Q 97-120

Question 1

Settlement Option Choices

Answer 1

Leave at (taxable interest), Fixed $,Fixed period:Life anuity options:-Pure life, Life income, Life, Joint&survivor, Joint

Question 2

Annuity Payout Option - Pure Life

Answer 2

Pure life - income paid for life (balance forfeited to co) - best if live past expected

Question 3

Annuity Payout Option - Temporary Period

Answer 3

Temporary period - pay only a stated number of years, not for life

Question 4

Personal Use Annuities

Answer 4

build a tax-deffered retirement fund/ educational fund / ira, 401k, sep, SIMPLE, Keogh HR-10

Question 5

Equity Indexed Annuities

Answer 5

annuity varies with S&P500. principal guraenteed, possible larger gains. Min rate guarenteed so can be sold with life licence.

Question 6

Variable Annuities

Answer 6

Prem invested into separate account of co. credited with accumulation units durring prepayment years, fixed units during payout

Question 7

Policy Loans

Answer 7

CV may be pledged as collateal for loan from ins. Co. Interest charged until loan paid back. Loans not taxed.

Question 8

Automatic Premium Loan (APL)

Answer 8

Option that gives co. right to pay overdue prem. From CV. Loan & interest not paid is added to orig loan

Question 9

Annuity Payout Option - Life income “refund”

Answer 9

Life income refund” - income paid for life, any balance of principal paid to beneficiary at death

Question 10

Annuity Payout Option - Life income period certain

Answer 10

Life income period certain - income paid for certain # years to annuitant or their beneficiary, or annuitant for life (greater)

Question 11

Annuity Payout Option - Joint & Survivor

Answer 11

Joint & survivor - Income paid till last of 2 annuitants dies. $ decreases after first death

Question 12

Annuity Payout Option - Joint

Answer 12

Joint - pays to 1st death of 2 annuitants

Question 13

Fixed loan rate, Variable loan rate

Answer 13

Max fixed 8% charged on loans, Variable based on Moody’s Bond Index

Question 14

How much paid at insured death?

Answer 14

Face amount paid - minus loans and past interest, and overdue premiums during grace period

Question 15

Income tax at surrender of policy

Answer 15

gain in life policy is taxable (CV-prem paid) only at surrender of policy

Question 16

Accelerated Death Benefit

Answer 16

provision that advances DB for terminally ill or nursing home. Balance paid to beneficiary when later dies

Question 17

Modified Endowment Contract (MEC)

Answer 17

If policy Single prem or fails 7 pay test, any loans/surrenders will be taxed as income plus 10% before 59.5. DB tax free

Question 18

Business Insurance

Answer 18

3rd party LI used to buy interst of a business owner. Stock redemption-for corporations(1/owner), Partnerships(1 every other partner)

Question 19

Viatical Settlements

Answer 19

Sale of LI policy of terminally ill “viator” to 3rd party “broker”. Broker receive DB, special licence, 15 day right of recisison

Question 20

Non-Qualified Plans

Answer 20

Co. may provide extra plans to selected employees (not all). Prem not tax deduction.

Question 21

Group LI

Answer 21

Min $ LI provided, co. pays all prem, may be converted to whole life 31 days after termination. Prem deductable by co.

Question 22

Max Term given without economic befefit tax

Answer 22

50,000 max term can be provided without employee paying tax for excess benefit

Question 23

Trad IRA

Answer 23

May put in $5500/yr if working. $ grows tax deferred, pre 59.5 +10% tax, must withdraw 70.5, over 50 +$1000/yr

Question 24

Roth IRA

Answer 24

$5500, +1000 over 50, not tax deductable, grows tax deferred, distributions tax free after 59.5 and open for 5 years. FHB $10,000 withdraw

Question 25

Premiums

Answer 25

consideration paid by insured to ins. Co. in exchange for ins protection. Paid anually, semi-anually, quarterly, or mo.

Question 26

Taxes & Ins. Prem and Proceedures

Answer 26

Ind. LI prem not tax deductable. DB are include in estate of deceased for federal estate tax purposes. Gifts of inforce are recaptured in estate for 3 year

Question 27

Dividneds & Taxes

Answer 27

Dividends are considered return of excess prem, not taxable, not guranteed. Shown as estimates only

Question 28

Powers of the Ins. Superintendant/Commisioner/Director

Answer 28

Director can: 1. Approve agent appointments, Hold hearings, fines, susspend, audit co., enforce insurance laws