ____ account

A

separate

184
Q

For variable annuity, separate account is held in ____ units - when annuitized, held in ____ units

A

accumulation units converted to annuity units

185
Q

Do you need a securities license to sell equity-indexed annuities?

A

NO

186
Q

Four uses of annuities are:

A

life income
tax favored savings
funding IRAs
Education funds

187
Q

Group annuities are funded by ____ contributions and distributions are determined by the _____

A

funded by employer contributions, distributions determined by employer

188
Q

Are premiums paid for individual life insurance tax deductible?

A

NO

189
Q

Interest earnings credited to life insurance cash values are ____

A

tax deferred as long as they remain inside the policy

190
Q

Withdrawals (partial surrenders) are withdrawn on a ____ basis

A

FIFO

191
Q

Policy loans are ___ taxable, even if loan amount exceeds cost basis. If a policy is surrendered or lapses, any portion of the loan amount that exceeds policy’s basis is a _____. Interest paid on policy loans is ____ tax deductible

A

policy loans not taxable
if lapses, amount in excess of basis is capital gain
interest paid on loans is NOT tax deductible

192
Q

Are dividends from a policy taxable?

A

no, considered return of premiums. will reduce basis

193
Q

Accelerated death benefits are ____

A

tax exempt

194
Q

Business life insurance premiums are NOT tax deductible to the business for:

A

key person
buy-sell
policies that will reimburse company for deferred comp arrangements

195
Q

Business life insurance premiums ARE tax deductible to the business for _____ plans

A

executive bonus plans

196
Q

Premiums for executive bonus policies are ____ to the employee

A

taxable income

197
Q

Distributions from an annuity are withdrawn on a ____ basis

A

LIFO

198
Q

Under 1035 exchanges:

Life to Life =
Annuity to Annuity =
Life to Annuity =
Annuity to Life =

A

Life to life, not taxable
Annuity to annuity, not taxable
Life to annuity, not taxable
Annuity to life, GAINS TAXABLE

199
Q

If you die with an annuity in the accumulation period, the gains and cost basis are both ____

A

included in the estate

200
Q

If you due with an annuity in the annuitization period, the present value of any payments to the ___ or ____ is included in the estate

A

beneficiary or survivor annuitant

201
Q

Can you put US minted coins in an IRA?

A

YES

202
Q

Employees are ____ vested in employer contributions under a SIMPLE plan

A

100% vested

Life Insurance (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions