Life Insurance And Annuities Exam Questions With Accurate
Answers.
After a group life master policy has been issued, what action may the insurer
take on future policy anniversaries?
A. It may cancel the insurance of any group members who have become
seriously ill or impaired.
B. It may adjust the premium to bring it in line with current mortality and
operating expenses.
C. It cannot make any changes in the contract or in the enrollees.
D. It may refuse to insure covered members with excessive claims. - accurate
answers-It may adjust the premium to bring it in line with current mortality
and operating expenses.
The company may adjust the premium, and they often do, at anniversary time
on a group policy.
If each partner purchases policies on the other partners, it is what type of
plan?
A. Entity plan
B. Cross purchase plan
C. Partnership plan
D. Stock redemption plan - accurate answers-Cross purchase plan
This is the definition of cross-purchase.
When does a tertiary beneficiary collect?
A. When the primary beneficiary dies
B. When the secondary beneficiary dies
C. When the primary and secondary pre-decease the insured
D. None of the above - accurate answers-When the primary and secondary
pre-decease the insured
Yes, when there is no one living on the two lines above the tertiary. There is
no one else for the proceeds to go to ahead of the third line. What if there was
a charity on the second line rather than a named beneficiary? Then the
proceeds would never make it to the third line because the charity is like a
corporation which never dies.
,The primary insurance amount (PIA) is equal to:
A. 1/2 worker's retirement at 62
B. 1/2 worker's retirement at 65
C. Full worker's retirement at 62
D. Full worker's retirement at Full-Retirement-Age - accurate answers-Full
worker's retirement at Full-Retirement-Age
Yes, and you have to wait until Full-Retirement-Age to get the full benefit.
An annuitant receives $1200 a month, the value of each annuity unit is $6,
How many annuity units did he receive?
A. 20
B. 200
C. 2,000
D. 7,200 - accurate answers-200
Yep. That's right. 1200 divided by 6 = 200. You can also check your math by
doing the problem backwards (which may be easier to understand). 200 units
at $6 apiece makes a total of $1200 dollars.
An annuity contract provides?
A. Income for life
B. Guaranteed death benefit
C. Creation of an immediate estate
D. None of the above - accurate answers-Income for life
Yes. This is the "amazing" thing that makes an annuity different than other
investments. All but the last one of the annuities are lifetime annuities. That
means those continue until the death of the "annuitant" no matter what their
other provisions might be. Don't talk to experienced people in your office
about annuities. They will try to be helpful and will tell you about things that
aren't on the test and will confuse you when you see the answers at exam
time.
An annuity is purchased for $10,000, the expected return is $20,000 what
amount is taxable if it pays $300 month?
A. Zero
B. $100
C. $150
,D. $300 - accurate answers-$150
Yes, and it is done by the exclusion ratio which states: divide the after tax
money going in by the expected return. That gives the fraction of each
payment which excludes taxes. In this case, the number is 1/2 of each
payment that is taxable so you don't get to see what would happen if perhaps
the expected return was $40,000. Then we would be excluding 1/4 of each
payment. Try the math.
Taking all the funds available to a family and planning for their financial
obligations is an example of:
A. Human life value approach
B. Needs approach
C. Dollar valuation
D. Multiple earnings - accurate answers-Needs approach
The needs approach takes many factors into consideration when planning for
the family's financial outcome. Interim goals can be considered as well as
retirement. The needs approach can consider all aspects of a family's future.
A variable annuity separate account will be invested in:
A. the legal reserve for liquidity
B. equity investments
C. bonds
D. short term government securities - accurate answers-equity investments
Now here's the deal: it says equity investments. That means stocks (or bond
funds) which indicates ownership and the chance for appreciation. That's the
goal. Equity means ownership.
An agent who writes controlled business must write how much business to
the public?
A. An equal amount
B. More
C. Less
D. None - accurate answers-An equal amount
, Equal or half or 50% is correct. That's the rule. It means if you as an agent are
selling in a "controlled" environment (you know somebody), at least half of
your business has to be from other sources.
Jose works for a large city as a firefighter and Mable, his wife, is a secretary for
a small new car dealer. Which one is likely not to be covered under social
security?
A. Mable
B. Jose
C. Both would be covered
D. Neither would be covered - accurate answers-Jose
It's Jose. Many cities, governmental agencies, etc., have their own retirement
system and don't connect with social security. Not true of small businesses,
which are going to be required to be in the social security system.
Most business assignments of life insurance policies are made in order to
protect the:
A. insured's insurability.
B. lender's financial interest in the insured.
C. beneficiary from the claims of creditors.
D. insurance company from fraudulent claims - accurate answers-lender's
financial interest in the insured.
Yes. It's the lender (the lending company) who is concerned about getting
repaid if the borrower dies before the loan is paid off.
All of the following activities could result in the suspension of an agent's
license EXCEPT:
A. misrepresenting the financial condition of an insurance company.
B. selling any replacement policy that causes an insured to lapse an existing
policy.
C. obtaining a license for the sole purpose of handling controlled business.
D. demonstrating incompetency to transact business as an insurance agent. -
accurate answers-selling any replacement policy that causes an insured to
lapse an existing policy.
Answers.
After a group life master policy has been issued, what action may the insurer
take on future policy anniversaries?
A. It may cancel the insurance of any group members who have become
seriously ill or impaired.
B. It may adjust the premium to bring it in line with current mortality and
operating expenses.
C. It cannot make any changes in the contract or in the enrollees.
D. It may refuse to insure covered members with excessive claims. - accurate
answers-It may adjust the premium to bring it in line with current mortality
and operating expenses.
The company may adjust the premium, and they often do, at anniversary time
on a group policy.
If each partner purchases policies on the other partners, it is what type of
plan?
A. Entity plan
B. Cross purchase plan
C. Partnership plan
D. Stock redemption plan - accurate answers-Cross purchase plan
This is the definition of cross-purchase.
When does a tertiary beneficiary collect?
A. When the primary beneficiary dies
B. When the secondary beneficiary dies
C. When the primary and secondary pre-decease the insured
D. None of the above - accurate answers-When the primary and secondary
pre-decease the insured
Yes, when there is no one living on the two lines above the tertiary. There is
no one else for the proceeds to go to ahead of the third line. What if there was
a charity on the second line rather than a named beneficiary? Then the
proceeds would never make it to the third line because the charity is like a
corporation which never dies.
,The primary insurance amount (PIA) is equal to:
A. 1/2 worker's retirement at 62
B. 1/2 worker's retirement at 65
C. Full worker's retirement at 62
D. Full worker's retirement at Full-Retirement-Age - accurate answers-Full
worker's retirement at Full-Retirement-Age
Yes, and you have to wait until Full-Retirement-Age to get the full benefit.
An annuitant receives $1200 a month, the value of each annuity unit is $6,
How many annuity units did he receive?
A. 20
B. 200
C. 2,000
D. 7,200 - accurate answers-200
Yep. That's right. 1200 divided by 6 = 200. You can also check your math by
doing the problem backwards (which may be easier to understand). 200 units
at $6 apiece makes a total of $1200 dollars.
An annuity contract provides?
A. Income for life
B. Guaranteed death benefit
C. Creation of an immediate estate
D. None of the above - accurate answers-Income for life
Yes. This is the "amazing" thing that makes an annuity different than other
investments. All but the last one of the annuities are lifetime annuities. That
means those continue until the death of the "annuitant" no matter what their
other provisions might be. Don't talk to experienced people in your office
about annuities. They will try to be helpful and will tell you about things that
aren't on the test and will confuse you when you see the answers at exam
time.
An annuity is purchased for $10,000, the expected return is $20,000 what
amount is taxable if it pays $300 month?
A. Zero
B. $100
C. $150
,D. $300 - accurate answers-$150
Yes, and it is done by the exclusion ratio which states: divide the after tax
money going in by the expected return. That gives the fraction of each
payment which excludes taxes. In this case, the number is 1/2 of each
payment that is taxable so you don't get to see what would happen if perhaps
the expected return was $40,000. Then we would be excluding 1/4 of each
payment. Try the math.
Taking all the funds available to a family and planning for their financial
obligations is an example of:
A. Human life value approach
B. Needs approach
C. Dollar valuation
D. Multiple earnings - accurate answers-Needs approach
The needs approach takes many factors into consideration when planning for
the family's financial outcome. Interim goals can be considered as well as
retirement. The needs approach can consider all aspects of a family's future.
A variable annuity separate account will be invested in:
A. the legal reserve for liquidity
B. equity investments
C. bonds
D. short term government securities - accurate answers-equity investments
Now here's the deal: it says equity investments. That means stocks (or bond
funds) which indicates ownership and the chance for appreciation. That's the
goal. Equity means ownership.
An agent who writes controlled business must write how much business to
the public?
A. An equal amount
B. More
C. Less
D. None - accurate answers-An equal amount
, Equal or half or 50% is correct. That's the rule. It means if you as an agent are
selling in a "controlled" environment (you know somebody), at least half of
your business has to be from other sources.
Jose works for a large city as a firefighter and Mable, his wife, is a secretary for
a small new car dealer. Which one is likely not to be covered under social
security?
A. Mable
B. Jose
C. Both would be covered
D. Neither would be covered - accurate answers-Jose
It's Jose. Many cities, governmental agencies, etc., have their own retirement
system and don't connect with social security. Not true of small businesses,
which are going to be required to be in the social security system.
Most business assignments of life insurance policies are made in order to
protect the:
A. insured's insurability.
B. lender's financial interest in the insured.
C. beneficiary from the claims of creditors.
D. insurance company from fraudulent claims - accurate answers-lender's
financial interest in the insured.
Yes. It's the lender (the lending company) who is concerned about getting
repaid if the borrower dies before the loan is paid off.
All of the following activities could result in the suspension of an agent's
license EXCEPT:
A. misrepresenting the financial condition of an insurance company.
B. selling any replacement policy that causes an insured to lapse an existing
policy.
C. obtaining a license for the sole purpose of handling controlled business.
D. demonstrating incompetency to transact business as an insurance agent. -
accurate answers-selling any replacement policy that causes an insured to
lapse an existing policy.
