Qs from Life Insurance Practice Exam (pg 127) - ONLY LIFE INS Qs

Question 1

Which clause contains statements made by the prospect in the insurance application?

a. co-insurance
b. consideration
c. incontestability
d. subrogation

Answer 1

b. consideration

The consideration clause states, “In consideration of the premium paid and the statements and answers contained herein, I hereby apply for Life Insurance with . . . “ The incontestability clause states that the insurance company may not contest a claim for any reason after the policy has been in force for two years. The subrogation clause addresses liability insurance and the co-insurance clause addresses Major Medical (Health) Insurance.

Question 2

Dividend projections can be included in a Life Insurance proposal when?

Answer 2

Dividend projections can be included in a Life Insurance proposal when there is a clear statement that payment of future dividends is not guaranteed.

Dividends MAY be paid to policy owners of a mutual insurance company. Dividends are considered to be a return of overpayment by the IRS and, therefore, ARE NOT TAXABLE. Although a company may state its dividend history in a proposal, it is illegal to guarantee future dividends, since they may not occur.

Question 3

An insurable interest must exist when?

Answer 3

Insurable interest must exist when a Life Insurance policy is applied for.

Insurable interest is based on love, devotion, or a family relationship that involves the possibility of economic loss at the death of the insured. An insurable interest must exist at the time of application for one person to buy a policy on the life of another. It need not exist at the time of claim. This requirement is intended to reduce or eliminate speculation of human life.

Question 4

Richard owns a 30-Pay Life policy he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of

a. 60
b. 65
c. 70
d. 120

Answer 4

d. 120

Limited-Pay Life Insurance policies such as Life Paid-Up at 65 or 20-Pay Life are simply variations of Whole Life policies. The cash value will equal face amount of the policy (at least) at the maturity of the policy, which is ALWAYS age 120 on Whole Life policies. These Limited-Pay policies are designed so the insured may pay the premiums faster and be “paid-up” at a certain age. However, just because the premiums are paid-up DOES NOT mean the policy has matured.

Question 5

When a Life Insurance policy applicant is found to be a substandard risk, the insurance company is most likely to

a. charge an extra premium
b. lower its insurability standards
c. refuse to issue the policy
d. require a yearly medical exam

Answer 5

a. charge an extra premium

Mist clients are insurable; it is a matter of selecting the proper premium to match the risk being undertaken. The client has a reduced life-span so some adjustments must be made to allow for this contingency.

Question 6

The reinstatement provision

a. guarantees the reinstatement of a policy that has been surrendered for cash
b. permits reinstatement within ten years after a policy has lapsed
c. provides for reinstatement of a policy regardless of the applicant’s health
d. requires the policyowner to pay all premiums in arrears plus interest for the policy to be reinstated

Answer 6

d. requires the policyowner to pay all premiums in arrears plus interest for the policy to be reinstated

Life Insurance companies must offer the right to apply for reinstatement UP TO THREE YEARS after a policy has lapsed. Although the client may have the right to apply, the company DOES NOT have to insure him. The client must prove continued good health and pay back premiums plus interest. In addition, the current premium must be paid. The company has nothing to lose by offering reinstatement. The client’s only reasons to apply for reinstatement, rather than applying for a new policy, are that, if accepted, the reinstated policy would have the ORIGINAL age and perhaps a lower interest rate on policy loans than a new policy may have.

Question 7

A parent who wishes to retain complete control of their son’s Life Insurance policy until their son reaches age 25 should have a(n)

a. consideration clause
b. insuring clause
c. ownership provision
d. payor provision

Answer 7

c. ownership provision

Although you may not be the insured, you can still be the policy owner. If a person buys a policy on his minor child, that person owns the policy and the child is the insured. The person controls the cash values and may designate the beneficiary. This is called the ownership provision. At a certain age (for example, when the child reaches age 25), the person may assign ownership of the policy to the child, giving up all rights to the policy. This is called an ABSOLUTE ASSIGNMENT.

Question 8

Term features that may be included in a policy include

a. convertibility
b. renewability
c. Waiver of Premium provision
d. all of the above

Answer 8

d. all of the above

All are very common on Term policies. The right to convert to a Whole Life policy regardless of continued good health makes the Term policy easier to sell. The insured, upon conversion, would pay more, but only because Whole Life costs more than term. Conversions are done at the insured’s attained age and the Term policy cannot be converted to a higher face amount than the policy originally specified.

The right to renew a Term policy is also very important. This means the insured can renew the policy for another Term period regardless of health. The premium may go up, but that is only because Term Insurance goes up each year, one way or another. Term policies are usually renewable only up to a certain age, say 60 or 65, after that the company will no longer offer renewal since the chance of death has greatly increased. It is important to note that NOT ALL Term policies are convertible and/or renewable (read the policy provisions to determine).

Due to its low cost, Waiver of Premium is a rider usually attached to all new Life Insurance Policies.

Question 9

Fred dies during the grace period of his Life Insurance policy but had not paid the required annual premium. What is the insurance company obligated to pay to his beneficiary?

Answer 9

The face amount of the policy LESS any overdue premiums

There are THREE grace periods to remember: 28 days on Industrial Life, 1 month (usually 30 or 31 days on all other Life (except Group), and 31 days on Group Life. The purpose of the grace period is to protect the insured who honestly forgot to pay on the due date.The policy will not actually lapse until the end of the grace period. If a client dies within the grace period, it is assumed he would have paid the premium, so the company will pay the face amount to the beneficiary, less any overdue premiums.

Question 10

Which Life Insurance policy clause prevents an insurance company from denying payment of a death claim after a specified period of time?

a. incontestability clause
b. insuring clause
c. Misstatement of Age clause
d. Reinstatement clause

Answer 10

a. incontestability clause

The company has two years from the original date of application to investigate the insured. If the client dies within the first two years and the insurance company can prove that he lied about a material fact on the original application, it can deny the claim. However, after the two-year period has elapsed, the company must pay the claim, even if the client lied.

Question 11

Which policy provides the greatest amount of protection as well as some cash accumulation for an insured’s premium dollar?

a. Annuity
b. Limited-Pay Life
c. Term
d. Whole Life

Answer 11

d. Whole Life

If the text had not mentioned cash accumulation, the answer would have been Term. However, Term has no cash value so the answer is Whole Life – which is the most inexpensive type of permanent insurance and will usually have a cash value after the third policy year. Although Limited Pay Life is a type of Whole Life, it is incorrect since it is usually quite expensive due to the shortened pay-in period. Annuities have no cash value except the money the annuitant paid in. Since there is no death benefit, no protection is offered.

Question 12

An example of a Limited-Pay Life policy is a(n)

a. Endowment maturing at age 65
b. Life Paid-Up at age 65
c. Renewable Term to age 70
d. Whole Life Policy

Answer 12

b. Life Paid-Up at age 65

Limited-Pay policies, such as LP65 and 20-Pay Life, are variations of Whole Life or Straight Life. The premium-paying period has been shortened, but the policy still does not mature until age 120.

Question 13

Which non-forfeiture option provides continuing cash value buildup?

a. Cash Surrender
b. Deferred Annuity
c. Extended Term
d. Reduced Paid-Up

Answer 13

d. Reduced Paid-Up

There are only three non-forfeiture options: (1) Cash surrender, (2) Reduced paid-up and the automatic option, and (3) Extended term. Their purpose is to protect the insured’s accumulated cash values in case the Whole Life or Endowment policy lapses. A Client has 60 days from the policy’s premium due date to select the option preferred. If none is selected, the company will give the client the AUTOMATIC OPTION - EXTENDED TERM. Here, the face amount of the new policy is the same as the initial policy. The ACCUMULATED CASH VALUE is used internally by the company to pay the premium for a new Term policy at the insured’s attained age. The length of the coverage is determined by the amount of the cash value that is available. Since Term has no cash value and, at the time of expiration of the Term, the policy expires and the insured has no further coverage.

If the client selects the REDUCED PAID-UP option, the company then uses all accumulated cash values to internally buy the client a new Whole Life policy, paid up to age 120. It would have an immediate cash value, but not further premiums would ever be due, The face amount would be more than the accumulated cash value, but less than the original face amount of the initial policy, so it is called Reduced Paid-Up. Cash value would continue to accumulate and, at maturity (age 120), the cash value would equal the face amount. No physical exam is required. Of course, if the client takes the cash surrender, there is no further coverage.

Question 14

An insurance company will grant an advance from the cash value of a Life Insurance policy when the policy owner requests a(n)

a. automatic premium loan
b. loan from Extended Term insurance
c. low-interest dividend loan
d. policy loan

Answer 14

d. policy loan

A policy loan may be requested by the insured anytime there is a cash value present. Some companies do require that the insured leave a certain minimum amount in cash value, so the insured cannot borrow everything. Most states have a maximum interest rate on policy loans. However, a company may not charge an interest rate higher than the one initially stated in the policy, which could be less than 8%. Loans do not have to be paid back while the insured is alive, since all loans plus overdue interest will be subtracted from policy proceeds in the event that the insured dies with an outstanding loan. Insurance companies may defer granting policy loans for up to six months, although they seldom do.

Question 15

The Life Insurance policy provision that provides protection against unintentional policy lapse is the ________________.

Answer 15

Automatic Premium Loan

Question 16

Andy, a business owner, is insured under a $100,000 Key Employee Life policy that contains a double indemnity clause and a suicide clause. His business pays the annual premium of $2000, and six months after the policy’s inception date, Andy commits suicide. The insurance company’s liability for payment is

a. $200,000
b. $100,000
c. $2,000
d. $0

Answer 16

c. $2,000

If an insured dies by suicide within the first two years of a new Life Insurance policy, there is no coverage. However, the insurance company will refund the premiums to the business who owned the policy. The insurance company will refund all premiums paid over the six months, but will not add any interest payment.

Question 17

When exercising a guaranteed insurability option,

a. the insured can exercise the option at any time after the age of 21
b. the maximum purchase amount per option is specified in the contract
c. the new insurance is available at the original issue age rate
d. purchase options are valid until the insured reaches age 65

Answer 17

b. the maximum purchase amount per option is specified in the contract

The Guaranteed Insurability Option (GIO) is a rider that may be attached to most Life Insurance policies by paying an extra premium. It allows the insured to buy additional amounts of coverage in the future without proving good health. The original policy will indicate how many future option dates there are and HOW MUCH ADDITIONAL COVERAGE MAY BE PURCHASED. There are usually six to eight future option dates, but most companies require that all six be exercised by age 40 or so. Sometimes, additional option dates are offered for marriage or birth of a child. Usually, the insured may add an increment of coverage identical to the original policy at each option date, sos if the original policy was for $10,000 face amount and all options were exercised, the insured would have a $70,000 policy. If an option is not exercised, it is lost. Additional increments of coverage are calculated at the insured’s attained age at the time the option is exercised.

Question 18

What is NOT part of a Life Insurance policy?

a. conditional receipt
b. copy of the application
c. incontestability clause
d. Insuring clause

Answer 18

a. conditional receipt

Under the entire contract provision, a copy of the insured’s application for Life Insurance is attached to the policy. If it were not attached, any false answers (misrepresentations) by the insured would not be admissible, since they would not be part of the entire contract. However, the conditional receipt is NOT part of a Life Insurance policy. It is part of the application and is torn off and given to the applicant when he or she pays the initial premium at the time of application.

Question 19

The Insuring Clause in a Life Insurance policy includes

a. a detailed description of the individual applicant’s health status
b. the location where the application was completed and the date the coverage takes effect
c. the promise that the insurance company will pay a stated amount to the beneficiary upon receipt of proof of death of the insured
d. specific riders attached to the policy

Answer 19

c. the promise that the insurance company will pay a stated amount to the beneficiary upon receipt of proof of the death of the insured

Every insurance policy or contract has four parts: (1) Declarations, (2) Insuring clause or agreements, (3) Conditions, and (4) Exclusions (acronym: DICE). The declarations contains the effective date and names of the parties to the contract. The insuring clause states the coverage. The conditions require the parties to the contract to do certain things, such as submit proof of loss. The exclusions contain things that are NEVER covered, such as a death due to a dangerous hobby (e.g. flying private aircrafts).

Question 20

The Waiver of Premium benefit under a Life policy covers disabilities resulting from

a. death arising strictly from an accident
b. sickness or accident
c. specific illnesses or conditions detailed in the Life policy
d. sudden and permanent non-occupational injury only

Answer 20

b. sickness of accident

Waiver of Premium is a rider or endorsement attached to most Life Insurance policies. It costs extra, but not much. This rider will automatically drop off the policy at age 65 and the premiums will be reduced accordingly. The premium charged for all riders must be shown separately from the Life Insurance premium. None of the extra premium charged goes toward cash value accumulation. This rider has a six-month “waiting” or “elimination” period before any premiums are paid. The client must be injured or sick by policy definition for six consecutive months before any premiums are waived.

If all conditions are met, the insurance company will waive premiums on a retroactive basis and reimburse the insured for any premiums paid during the waiting period. If the insured recovers, the waiver stops and the insured must resume premium payments.

Question 21

If the insured, Mark, understated his age and the error is discovered after his death, the insurance company will

a. pay the amount the premium would have purchased at Mark’s correct age.
b. pay the face amount of Mark’s policy with a deduction for the amount of the underpayment of premium
c. refund all past premiums paid with any accumulated interest
d. refuse to pay Mark’s death claim

Answer 21

a. pay the amount the premium would have purchased at Mark’s correct age

Under the Misstatement of Age clause, the insurance company is protected again clients who state they are younger than they really are in order to obtain a lower rate. Although lying about one’s age will not void the policy, the company will adjust the death benefit to the amount that the correct premium would have purchased had Mark told the truth.

Question 22

Greg, a standard-risk male, is inured by a Whole Life policy with a typical Accidental Death Benefit provision. The Accidental Death Benefit

a. amount is usually equal to or twice the amount of the policy
b. is doubled or tripled if an accident is caused by a heart attack
c. is payable if the insured dies in an accident at age 72
d. may be selected without need for an additional premium

Answer 22

a. amount is usually equal to or twice the face amount of the policy

Accidental Death Benefit (ADB or double indemnity) is a rider that may be attached to any Life Insurance policy by paying an extra charge. It pays double ONLY in the event of accidental death, or it is termed o be natural causes and the company will pay only the base amount. As with most riders, the ADB rider automatically drops off most policies by age 60 or 65, since the chance of accidental death increases dramatically. The extra premium charged for the rider also drops off. The extra cost for the rider DOES NOT boost cash values; it is a payment for an extra feature.

Question 23

Endowment policies

a. are now able to be written under expanded MEC rules
b. were among the least expensive permanent policies
c. written for a long term, generally have the major purpose of combining death protection with a guaranteed lump sum payment
d. written for a short term, generally have the major purpose of combining immediate protection with only modest cash accumulation

Answer 23

c. written for a long term, generally have the major purpose of combining death protection with a guaranteed lump sum payment

Endowments are Life Insurance policies. The primary purpose of Life Insurance is protection. Endowments are like Whole Life, except that they reach maturity at a predetermined age selected by the policy owner. An Endowment written on the life of a child may be designed for college funding, so it would provide Life Insurance protection plus a guaranteed cash value at age 18 (this can no longer be sold in Ohio). There are many endowments still in force.

An Endowment written for retirement purposes provided Life Insurance protection (the face amount) and guaranteed the client that he would have a lump sum available at age 65 for retirement. Endowments were always the most expensive type of Life Insurance and also built cash values the fastest. If an insured bought a $50,000 Endowment at age 30 to mature at age 65, he would be certain to have at least $50,000 in the cash value account by age 65, assuming all of the premium payments were made. However, if the insured died at age 32, the beneficiary would receive the $50,000 death benefit, since an Endowment is a Life Insurance policy and the death benefit during the early years of the policy far exceeds the amount of premiums paid in.

Question 24

The assignment of a Life Insurance policy

a. can be done only between spouses
b. cannot be assigned to a lending institution for the purpose of securing a loan
c. has no insurable interest in the borrower by a bank that puts up a business loan
d. is required to be filed at the home office by most insurance companies

Answer 24

d. is required to be filed at the home office by most insurance companies

There are two types of assignment: (1) Absolute, and (2) Collateral. An absolute assignment is made when the parent who bought a Life Insurance policy on a minor child years ago, elects to “assign” all interests in the policy to the child who is now old enough to pay his own premium. Under the terms of a collateral assignment, the insured’s policy may be assigned to a bank or other financial institution as a collateral for a loan. When the insured pays off the loan, the collateral assignment is removed. Of course, in order for either type of assignment to be valid, it would have to be on file at the insurance company’s home office.

Question 25

A waiver of premium provision in a Whole Life policy written on a standard risk

a. has no added cost to incorporate this option
b. increases the policy’s cash value
c. must be continued by the insurance company when the insured changes from a low-hazard to a high-hazard charge
d. requires the insured to notify the life insurance company of job changes

Answer 25

c. must be continued by the insurance company when the insured changes from a low-hazard to a high-hazard job

None if the extra premium paid by an insured for riders, such as waiver of premium, goes towards cash value accumulation. In fact, such extra premiums must be shown separately from the premium charged for the life insurance. Since this rider was attached to a Whole Life policy, which can never be changed by the company, the rider would continue with no increase in premium charged if the insured changes from a low-hazard to a high-hazard job. Remember, this rider will eventually drop off the policy, usually at age 60 or 65.

Question 26

When an insured wishes to cash in a policy, insurance companies

a. may defer payment for as long as six months
b. may delay payment for one month
c. must pay the insured within 90 days
d. must pay the insured within two weeks

Answer 26

a. may defer payment for as long as six months

In order to discourage a possible “run on the bank,” Life Insurance companies have six months to defer the granting of a policy loan or a cash surrender. However, most insurance companies will grant a loan or a cash surrender immediately in the interest of good public relations.

Question 27

Most assignments of Life Insurance policies are made in order to enhance the

a. beneficiary’s protection from the claims of creditors
b. insurance company’s protection from fraudulent claims
c. insured’s insurability
d. insured’s personal or business credit

Answer 27

d. insured’s personal or business credits

Collateral assignments, in which the insured pledges his policy to the bank or insurance company as collateral for a loan, are very common. When the load in paid, the collateral assignment drops off. A collateral assignment assures the bank or insurance company that, if the insured dies with the loan outstanding the load will be paid, this increasing the possibility that a loan may be approved.

Question 28

If the insured’s age was overstated at the time a Life Insurance policy was purchased and the error is discovered upon the death of the insured, the insurance company will

a. be prevented from taking any action according to the provisions of the incontestability clause
b. provide the additional insurance in the amount that has been purchased by the additional premium
c. refund the overcharge in premiums to the beneficiary
d. void the policy

Answer 28

b. provide the additional insurance in the amount that has been purchased by the additional premium

This is the reverse of the typical situation in which the insured usually UNDERSTATES age to have a lower premium. If the insured had overstated age then, of course, the insured would have been paying a higher premium (thank his real age would have required) all along. So, the formula works in reverse, too: The company would adjust the face amount to be higher, based on the amount the incorrect premium would have bought at the correct age.

Question 29

Insurance is considered to be in force when the

a. agency manager deposits the initial premium check into an escrow account
b. agent completes the application and the proposed insured signs it
c. insurance company mails a policy to the agent, and the agent delivers it to the proposed insured and collects the first premium along with any required paperwork
d. proposed insured signs an application and a medical examiner acceptable to the insurance company completes an examination of the proposed insured

Answer 29

c. insurance company mails a policy to the agent, and the agent delivers it to the proposed insured and collects the first premium along with any required paperwork

When the conditions are met in this situation, the coverage begins.

Question 30

Which statement about Accidental Death Coverage in Life Insurance is TRUE?

a. Accidental death within 180 days of the accident days is covered
b. Accidents that are caused by death from other causes are still eligible and multiply the death benefit
c. Benefits are payable when the death of the insured is the result of an accident when all conditions are met
d. it increases the non-forfeiture values of the basic policy or dividends under a participating policy

Answer 30

c. Benefits are payable when the death of the insured is the result of an accident when all conditions are met

The Accidental Death Benefit (ADB) rider pays double or triple indemnity if the insured dies solely as the result of an accident. The death must occur within 90 days of the accident.

Question 31

The insured, if still living, can receive the face amount of an Endowment policy when the policy’s

a. cash value equals the face amount
b. cash value equals the premiums paid
c. cash value exceeds the premiums paid
d. premiums exceed the face amount

Answer 31

a. cash value equals the face amount

On an Endowment policy, the insured’s cash value will equal the face amount of the policy at maturity, which is a predetermined time set by the insured when he buys the policy.

Question 32

Which settlement option provides payments to be made in regular installments of a specified amount until the principal and interest are exhausted?

a. fixed amount
b. fixed period
c. interest
d. life income

Answer 32

a. fixed amount

When the insured dies, the beneficiary may select any one of five settlement options: (1) Cash, (2) Fixed Amount (e.g. the beneficiary elects to receive $1,000 a month for as long as the money lasts), (3) Fixed period (the beneficiary chooses to be paid out over a 20-year period), (4) Interest (the beneficiary leaves all the proceeds with the company to accumulate additional interest), and (5) Life income (the beneficiary takes the policy proceeds as cash and buys a Straight Life or Pure Life Annuity).

Question 33

Factors affecting the premium (purchase payment) required for a Joint and Survivor Life Annuity include

a. age and sex of the applicants
b. health of the applicants
c. occupation of the applicants
d. other Annuities owned by the applicants

Answer 33

a. age and sex of the applicants

The premium paid for any annuity is the amount the annuitant agrees to pay in, either as a lump sum at purchase or over a period of time. Since annuities are not Life Insurance, and THERE IS NO DEATH BENEFIT, the company does not care about the annuitant’s health, occupation, or dangerous hobbies; none of these figure into the premium paid. If the annuitants are buying a Joint and Survivor Annuity, which pays them until the death of the last survivor, the payout would be based on the ages and expected life spans of the annuitants and on their sexes, since women generally live longer than men.

Question 34

Which statement about Renewable Term Insurance is TRUE?

a. An insurance company must renew a Renewable Term Policy at the owner’s request regardless of the insurability status of the insured.
b. The policy can be renewed indefinitely by the insured.
c. The suicide waiting period starts over at each renewal.
d. When a Renewable Term policy is renewed, the incontestability clause is renewed.

Answer 34

a. An insurance company myst renew a Renewable Term Policy at the policy owner’s request regardless of the insurability status of the insured

The owner renews the policy each time the premium is paid at the renewal time. Since this policy is renewable, the company must accept the premium and cannot require the insured to prove insurability.

Question 35

A terminated employee may convert to an individual ____________ policy within 31 days __________ submitting evidence of insurability.

a. Permanent Life / by
b. Permanent Life / without
c. Term / by
d. Term / without

Answer 35

b. Permanent Life / Without

The conversion privilege on Group Life extends for 31 days after the insured terminates from a job. He can convert ONLY TO A WHOLE LIFE (permanent insurance) policy written by the same company without submitting evidence of insurability. He cannot convert to more coverage than was had on the Group Life policy.

Question 36

Which statement about Social Security benefits is FALSE?

a. Benefits are financed through taxes
b. Benefits may include a lump sum death benefit and a monthly income to survivors
c. Monthly payments must remain the same once benefits commence
d. Virtually all employed persons are covered

Answer 36

c. Monthly payments must remain the same once benefits commence

Social Security is a type of social insurance. Social Security actually covers old age (retirement), survivors’ benefits, Health Insurance (Medicare), and Disability Income Insurance. There is a lump sum death benefit, but it is only $255.00. Since Social Security monthly benefit payments are tied to the consumer price index, the amounts of monthly benefits will usually go up over a period of time.

Question 37

Which statement about Life Insurance and the risk it covers is FALSE?

a. As the number of separate risks of the same type increase, the amount of loss within a given period becomes more predictable
b. Life Insurance is like a mutual fund; a certain sum of money must be set aside each year to meet the contractual obligations of the insured
c. Life Insurance is a mechanism for pooling and sharing risks
d. The probability of an individual insured’s death increases each year until it becomes a certainty

Answer 37

b. Life Insurance is like a mutual fund; a certain sum of money must be set aside each year to meet the contractual obligations of the insured

Life Insurance is based upon the law of large numbers. A Life Insurance mortality table starts with 10,000,000 lives. By age 120, all have died, making death a certainty. All the responses to this question are correct except “b,” and it is correct also EXCEPT for the reference to mutual funds. REMEMBER, ANY PART OF A QUESTION OR ANSWER THAT IS FALSE MAKES THE ENTIRE QUESTION OR ANSWER FALSE. Life Insurance has NOTHING in common with mutual funds, which are regulated under the federal securities law. It is true, however, that life insurance companies do have to set aside a certain sum of money each year to meet the future contractual obligations they have to the insured.

Question 38

The fee for a solicitor is $20 and paid

a. annually by the solicitor by June 30th
b. by the agent doing the appointing of the solicitor
c. by the company whose products are being sold
d. only at time of appointment by the agent

Answer 38

b. by the agent doing the appointing of the solicitor

The agent is to pay the $20 by June 30th each year. A separate fee is to be paid for each solicitor the agent hires.

Question 39

A 457 plan covers

a. public employees such as state workers
b. public school teachers
c. sole proprietors only
d. sole proprietors and their employees

Answer 39

a. public employees such as state workers

A 457 plan covers not only state workers but can cover police officers and firefighters. This plan is similar to the 403(b) plans for schoolteachers.