NC Life Insurance State Exam Study Guide Questions With Correct Answers 100% Verified

NC Life Insurance State Exam Study Guide Questions With Correct Answers 100% Verified 401k - Answer To provide employee for retirement plans. As means of distributing company stock to employees. Is an arrangement that allows an employee to choose between taking compensation in cash or deferring a percentage of it to an account under the plan. The amount deferred is usually not taxable to the employee. A policy surrendered for cash - Answer May NOT be in reinstated Do not need to re-establish insurable interest in order to reinstate only at time of application Incontestability clause and Suicide Clause state over. Absolute assignment - Answer Is permanent change of ownership. Child policy may be assigned to the child at age 18. Old owner is known as the Assignor of the policy. The New owner is known as the Assignee of the policy. Assignments are not effective until countersigned by insurer. Accelerated Death benefit - Answer Apply when insured gets a terminal illness. Insurers will pay out a portion of the death benefit to insured. Face Amount paid to the beneficiary at death is reduced, by the amount paid out to the insured while living. Amounts paid are NOT TAXABLE. Accidental Death Benefit rider - Answer A type of accident insurance added to a life policy. Sometimes called (multiple indemnity rider). Pays double the Face Amount (sometimes Triple) if the insured dies as a result of an accident. Death must occur within 90 days of the accident, or it is assumed to be from natural causes. DOES NOT cover death due to sickness, only accidents Pays a stated amount if the insured is blinded in an accident (AD&D Rider) Adjustable Whole life ( Flexible Premium) - Answer Is a combination of Term and Whole Life! Still cover you until you die or age 100 (matures) Insureds can adjust Face Amount, Premiums or Term of Protection. Sold to Clients with Fluctuating income ( real estate brokers) Coverage may not be increased beyond the original amount without an physical. Adjustable/Flexible - Answer Adjustable: Adjust Face Amount, Premiums or Term of protection Flexible: Fluctating incomes Annuities - Answer Are perfect for a client who is worried that they are going to live too long since the payments payout for life. Has a 30 day grace period. Annuity option - Answer Beneficiary selects a lifetime payout. Proceeds cannot be exhausted. Payments are made for the life time of the beneficiary. Monthly payments depend upon the age of the beneficiary, the amount of the proceeds and the annuity option selected. Annuity pay out options - Answer Contractual in nature cannot be changed once selected. Selected by annuitant upon annuitization. Amounts received in excess of the cost basis are taxable as ordinary income. All payouts options will pay annuitant for life. Annuitization is not required, annuitant may remain in pay-in period indefinitely. Cash surrender under 59 1/2 are subject to an IRS 10% penatly. Most are Nonqualified (funded with after tax dollars) Apply to premium when due - Answer Dividend offsets amount of premium due. Insured just pays the difference Are Annuities Tax-deferred? - Answer Yes, during the pay-in or accumulation period Assignments - Answer Allows owner to permanently or temporarily assign owner's rights.