Life Insurance and Health Insurance
Section 529 Plans - correct answer - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA - correct answer private retirement plan that taxes income before it is saved, but
which does not tax interest on that income when funds are used upon retirement
Distributions don't have to start before 70.5
401(k) plan - correct answer Elective deferral plan that allows employee to reduce
compensation by a stated percentage on a tax deductible/ tax differed basis; often the
employer matches the employee contributions
Simplified Employee Pension (SEP) - correct answer A qualified plan in which a smaller
employer contributes specified amounts directly into IRA accounts on behalf of eligible
employees
403(b) plan - correct answer An elective deferral plan for employees of organizations such as
school systems, churches, and hospitals
Keogh Plan - correct answer Retirement plan for self-employed individual and their qualified
employees
Rollover - correct answer Tax free withdrawal of cash or other assets from one retirement
program and its reinvestment in another program. It is not considered income and it is not
taxable until a later withdrawal. Has to be completed in 60 days
Transfer - correct answer When amounts of a qualified plan are transferred to another qualified
plan
Employee Retirement Income Security Act (ERISA) - correct answer Federal law that increased
the responsibility of pension plan trustees to protect retirees, established certain rights related
to vesting and portability, and created the Pension Benefit Guarantee Corporation
profit-sharing plan - correct answer a benefit whereby employees may share in the profits of
the business
Catch-up Contributions - correct answer -for those aged 50 or older
-additional $1,000 annually
,**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch
up provisions**
Rollover time frame - correct answer 60 days
Keogh Plan - correct answer A federally-approved, tax-deferred savings program for self-
employed people, allowing them to set money aside for their retirement.
Annuity Period - correct answer the payout period of an annuity
Flexible Premium Annuity - correct answer allows the owner to vary the premium payments
Deferred Annuity - correct answer An annuity that starts sometime in the future.
Variable Annuity - correct answer Annuity that has a varying rate of return based on the mutual
funds in which one has invested
Gramm-Leach-Bliley Act - correct answer requires financial institutions to ensure the security
and confidentiality of customer data
Certificate of Insurance (COI) - correct answer proof that the insured has insurance
Market conduct - correct answer refers to the marketing practices of insurers and agents that
involve interaction with insureds, claimants, or consumers
expense loading - correct answer the amount needed to pay all expenses, including
commissions, general administrative expenses, state premium taxes, acquisition expenses, and
an allowance for contingencies and profit
Straight Life Annuity - correct answer The payout option that will guarantee an annuity
payment for the remainder of an individual's life. This option typically provides the largest
monthly payment.
Refund Life Annuity - correct answer Provides annuity payments for the annuitant's lifetime
with the guarantee that in no event will total income be less than the purchase price of the
contract. If the annuitant dies before receiving this amount, the difference is paid to a named
beneficiary either as a cash refund or in installments.
convertible term policy - correct answer
Aleatory Contract - correct answer a contract where the values exchanged may not be equal
but depend on an uncertain event
Insurance Dividends - correct answer Considered to be a return of overpaid premiums and is
not taxable. You can get the dividend in the form of CRAPPO
- Cash
,- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is
taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will
change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year,
the term expires)
insurance benefit - correct answer Advantage, privilege, right, or financial reimbursement
Insurance Considerations - correct answer The easiest way to protect yourself and your
organization from the legal liability and financial loss associated with environmental safety risks
is through insurance. Coverage by insurance allows the facility to transfer the potentially
devastating financial risk of a future loss for the cost certainty of a monthly or yearly payment
(i.e., premium).
Adverse Selection - correct answer A high-risk person benefits more from insurance, so is more
likely to purchase it.
qualified retirement plan - correct answer A retirement savings plan approved by the Internal
Revenue Service that provides individuals with a tax benefit
Unilateral Contract - correct answer promise in exchange for an act
Elements of a Contract - correct answer offer, acceptance, consideration
Section 1035 (Policy Exchanges) - correct answer Due to the fact that life insurance, annuities
and endowments are all similar in nature (though they have their differences), the IRS, under
certain circumstances, allows for the exchange of one policy for another without taxation to the
individual, as long as funds are not distributed to the individual in the process.
limited pay life insurance - correct answer A form of whole life insurance characterized by
premium payments only being made for a specified or limited number of years.
annuity - correct answer payment received every year
Mutual Insurance Company - correct answer A type of insurance company owned by its
policyholders.
Whole Life Insurance Policy - correct answer the cash value is greatest at the end of the policy
period, and the insurance protection is greatest at the start of the policy
class beneficiary - correct answer a member of a group, e.g., children of the insured
, Tertiary Beneficiary - correct answer The third in line to receive the benefits of a life insurance
policy.
State Guaranty Association - correct answer protect policy owners in the event of any insurance
company going out of business, becoming insolvent, or the in ability to pay claims
What effects the amount of the person premium? - correct answer If it does not effect their life
span it does not effect their premium
Credit Life Insurance - correct answer A special type of coverage written to pay off the balance
of a loan in the event of the death of the debtor.
Individual Life Insurance - correct answer purchased by individuals; usually greater face value
Has 10 day return policy upon delivery
Insurance twisting - correct answer When a person knowingly makes misleading statements
about the policy, to make a sale
Policy Replacement - correct answer if a policy is to be replaced then you must provide in
writing the information about the policy that is going to be submitted with the application
Pure Risk - correct answer a risk that presents the chance of loss but no opportunity for gain
Speculative Risk - correct answer A chance of loss, no loss, or gain.
Dread Disease Policy - correct answer Provides coverage for specific disease(s), such as cancer
or leukemia.
Fair Credit Reporting Act - correct answer Act that protects privacy of background information
and ensures that information supplied is accurate.
Controlled business insurance - correct answer Includes the insurnace writting the the business
of the licensees self or by virtue of the influence with the buyer (spouse, family member)
Limited Partnership (LP) - correct answer A partnership consisting of one or more general
partners and one or more limited partners.
Life Income Option - correct answer installment payments are paid only while the beneficiary is
alive and cease on the beneficiary's death
Insurable Interest - correct answer Only allowed when contract is issued and does not have to
be maintained throughout the life of the contract
Insuring Clause - correct answer A general statement that identifies the basic agreement
between the insurance company and the insured, usually located on the first page of the policy.
Section 529 Plans - correct answer - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA - correct answer private retirement plan that taxes income before it is saved, but
which does not tax interest on that income when funds are used upon retirement
Distributions don't have to start before 70.5
401(k) plan - correct answer Elective deferral plan that allows employee to reduce
compensation by a stated percentage on a tax deductible/ tax differed basis; often the
employer matches the employee contributions
Simplified Employee Pension (SEP) - correct answer A qualified plan in which a smaller
employer contributes specified amounts directly into IRA accounts on behalf of eligible
employees
403(b) plan - correct answer An elective deferral plan for employees of organizations such as
school systems, churches, and hospitals
Keogh Plan - correct answer Retirement plan for self-employed individual and their qualified
employees
Rollover - correct answer Tax free withdrawal of cash or other assets from one retirement
program and its reinvestment in another program. It is not considered income and it is not
taxable until a later withdrawal. Has to be completed in 60 days
Transfer - correct answer When amounts of a qualified plan are transferred to another qualified
plan
Employee Retirement Income Security Act (ERISA) - correct answer Federal law that increased
the responsibility of pension plan trustees to protect retirees, established certain rights related
to vesting and portability, and created the Pension Benefit Guarantee Corporation
profit-sharing plan - correct answer a benefit whereby employees may share in the profits of
the business
Catch-up Contributions - correct answer -for those aged 50 or older
-additional $1,000 annually
,**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch
up provisions**
Rollover time frame - correct answer 60 days
Keogh Plan - correct answer A federally-approved, tax-deferred savings program for self-
employed people, allowing them to set money aside for their retirement.
Annuity Period - correct answer the payout period of an annuity
Flexible Premium Annuity - correct answer allows the owner to vary the premium payments
Deferred Annuity - correct answer An annuity that starts sometime in the future.
Variable Annuity - correct answer Annuity that has a varying rate of return based on the mutual
funds in which one has invested
Gramm-Leach-Bliley Act - correct answer requires financial institutions to ensure the security
and confidentiality of customer data
Certificate of Insurance (COI) - correct answer proof that the insured has insurance
Market conduct - correct answer refers to the marketing practices of insurers and agents that
involve interaction with insureds, claimants, or consumers
expense loading - correct answer the amount needed to pay all expenses, including
commissions, general administrative expenses, state premium taxes, acquisition expenses, and
an allowance for contingencies and profit
Straight Life Annuity - correct answer The payout option that will guarantee an annuity
payment for the remainder of an individual's life. This option typically provides the largest
monthly payment.
Refund Life Annuity - correct answer Provides annuity payments for the annuitant's lifetime
with the guarantee that in no event will total income be less than the purchase price of the
contract. If the annuitant dies before receiving this amount, the difference is paid to a named
beneficiary either as a cash refund or in installments.
convertible term policy - correct answer
Aleatory Contract - correct answer a contract where the values exchanged may not be equal
but depend on an uncertain event
Insurance Dividends - correct answer Considered to be a return of overpaid premiums and is
not taxable. You can get the dividend in the form of CRAPPO
- Cash
,- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is
taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will
change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year,
the term expires)
insurance benefit - correct answer Advantage, privilege, right, or financial reimbursement
Insurance Considerations - correct answer The easiest way to protect yourself and your
organization from the legal liability and financial loss associated with environmental safety risks
is through insurance. Coverage by insurance allows the facility to transfer the potentially
devastating financial risk of a future loss for the cost certainty of a monthly or yearly payment
(i.e., premium).
Adverse Selection - correct answer A high-risk person benefits more from insurance, so is more
likely to purchase it.
qualified retirement plan - correct answer A retirement savings plan approved by the Internal
Revenue Service that provides individuals with a tax benefit
Unilateral Contract - correct answer promise in exchange for an act
Elements of a Contract - correct answer offer, acceptance, consideration
Section 1035 (Policy Exchanges) - correct answer Due to the fact that life insurance, annuities
and endowments are all similar in nature (though they have their differences), the IRS, under
certain circumstances, allows for the exchange of one policy for another without taxation to the
individual, as long as funds are not distributed to the individual in the process.
limited pay life insurance - correct answer A form of whole life insurance characterized by
premium payments only being made for a specified or limited number of years.
annuity - correct answer payment received every year
Mutual Insurance Company - correct answer A type of insurance company owned by its
policyholders.
Whole Life Insurance Policy - correct answer the cash value is greatest at the end of the policy
period, and the insurance protection is greatest at the start of the policy
class beneficiary - correct answer a member of a group, e.g., children of the insured
, Tertiary Beneficiary - correct answer The third in line to receive the benefits of a life insurance
policy.
State Guaranty Association - correct answer protect policy owners in the event of any insurance
company going out of business, becoming insolvent, or the in ability to pay claims
What effects the amount of the person premium? - correct answer If it does not effect their life
span it does not effect their premium
Credit Life Insurance - correct answer A special type of coverage written to pay off the balance
of a loan in the event of the death of the debtor.
Individual Life Insurance - correct answer purchased by individuals; usually greater face value
Has 10 day return policy upon delivery
Insurance twisting - correct answer When a person knowingly makes misleading statements
about the policy, to make a sale
Policy Replacement - correct answer if a policy is to be replaced then you must provide in
writing the information about the policy that is going to be submitted with the application
Pure Risk - correct answer a risk that presents the chance of loss but no opportunity for gain
Speculative Risk - correct answer A chance of loss, no loss, or gain.
Dread Disease Policy - correct answer Provides coverage for specific disease(s), such as cancer
or leukemia.
Fair Credit Reporting Act - correct answer Act that protects privacy of background information
and ensures that information supplied is accurate.
Controlled business insurance - correct answer Includes the insurnace writting the the business
of the licensees self or by virtue of the influence with the buyer (spouse, family member)
Limited Partnership (LP) - correct answer A partnership consisting of one or more general
partners and one or more limited partners.
Life Income Option - correct answer installment payments are paid only while the beneficiary is
alive and cease on the beneficiary's death
Insurable Interest - correct answer Only allowed when contract is issued and does not have to
be maintained throughout the life of the contract
Insuring Clause - correct answer A general statement that identifies the basic agreement
between the insurance company and the insured, usually located on the first page of the policy.
