in

Arizona Life Insurance Exam Answers

Life Insurance exam answers Arizona

Arizona Life Insurance Exam Answers

 

a whole life policy that provides a choice of dividend options include the following statement about dividends

they accrue at a guaranteed rate

they are deferred for one year

they are not guaranteed

they are guaranteed after the first year

 

When there is a named beneficiary on a life insurance policy, the death benefits

1. are directed to a trustee if the insured has any outstanding debts

2. are paid directly to the insured`s creditors, with any remaining balance forwarded to the beneficiary

3. are paid directly to the beneficiary, minus any debt claims by the insured`s creditors

4. are paid directly to the beneficiary without interference from the insured`s creditors

 

What determines how much an annuitant is paid for a variable annuity

1. varies according to how many outstanding annuitant is paid for a variable annuity

2. payments fluctuate as annuitant gets older

3. the market value variations of the securities backing it

4. varies according to the insurers investments in its general account

 

A terminated employee has how many days upon termination to convert group life insurance coverage to an individual policy

10 days

15 days

30 days

31 days

 

Rick owns a variable universal life insurance policy and chooses a variable death benefit option. what will typically happen to the death benefit as a result of this section

1. remain the same

2 decrease but never increase

3 increase but never decrease

4 fluctuate with changes in the cash amount

 

The policy provision that permits an employee to change from group life insurance to an individual policy is called

1 assignment provision

2 conversion provision

3 certificate provision

4 modification provision

 

when the deferred annuity is surrendered, who must sign the authorization to do so

owner

annuitant and beneficiary

annuitant

all parties involved

 

Which of the following is NOT a valid contract exchange?

1. an annuity exchanged for a life insurance policy

2 an annuity exchanged for another annuity

3 a life insurance policy exchanged for another life insurance policy

4 a life insurance policy exchanged for another annuity

 

which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate

evidence of insurability is required

coverage remains until death of the insured

the premium to purchase the coverage comes from the policy`s cash value

cash value will continue to grow

 

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured death

total premiums paid plus the policy face amount

face amount plus interest

interest acquired plus total premiums paid

face amount minus any outstanding loan balances

 

which of these is NOT considered the responsibility of a producer during the underwriting process

collecting additional medical information if needed

promptly sending the completed application to the insurance company

forwarding any material personal observations to the insurer

selecting the final approval date

 

which of the following is NOT guaranteed in a whole life policy

settlement options

nonforfeiture options

dividend scale

policy loan values

 

all of these duties that a producer may be required to perform when delivering an insurance policy EXCEPT

acquire a statement of good health signature

gather the initial premium

review policy with applicant

leave a conditional receipt with client

 

laura added a children`s rider to her life insurance policy. what type of coverage was added

level term

increasing term

decreasing term

juvenile term

 

what would be the disadvantage of naming a trust as a beneficiary of a life insurance policy

trusts cannot be formed for life insurance purposes

trust administrations fees would reduce policy proceeds

trusts cannot be used if a minor is the beneficiary

trustee must be a bank or brokerage

 

what does a fixed life annuity offer protection against

inflation

premature death

inadequate retirement planning

savings depletion due to longevity

 

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid

mandatory income tax withholding on the amount transferred

paying transfer fees

paying trustee fees

ever paying income taxes on the distributions

 

what happens when a policy owner borrows against the cash value of his life insurance policy

the policy proceeds would be reduced by the outstanding loan balance

no additional loans can be taken out in the future

the amount borrowed is added to the policy owners gross income for tax purposes

the interest on the loan is tax deductible

 

straight whole life insurance can be accurately described in all of these statements EXCEPT

policy protection normally expires at age 65

nonforfeiture values are available to the policy owner

provides level protection with level premiums

cash value loans are permitted

 

which statement regarding the joint and survivor life insurance settlement options is NOT true

age of beneficiaries plays a factor when determining the payment amounts

income continues until the last beneficiary dies

two or more beneficiaries can be paid

the amount of each installment is larger than the single life income option

 

which statement regarding universal life insurance in correct

cash value accumulations have a guaranteed minimum interest rate

policy owner can change the face amount but not the premium

policy owner can change the premium but not the face amount

partial withdrawals cannot be made from the policy`s cash value

 

which of the following statements about universal life insurance in NOT true

death benefit can be increased

premiums are flexible

universal life insurance normally has a minimum guaranteed cash value for duration of the policy

the cash value interest rate must equal or exceed a guaranteed minimum value

 

contributions made by an employee to a qualified retirement plan are required to be

subject to income taxes

fully refundable

nonforfeitable

subject to a vesting schedule

 

Taxable income may be the result from all of these modified endowment contract (MEC) tranasactions except for

a cash value loan is taken out

automatic premium loan provision is utilized

the policy is surrendered for less than what was paid into it

dividend is issued

 

which statement regarding the life insurance premium for a childrens rider is true

decreasing premium as each child becomes an adult

premium remains the same no matter how many children

increasing premium as additional children are born

no premium is normally charged for a childrens rider

 

which of the life insurance policies does NOT contain a cash value provision

modified whole life

universal life

decreasing term life

adjustable life

 

what is the tax treatment of benefit payments for a non-qualified annuity

benefit payments are always fully taxable

benefit payments are subject to taxes only prior to age 70 1/2

benefit payments must begin at age 59 1/2 to void a penalty

benefit payments received after 70 1/2 are always tax-exempt

 

The insurance coverage in a variable life insurance policy may vary based on the value of

the AM best rating the company has received

its underlying investments

the consumer price index

the total premiums paid

 

 

A life insurance policys waiver of premium rider has the ability to

waive the premium payments in the event the insured becomes financially insolvent

relieve the insured of preimum payments following an initial waiting period after the insured becomes totally disabled

provide a policy loan to cover the premium payments in the event the insured becomes totally disabled

waive the premiums on this policy as well as any other insurance policy belonging to the insured i the event of total disability

 

kevin has an existing life insurance policy and assigns it to another insurer for a new contract. how would this transaction be treated for tax purposes

as section 1035 exchange

as a transfer

as a rollover

as a section 1040 exchange

 

 

when would evidence of insurability be required for a person already covered with a variable universal life policy

when the premium is increased

when the policy has renewed

when the death benefit is increased

when policy is being converted to permanent coverage

 

 

which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy

mortality costs

administrative charges

investment management fees

federal premium taxes

 

 

A material change in a modified endowment contract (MEC) results in

the contract becoming void

a new contestable period

the seven pay test, adjustable for cash value, applies again

a tax penalty

 

 

which event triggers a deferred annuity to start making benefit payments to the annuitant

when he owner dies

when the contracts cash value exceeds the cost basis

when the contract is annuitized

cash surrender of the annuity

 

 

A business becoming incorporated is an example of risk ____.

eduction

severance

retention

transfer

 

 

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

If the interest rate rises above a certain level, the surrender charge is waived

It allows the Life and Health Guaranty Association to bailout the insolvent insurer

A reinsurer will make the remainder of the annuity payments if the original insurance company becomes insolvent

 

 

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

10% is withheld for income taxes

20% is withheld for income taxes

30% is withheld for income taxes

Nothing is withheld

 

 

Which of these is NOT an advantage of term life insurance?

The greatest amount of coverage can be provided for the initial premium paid

It can be provided as a rider to another policy

A cash benefit will be provided if the insured is alive at the end of the policy period

Temporary insurance needs can be met

 

 

Which of the following is a TRUE statement regarding universal life insurance?

Death benefits are normally taxable

Policy loans are not permitted

Premiums or face amount cannot be changed

Policy indicates how much of each premium is used toward company expense

 

 

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

Variable universal life

Modified endowment contract

Adjustable life

Graded premium whole life

 

 

How long does protection normally extend to under a limited pay whole life policy?

It depends on the performance of the underlying investment account

When premiums are no longer
required as stated in the contract

Until age 65

Until age 100

 

 

A life policy that has premiums that are lower than normal during the early years is called

Decreasing term

Modified life

Variable life

Limited-pay life

 

 

The annuitant in a single premium deferred annuity (SPDA)

receives immediate benefit payments

makes only one premium payment

can make tax-free withdrawals until the principal is recovered

is also the beneficiary

 

 

How can an insurance company minimize exposure to loss?

Risk concealing

Reinsuring risks

Reissuance

Risk assumption

 

 

What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?

Joint and survivorship

Survivorship life

Universal life

Joint life

 

 

What happens to the cash value of a market value adjusted annuity if it’s surrendered prior to the end of the stated guarantee period?

Subject to market value adjustment

Subject to no adjustments

Subject to a surrender charge only

Cash value is forfeited

 

 

What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?

All actions by the producer

Not responsible for any acts by the producer

Responsible for acts that involve misrepresentation only

Responsible for acts by the producer that are authority only

 

 

A life insurance producer’s underwriting duties may include

approving or declining a life insurance application

seeking additional information requested by the insurance company

ordering an MIB report

determining the rate classification of the applicant

 

 

Which of these annuity contract features is meant to discourage withdrawals and exchanges?

Annuitization

Annual fees

Withdrawal penalty

Surrender charges

 

 

A Keogh plan is a(n)

unqualified retirement plan for large corporations

qualified retirement plan for the self employed

tax-exempt annuity for government workers

split dollar plan for key employees

 

 

A qualified profit-sharing plan is designed to

allow key employees to participate in the profits of the company

distribute a portion of company earnings to its employees

keep key employees from leaving the company

allow employees to elect company officers

 

 

What effect can a long-term care benefit rider have on a life insurance policy?

Increased cash value

Decreased cash value

Increased death benefit

Reduced death benefit

 

 

ABC Company is attempting to minimize the severity of potential losses within its company. The company is engaged in risk

transference

retention

reduction

avoidance

 

 

Which of the following is NOT a reason for a business to buy key person life insurance?

The reduction in sales as a direct result from death of the key employee

A void in leadership if the key person were to die

The loss of company revenues while a replacement is being sought

An increased pension liability if the key employee dies

 

 

The insurance coverage in a variable life insurance policy may vary based on the value of

the AM Best rating the company has received

its underlying investments

the consumer price index

the total premiums paid

 

 

Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?

Convert the cash value to a paid-up term policy

Gives policyowner ability to borrow against funds within two years

Increases the policy’s face amount

Provide supplemental income in 35 years

 

 

An agent’s authority to bind an insurer to an insurance contract may be granted in the

agent’s contract and the insurance company’s appointment

agent’s license and insurance

company’s certificate of authority

buyer’s guide and policy summary
state guaranty association

 

 

An annuity’s accumulation period may

continue after the purchase payments stop

continue after the benefit payments start

continue after the annuitant dies

continue after the annuity has been surrendered

 

 

When would evidence of insurability be required for a person already covered with a variable universal life policy?

When the premium is increased

When the policy has renewed

When the death benefit is increased

When policy is being converted to permanent coverage

 

 

What is considered the collateral on a life insurance policy loan?

No collateral is needed

The policy’s cash value

The policy’s face value

The equity in a policyowner’s home

 

 

What is the face amount of a $50,000 graded death benefit life insurance policy when the policy is issued?

$0

$50,000

Under $50,000 initially, but decreases annually over time

Under $50,000 initially, but increases over time

 

 

Under the Law of Agency, the principal is considered to be

the producer

the insurer

the plan administrator

the insured

 

 

Which would be described as a beneficiary designation by class?

Children of the insured

Estate of the insured

Tertiary beneficiary

A specific named beneficiary

 

 

Which of these policies is considered a whole life policy?

Credit life

Single premium life

Renewable life

Convertible life

 

 

An insurance policy that can also be classified as a securities product is called

variable life

modified life

universal life

a Modified Endowment Contract

 

 

How does a continuous premium whole life policy differ from a limited payment whole life policy?

The time period in which premiums will be paid

The availability of cash value loans

The availability of nonforfeiture options

The settlement options

 

 

Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?

Interest rate is guaranteed with a minimum rate

Interest on proceeds must be paid by the beneficiary

Interest is payable to a stated beneficiary

Interest must be paid at least annually

 

 

All of these are considered features of whole life insurance EXCEPT

Cash value accumulation

Permanent coverage

Initial premium is lower than for an equivalent amount of term insurance

Policy loans are allowed

 

 

Which benefit is normally payable to a life insurance policyowner when the insured’s life expectancy has been severely limited?

Reduced paid-up option

Accelerated (living) benefit

Return of Premium benefit

Extended term option

 

 

Who normally pays the premiums for group credit life insurance?

Creditor and borrower share the cost equally

Borrower

Creditor

Beneficiary

 

 

Which of these is NOT a common life insurance nonforfeiture option?

Reduced paid-up insurance

Extended term option

Cash surrender option

Life income annuity

 

 

An individual who purchases a modified life insurance policy expects

a higher rate of return

coverage for two people

an improvement in future income

a flexible face amount

 

 

Which of these is a true statement regarding survivor benefits under a qualified retirement plan?

Survivor benefits can only be waived with the written consent of a married employee’s spouse

Survivor benefits CANNOT be waived with the written consent of a married employee’s spouse

Survivor benefits are rarely included in small company plans

Survivor benefits do not apply to divorced employees

 

 

Which of the following would NOT be appropriate for an immediate annuity?

A lottery winner who opted for a lump-sum payment

A parent saving for a child’s college

A beneficiary collecting the face amount of a life insurance policy

Someone who just won a large settlement

 

 

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to

purchase life insurance policies on his children as they are born

purchase life insurance on a spouse after becoming married

purchase additional life insurance at anytime

periodically purchase additional insurance

 

 

Which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and 100% survivor annuity?

Ages 70 and 72

Ages 60 and 80

Ages 71 and 73

Ages 69 and 71

 

 

How is a collateral assignment used in a life insurance contract?

Transfers permanent ownership rights to a creditor

Assigns complete ownership rights to a creditor

Transfers specific ownership rights to a creditor

Assigns ownership rights to the primary beneficiary

 

 

What could be the potential result of taking out a cash value loan under a life insurance policy?

Death benefit will be subject to income taxes if insured dies with an outstanding loan balance

Interest that accrues on policy loan is tax-deductible to the policyowner

Loan amount will be added to the policyowner’s gross income

Reduces the amount receivable upon surrender of the contract

 

 

Which statement regarding the cash value of a whole life insurance policy is correct?

Can be borrowed against, starting in the policy’s fifth year

Cash value accumulation is based on the performance of a separate investment account

Available to the policyowner when policy has been surrendered

Starts growing with the initial premium

 

 

During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?

Trustee

Beneficiary

Policyowner

Annuitant

 

 

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

Interest normally accrues on unpaid balances

Loan cannot exceed the policy’s cash value

Policy contract terms dictate the interest rate

Interest payments made by policyowner are deductible

 

 

Which of these is NOT considered to be a cost connected with an individual’s death?

Funeral expense

Tax liability

Business expenses

Probate costs

 

 

What is an insurance contract that identifies individuals by relationship to a specific organization?

Employer insurance

Group insurance

COBRA plan

Industrial insurance

 

 

According to the IRS, a company may NOT do which of the following in regards to funds in a qualified retirement plan?

Transfer the funds to a new custodian

Invest the funds in mutual funds

Transfer vested funds to terminated employees

Repossess the funds for business purposes

 

 

Which of the following is associated with an immediate annuity?

Tax-free benefit payments

Installment premium payments

Lack of an accumulation period

Lump-sum benefit

 

 

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends

equal the net single premium for the same face amount at the insured’s attained age

can purchase extended term coverage for a period of two years or more

equal the nonforfeiture value of the policy

can purchase a paid-addition

 

 

A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called

fixed period

period certain

installment refund

straight life

 

 

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

Increases

Decreases

Not affected by inflation

Tied to stock index

 

 

Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?

When the contract has been held for the period specified in the policy

For the entire length of the contract

Never

When the cash value has reached a stated minimum amount

 

 

When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest earned minus

bailout option charge

surrender charges

taxes owed

expenses and withdrawals

 

 

A retired couple would like to maximize the income derived from their combined life savings and have it payable until they both die. Which annuity would be their best choice?

Fixed annuity

Survivorship annuity

Joint life annuity

Joint and survivor annuity

 

 

The reason for backdating a policy is

to avoid being considered a substandard risk due to a recent cancer diagnosis

to obtain a premium rate based on an earlier age

to decrease the face amount

to decrease the Contestable period

 

 

What effect does interest income have upon insurance premiums?

Increases premium

Decreases premium

Levels the premium

Adjusts premium on a quarterly basis

 

 

A teacher recently retired at age 63 and has a tax sheltered annuity (TSA). Periodic deposits total $120,000 and the value of the contract is now worth $200,000. How much is taxed if the current value is surrendered today?

$200,000

$80,000

$120,000

$0

 

 

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?

Distribution is subject to capital gains tax

Distribution is subject to ordinary income tax

Distribution is subject to a tax penalty

Distribution is subject to federal income tax withholding

 

 

When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld?

10%

20%

30%

None

 

 

Which of the following would most likely purchase an immediate annuity?

Individual wishing to contribute to a tax-sheltered annuity

Individual wanting to accumulate an investment over time

Retiree having a lump sum to invest

Business needing an immediate tax write-off

 

 

A business may purchase an annuity for all of the following reasons EXCEPT

Structuring a liability settlement payment

informally funding a non-qualified deferred compensation plan

Accumulating assets on a tax-deferred basis

Providing a pension to employees

 

 

During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT

Misstatement of age in the application

Material misrepresentation in the application

Fraud in the purchase of the policy

Material concealment in the purchase of a policy

 

 

An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as?

Back-end assessment

Cancellation fee

Surrender charge

Tax penalty

What do you think?

Written by Homework Lance

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

Walmart Hiring Assessment

Walmart Hiring Assessment Test