Practice Flashcards
The primary purpose of an annuity is
Income for life
What retirement plan is deemed to be qualified
Defined benefit plan
To be fully insured under social security, one needs how many quarters of coverage
40
What dies the conversion clause provide a terminated employee under a group life plan
Coverage for 31 days
When must owners of IRAs begin to receive payments from their retirement funds
April 1 following age 70 1/2
At what age can IRA owners begin to receive payments and not incur a tax penalty
59 1/2
Pension plan Benefits can be determined by
Based on years of service
Expressed as fixed dollar amount
Based on a percentage of compensation
What are the annuity benefit factors
Age of annuitant
Amount of proceeds
Interest rate
The MIBs main purpose is
Prevent fraud
Interim term policies have a max benefit period of how long
11 months
In a single premium Immediate annuity one must start taking payments within how many months
12
J gets fired March 10th, dies March 25th, under his group policy what would the insurers pay
Full face value
An annuity is purchased for 10,000, the expected return is $20,000, what is taxable if it pays $300 a month
$150
In a variable annuity who regulates the separate account
SEC
M cashes in his policy he paid $6,000 in premium, he received $7,200 in cash surrender, how much is taxable
$1,200
What signatures must sign the application
Insured
Owner
Agent
In a fixed annuity, during the annuity period interest rates rises. What happens to payout
Payout stays the same (life)
Which of the following promises full income for the lifetime of two annuitants
A joint and survivor life annuity
The policy owner possesses complete control of the policy except
An irrevocable beneficiary has been named on the policy
The gross premium for life insurance policy is made up of
Expense loading
Interest
Mortality costs
A plan that meets requirements of the federal government in order to receive favorable tax treatment is
Qualified
A deferred compensation plan is not
Tax free
A joint and full survivor settlement option on an annuity will pay until
The second insured dies
If the employer pays the whole premium on a group policy the plan is called
Non contributory
In Florida how many people are needed to qualify for group life insurance
No minimum
The annuitant wishes to have their annuity pay until their death, with no further payments to anyone. What type of annuity should they get
Straight life annuity
Under a SEP, the max contribution that can be made on an employees behalf is
$40,000
What report reflects an applicants mode of living, and exposure to abnormal hazards
Inspection report
A policy owner commits suicide 2 1/2 years after the policy is issued. What will the company pay
Face amount
Insurance underwriting is the process of
Selection of risk
Classifying of risk
Rating of risk
What report reflects an applicants mode if living, and exposure to abnormal hazards
Inspection report
What is the disadvantage of a fixed annuity
Loss of purchasing power
Where ate franchise life plans used
Groups too small for group
A family Oman uses which type of insurance further head of the family
Whole life
Before payout begins, accumulation units must be converted to
Annuity units
The incontestable clause is two years from when
Issue date
What will pay the policy owner an amount that does not exceed the guaranteed cash value
Policy loan
In order to maximize policy death benefits for a beneficiary which dividend option should be selected
Paid up additions
The max amount of insurance for dependents can be what percent of employees coverage
50%
Life insurance is considered what type of contract
Valued contract
The type of hazard that arises from an attitude or state of mind that causes indifference to loss is
Morale
The minimum number of employees needed by a corporation to set up a group variable annuity is
25
Who all are considered to have an insurable interest
Employer
Spouse
Business partner
What is always an exclusion clause in a life policy
Suicide
What policy is paid up early and endows at age 100
20- pay life
All of the following can be used to determine group benefits excepts
Age
What can be used to determine group benefits
Earnings
Employment position
Flat benefit
An insurer can delay payment of a policy loan for
6 months
Morale hazard is characterized by
Lifestyle
The type of insurance that would not make a good retirement vehicle
Term
The insurances cancels her policy, but wants coverage for remainder of her life she would choose a
Reduced paid up?????
The agents report is found where in the application
Part 3
The primary insurance amount PIA is equal to
Full workers retirement at 65
Who regulates retirement plans in Florida
ERISA
Legal reserves show on the balance sheet as
Future liabilities
What is found on the front page of all insurance policies
Insuring clause
What best describe the fifth dividend option
One year term
Stock insurance companies usually sell what type of policies
Non-participating
What type of policies do mutual companies usually sell
Participating
Name the dividend options
Paid up additions
One year term
Cash
Under a group policy the termination clause states the employee
Has 31 days to convert to individual policy
What are the necessities for a risk to be insurable
A reasonably predictable loss
A definite loss
Exposure of large group
What describes a 20 year limited pay life policy
Payment for 20 years and endows at 100
To calculate the tax free portion of each annuity payment, you would use
Exclusion ratio
Most group life plans use which type of insurance
Annual renewable term
When can an immediate annuity begin the benefit payment phase
As soon as it is purchased
An annuity owner received $600 a month, and the value of each annuity unit is $3, how many units did he receive monthly
$200
The authority that’ve granted by way if the agents contract is
Expressed
Which feature of an insurance contract states that only one party had any further obligation.
Unilateral
How soon must cash surrender values become available to insured in an ordinary life policy
3 years
T has a policy in which the cash value increased to a point where the corridor was utilized
Universal option 1
Which feature on a life insurance policy allows an insured to stop paying premiums and takes paid up policy with a face amount less than that of the original policy
Non forfeiture option
List the 3 types of hazards
Moral-alcoholism
Morale -indifference to loss
Physical-medical history, blindness, deafness.
4 ways to handle risk
Avoidance
Reduction
Retention
Transfer
What is a peril
Cause of loss
Risk in insurance terminology refers to
Uncertainty of financial loss
All of the following are elements of insurable risk except
The loss must be unpredictable
Characteristics of moral hazards are
Stealing, smoking, drinking, and being drunk.
Characteristics of morale hazard includes
Jay walking, careless
What does domestic insurer mean.
Incorporated in the state they ate doing business in ( Florida)
What does foreign insurer mean
Incorporated in another state
What does alien insurer mean
Operating in another country
Define a value contract
Pays a specific amount in the event of loss
Define indemnity
Reimburses or pays the amount of the loss (health insurance)
Define expressed authority
Powers specifically stated in contract
Define implied authority
Not specifically stated in the contract, but is assumed authority needed to conduct business
Define apparent authority
The appearance of a relationship between the agent and principal based on words or actions
Name the term policies
Level-stats the same.
Decreasing-mortgage and credit insurance.
Increasing-increase at specific times… Cost of living rider
Annual renewable- premiums increase…renews each year without proof of insurability.
The entire contract includes what
Policy
Copy of application
Riders
Define insuring clause
Insurers promise to pay benefits
Explains the scope of coverage
Define consideration clause
Policy owner agrees to pay premium
Explained reinstatement clause
3 years to do 3 things
Payback all premiums plus interest
Payback any loans
Proof of insurability
Identify the non forfeiture options
Reduced paid up
Extended term-automatic option
Cash-cash surrender
Identify the dividend options
Cash Reduce premium Accumulation at interest Paid up additions One year term
Name the types of riders
Guaranteed insurability Waiver of premium Automatic premium loan Payor provision Accidental death Return I'd premium Ryder COLA Other insurers riders
Name the dividend options
( CRAPO) Cash payment Reduce premium Accumulate at interest Paid up additions One year term
Where Is the insuring clause found in a policy
On the cover page
How long is free look
14 days
When does free look begin
At physical policy delivery
What does automatic premium loan provide
Insurer can pay insured premium from cash value
What are the 3 parts of a life insurance application
Part I-General
Part II- Medical
Part III- Agent report
What is the purpose of the MIB
Hold down insurance cost
The max fixed policy loan interest that an insurance company can charge in Florida is
10 percent
What plan is used when only the employee contributes
Non contributory
100%
The max fixed policy loan interest that an insurance company can charge in Florida is
10 percent
What plan is used when only the employee contributes
Non contributory
100%
What part of the insured is the payment of premium
Consideration
