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Questions and Answers
Life insurance replacement regulation is designed to protect the interests of the _____
Life insurance replacement regulation is designed to protect the interests of the _____
policy owner
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
- Annuity (correct)
- Whole Life
- Universal Life
- Term Life
What are the characteristics of an Adjustable Life policy?
What are the characteristics of an Adjustable Life policy?
Adjustable premiums, adjustable premium payment period, and combination of term and whole life insurance
The Consideration clause in a life insurance policy indicates that a policy owner's consideration consists of a completed application and ____
The Consideration clause in a life insurance policy indicates that a policy owner's consideration consists of a completed application and ____
A producer who fails to renew a license may reapply for a license w/o examination within____ year with____
A producer who fails to renew a license may reapply for a license w/o examination within____ year with____
What action can a policy owner take if an application for a bank loan requires collateral?
What action can a policy owner take if an application for a bank loan requires collateral?
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
What is the consideration given by an insurer in the Consideration clause of a life policy?
What is the consideration given by an insurer in the Consideration clause of a life policy?
A person who is insured within a group contract will be given a:
A person who is insured within a group contract will be given a:
A term life insurance policy matures:
A term life insurance policy matures:
A _____ Life policy offers the owner investment in products such as money-market funds, long term bonds and equities
A _____ Life policy offers the owner investment in products such as money-market funds, long term bonds and equities
At what point does the Life and Health Insurance Guaranty Association become involved with an insurer's affairs?
At what point does the Life and Health Insurance Guaranty Association become involved with an insurer's affairs?
An annuity that pays out a fixed amount for life starting at a future date is called:
An annuity that pays out a fixed amount for life starting at a future date is called:
What kind of receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect?
What kind of receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect?
The Life and Health Insurance Guaranty Association is funded by:
The Life and Health Insurance Guaranty Association is funded by:
A plan is considered 'top-heavy' if more than ___ of plan assets are attributable
A plan is considered 'top-heavy' if more than ___ of plan assets are attributable
When can a policy owner change a revocable beneficiary?
When can a policy owner change a revocable beneficiary?
What does the insuring agreement in a Life insurance contract establish?
What does the insuring agreement in a Life insurance contract establish?
A policy that provides an income for a specific period starting at the death of the insured is called:
A policy that provides an income for a specific period starting at the death of the insured is called:
What is the purpose of the U.S.A Patriot Act?
What is the purpose of the U.S.A Patriot Act?
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Which policy is characterized by a guaranteed minimum death benefit?
Which policy is characterized by a guaranteed minimum death benefit?
A producer is attempting to replace an existing life insurance policy with a new one. What must this producer submit as part of the application?
A producer is attempting to replace an existing life insurance policy with a new one. What must this producer submit as part of the application?
Characteristic of a variable annuity?
Characteristic of a variable annuity?
Any policy that includes 'universal' indicates____
Any policy that includes 'universal' indicates____
Any policy that includes 'variable' indicates___
Any policy that includes 'variable' indicates___
When was the USA Patriot Act enacted?
When was the USA Patriot Act enacted?
Which policy requires an agent to register with the National Association of Securities Dealers before selling?
Which policy requires an agent to register with the National Association of Securities Dealers before selling?
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
What enables a policy owner to sell a policy for more than its cash value?
What enables a policy owner to sell a policy for more than its cash value?
What Life Insurance rider allows an applicant to have excess life insurance coverage?
What Life Insurance rider allows an applicant to have excess life insurance coverage?
The automatic premium loan provision is designed to__
The automatic premium loan provision is designed to__
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:
Which combination plan is designed to protect an insured from an unpaid mortgage balance upon premature death?
Which combination plan is designed to protect an insured from an unpaid mortgage balance upon premature death?
A producer has returned part of his commission to the insured as an inducement to purchase the insurance. This illegal action is called___
A producer has returned part of his commission to the insured as an inducement to purchase the insurance. This illegal action is called___
The Commission of Insurance MUST give ___ days notice before holding a hearing regarding a producer's unfair practice
The Commission of Insurance MUST give ___ days notice before holding a hearing regarding a producer's unfair practice
Prior to a hearing for a suspended producer's license, the Commissioner of Insurance is required to___
Prior to a hearing for a suspended producer's license, the Commissioner of Insurance is required to___
The annuity that represents the largest possible monthly payment to an individual annuitant is:
The annuity that represents the largest possible monthly payment to an individual annuitant is:
What is being delivered during a policy delivery?
What is being delivered during a policy delivery?
What is the income tax withholding requirement for a profit-sharing plan?
What is the income tax withholding requirement for a profit-sharing plan?
A Return of Premium life insurance policy is:
A Return of Premium life insurance policy is:
A term life insurance policy matures:
A term life insurance policy matures:
Life insurance replacement regulation is designed to protect the interests of the:
Life insurance replacement regulation is designed to protect the interests of the:
If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?
If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:
What type of insurance offers permanent life coverage with premiums that are payable for life?
What type of insurance offers permanent life coverage with premiums that are payable for life?
Aleatory
Aleatory
Contract of adhesion
Contract of adhesion
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Credit life insurance is typically issued with which of the following types of coverage?
Credit life insurance is typically issued with which of the following types of coverage?
Which policy requires an agent to register with the National Association of Securities Dealer before selling?
Which policy requires an agent to register with the National Association of Securities Dealer before selling?
What kind of premium does a Whole Life policy have?
What kind of premium does a Whole Life policy have?
Who makes the legally enforceable promises in a unilateral insurance policy?
Who makes the legally enforceable promises in a unilateral insurance policy?
What kind of policy is a Return of Premium Life?
What kind of policy is a Return of Premium Life?
How long is the Suicide clause period?
How long is the Suicide clause period?
A producer must notify the Commissioner of Insurance within___days of an address change.
A producer must notify the Commissioner of Insurance within___days of an address change.
What provision keeps a Whole Life policy in force if a required premium payment is not made and there is sufficient cash value?
What provision keeps a Whole Life policy in force if a required premium payment is not made and there is sufficient cash value?
Traditional individual retirement annuity (IRA) distributions must start by:
Traditional individual retirement annuity (IRA) distributions must start by:
When must insurable interest be present in order for a life insurance policy to be valid?
When must insurable interest be present in order for a life insurance policy to be valid?
How long does an individual have to 'rollover' funds from an IRA or qualified plan?
How long does an individual have to 'rollover' funds from an IRA or qualified plan?
An arrangement where an employer and employee share in the cost of purchasing a life insurance policy on an employee:
An arrangement where an employer and employee share in the cost of purchasing a life insurance policy on an employee:
Which policy is characterized by a guaranteed minimum death benefit?
Which policy is characterized by a guaranteed minimum death benefit?
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Study Notes
Life Insurance Overview
- Life insurance replacement regulation safeguards the interests of policy owners.
- An annuity is ideal for retired individuals seeking to invest a lump sum.
- Adjustable Life policies feature adjustable premiums, payment periods, and a mix of term and whole life insurance.
Key Policy Features
- The Consideration clause includes the completed application and the initial premium from the policy owner.
- A producer can reapply for a license without examination within one year, accompanied by a $50 late fee if the license lapses.
- Policy ownership can be assigned to a bank if collateral is needed for a loan.
Riders and Policies
- Long Term Care riders activate if an insured cannot perform two or more activities of daily living.
- Insurer's consideration in a life policy involves the promise to pay a death benefit to a named beneficiary.
- Individuals insured under a group contract receive a certificate.
Types of Insurance
- A term life insurance policy matures only upon the insured's death during the contract period.
- Variable Life policies allow investment in products like money-market funds, bonds, and equities.
- Fixed Deferred annuities pay a fixed amount for life starting at a chosen future date.
Legal and Regulatory Aspects
- The Life and Health Insurance Guaranty Association intervenes when an insurer is insolvent.
- Universal Life policies feature monthly mortality charges with self-directed investment options.
- Variable Life policies come with a guaranteed minimum death benefit.
Policy Changes and Conditions
- A producer must submit a signed statement regarding the replacement when shifting from an existing policy to a new one.
- Characteristics of a variable annuity are defined by underlying equity investments.
- Any policy labeled "universal" indicates flexible or adjustable premiums.
Tax and Planning
- The USA Patriot Act aims to detect and deter terrorism, enacted in 2001.
- A return of premium life insurance policy encompasses whole life and increasing term options.
- 20% is withheld for income taxes from profit-sharing plan distributions.
Contracts and Provisions
- Aleatory contracts hinge on specific triggering events for actions to take place.
- Contracts of adhesion are drafted by one party with more power, leaving the other party with little negotiation.
- Convertible Term policies provide temporary coverage that can later be adjusted to permanent without proof of insurability.
Other Considerations
- Credit life insurance typically uses decreasing term coverage.
- Whole Life policies have level premiums, and insurance promises are legally enforced by the insurance company.
- The suicide clause generally spans 1-2 years.
Compliance and Regulations
- Producers must notify the Commissioner of Insurance within 30 days of any address change.
- An automatic policy loan keeps a Whole Life policy active if premium payments are missed and a cash value exists.
- IRA distributions must commence by April 1 following the year the participant reaches age 70½.
Timelines and Requirements
- Insurable interest must exist at the application time for a life insurance policy to be valid.
- Funds can be rolled over from an IRA or qualified plan within 60 days.
- Split-dollar plans involve shared costs between employers and employees for life insurance policies.
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