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Insurance License Exam - Ohio Health and Life
Questions with 100% Correct Answers | Updated
& Verified | 2024
immediate annuity - ✔✔Jessica purchased an annuity with a single $175,000 premium payment, and payments began one month later. Based on these facts, what type of annuity did she purchase? Benefits are typically paid while the contract owner is alive - ✔✔Compared with life insurance, which of the following statements regarding annuities is most correct? Mortality and interest assumptions - ✔✔Actuaries calculate net single premiums based on which of the following? term life insurance policy - ✔✔What is a life insurance policy that offers coverage for a specified, limited period with no cash value building up called? Jan's taxable income will be lower than David's - ✔✔Jan and David both work for Acme Motors, have $50,000 of taxable income, and are in the 25 percent tax bracket. If Jan contributes to Acme's 401(k) plan this year and David does not, which of the following statements is true? suicide - ✔✔All of the following are standard permanent exclusions found in life insurance policies EXCEPT:
a need for current liquidity - ✔✔A customer's investment objectives, risk tolerance, and time horizon affect suitability for annuity purchases. Which of the following indicates that a customer is not suited for an annuity? The corporation will buy the deceased owner's shares - ✔✔Three equal partners in a corporation worth $3 million decide to set up a stock redemption agreement. The corporation buys and pays the premiums for life insurance policies to fund the agreement. What will happen if one of the owners dies? The surviving spouse may convert the policy without proving insurability - ✔✔A married couple is insured under a joint life policy. The first spouse dies. What can the surviving spouse do with the policy? life with term certain - ✔✔Jill is the beneficiary of her uncle's life insurance policy and is guaranteed to receive income payments for life. However, she is also guaranteed to receive payments for at least ten years. Under which settlement option is Jill receiving the life insurance proceeds? the master policy - ✔✔What does the employer own under a group insurance plan? the viatical settlement broker - ✔✔Which one of the following most typically arranges a viatical settlement agreement between the parties? the same premium applies to all of the insured's children, no matter how may are covered - ✔✔Which of the following statements about children's term riders is CORRECT? both base the premium on a mortality charge that reflects the insured's risk of death - ✔✔Which one of the following is most correct with respect to the contract charges and fees charged by variable life and traditional whole life policies?
Ann will receive the annuity's accumulated value and may select a payout option - ✔✔Ann is the beneficiary of an annuity owned by Jim. Jim intended to annuitize the contract at retirement but died shortly before retiring. What benefits will Ann receive from the annuity? receive a series of income payments - ✔✔Mr. Johnson buys an annuity when he turns 50 years old. An agent tells Johnson the account is set up so that the accumulated funds will be annuitized in 20 years. At that time, Mr. Johnson can expect to one-half(50%) of the total tax - ✔✔The FICA tax is split between an employee and employer, with the employee paying how much? only married couples may buy it - ✔✔All the following statements regarding about joint life insurance are correct, EXCEPT: a domestic insurer without a certificate of authority - ✔✔Which of the following is a non-admitted insurance company? The net single premium for a traditional life insurance policy is the amount charged to the policyowner. - ✔✔Which statement about the net single premium for a traditional life insurance policy is NOT correct? a physical hazard - ✔✔Dan, age 43, is applying for an individual health insurance policy. The application asks about his current health and whether he has any known medical conditions. Dan discloses that he is partially blind, which would be considered which of the following?
its purpose is to liquidate a fund and protect against outliving one's income - ✔✔Among the variety of life insurance products, what of the following is a unique advantage of an annuity? straight life - ✔✔Which of the following life insurance settlement options is the least complicated? until the policy is paid up - ✔✔Joe, age 35, has a limited payment life insurance policy that will be paid up at age 60. Under the waiver of premium rider with this policy, should Joe become totally and permanently disabled tomorrow, premiums will be waived $7,000 - ✔✔Cal bought a $100,000 universal life policy ten years ago. He has paid $8,000 in premiums into the policy. He now decides to surrender the policy for its full $15,000 cash value. What amount is taxable? nonforfeiture benefits - ✔✔What kind of benefits under life insurance policies provide for a minimum amount to be paid if the policyholder defaults on premiums? Sally Grant - ✔✔Who is the primary beneficiary in the following beneficiary designation: "Sally Grant, wife of the insured, if she survives the insured; otherwise in equal shares to surviving children of the insured, if any; otherwise to Frank Grant, brother of the insured." the labor union owns the policy for the benefit of John and the other group members - ✔✔As a union member, John is covered by his group policy. Which of the following best describes the relationship between John, the union, and the policy? collateral assignment - ✔✔Allen wants to use his life insurance policy as security for a loan, using the policy's cash value as the pledge. What is this called?
whole life insurance - ✔✔Harry and Constance want life insurance to provide death benefits in case either dies, as well as living benefits in the event of financial emergencies. Which of the following would this couple most likely buy? as the Consumer Price Index (CPI) increases, o does the policyowner's coverage, providing, the insured can provide insurability - ✔✔Which statement regarding life insurance cost-of-living riders is NOT correct? If Tom wants to increase the amount of the death benefit by more than $50,000, he will have to buy a new policy - ✔✔Tom bought a $100,000 adjustable life insurance policy. With respect to that policy, all the following statements are correct EXCEPT when issued, the level term policy will be less expensive than the permanent policy - ✔✔Which one of the following statements about term life insurance and permanent insurance is most correct? foreign - ✔✔An insurance company with a home office in Wisconsin that does business in Illinois is a domestic company in Wisconsin. What kind of company is it in Illinois? Bob may borrow against his policy's cash value from the moment the policy is issued and at any time thereafter - ✔✔Which statement regarding loans against life insurance policyowner Bob's cash value is NOT correct? concealment - ✔✔What is the term for deliberately withholding material facts when applying for insurance?
the accumulation period - ✔✔Tim is 50 years old. He makes monthly premium payments on an annuity from which he expects to draw $1,000 a month starting at age 70. The next 20 years are referred to as which of the following? what the owner does for a living - ✔✔Which of the following is NOT a factor in determining the tax treatment that applies to life insurance and annuity products? they are generally income tax free - ✔✔Which one of the following most accurately describes the income tax treatment of life insurance death benefits received by a terminally ill insured under the accelerated benefits rider? He should see that the funds are remitted to the customer as soon as possible - ✔✔Ross collects a policy's first premium with the application for insurance and finds out the next day that the customer canceled the policy. How must Ross treat the funds? David must pay the premiums - ✔✔Karen transfers all rights in her life insurance policy to her brother, David, in an absolute assignment. Who is typically responsible for paying the policy's premiums from that point forward? one - ✔✔Art is interested in purchasing an immediate annuity. What is the maximum number of premium payments he can make towards its purchase? All employees must be insurable - ✔✔Which of the following is not a requirement for employer- sponsored group insurance?
the amount of the retirement benefit the worker will receive at normal retirement age - ✔✔Social Security benefits are a function of a worker's average indexed monthly earnings and primary insurance amount (PIA). What is a worker's PIA? legal delivery - ✔✔Jennifer applied for a $500,000 whole life insurance policy. The insurer issued the policy but classified Jennifer as a substandard risk, resulting in a higher premium. Which type of policy delivery would be preferred in this situation? constructive delivery Chester and Nellie do not have to pay tax on the distriution - ✔✔Chester and his wife, Nellie, established a 529 plan for their daughter and contributed $5,000 to her account this year. Six months later, they withdrew $20,000 to pay for their daughter's college tuition. Which statement is correct? income tax - ✔✔Cal bought a $100,000 universal life policy ten years ago. He has paid $8,000 in premiums into the policy. He now decides to surrender the policy for its full $15,000 cash value and must pay taxes on $7,000 of that cash value. Which one of the following most correctly describes the type of tax that is applicable in this case? retention - ✔✔Emily is married, has two children, and is the primary breadwinner in the family. She knows that her family would suffer serious financial consequences if she were to die prematurely. However, she continues to put off purchasing a life insurance policy, saying that her family would use its savings to take care of final expenses should she die prematurely. Which method is Emily using to deal with risk?
Sue, an IRA owner - ✔✔All of the following people want to roll over their qualified retirement savings. Each asks that the plan trustee release the funds to her personally. Who will escape the mandatory 20 percent withholding? It gives $100,000 of coverage until the insured reaches age 65 - ✔✔Which one of the following statements regarding a $100,000 level term-to-65 policy is most correct? She is terminally or chronically ill - ✔✔Joanna has a $500,000 permanent life insurance policy that she no longer wants to keep in force. In order to enter into a viatical settlement, what must Joanna prove? The key person's family receives the death benefits - ✔✔Which statement about key person insurance coverage is NOT correct? The net single premium is the sum of the present values of all the expected benefits under the policy. - ✔✔The basic function of a life insurance policy's net single premium is most correctly described by which of the following statements? a fixed account - ✔✔Melanie is young and purchases a variable annuity. She has a high risk tolerance, her investment horizon is long, and she intends to use the annuity as a retirement funding vehicle. She wants to allocate all premiums to the insurer's separate account. If she makes such an allocation, which of the following is she least likely to be investing in? interest-only option - ✔✔Fred's wife was the primary beneficiary of his $750,000 life insurance policy. She received payments of approximately $900 a month in interest during her life, and at her death, their son received a lump-sum payment equal to $750,000. What settlement option was in effect at Fred's death?
They pay a death benefit whether the insured dies during or after the endowment period. - ✔✔Which statement about endowment contracts is NOT correct? universal life insurance - ✔✔At any moment, an adjustable life insurance can be structured and function like any of the following types of life insurance, EXCEPT state insurance departments and the SEC - ✔✔Which of the following entities regulates variable insurance products? The policy pays a death benefit only if the insured dies during the term. - ✔✔Which one of the following statements about term insurance is correct? accelerated benefit rider - ✔✔Nell is insured under a variable life insurance policy with a $500,000 face amount. After being diagnosed with cancer, she has incurred significant medical expenses. Nell can access part or all of her policy's face value to pay these bills if her insurance policy contains which of the following riders? surrender charges - ✔✔Jill, age 60, owns a deferred annuity. If she withdraws funds from the annuity within a set period after buying the contract, she may be forced to pay which of the following, imposed by the insurer? Policy dividends are considered a return of unearned premium. - ✔✔Which statement about life insurance policy dividends is correct? 24 months - ✔✔How long from contract signing and issue does an insurance company have to discover and void an insurance policy due to fraud?
waiver - ✔✔What is the term for voluntarily giving up a known right? to wait before filing suit - ✔✔Paul is the beneficiary under his wife's life insurance policy. When he submits a claim under the policy after his wife's death, the insurer doesn't respond. After one month, Paul wants to take legal action and consults an attorney. Which of the following is his attorney likely to advise? Bob's beneficiary will not receive the death benefit. - ✔✔Bob bought a $100,000 ten-year level term insurance policy ten years ago on March 1. What will happen if he dies this year on March 1? The policy will remain in effect. - ✔✔If the total amount of a policy loan plus interest is less than the policy's cash surrender value, which of the following will happen? Paul, the contract owner, and ABC Insurance Company, the issuer - ✔✔Who of the following are parties to an annuity contract? cancel the policy and refund the premium because the policy is still in the free-look period - ✔✔Agent Salvador takes an application for life insurance along with the first premium. When the policy is ready for delivery, he personally delivers it to his insured. The next day, the insured decides she can't really afford it and doesn't want the policy. Which of the following is the best course of action for Salvador? a life settlement - ✔✔Richard just retired at age 72 and owns a $500,000 life insurance policy. Because he no longer needs insurance protection, Richard would like to sell his policy and use the proceeds to travel during retirement. Which option would be best suited for this purpose?
$100,000 - ✔✔Paul dies with a $50,000 unpaid loan (including interest) against his $150,000 life insurance policy. What death benefit would the insurance company pay his beneficiary? an annuity - ✔✔Brenda owns a deferred annuity that she no longer needs. Through a Section 1035 exchange, she can exchange her annuity income tax free for which of the following? He must inform Patty of the consequences of replacing the policy. - ✔✔Patty is considering purchasing a life insurance policy, and Agent Brown asks if she has any existing policies. She does, and states that she would not maintain her current policy if she purchased the policy that Agent Brown presented. Therefore, Agent Brown has which of the following duties? which annuity income option to select - ✔✔When discussing settlement options with an annuity owner, what is the agent likely to advise a client? fixed number of years or the length of the annuitant's life - ✔✔Settlement options can be based on which of the following? Frank Grant - ✔✔Who is the contingent beneficiary, second level, in the following beneficiary designation: "Sally Grant, wife of the insured, if she survives the insured; otherwise in equal shares to surviving children of the insured, if any; otherwise to Frank Grant, brother of the insured." The insurer must write separate riders for each child in a family. - ✔✔Which statement about children's term riders in life insurance is NOT correct?
The insurer may cancel both types of policies if the policyowner does not pay the premiums. - ✔✔When may an insurer cancel either whole life or term life insurance? living benefits - ✔✔Frank intends to use his life insurance to make the down payment on a vacation home. In so doing, Frank is using which of the following? securities - ✔✔What are variable life insurance policies considered? Life insurance creates an estate, while annuities liquidate an estate. - ✔✔Annuities are often called the mirror image of life insurance. Why is this? They are a way to accumulate money over time by deferring the date at which the contract will begin distributing income. - ✔✔How would an insurance producer best explain flexible premium deferred annuities to a client? fees for reviewing the prospectus - ✔✔Variable life insurance policies may carry all of the following charges and fees EXCEPT Self-employed workers pay a lower FICA tax than employees. - ✔✔All of the following statements about the funding of Social Security benefits are correct, EXCEPT: waiver of stipulated premium - ✔✔Your client has a universal life policy. He wants to be assured that the death benefit will remain intact if he becomes disabled and stops premium payments. What type of rider would accomplish this?
Employees can contribute a percentage of their salary every year, up to specified limits, on a pre-tax basis. - ✔✔If an employer establishes a 401(k) plan for its employees, which of the following statements is correct? Funds cannot be accessed until the payout period. - ✔✔Which of the following is not true about deferred annuities? assignee - ✔✔In an absolute assignment, what term is used to describe the new policyowner? her average indexed monthly earnings - ✔✔Sammie, 58, is applying for Social Security disability benefits. She has worked for most of her life. If approved, her benefit amount will be based on which of the following?
