Kentucky Life Insurance State Exam Practice
Questions and Answers
Question 1
A terminally ill policyowner decides to sell his life insurance policy to help support his
family. This sale is called a(n)
Correct Answer
Viatical settlement
Question 2
Which Annuity is based on Units rather than specific amounts?
Correct Answer
Variable
Question 3
An employee quits her job where she has a balance of $10,000 in qualified plan. If she
decides to rollover her plan to a Traditional IRA, how much will she receive from the
plan administrator, and how long does she have to complete the tax-free rollover?
Correct Answer
$8,000; 60 days
Question 4
What does a fixed life annuity offer protection against?
Correct Answer
Savings depletion because of longevity
Page 1 of 21
,Question 5
Which term rider attached to a life insurance policy insures an entire family?
Correct Answer
Family
Question 6
Traditional individual retirement annuity (IRA) distributions must start by
Correct Answer
April 1st of the year following the year the participant attains age 70 1/2
Question 7
An insurance policy is initially a two party contract. The term Unilateral permits the
enforcement of the policy's terms by which party?
Correct Answer
Insured
Question 8
An employer that offers a qualified retirement plan to its employees is eligible to
Correct Answer
Make tax-deductible contributions to the plan
Question 9
A 55 year old recently received a $30,000 distribution from a previous employer's
401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds
were rolled over?
Correct Answer
Income taxes plus a 10% penalty tax on $30,000
Page 2 of 21
, Question 10
What happens to the purchasing power of benefit payments from a fixed life annuity
when the cost of living goes up?
Correct Answer
Decreases
Question 11
In the event of premium default, which life insurance provision will utilize the cash
value to keep the policy in force?
Correct Answer
Automatic premium loan
Question 12
Which tax is normally associated with death?
Correct Answer
Federal estate tax
Question 13
What benefit is normally available to a life insurance policyowner who has contracted
a terminal illness?
Correct Answer
Accelerated (living) benefit
Question 14
How long can an insurer normally postpone paying the cash value of a surrendered
life insurance policy?
Correct Answer
6 months
Page 3 of 21
Questions and Answers
Question 1
A terminally ill policyowner decides to sell his life insurance policy to help support his
family. This sale is called a(n)
Correct Answer
Viatical settlement
Question 2
Which Annuity is based on Units rather than specific amounts?
Correct Answer
Variable
Question 3
An employee quits her job where she has a balance of $10,000 in qualified plan. If she
decides to rollover her plan to a Traditional IRA, how much will she receive from the
plan administrator, and how long does she have to complete the tax-free rollover?
Correct Answer
$8,000; 60 days
Question 4
What does a fixed life annuity offer protection against?
Correct Answer
Savings depletion because of longevity
Page 1 of 21
,Question 5
Which term rider attached to a life insurance policy insures an entire family?
Correct Answer
Family
Question 6
Traditional individual retirement annuity (IRA) distributions must start by
Correct Answer
April 1st of the year following the year the participant attains age 70 1/2
Question 7
An insurance policy is initially a two party contract. The term Unilateral permits the
enforcement of the policy's terms by which party?
Correct Answer
Insured
Question 8
An employer that offers a qualified retirement plan to its employees is eligible to
Correct Answer
Make tax-deductible contributions to the plan
Question 9
A 55 year old recently received a $30,000 distribution from a previous employer's
401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds
were rolled over?
Correct Answer
Income taxes plus a 10% penalty tax on $30,000
Page 2 of 21
, Question 10
What happens to the purchasing power of benefit payments from a fixed life annuity
when the cost of living goes up?
Correct Answer
Decreases
Question 11
In the event of premium default, which life insurance provision will utilize the cash
value to keep the policy in force?
Correct Answer
Automatic premium loan
Question 12
Which tax is normally associated with death?
Correct Answer
Federal estate tax
Question 13
What benefit is normally available to a life insurance policyowner who has contracted
a terminal illness?
Correct Answer
Accelerated (living) benefit
Question 14
How long can an insurer normally postpone paying the cash value of a surrendered
life insurance policy?
Correct Answer
6 months
Page 3 of 21
