Practice exam - New York Life Only questions and answers 100% Correct

What does a 401(k) plan generally provide its participants? - ANSWER-Salary-deferral option When using the needs approach for life insurance planning, A lump sum on may be created to provide for all of the following EXCEPT - ANSWER-employee benefits What are premiums for a group credit life insurance based on? - ANSWER-Flat rate unrelated to the borrower's age Which of these must be disclosed in a universal life policy? - ANSWER-The policy's surrender charges What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old? - ANSWER-Less than the policy's face amount How is the insured protected if a payor benefit rider is attached to the life insurance policy? - ANSWER-Premium payments are waived in the event the premium payor dies or becomes disabled An existing life insurance policy is sold by the policyowner to help finance the cost of a terminal illness. This is an example of a(n) - ANSWER-Life settlement Under a fixed Life annuity, the purchasing power - ANSWER-Decreases when the cost of living rises. An insurer operating in the U.S. but headquartered outside the U.S is - ANSWER-An alien insurer What is the name of the rider that provides in additional purchase option in a life insurance policy - ANSWER-Guaranteed insurability rider Which life insurance policy provision prohibits a beneficiary from "commuting, encumbering, withdrawing, or assigning" any portion of the proceeds prior to actual receipt from the company - ANSWER-Spendthrift clause : Prevents a beneficiary from recklessly spending benefits. The insurance coverage in a variable life insurance policy may vary based on the value of - ANSWER-Underlying investment : Net payment cost index - ANSWER-Useful of one's premium concern is the amount of death benefits provided in the policy. Helpful comparing future costs. Replacing a policy when it is not in the best interest of the client is known as - ANSWER-Twisting What would be considered an advantage of purchasing term life insurance - ANSWER-The initial premium is lower compared to an equivalent amount of whole life coverage Premature IRA distributions are subject to a penalty tax of - ANSWER-10% The exclusion ratio determines - ANSWER-The amount of an annuity payment subject to income tax. When a 10 year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for - ANSWER-Ten year term insurance for a person aged 55 Which of these life insurance policies does NOT contain a cash value provision - ANSWER-Decreasing term life: Do not have the ability to gain cash value. The absolute assignment of a life insurance policy results in - ANSWER-all incidents of ownership transferred to the assignee When determining the suitability of an annuity for a consumer, the insurance provider is obligated to - ANSWER-Make reasonable efforts to fit the annuity with the consumer's needs In what way are insurance policies said to be aleatory? - ANSWER-Involves the potential for the unequal exchange of values Accident and health insurance standard provisions require that - ANSWER-Entire contract What could be the potential result of taking out a cash value loan under a life insurance policy? - ANSWER-Reduces the amount receivable upon surrender of the contract Split-dollar - ANSWER-Employer and employee share in the cost of purchasing a life insurance policy on the employee. The employee is also allowed to name the beneficiary.