Test C Flashcards
Which best represents what the phrase “life insurance creates an immediate estate” means?
The face value of the policy is payable to the beneficiary upon the death of the insured.
What best describes the reduced paid-up non-forfeiture option?
The insured exchanges the current whole life policy for another whole life policy with a lower death benefit. A reduced premium is charged. No additional premium is required.
All the following are not true about the social security program, except:
A. It is mandatory to pay FICA taxes.
B. All participants are provided with a copy of the contractual agreement.
C.The retirement benefit is the same for everyone.
D. The benefits received closely match the amount of the taxes paid in.
A. It is mandatory for most workers to pay FICA taxes.
Keith purchased a variable annuity. He has not waived his rights during the free-look period. Where will premiums be initially invested during the free-period?
A fixed income or money market account.
Which statement of federal income taxation of life insurance settlement payments is true?
A lump-sum settlement is paid out tax free when paid to a natural person
All the following are true regarding the taxation of life insurance products, except:
A. Annuity tax benefits are paid out totally tax free.
B. When an individual pays their own life insurance premiums they can deduct them on personal income taxes.
C. Premiums paid by an employer on a non-contributory group plan are tax deductible as a business expense.
D. All the above are true
A. Annuity benefits are paid out totally tax free
(annuity death benefits are paid out tax free only up to the amount of premium paid, anything above that is interest earnings and is taxable upon death)
What benefit is not included in a LTC policy?
Hospice Acute Care
In reinsurance, the insurance company who transfers it’s losses exposure to another insurer is the:
Primary insurer
There are 4 basic classes of life insurance. What may not be regarded as ordinary insurance?
A group life insurance policy
Concerning the “family protection policy” all of the following statements are true, except:
A. This policy consist of whole life on the basis insured & riders on the others.
B. convertible term riders cover both the spouse and all children.
C. Additional children born after the policy is issued are covered automatically at no extra cost.
D. Children, upon reaching the age of majority are permitted to convert to an individual policy with proof of insurability.
D. Children, upon reaching the age of majority are permitted to convert to an individual policy with proof of insurability
(Children’s coverage is converted “without” evidence of insurability.)
The additional amount of premium paid for an accidental death benefit rider on a whole life policy does not:
A. Cover the cost of added protection
B. increase the cash values
C. Both a & b
D. Neither a nor b
D. Neither a nor b
additional premium is used only to compensate the insurer for the added risk of the rider
Life insurance settlement options provide the beneficiary several choices as to how the insurer will pay them the death benefits of the policy. Which of the following is not true about these options?
The beneficiary can change to a second option if made within 6 months of the initial payout.
All of the following are dived options except:
A. Fund the distribution of periodic income payments
B. Purchase one yr. term insurance
C. Apply it towards paying the current premium
D. Purchase paid-up additions lot their policy.
A. Fund the distribution of periodic income payments.
(5 dividend options : “OCRAP”)
O = one yr. term C = cash R = reduce current premium A = accumulate at interest P = paid-up additions
Regarding group life insurance coverage sponsored by a business, which of the following persons is the one responsible for applying or the plan, providing member info, making premium payments for the members, and maintaining the policy or contract?
The master policyholder
