MN State Insurance Exam Questions With Complete Solutions.

How are employee FICA taxes collected? - The employer withholds the employee's tax and pays it along with the employer's portion Mateo applies for an insurance policy that will have an annual premium payment of $1,000 ($510 semiannually, $260 quarterly, and $100 monthly) if issued. Which of the following premium checks would be adequate consideration if he chose to pay monthly? - $100 The nonforfeiture option that provides the least amount of coverage is: - Reduced Paid-Up In order for an insurance company to determine if it will issue a policy, what document must always be submitted for review? - The application Before an insurer can operate in this state, it must have which of the following? - Certificate of Authority issued by the state Insurance Department Prelicensing education must include how many hours of education per line of authority? - 20 If an applicant is a minor, who signs the application? -Their guardian All of the following are Dividend Options, except: - Reduced paid-up An insured has contributed $12,000 in premiums toward a universal life policy. She decides to cancel the policy and take the cash value of $15,000. What are the tax consequences of this distribution? - $12,000 is a return of after tax dollars (i.e. cost basis), $3,000 is taxable as ordinary income All of the following are characteristics of Ordinary Whole Life Insurance, except: - If insured lives to age 100, the total amount of premium paid over the lifetime of the insured is returned to the policyownerLevel, decreasing and increasing term refer to which policy feature - Death benefit A misstatement of an insured's age was not discovered until after the insured died. The policy had been in effect for 3 years. What will the insurer do to address this situation? - Pay benefits based on what past premiums would have purchased at the correct age All of the following are considered specialized policies, except: - Whole Life As part of Social Security benefits, a one-time payment of $_______ may be made paid to a surviving spouse after a taxpayer's death. - 255 The insurable interest on one's own life is generally regarded as: - Unlimited When the life insurance policy's cash value equals the face amount of the policy and the proceeds are paid to the policyowner, this is known as the policy's _________. - Endowment When the owner of the policy and insurer must meet certain conditions in order for the health insurance policy to be enforceable, it is referred to as a(n): - Conditional contract With indexed life, the interest credited to the policy is: - Based on a percentage of the increase in a stipulated stock index Jerry has selected a Life Income 10 year Period Certain. What happens to the income payments if he dies in year 4 after starting to receive income benefit payments? - The payments continue for the balance of the Period Certain to a named beneficiary What is the fastest way to pay up an ordinary whole life policy? - Buy a single premium policy If an applicant for life insurance misstates his age on the application, what would be the consequence if/when it is discovered? - Death benefit will be what the premium paid would have purchased at issuance at the correct ageThe purchase of a policy from a terminally ill insured by a third party who becomes the new owner is considered a ___________. - Viatical settlement