Questions and Answers
What is the other term for the cash payment settlement option?
Lump sum
Which of the following statements is INCORRECT concerning an IRA?
When the insured selects the extended term nonforfeiture option, what will the cash value purchase?
Term insurance equal to the original policy face amount
How often must long-term care insurers in California submit updated agent lists to the Commissioner?
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What does an intentional or unintentional concealment entitle the affected party to?
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What is the term for a sales campaign conducted through the mail?
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Social Security was created to provide all of the following benefits EXCEPT?
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For which beneficiary would the interest accumulated in a nonqualified annuity NOT be taxable in the event of the owner's death before the starting date?
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Which of the following would be least likely to be considered a legitimate need that would be paid by insurance proceeds?
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Which of the following is NOT a goal of risk retention?
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If an individual works for a manufacturing company and decides to fund a retirement plan for himself, which plan could he qualify for?
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During a pre-selection interview, an agent is allowed to do all of the following EXCEPT?
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An insured had a $10,000 term life policy. If the annual premium of $200 was due, but the premium was not paid before the insured died, how much would the beneficiary receive?
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When the insured selects the extended term nonforfeiture option, the cash value is used to purchase term insurance with what face amount?
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Which of the following types of policies allows for a flexible premium and a variable investment component?
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What is the tax status of the interest earned on policy dividends?
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What kind of contract occurs when the proposed insured makes the premium payment on a new insurance policy before approval?
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What must a domestic insurer issuing variable contracts establish?
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Which department is responsible for developing mortality and morbidity tables?
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To which product does the Replacement Regulation apply?
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What is TRUE about the cash surrender nonforfeiture option?
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Study Notes
Lump Sum Payment
- The cash payment settlement option for insurance proceeds is referred to as a lump sum, paid upon the insured's death.
Incorrect IRA Statement
- Married individuals are not required to contribute into a single IRA account; they can each contribute to separate accounts regardless of individual income.
Extended Term Nonforfeiture Option
- When selecting this option, the cash value of a policy is used to purchase term insurance equal to the original policy's face amount.
Long-Term Care Insurance Regulation
- In California, long-term care insurers must update their list of authorized agents at least semiannually.
Consequences of Concealment
- Intentional or unintentional concealment can result in rescission of the insurance contract for the affected party.
Direct-Response Sales Campaigns
- A sales campaign conducted entirely through mail is classified as a direct-response campaign.
Social Security Benefits
- Social Security does not provide benefits for unemployment income.
Tax Implications of Nonqualified Annuities
- In the event of the applicant's death before the annuity starts, interest accumulated is not taxable if the beneficiary is the spouse.
Insurance Proceeds and Legitimate Needs
- Vacation travel expenses are generally not considered legitimate needs for insurance proceeds.
Twisting in Insurance Practices
- Persuading insureds to cancel one policy in favor of another, which may not benefit them, is known as twisting.
Goals of Risk Retention
- The goal of risk retention does not include minimizing the insured's liability but focuses on reducing expenses and improving cash flow.
Eligibility for Retirement Plans
- An individual at a manufacturing company can qualify for an individual retirement account (IRA) to fund a retirement plan.
Pre-selection Interview Restrictions
- Agents cannot ask questions unrelated to the application but relevant for underwriting during a pre-selection interview.
Death Benefit Payment Example
- If a $10,000 term life policy premium is unpaid and the insured dies shortly after, the beneficiary would receive $9,800.
Variable Universal Life Insurance
- This type of policy allows for flexible premiums and includes a variable investment component.
Tax on Policy Dividends
- Interest earned on policy dividends is subject to taxes.
Conditional Insurance Contract
- An insurance policy for which the insurer pays a death benefit contingent upon approval of the application is considered a conditional contract.
Separate Accounts for Variable Contracts
- Domestic insurers issuing variable contracts must create separate accounts to manage these policies.
Actuarial Responsibility
- The actuarial department is responsible for developing mortality and morbidity tables used in insurance.
Replacement Regulation Scope
- The Replacement Regulation applies primarily to whole life insurance policies.
Cash Surrender Nonforfeiture Option
- Under this option, any funds received that exceed the premiums paid are taxable as ordinary income.
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Test your knowledge with these flashcards focused on the Primerica exam. Each card contains essential concepts regarding cash payment settlements and IRA regulations. Perfect for anyone preparing for their financial services certification.
