Colorado Life and Health Test Questions with Correct Solutions Rated A+

Which of the following is an IRS qualified retirement program for the self-employed? - Keogh he interest earned on policy dividends is - taxable During partial withdrawal from a universal life policy, which portion will be taxed? - Interest A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? - The amount of the distribution is reduced by the amount of a 20% withholding tax What is the other term for the cash payment settlement option? - Lump sum The premium of a survivorship life policy compared with that of a joint life policy would be - lower Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? - family term rider An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? - consideration Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? - automatic premium loan An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? - conditonal who is the owner and who is the beneficiary on a Key Person Life Insurance policy? - The employer is the owner and beneficiary Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? - The employer is the owner and beneficiary An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? - Conditional According to the Entire Contract provision, a policy must contain - A copy of the original application for insurance. Which of the following is the best reason to purchase life insurance rather than annuities? - To create an estate The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is - A nonqualified annuity plan Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? - Consumer report A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? - Level term Which is NOT true about beneficiary designations? - The beneficiary must have insurable interest in the insured The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract? - Conditional Which of the following is TRUE regarding the premium in term policies? - The premium is leve Which of the following is NOT typically excluded from life policies? - Death due to plane crash for a fare-paying passenger Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? - Buy-sell agreement Which of the following is NOT typically excluded from life policies? - Death due to plane crash for a fare-paying passenger In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? - Unilateral Which of the following is true regarding taxation of dividends in participating policies - Dividends are not taxable. Which of the following is true about the mandatory free look in a Life Insurance policy? - It commences when the policy is delivered. What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? - It determines who receives policy benefits if the primary beneficiary is deceased Which of the following information will be stated in the consideration clause of a life insurance policy - The amount of premium payment An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? - She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? - Fixed amoun The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as - The policy contains sufficient cash value to cover the cost of insurance. An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? - Selection, classification, and rating of risks An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize? - Viatical settlement Which of the following includes information regarding a person's credit, character, reputation, and habits? - Consumer report