WISCONSIN LIFE EXAM FX QUESTIONS & ANSWERS
An intermediary must maintain records for how long?
a)3 years
b)5 years
c)10 years
d)Permanently - Answers :a)3 years
Each intermediary must maintain records for a 3 year period.
A rider attached to a life insurance policy that provides coverage on the insured's family
members is called the
a)Payor rider.
b)Other-insured rider.
c)Change of insured rider.
d)Juvenile rider. - Answers :b)Other-insured rider.
The other-insureds rider is useful in providing insurance for more than one family
member. The type of insurance offered by this rider is usually term insurance, with the
right to convert to permanent insurance.
The policyowner may assign a part of the policy (collateral assignment) or the entire
policy (absolute assignment).
If reasonably possible, a notice of proof of loss claim must be provided to the insurer
within what period of time after the time required by the policy?
a)3 months
b)6 months
c)9 months
d)12 months - Answers :d)12 months
A notice of proof of loss claim must be provided as soon as reasonably possible to the
insurer and within 1 year after the time required by the policy.
All of the following would be considered rebating EXCEPT
a)An agent misrepresents policy benefits to convince a policyowner to replace policies.
b)An agent offers the use of his lake house to a client as an inducement to buy an
insurance policy from him.
c)An agent offers to share his commission with a policyholder.
d)An agent offers tickets to a baseball game as an inducement to buy insurance. -
Answers :a)An agent misrepresents policy benefits to convince a policyowner to replace
policies.
,Rebating occurs when an insured is offered something of value in order to induce the
sale of an insurance product. Both the offer and acceptance of a rebate are illegal.
When the appointment of an individual agent is terminated, the insurer must notify the
Office of the Commissioner with appropriate forms within how many days after the
termination date?
a)30
b)10
c)15
d)20 - Answers :a)30
The insurer has 30 days to notify the Office of the Commissioner.
Which two terms are associated directly with the way an annuity is funded?
a)Immediate or deferred
b)Renewable or convertible
c)Single payment or periodic payments
d)Increasing or decreasing - Answers :c)Single payment or periodic payments
Annuities are characterized by how they can be paid for: either a single payment (lump
sum) or through periodic payments in which the premiums are paid in installments over
a period of time. Periodic payment annuities can be either level, in which the
annuitant/owner pays a fixed installment, or the payments can be flexible, in which the
amount and frequency of each installment varies.
An individual is purchasing a permanent life insurance policy with a face value of
$25,000. While this is all the insurance that he can afford at this time, he wants to be
sure that additional coverage will be available in the future. Which of the following
options should be included in the policy?
a)Dividend options
b)Guaranteed renewable option
c)Nonforfeiture options
d)Guaranteed insurability option - Answers :d)Guaranteed insurability option
The guaranteed insurability option allows the insured to purchase specific amounts of
additional insurance at specific times without proving insurability.
All of the following would be different between qualified and nonqualified retirement
plans EXCEPT
a)Taxation on accumulation
b)Taxation of withdrawals
c)Taxation of contributions
d)IRS approval requirements - Answers :a)Taxation on accumulation
, An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years
old when he decides to collect distributions. What kind of penalty would the IRA owner
pay?
a)50% tax on the amount not distributed as required
b)No penalties, since the owner is older than 59 ½
c)10% for early withdrawal
d)15% for early withdrawal - Answers :a)50% tax on the amount not distributed as
required
When immediate annuities are used to pay IRA benefits, distributions must begin no
later than age 70½ in order for the annuitant to avoid penalties. The penalty is 50% of
the shortfall from the required annual amount.
In a life settlement contract, whom does the life settlement broker represent?
a)The owner
b)The insurer
c)The beneficiary
d)The life settlement intermediary - Answers :a)The owner
Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers
to negotiate a life settlement contract. Life settlement brokers represent only the
policyowners.
Which of the following statements is TRUE about a policy assignment?
a)It transfers rights of ownership from the owner to another person.
b)It is the same as a beneficiary designation.
c)It permits the beneficiary to designate the person to receive the benefits.
d)It authorizes an agent to modify the policy. - Answers :a)It transfers rights of
ownership from the owner to another person.
The policyowner pays for her life insurance annually. Until now, she has collected a
nontaxable dividend check each year. She has decided that she would rather use the
dividends to help pay for her next premium. What option would allow her to do this?
a)Reduction of premium
b)Paid-up addition
c)Accumulation at interest
d)Cash option - Answers :a)Reduction of premium
The Reduction of Premium option allows the policyholder to apply policy dividends
toward the next year's premium. The dividend is subtracted from the premium amount,
yielding the new premium due for the next year.
An intermediary has just placed insurance on himself. He can receive compensation for
this transaction only if he has placed insurance on other individuals with the same
insurer within the last
a)3 months.
An intermediary must maintain records for how long?
a)3 years
b)5 years
c)10 years
d)Permanently - Answers :a)3 years
Each intermediary must maintain records for a 3 year period.
A rider attached to a life insurance policy that provides coverage on the insured's family
members is called the
a)Payor rider.
b)Other-insured rider.
c)Change of insured rider.
d)Juvenile rider. - Answers :b)Other-insured rider.
The other-insureds rider is useful in providing insurance for more than one family
member. The type of insurance offered by this rider is usually term insurance, with the
right to convert to permanent insurance.
The policyowner may assign a part of the policy (collateral assignment) or the entire
policy (absolute assignment).
If reasonably possible, a notice of proof of loss claim must be provided to the insurer
within what period of time after the time required by the policy?
a)3 months
b)6 months
c)9 months
d)12 months - Answers :d)12 months
A notice of proof of loss claim must be provided as soon as reasonably possible to the
insurer and within 1 year after the time required by the policy.
All of the following would be considered rebating EXCEPT
a)An agent misrepresents policy benefits to convince a policyowner to replace policies.
b)An agent offers the use of his lake house to a client as an inducement to buy an
insurance policy from him.
c)An agent offers to share his commission with a policyholder.
d)An agent offers tickets to a baseball game as an inducement to buy insurance. -
Answers :a)An agent misrepresents policy benefits to convince a policyowner to replace
policies.
,Rebating occurs when an insured is offered something of value in order to induce the
sale of an insurance product. Both the offer and acceptance of a rebate are illegal.
When the appointment of an individual agent is terminated, the insurer must notify the
Office of the Commissioner with appropriate forms within how many days after the
termination date?
a)30
b)10
c)15
d)20 - Answers :a)30
The insurer has 30 days to notify the Office of the Commissioner.
Which two terms are associated directly with the way an annuity is funded?
a)Immediate or deferred
b)Renewable or convertible
c)Single payment or periodic payments
d)Increasing or decreasing - Answers :c)Single payment or periodic payments
Annuities are characterized by how they can be paid for: either a single payment (lump
sum) or through periodic payments in which the premiums are paid in installments over
a period of time. Periodic payment annuities can be either level, in which the
annuitant/owner pays a fixed installment, or the payments can be flexible, in which the
amount and frequency of each installment varies.
An individual is purchasing a permanent life insurance policy with a face value of
$25,000. While this is all the insurance that he can afford at this time, he wants to be
sure that additional coverage will be available in the future. Which of the following
options should be included in the policy?
a)Dividend options
b)Guaranteed renewable option
c)Nonforfeiture options
d)Guaranteed insurability option - Answers :d)Guaranteed insurability option
The guaranteed insurability option allows the insured to purchase specific amounts of
additional insurance at specific times without proving insurability.
All of the following would be different between qualified and nonqualified retirement
plans EXCEPT
a)Taxation on accumulation
b)Taxation of withdrawals
c)Taxation of contributions
d)IRS approval requirements - Answers :a)Taxation on accumulation
, An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years
old when he decides to collect distributions. What kind of penalty would the IRA owner
pay?
a)50% tax on the amount not distributed as required
b)No penalties, since the owner is older than 59 ½
c)10% for early withdrawal
d)15% for early withdrawal - Answers :a)50% tax on the amount not distributed as
required
When immediate annuities are used to pay IRA benefits, distributions must begin no
later than age 70½ in order for the annuitant to avoid penalties. The penalty is 50% of
the shortfall from the required annual amount.
In a life settlement contract, whom does the life settlement broker represent?
a)The owner
b)The insurer
c)The beneficiary
d)The life settlement intermediary - Answers :a)The owner
Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers
to negotiate a life settlement contract. Life settlement brokers represent only the
policyowners.
Which of the following statements is TRUE about a policy assignment?
a)It transfers rights of ownership from the owner to another person.
b)It is the same as a beneficiary designation.
c)It permits the beneficiary to designate the person to receive the benefits.
d)It authorizes an agent to modify the policy. - Answers :a)It transfers rights of
ownership from the owner to another person.
The policyowner pays for her life insurance annually. Until now, she has collected a
nontaxable dividend check each year. She has decided that she would rather use the
dividends to help pay for her next premium. What option would allow her to do this?
a)Reduction of premium
b)Paid-up addition
c)Accumulation at interest
d)Cash option - Answers :a)Reduction of premium
The Reduction of Premium option allows the policyholder to apply policy dividends
toward the next year's premium. The dividend is subtracted from the premium amount,
yielding the new premium due for the next year.
An intermediary has just placed insurance on himself. He can receive compensation for
this transaction only if he has placed insurance on other individuals with the same
insurer within the last
a)3 months.
