Podcast
Questions and Answers
Which of the following statements describes one of the reasons individuals purchase life insurance?
Which of the following statements describes one of the reasons individuals purchase life insurance?
How long is the grace period for an individual life insurance policy?
How long is the grace period for an individual life insurance policy?
1 month
In this state, the owner gets a 'free look' of a specified number of days from delivery of the policy.
In this state, the owner gets a 'free look' of a specified number of days from delivery of the policy.
Delivery of the policy
Which of the following would be likely to establish a SEP?
Which of the following would be likely to establish a SEP?
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If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?
If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?
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Cash Value guarantees in a whole life policy are called?
Cash Value guarantees in a whole life policy are called?
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Which of the following statements concerning the Medical Information Bureau is correct?
Which of the following statements concerning the Medical Information Bureau is correct?
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Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy?
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy?
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If a retirement plan or annuity is qualified, this means?
If a retirement plan or annuity is qualified, this means?
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Which of the following is NOT a personal use of life insurance?
Which of the following is NOT a personal use of life insurance?
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Which of the following is true of the taxation of cash values in a business life insurance policy?
Which of the following is true of the taxation of cash values in a business life insurance policy?
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Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)?
Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)?
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For an insurance contract, the principle of utmost good faith means?
For an insurance contract, the principle of utmost good faith means?
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All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT?
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT?
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An individual has a $200,000 convertible term life insurance policy. If he chooses, he can?
An individual has a $200,000 convertible term life insurance policy. If he chooses, he can?
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All of the following are true regarding a producer's fiduciary responsibilities EXCEPT?
All of the following are true regarding a producer's fiduciary responsibilities EXCEPT?
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An annuity has accumulated a cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive?
An annuity has accumulated a cash value of $70,000, of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive?
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If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will?
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will?
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An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered?
An insurer mails an insurance policy to a new policyowner. When the insurer relinquishes control of the policy, the policy is considered?
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Which of the following will be eligible for a tax-sheltered annuity?
Which of the following will be eligible for a tax-sheltered annuity?
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Study Notes
Life Insurance Key Concepts
- Individuals purchase life insurance to create an immediate estate, providing financial security to beneficiaries upon death.
- A grace period for individual life insurance policies is typically one month, allowing time for premium payments.
- In Idaho, policyholders receive a "free look" period starting from the delivery date of the policy, allowing them to review it before committing.
Specific Insurance Policies and Provisions
- Small employers commonly establish Simplified Employee Pension (SEP) plans to provide retirement benefits.
- Producers suspecting misrepresentation by the applicant must inform the insurance company to uphold ethical practices.
- Whole life policies offer cash value guarantees known as nonforfeiture values, which are protected by state law and cannot be surrendered by the policyholder.
Medical Information and Riders
- The Medical Information Bureau assists underwriters by evaluating and classifying risks to ensure informed underwriting decisions.
- The Accidental Death Rider provides a death benefit that is twice or thrice the face amount if death results from an accident as defined in the policy.
Retirement and Tax Implications
- Qualified retirement plans or annuities must meet IRS criteria for favorable tax treatment, giving them certain tax benefits.
- Life insurance policies accumulate cash values on a tax-deferred basis, applying to both business and individually owned policies.
Modified Endowment Contracts (MECs)
- Modified Endowment Contracts must pass the 7-pay test; failing results in taxation on policy loans or withdrawals, especially if taken before age 59½, incurring a 10% penalty.
Good Faith and Responsibilities
- The principle of utmost good faith requires both parties in an insurance contract to trust each other's truthfulness.
- Ordinary (Straight) Life policies provide guaranteed death benefits, contrary to some misunderstandings about their nature.
Conversions and Fiduciary Duties
- Policyholders with a convertible term life insurance policy can switch to a whole life policy for the same face amount without proving insurability.
- Producers must not commingle personal funds with company funds, maintaining separation for ethical fiduciary responsibility.
Benefits Upon Death
- In the event of an annuitant's death during the accumulation phase, beneficiaries receive the full accumulated cash value of the annuity.
- If an insured’s age or gender is misrepresented, the life insurance company adjusts the death benefit based on what the premium would have purchased at the correct age/gender.
Delivery of Policies and Annuities
- When an insurer sends an insurance policy to a policyholder, it is considered legally delivered once control is relinquished.
- Public school teachers are eligible for tax-sheltered annuities, providing additional retirement savings options.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge of life insurance concepts with these flashcards tailored for Idaho's regulations. Covering topics like grace periods and immediate estates, this quiz helps reinforce essential life insurance information for both students and professionals.
