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What is TRUE regarding the accumulation period of an annuity
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Why is an equity indexed annuity considered to be a fixed annuity?
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Life/Health Insuranc
Life/Health Insurance
| Question | Answer |
|---|---|
| What is TRUE regarding the accumulation period of an annuity | It is a period during which the payments into the annuity grow taxed deferred |
| Why is an equity indexed annuity considered to be a fixed annuity? | It has a garanteed minimum interest rate |
| What is NOT true regarding Equity Indexed Annuities | They earn lower interest rates than fixed rates |
| The current interest rate on an equity indexed annuity is often based on | An index like Standard & Poor's 500 |
| What is NOT true about an annuity certain | Benefits stop at the annuitant's death |
| Under which installment options does the annuitant select the amount of each payment and the insurer determines how long they will pay the benefits? | Fixed amount |
| An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? | Payments for 15 years |
| What is a short term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated | Annuity certain |
| Under a pure life annuity, an income is payable by the company | Only for the life of the annuiant |
| Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive | Nothing; the payments will cease. |
| Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? | It does not guarantee that the entire principal amount will be paid out. |
| If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a | Joint life annuity. |
| Which of the following best describes a pure life annuity settlement option? | Pure life provides payments for as long as the annuitant is alive. |
| All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT | It is a life contingency option. |
| A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called | Cost of living rider. |
| Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? | Insuring clause |
| A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? | Cost of Living Rider |
| The interest earned on policy dividends is | Taxable |
| Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? | Paid-up option |
| Which of the following is TRUE about nonforfeiture values? | They are required by state law to be included in the policy. |
| Which nonforfeiture option provides coverage for the longest period of time? | Reduced paid-up |
| For how long is an insurance company allowed to defer policy loan requests? | 6 months |
| What is the benefit of choosing extended term as a nonforfeiture option? | It has the highest amount of insurance protection. |
| The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? | 2 years |
| Which of the following settlement options in life insurance is known as straight life? | Life income |
| An insured receives an annual life insurance dividend check. What term best describes this arrangement? | Cash option |
| When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy? | Return of premium |
| Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? | Automatic premium loan |
| What is the advantage of reinstating a policy instead of applying for a new one? | The original age is used for premium determination. |
| If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used? | Lump sum |
| The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? | Reduction of premium |
| Nonforfeiture values guarantee which of the following for the policyowner? | That the cash value will not be lost |
| Which of the following best describes fixed-period settlement option? | Both the principal and interest will be liquidated over a selected period of time. |
| Which of the following is TRUE about nonforfeiture values? | They are required by state law to be included in the policy. |
| The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the | One-year term option. |
| All of the following are Nonforfeiture options EXCEPT | Interest only |
| What does “liquidity” refer to in a life insurance policy? | Cash values can be borrowed at any time. |
| In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? | 5 |
| An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? | The insured may choose to convert to term or permanent individual coverage. |
| A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then | The benefit is received tax free. |
| In life insurance policies, cash value increases | Grow tax deferred. |
| Employer contributions made to a qualified plan | Are subject to vesting requirements. |
| All of the following would be different between qualified and nonqualified retirement plans EXCEPT | Taxation on accumulation |
| All of the following are characteristics of group life insurance EXCEPT | Premiums are determined by the age, sex and occupation of each individual certificate holder. |
| In which of the following instances would the premium be tax deductible? | Premiums paid by an employer on a $30,000 group term life insurance plan for employees |
| All of the following employees may use a 403(b) plan for their retirement EXCEPT | The CEO of a private corporation. |
| All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT | Being age 65. |
| All of the following would be different between qualified and nonqualified retirement plans EXCEPT | Taxation on accumulation |
| Which of the following applicants would NOT qualify for a Keogh Plan? | Someone who works 400 hours per year |
| Which of the following is the required number of participants in a contributory group plan? | 75% |
| If an insured worker has earned 40 quarters of coverage, the worker’s status under Social Security disability is | Fully insured. |
| Employer contributions made to a qualified plan | Are subject to vesting requirements. |
| An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable? A$50,000 | $3,000 |
| Which of the following is the best reason to purchase life insurance rather than an annuity? | To create an estate |
| An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his | Attained age. |
| Death benefits payable to a beneficiary under a life insurance policy are generally | Not subject to income taxation by the Federal Government. |
| In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called? | Blackout Period |
| All of the following would be eligible to establish a Keogh retirement plan EXCEPT | The president and employee of a family corporation. |
| Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? | Withdrawals are not taxable. |
| Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? | Life expectancy |
| Employer contributions made to a qualified plan | Are subject to vesting requirements. |
| If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? | It is only taxable if the cash value exceeds the amount paid for premiums. |
| All of the following are examples of third-party ownership of a life insurance policy EXCEPT | An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. |
| To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested? | At the time of application |
| Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT | Premiums always stay the same. |
| What document describes an insured’s medical history, including diagnoses and treatments? | Attending Physician’s Statement |
| Which is true regarding obtaining underwriting sources? | The applicant must be informed of the sources contacted and how the information is being gathered. |
| An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? | Ask her to sign a statement of good health |
| Who must pay for the cost of a medical examination required in the process of underwriting? | Insurer |
| Which of the following entities can legally bind coverage? | Insurer |
| An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do? | Ask her to sign a statement of good health |
| Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT | Premiums always stay the same. |
| All of the following are differences between individual and group health insurance EXCEPT | Individual insurance does not require medical examinations, while group insurance does require medical examinations. |
| Who determines the eligibility and contribution limits of an HRA? | The employer |
| Regarding long-term care policies, which of the following would NOT be included in activities of daily living? | Sleeping |
| Which of the following statements about HRAs is TRUE? | The account allows roll-over of unused balances at the end of the year at the employer's discretion |
| Employers can reduce health plan costs by coupling a Health Reimbursement Account (HRA) with | A high deductible health plan. |
| What are the three basic coverages for medical expense insurance? | Hospital, Surgical, Medical |
| Which of the following is NOT an activity of daily living (ADL)? | Talking |
| The period of time immediately following a disability during which benefits are not payable is | The elimination period |
| What is necessary in order to be eligible to receive benefits from a long term care policy | The insured must be unable to perform some activat |
| A guaranteed renewable disability insurance policy | Is renewable at the insured's option to a specified age. |
| Which of the following riders would NOT increase the premium for a policyowner? | Impairment rider |
| The insuring clause of a disability policy usually states all of the following EXCEPT | The method of premium payment. |
| In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid? | 45 days |
| Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured i | Monthly. |
| According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT | Unearned premiums are retained by the insurance company. |
| How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? | Within 90 days or as soon as reasonably possible, but not to exceed 1 year |
| An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would | Pay the claim. |
| Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain | A statement that is sufficiently clear to identify the insured and the nature of the claim. |
| Which of the following is NOT a feature of a guaranteed renewable provision? | The insurer can increase the policy premium on an individual basis. |
| An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? | 10 days |
| Which of the following is NOT an exclusion in medical expense insurance policies? | Coverage for dependents |
Created by:
Marshall.hayley1992