1
AAMS Exam fully solved & updated
(latest version verified for accuracy)
(Questions + Answers) Solved 100%
Correct!!
Which of these statements is most accurate with respect to the life insurance
needs of the typical family? - (ANSWER)Total life insurance requirements may
decrease as an individual approaches retirement
Assume a client has $30,000 in a money market fund, $2,000 in a checking
account, a mortgage loan of $110,000 (not to be paid off, as it will be transferred
to the spouse), an auto loan of $20,000, and credit card balances of $5,000.
Assume that if he died, postmortem expenses would be $15,000. What would be
the cash requirements for this client? - (ANSWER)$8,000
An investment professional is assessing the life insurance needs of the Robinson
family. Mr. Robinson has determined that the family's immediate cash flow
requirements in the event of his death are $65,000. The amount needed to meet
all future funding requirements (net of Mrs. Robinson's income and Social
Security and pension benefits) is estimated to be $550,000. The family owns a
home in which their equity interest is $200,000. Based upon these figures, the
investment professional would recommend life insurance with a face amount of: -
(ANSWER)$615,000
With regard to financial planning, many individuals and households overlook the
potential needs for: - (ANSWER)disability income and long-term care insurance
, 2
Mrs. Bartlett purchased a life insurance policy that will pay $100,000 to her
beneficiary should she die at any time during the next year. The policy guarantees
the right to renew every year for the next five years, and builds no cash value.
Mrs. Bartlett has purchased a - (ANSWER)term life insurance policy
Which types of clients would be identified as the best prospect for cash value life
insurance? - (ANSWER)Clients who prefer the discipline of regular, periodic
investments
With respect to cash value life policies, what part of the policy value, if any, is
subject to income taxation when the policy is surrendered? - (ANSWER)The
amount of the cash value that exceeds the investment in the contract
Brenda Bradford is the owner of a whole life policy on her husband, Rolf. Their
daughter, Vera, is named in the policy as the contingent beneficiary. In issuing the
policy, the insurance company has asked that a settlement option be selected.
Which one of the following individuals is currently empowered to make the
selection? - (ANSWER)Brenda, the policy owner
Your client, Ann, age 50, received a $300,000 inheritance from her late parents'
estate. She would like to invest this money in a safe place, where it will grow in
value until she takes early retirement at age 60. Which one of the following would
be the most logical choice for Ann? - (ANSWER)Single-premium deferred annuity
Ten years ago, June, age 58, purchased a deferred annuity with a fixed rate of
return of 4%. She believes that she could do better if she had a variable annuity
with performance tied to the stock market. June has held on to this fixed-rate
annuity out of fear that surrendering it would trigger a taxable event and a
, 3
possible penalty. You should explain that she: - (ANSWER)Can avoid the tax and
the penalty by making a section 1035 exchange
If disability insurance premiums are paid with pretax dollars, any benefits
received would: - (ANSWER)be subject to income tax
Universal life insurance gives the policyowner the ability to adjust all of the
following except: - (ANSWER)mortality rates
A beneficiary who is guaranteed payments for life (with a minimum guarantee of
10 years of payments) has selected which one of the following settlement
options? - (ANSWER)Life income with period certain
Which of the following classes of life insurance has a death benefit only,
increasing premiums temporary coverage, and expires at the end of a given
period of time? - (ANSWER)Term life insurance
Dividends received from a participating life insurance policy are: - (ANSWER)a
return of unused premium payments
Assume that a client has the following needs and objectives when purchasing a
life insurance policy:
1. flexible premium payments
2. possibility of increasing death benefit
3. investment options
, 4
4. permanent protection
Which type of policy is most suitable for this client? - (ANSWER)Variable
Universal Life
Life insurance can be used to address all of the following needs except:
1. payment of estate taxes
2. third-party ownership
3. replacement of a deceased spouse's income
4. care of aging parents - (ANSWER)third-party ownership
The amount of life insurance an individual needs is equal to the: - (ANSWER)Total
of the cash requirements needed to pay off debts and final expenses plus replace
lost income
Jim has selected to receive only the interest from his mother's life insurance
policy. When Jim dies, his children will receive the lump-sum benefit in addition to
the benefit from his life insurance policy. Jim has selected the -
(ANSWER)interest-only option
In the early years of his or her business, a self-employed individual may be a good
candidate for: - (ANSWER)term life insurance
Generally, loans taken against the cash value of an in-force life insurance policy
(not classified as a MEC) are - (ANSWER)not currently taxable
AAMS Exam fully solved & updated
(latest version verified for accuracy)
(Questions + Answers) Solved 100%
Correct!!
Which of these statements is most accurate with respect to the life insurance
needs of the typical family? - (ANSWER)Total life insurance requirements may
decrease as an individual approaches retirement
Assume a client has $30,000 in a money market fund, $2,000 in a checking
account, a mortgage loan of $110,000 (not to be paid off, as it will be transferred
to the spouse), an auto loan of $20,000, and credit card balances of $5,000.
Assume that if he died, postmortem expenses would be $15,000. What would be
the cash requirements for this client? - (ANSWER)$8,000
An investment professional is assessing the life insurance needs of the Robinson
family. Mr. Robinson has determined that the family's immediate cash flow
requirements in the event of his death are $65,000. The amount needed to meet
all future funding requirements (net of Mrs. Robinson's income and Social
Security and pension benefits) is estimated to be $550,000. The family owns a
home in which their equity interest is $200,000. Based upon these figures, the
investment professional would recommend life insurance with a face amount of: -
(ANSWER)$615,000
With regard to financial planning, many individuals and households overlook the
potential needs for: - (ANSWER)disability income and long-term care insurance
, 2
Mrs. Bartlett purchased a life insurance policy that will pay $100,000 to her
beneficiary should she die at any time during the next year. The policy guarantees
the right to renew every year for the next five years, and builds no cash value.
Mrs. Bartlett has purchased a - (ANSWER)term life insurance policy
Which types of clients would be identified as the best prospect for cash value life
insurance? - (ANSWER)Clients who prefer the discipline of regular, periodic
investments
With respect to cash value life policies, what part of the policy value, if any, is
subject to income taxation when the policy is surrendered? - (ANSWER)The
amount of the cash value that exceeds the investment in the contract
Brenda Bradford is the owner of a whole life policy on her husband, Rolf. Their
daughter, Vera, is named in the policy as the contingent beneficiary. In issuing the
policy, the insurance company has asked that a settlement option be selected.
Which one of the following individuals is currently empowered to make the
selection? - (ANSWER)Brenda, the policy owner
Your client, Ann, age 50, received a $300,000 inheritance from her late parents'
estate. She would like to invest this money in a safe place, where it will grow in
value until she takes early retirement at age 60. Which one of the following would
be the most logical choice for Ann? - (ANSWER)Single-premium deferred annuity
Ten years ago, June, age 58, purchased a deferred annuity with a fixed rate of
return of 4%. She believes that she could do better if she had a variable annuity
with performance tied to the stock market. June has held on to this fixed-rate
annuity out of fear that surrendering it would trigger a taxable event and a
, 3
possible penalty. You should explain that she: - (ANSWER)Can avoid the tax and
the penalty by making a section 1035 exchange
If disability insurance premiums are paid with pretax dollars, any benefits
received would: - (ANSWER)be subject to income tax
Universal life insurance gives the policyowner the ability to adjust all of the
following except: - (ANSWER)mortality rates
A beneficiary who is guaranteed payments for life (with a minimum guarantee of
10 years of payments) has selected which one of the following settlement
options? - (ANSWER)Life income with period certain
Which of the following classes of life insurance has a death benefit only,
increasing premiums temporary coverage, and expires at the end of a given
period of time? - (ANSWER)Term life insurance
Dividends received from a participating life insurance policy are: - (ANSWER)a
return of unused premium payments
Assume that a client has the following needs and objectives when purchasing a
life insurance policy:
1. flexible premium payments
2. possibility of increasing death benefit
3. investment options
, 4
4. permanent protection
Which type of policy is most suitable for this client? - (ANSWER)Variable
Universal Life
Life insurance can be used to address all of the following needs except:
1. payment of estate taxes
2. third-party ownership
3. replacement of a deceased spouse's income
4. care of aging parents - (ANSWER)third-party ownership
The amount of life insurance an individual needs is equal to the: - (ANSWER)Total
of the cash requirements needed to pay off debts and final expenses plus replace
lost income
Jim has selected to receive only the interest from his mother's life insurance
policy. When Jim dies, his children will receive the lump-sum benefit in addition to
the benefit from his life insurance policy. Jim has selected the -
(ANSWER)interest-only option
In the early years of his or her business, a self-employed individual may be a good
candidate for: - (ANSWER)term life insurance
Generally, loans taken against the cash value of an in-force life insurance policy
(not classified as a MEC) are - (ANSWER)not currently taxable
