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Arkansas State life insurance exam Questions and Answers
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Rob has a benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits this description? - answer Income deferral option Who were Keogh plans designed to provide pension benefits for? - answer the self- employed What correctly describes a certificate of authority? - answer Permits an insurance company to transact business in Arkansas An example of replacement is - answer canceling a term life policy to buy a whole life policy Loans obtained by a policyowner against the cash value of a life insurance policy - answer would not be treated as taxable income If an insured dies during the grace period with no premiums paid - answer the policy would be payable, minus the premium amount Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because - answerthe MEC tends to be an investment vehicle When does an immediate annuity begin making payments? - answerAfter the first premium has been paid When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT - answerobtain the beneficiary's signature Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30- year period? - answerdecreasing term insurance What is a corridor in relation to a Universal Life insurance policy? - answerThe gap between the total death benefit and the policy's cash value The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of - answerpast due premiums that have not been paid by the end of the grace period
Which statement concerning Traditional IRAs is correct - answerearnings are taxable when withdrawn Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue? - answeraccumulation at interest option Which of these is a method of determining the level of funds required for ongoing support in the event of the breadwinner's death? - answerHuman life value What is the primary purpose of a rating service company such as A.M. Best? - answerDetermine financial strength of an insurance company Which of the following is not a federal requirement of a qualified plan? - answerEmployee must be able to make unlimited contributions The coverage, conditions, and limitations in the master policy of a group contract can be found in which document? - answerCertificate of coverage and benefits Lapsed individual life insurance may be reinstated at any time within: - answer3 years Which market index is normally associated with an indexed annuity's rate of return? - answerS&P 500 A policyowner may change two policy features on what type of life insurance? - answerAdjustable life Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen? - answerFixed amount What is the name of the provision which states that a copy of the application must be attached to the policy when issued? - answerEntire contract A life insurance policy that is subject to a contract interest rate is referred to as - answerUniversal life Within how many days must a traditional IRA be rolled over to another IRA in order to avoid tax consequences? - answer A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a(n) - answerLimited pay policy An insured's status under Social Security can be described as - answerfully insured T or F: Flexible surrender value is a characteristic of a universal life policy - answerFalse
Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken? - answer$5, What does the word level in Level Term describe? - answerFace amount An example of a tax-qualified plan would be a(n) - answerDefined contribution plan How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability? - answer months Within how many days must a rollover be completed in order to avoid being taxed as current income? - answer What has to be determined when using the Needs approach? - answerThe family's financial objectives if the income earner were to die or become disabled Micheal the insurance producer act in a fiduciary capacity when conducting business with all of these principals except - answerthe Commissioner The authority granted to a licensed producer is provided via the - answerLaw of Agency Which of these is NOT a legitimate insurance company in the same state? - answerDomestic and foreign All of these are valid options for an Adjustable Life Policy EXCEPT - answerA nonforfeiture option can be used to increase the death benefit All of these are valid policy dividend options for a life insurance policyowner EXCEPT - answeraccumulate without interest Which of the following employers is required to follow ERISA regulations? - answerA local electrical supply company with 12 employees The deeds and actions of a producer indicate what kind of authority? - answerApparent The taxable portion of each annuity payment is calculated using which method? - answerExclusion ratio a producer replaced a client's insurance policy when it was not in the client's best interest. The producer could be found guilty of - answerTwisting During the application process, the producer's primary responsibility is to - answerthe insurance company
Which of these is not considered to be a common life insurance nonforfeiture option? - answerLife income annuity Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any money withdrawn. - answerincome Convincing a prospective insured to buy an insurance policy based on exaggerations is called - answermisrepresentation Which of these would limit a company's liability to provide insurance coverage? - answerExclusions The period in which there are no Social Security benefits for the surviving spouse is called the - answerblackout period A Renewable Term Life insurance policy can be renewed - answerat a predetermined date or age, regardless of the insured's health J is a producer who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of? - answerTwisting T or F: Extended term insurance is NOT considered to be a nonforfeiture option in a whole life insurance policy? - answerFalse T or F: Interest only is NOT considered to be a nonforfeiture option in a whole life insurance policy? - answerTrue T or F: A waiver of premium rider can increase the death benefit - answerFalse What is determined in the Human life value approach? - answerIt predicts the person's earning potential and determines how much of that amount would be devoted to dependents Under a Traditional IRA, interest earned is taxed - answerupon distribution What must be signed by both the producer and applicant when an existing life insurance policy is being reissued with a reduction in cash value? - answerNotice regarding replacement T or F: Deferred compensation is not an example of a business continuation plan - answerTrue Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? - answerThe face amount and premium amount will remain constant over the 10-year period