reviewed life insurance

Tim works full-time as a life settlement broker in upstate New York. Which party does he represent in a life settlement transaction?

the life insurance policy owner

A temporary producer’s license issued in New York is generally valid for up to how many days?

90

A life insurance policy can exclude coverage for death caused by all of the following EXCEPT

aviation as a fare paying passenger

After Bob and Ellen’s first child is born, the couple wants to add the baby to their policy, while increasing Ellen’s coverage. They would probably buy which of the following?

Family term rider

The type of section 529 plan that builds a tax-free pool of money the account owner can use to pay for qualifying education expenses, including tuition, fees, room and board, nd books is called a(n)

education savings plan

jane owns a variable annuity with a guaranteed minimum withdrawal benefit rider. She has invested 50,000 in premiums, and the rider permits annual withdrawals of up to 5 percent. If the values in Jane’s variable annuity declined to zero, what amount can she withdraw this year?

2,500

Under a joint life insurance policy, when does the insurer pay the death benefit?

when the first insured dies

If a retired worker’s total combined income including one-half of his or her Social Security benefit exceeds a threshold amount, then up to what percentage of benefits exceeding the threshold are taxable

85 percent

What must an annuity owner do to withdraw funds from his or her annuity contract?

request it from the insurer

When collecting personal financial or health information, an insurance company is required to do all of the followinf except

provide individuals with copies of the documents disclosed to other parties

regarding qualified plan required minimum distributions (RMDs), the penalty

Regarding qualified plan required minimum distributions (RMDs), the penalty tax that is assessed on any shortfall (i.e., the difference between the annual RMD amount and actual amount) is

25 percent

On what is the human life value approach to calculating the amount of life insurance an insured needs based?

the economic value of a human life

Credit life insurance is most commonly based on which type of product?

group decreasing term life insurance

Anthony becomes a producer for Acme Insurance Company. Acme has not filed the notice of appointment with the Superintendent. It must do so within how many days?

15

Cal bought a $100,000 universal life policy ten years ago. He has paid $8,000 in premiums into the policy. He now decides to surrender the policy for its full $15,000 cash value. What amount is taxable?

$7,000

Which one of the following statements about variable life insurance is correct?

Variable life insurance policyowners can transfer funds between subaccounts and the insurer's general account.

If the policy loan amount plus interest owed is greater than the policy's cash value, which of the following will happen?

The insurer will cancel the policy.

Which of the following statements about increasing term insurance is correct?

It is normally sold as a rider on a permanent life policy.

A life insurance policy can exclude coverage for death caused by all of the following EXCEPT:

accidental death

Which one of the following statements about variable life insurance is correct?

Variable life's policy values can be invested in subaccounts, which are unsecured and nonguaranteed.

Life insurance settlement options with a life contingency are generally called:

life income settlement options

A type of life insurance that covers two people and pays the death benefit only upon the second insured's death is called

survivorship life

An insurance policy provides financial protection against:

losses caused by perils

When a deferred annuity is annuitized, which one of the following most correctly describes the tax treatment of the contract's "gain" (i.e., accrued interest) portion of each payment?

It is taxable as ordinary income.

Tom bought a $100,000 adjustable life insurance policy. With respect to that policy, all the following statements are correct EXCEPT:

If Tom wants to increase the amount of the death benefit by more than $50,000, he will have to buy a new policy.

A distribution from a qualified retirement plan before age 59½ is generally subject to:

both ordinary income taxation and a 10 percent premature distribution penalty tax

Corporate-owned life insurance (COLI) insures which of the following?

rank and file as well as key employees

Suppose an agent's contract with the insurer gives the agent permission to sell and solicit business for the insurer. What kind of authority does the contract grant to the agent?

express

George purchased an annuity in which his wife will receive income for as long as she lives. In this scenario, what is George most correctly called?

the owner

A person who smokes heavily and drinks alcohol to excess exhibits what kind of an insurance risk?

moral hazard

When calculating the surviving family's ongoing cash needs at the death of the prospective customer, the agent must consider all of the following expenses EXCEPT:

the insured's funeral expenses

In addition to the four basic dividend options, a so-called '5th dividend option' is sometimes available, which basically involves:

one-year term life insurance

Which of the following types of qualified defined contribution plans is available only to employees of state and local governments?

457 plan

Flora's deferred annuity contract has an 11-year surrender charge period, during which the surrender charge will most likely:

decrease

With respect to Roth IRA conversions, all the following statements are correct EXCEPT:

To convert to a Roth IRA, a person must have earned income.

A life insurance underwriter may request an attending physician's statement (APS):

for specific details from the applicant's physician about any medical conditions found in the health section of the application

In a few situations, premiums paid for a life insurance policy are tax deductible. These situations include all of the following, EXCEPT:

the policyowner intends to use the policy's cash value to help pay for his child's college education

An insurable interest will typically be presumed in all of the following types of relationships EXCEPT:

neighbor and friend

Jane owns a variable annuity with a guaranteed minimum withdrawal benefit rider. She has invested $50,000 in premiums, and the rider permits annual withdrawals of up to 5 percent. If the values in Jane's variable annuity declined to zero, what amount can she withdraw this year?

$2,500

Which one of the following is included in an employee's taxable income?

the value of any group life insurance exceeding $50,000, less any premiums the employee pays

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What prohibited practice has Melanie engaged in?

twisting

A life settlement involves a transaction in which a life insurance policyowner sells his or her policy to whom?

a life settlement provider

Life insurance settlement options with a life contingency are generally called:

life income settlement options

A type of life insurance that covers two people and pays the death benefit only upon the second insured's death is called

survivorship life

An insurance policy provides financial protection against:

losses caused by perils

When a deferred annuity is annuitized, which one of the following most correctly describes the tax treatment of the contract's "gain" (i.e., accrued interest) portion of each payment?

It is taxable as ordinary income.

Tom bought a $100,000 adjustable life insurance policy. With respect to that policy, all the following statements are correct EXCEPT:

If Tom wants to increase the amount of the death benefit by more than $50,000, he will have to buy a new policy.

A distribution from a qualified retirement plan before age 59½ is generally subject to:

both ordinary income taxation and a 10 percent premature distribution penalty tax

Corporate-owned life insurance (COLI) insures which of the following?

rank and file as well as key employees

Suppose an agent's contract with the insurer gives the agent permission to sell and solicit business for the insurer. What kind of authority does the contract grant to the agent?

express

George purchased an annuity in which his wife will receive income for as long as she lives. In this scenario, what is George most correctly called?

the owner

A person who smokes heavily and drinks alcohol to excess exhibits what kind of an insurance risk?

moral hazard

When calculating the surviving family's ongoing cash needs at the death of the prospective customer, the agent must consider all of the following expenses EXCEPT:

the insured's funeral expenses

In addition to the four basic dividend options, a so-called '5th dividend option' is sometimes available, which basically involves:

one-year term life insurance

Which of the following types of qualified defined contribution plans is available only to employees of state and local governments?

457 plan

Flora's deferred annuity contract has an 11-year surrender charge period, during which the surrender charge will most likely:

decrease

With respect to Roth IRA conversions, all the following statements are correct EXCEPT:

To convert to a Roth IRA, a person must have earned income.

A life insurance underwriter may request an attending physician's statement (APS):

for specific details from the applicant's physician about any medical conditions found in the health section of the application

In a few situations, premiums paid for a life insurance policy are tax deductible. These situations include all of the following, EXCEPT:

the policyowner intends to use the policy's cash value to help pay for his child's college education

An insurable interest will typically be presumed in all of the following types of relationships EXCEPT:

neighbor and friend

Jane owns a variable annuity with a guaranteed minimum withdrawal benefit rider. She has invested $50,000 in premiums, and the rider permits annual withdrawals of up to 5 percent. If the values in Jane's variable annuity declined to zero, what amount can she withdraw this year?

$2,500

Which one of the following is included in an employee's taxable income?

the value of any group life insurance exceeding $50,000, less any premiums the employee pays

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What prohibited practice has Melanie engaged in?

twisting

A life settlement involves a transaction in which a life insurance policyowner sells his or her policy to whom?

a life settlement provider

Children covered by a family term rider can convert their coverage to permanent coverage at age 21 without proof of insurability. The converted policy's face value is typically which of the following amounts?

up to five times the coverage under the family term rider

What is credit life insurance designed to cover?

the borrower's life

All the following statements about increasing term insurance policies are correct EXCEPT:

The premium increases over the term of the policy.

What is the name of one of the first systems developed for determining how much life insurance is necessary, based on the economic value of a human life?

human life value approach

When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT

provide individuals with copies of documents disclosed to other parties.

All of the following statements regarding the use of deferred annuities in retirement planning are correct, EXCEPT:

Earnings grow on a tax-free basis only when a deferred annuity is used to fund a qualified retirement plan.

From a regulatory perspective, what are variable life insurance policies considered?

securities

Which of the following most correctly describes the basic purpose for the MIB?

reduce adverse selection

What is the purpose of the prohibited policy provisions imposed on insurers by most states?

They protect policyowners from unfair manipulation and detrimental behavior by insurance companies and their representatives.

A type of life insurance that covers two people and pays the death benefit only upon the second insured's death is called

survivorship life

Which of the following is not a potential consequence of replacing a life insurance policy?

the possibility of the new insurer cancelling the replacement policy after it is issued

Which of the following statements about permanent life insurance cash values is NOT correct?

The beneficiary has full access to the cash value.

Which of the following statements about Section 529 college savings plans is correct?

They are available in just about every state.

Jill, age 60, owns a deferred annuity. If she withdraws funds from the annuity within a set period after buying the contract, she may be forced to pay which of the following, imposed by the insurer?

surrender charges

Andrew purchased a variable annuity on June 12 but decides not to keep it. How many days does he have to return the contract for a full refund of the premium?

10

Which of the following statements about increasing term insurance is correct?

It is normally sold as a rider on a permanent life policy.

Which one of the following is most correct with respect to the contract charges and fees charged by variable life and traditional whole life policies?

Both base the premium on a mortality charge that reflects the insured's risk of death.

The exclusion ratio applies until all principal in the annuity contract has been paid out. After that, what happens?

The full amount of future annuity payments are treated as taxable income.

The premiums the Acme Company pays for business life insurance on the lives of a business owner or key executive are generally:

not tax deductible

What is the typical life insurance contract's reinstatement provision period?

three years or longer depending on the insurer and state law

Karen bought a life insurance policy at age 23. She added the guaranteed insurability rider to the policy. If Karen buys another policy under the rider at age 39, the premium of that policy will be based on which of the following?

Karen's current age

In a fixed annuity, what is the declared rate after the initial rate period called?

renewal rate

Anne turned 70 this year on March 15. Assuming she has retired, by what date does she have to begin taking distributions from her retirement plan?

April 1 next year

If a person buys a new life insurance policy to replace an existing one, the producer must give the applicant the Notice Regarding Replacement form no later than when?

when the application is taken

Under which settlement option is an income paid until the second of the two annuitants dies, and at the second death, no further payments are made to anyone?

joint and survivor life income

Under the integrated option of a long-term care rider, the beneficiary receives the remainder of the face amount as the death benefit at the insured's death. In this way, the long-term care integrated option is similar to which of the following?

an accelerated benefits rider

Which of the following usually offers credit life insurance in connection with a transaction?

lender

A viatical settlement provider would buy a life insurance policy from a policyholder who most likely is which of the following?

terminally ill

Which of the following would be likely to offer credit life insurance?

a loan company

Under the settlement option that Gary and Fran chose as beneficiaries of their father's life```text

Under the settlement option chosen by Gary and Fran, monthly payments continue until the second payee dies. What option did they choose?

joint and survivor life income

A policy that lasts for an insured's entire lifetime or until age 120 as long as premiums are paid describes any permanent life policy, EXCEPT which type?

term life insurance

The Notice Regarding Replacement provides essential replacement and policy details to an applicant, EXCEPT for which of the following?

the role of the Department of Insurance in regulating replacement transactions

Johnson Industries funds its workers' compensation program and uses these funds to pay employee claims directly. What type of insurer is Johnson Industries?

self-insurer