COLORADO HEALTH INSURANCE AND LIFE
INSURANCE | QUESTIONS AND VERIFIED
ANSWERS |100% CORRECT 2024/2025
QUESTION: Roth IRA ✓✓Correct Answer: private retirement plan that taxes income before it is
saved, but which does not tax interest on that income when funds are used upon retirement
Distributions don't have to start before 70.5
QUESTION: 401(k) plan ✓✓Correct Answer: Elective deferral plan that allows employee to reduce
compensation by a stated percentage on a tax deductible/ tax differed basis; often the employer
matches the employee contributions
QUESTION: Simplified Employee Pension (SEP) ✓✓Correct Answer: A qualified plan in which a
smaller employer contributes specified amounts directly into IRA accounts on behalf of eligible
employees
QUESTION: 403(b) plan ✓✓Correct Answer: An elective deferral plan for employees of organizations
such as school systems, churches, and hospitals
QUESTION: Keogh Plan ✓✓Correct Answer: Retirement plan for self-employed individual and their
qualified employees
QUESTION: Rollover ✓✓Correct Answer: Tax free withdrawal of cash or other assets from one
retirement program and its reinvestment in another program. It is not considered income and it is
not taxable until a later withdrawal. Has to be completed in 60 days
QUESTION: Transfer ✓✓Correct Answer: When amounts of a qualified plan are transferred to
another qualified plan
Page 1 of 188
, QUESTION: Employee Retirement Income Security Act (ERISA) ✓✓Correct Answer: Federal law that
increased the responsibility of pension plan trustees to protect retirees, established certain rights
related to vesting and portability, and created the Pension Benefit Guarantee Corporation
QUESTION: profit-sharing plan ✓✓Correct Answer: a benefit whereby employees may share in the
profits of the business
QUESTION: Catch-up Contributions ✓✓Correct Answer: -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch up
provisions**
QUESTION: Rollover time frame ✓✓Correct Answer: 60 days
QUESTION: Keogh Plan ✓✓Correct Answer: A federally-approved, tax-deferred savings program for
self-employed people, allowing them to set money aside for their retirement.
QUESTION: Annuity Period ✓✓Correct Answer: the payout period of an annuity
QUESTION: Flexible Premium Annuity ✓✓Correct Answer: allows the owner to vary the premium
payments
QUESTION: Deferred Annuity ✓✓Correct Answer: An annuity that starts sometime in the future.
QUESTION: Variable Annuity ✓✓Correct Answer: Annuity that has a varying rate of return based on
the mutual funds in which one has invested
QUESTION: Gramm-Leach-Bliley Act ✓✓Correct Answer: requires financial institutions to ensure the
security and confidentiality of customer data
QUESTION: Certificate of Insurance (COI) ✓✓Correct Answer: proof that the insured has insurance
Page 2 of 188
,QUESTION: Market conduct ✓✓Correct Answer: refers to the marketing practices of insurers and
agents that involve interaction with insureds, claimants, or consumers
QUESTION: expense loading ✓✓Correct Answer: the amount needed to pay all expenses, including
commissions, general administrative expenses, state premium taxes, acquisition expenses, and an
allowance for contingencies and profit
QUESTION: Straight Life Annuity ✓✓Correct Answer: The payout option that will guarantee an
annuity payment for the remainder of an individual's life. This option typically provides the largest
monthly payment.
QUESTION: Refund Life Annuity ✓✓Correct Answer: Provides annuity payments for the annuitant's
lifetime with the guarantee that in no event will total income be less than the purchase price of the
contract. If the annuitant dies before receiving this amount, the difference is paid to a named
beneficiary either as a cash refund or in installments.
QUESTION: convertible term policy ✓✓Correct Answer:
QUESTION: Aleatory Contract ✓✓Correct Answer: a contract where the values exchanged may not
be equal but depend on an uncertain event
QUESTION: Insurance Dividends ✓✓Correct Answer: Considered to be a return of overpaid
premiums and is not taxable. You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is
taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will
change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year, the
term expires)
Page 3 of 188
, QUESTION: insurance benefit ✓✓Correct Answer: Advantage, privilege, right, or financial
reimbursement
QUESTION: Insurance Considerations ✓✓Correct Answer: The easiest way to protect yourself and
your organization from the legal liability and financial loss associated with environmental safety risks
is through insurance. Coverage by insurance allows the facility to transfer the potentially devastating
financial risk of a future loss for the cost certainty of a monthly or yearly payment (i.e., premium).
QUESTION: Adverse Selection ✓✓Correct Answer: A high-risk person benefits more from insurance,
so is more likely to purchase it.
QUESTION: qualified retirement plan ✓✓Correct Answer: A retirement savings plan approved by the
Internal Revenue Service that provides individuals with a tax benefit
QUESTION: Unilateral Contract ✓✓Correct Answer: promise in exchange for an act
QUESTION: Elements of a Contract ✓✓Correct Answer: offer, acceptance, consideration
QUESTION: Section 1035 (Policy Exchanges) ✓✓Correct Answer: Due to the fact that life insurance,
annuities and endowments are all similar in nature (though they have their differences), the IRS,
under certain circumstances, allows for the exchange of one policy for another without taxation to
the individual, as long as funds are not distributed to the individual in the process.
QUESTION: limited pay life insurance ✓✓Correct Answer: A form of whole life insurance
characterized by premium payments only being made for a specified or limited number of years.
QUESTION: annuity ✓✓Correct Answer: payment received every year
QUESTION: Mutual Insurance Company ✓✓Correct Answer: A type of insurance company owned by
its policyholders.
QUESTION: Whole Life Insurance Policy ✓✓Correct Answer: the cash value is greatest at the end of
the policy period, and the insurance protection is greatest at the start of the policy
Page 4 of 188
INSURANCE | QUESTIONS AND VERIFIED
ANSWERS |100% CORRECT 2024/2025
QUESTION: Roth IRA ✓✓Correct Answer: private retirement plan that taxes income before it is
saved, but which does not tax interest on that income when funds are used upon retirement
Distributions don't have to start before 70.5
QUESTION: 401(k) plan ✓✓Correct Answer: Elective deferral plan that allows employee to reduce
compensation by a stated percentage on a tax deductible/ tax differed basis; often the employer
matches the employee contributions
QUESTION: Simplified Employee Pension (SEP) ✓✓Correct Answer: A qualified plan in which a
smaller employer contributes specified amounts directly into IRA accounts on behalf of eligible
employees
QUESTION: 403(b) plan ✓✓Correct Answer: An elective deferral plan for employees of organizations
such as school systems, churches, and hospitals
QUESTION: Keogh Plan ✓✓Correct Answer: Retirement plan for self-employed individual and their
qualified employees
QUESTION: Rollover ✓✓Correct Answer: Tax free withdrawal of cash or other assets from one
retirement program and its reinvestment in another program. It is not considered income and it is
not taxable until a later withdrawal. Has to be completed in 60 days
QUESTION: Transfer ✓✓Correct Answer: When amounts of a qualified plan are transferred to
another qualified plan
Page 1 of 188
, QUESTION: Employee Retirement Income Security Act (ERISA) ✓✓Correct Answer: Federal law that
increased the responsibility of pension plan trustees to protect retirees, established certain rights
related to vesting and portability, and created the Pension Benefit Guarantee Corporation
QUESTION: profit-sharing plan ✓✓Correct Answer: a benefit whereby employees may share in the
profits of the business
QUESTION: Catch-up Contributions ✓✓Correct Answer: -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch up
provisions**
QUESTION: Rollover time frame ✓✓Correct Answer: 60 days
QUESTION: Keogh Plan ✓✓Correct Answer: A federally-approved, tax-deferred savings program for
self-employed people, allowing them to set money aside for their retirement.
QUESTION: Annuity Period ✓✓Correct Answer: the payout period of an annuity
QUESTION: Flexible Premium Annuity ✓✓Correct Answer: allows the owner to vary the premium
payments
QUESTION: Deferred Annuity ✓✓Correct Answer: An annuity that starts sometime in the future.
QUESTION: Variable Annuity ✓✓Correct Answer: Annuity that has a varying rate of return based on
the mutual funds in which one has invested
QUESTION: Gramm-Leach-Bliley Act ✓✓Correct Answer: requires financial institutions to ensure the
security and confidentiality of customer data
QUESTION: Certificate of Insurance (COI) ✓✓Correct Answer: proof that the insured has insurance
Page 2 of 188
,QUESTION: Market conduct ✓✓Correct Answer: refers to the marketing practices of insurers and
agents that involve interaction with insureds, claimants, or consumers
QUESTION: expense loading ✓✓Correct Answer: the amount needed to pay all expenses, including
commissions, general administrative expenses, state premium taxes, acquisition expenses, and an
allowance for contingencies and profit
QUESTION: Straight Life Annuity ✓✓Correct Answer: The payout option that will guarantee an
annuity payment for the remainder of an individual's life. This option typically provides the largest
monthly payment.
QUESTION: Refund Life Annuity ✓✓Correct Answer: Provides annuity payments for the annuitant's
lifetime with the guarantee that in no event will total income be less than the purchase price of the
contract. If the annuitant dies before receiving this amount, the difference is paid to a named
beneficiary either as a cash refund or in installments.
QUESTION: convertible term policy ✓✓Correct Answer:
QUESTION: Aleatory Contract ✓✓Correct Answer: a contract where the values exchanged may not
be equal but depend on an uncertain event
QUESTION: Insurance Dividends ✓✓Correct Answer: Considered to be a return of overpaid
premiums and is not taxable. You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is
taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will
change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year, the
term expires)
Page 3 of 188
, QUESTION: insurance benefit ✓✓Correct Answer: Advantage, privilege, right, or financial
reimbursement
QUESTION: Insurance Considerations ✓✓Correct Answer: The easiest way to protect yourself and
your organization from the legal liability and financial loss associated with environmental safety risks
is through insurance. Coverage by insurance allows the facility to transfer the potentially devastating
financial risk of a future loss for the cost certainty of a monthly or yearly payment (i.e., premium).
QUESTION: Adverse Selection ✓✓Correct Answer: A high-risk person benefits more from insurance,
so is more likely to purchase it.
QUESTION: qualified retirement plan ✓✓Correct Answer: A retirement savings plan approved by the
Internal Revenue Service that provides individuals with a tax benefit
QUESTION: Unilateral Contract ✓✓Correct Answer: promise in exchange for an act
QUESTION: Elements of a Contract ✓✓Correct Answer: offer, acceptance, consideration
QUESTION: Section 1035 (Policy Exchanges) ✓✓Correct Answer: Due to the fact that life insurance,
annuities and endowments are all similar in nature (though they have their differences), the IRS,
under certain circumstances, allows for the exchange of one policy for another without taxation to
the individual, as long as funds are not distributed to the individual in the process.
QUESTION: limited pay life insurance ✓✓Correct Answer: A form of whole life insurance
characterized by premium payments only being made for a specified or limited number of years.
QUESTION: annuity ✓✓Correct Answer: payment received every year
QUESTION: Mutual Insurance Company ✓✓Correct Answer: A type of insurance company owned by
its policyholders.
QUESTION: Whole Life Insurance Policy ✓✓Correct Answer: the cash value is greatest at the end of
the policy period, and the insurance protection is greatest at the start of the policy
Page 4 of 188
