Kentucky Life Insurance State Exam Practice

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Kentucky Life Insurance State Exam Practice The premiums paid by an employer for his employee's group life insurance are usually considered to be - ✔✔Tax-deductible to the employer Which of th... ese is NOT considered to be a cost connected with an individual's death? - ✔✔Business expenses These are all accurate statements regarding universal life insurance EXCEPT - ✔✔Policy loans are not permitted Which of these is NOT relevant when determining the amount of personal life insurance needed? - ✔✔Local unemployment rate Who elects the governing body of a mutual insurance company? - ✔✔Policyholders Why would evidence of insurability be required for a person insured with a variable universal life policy? - ✔✔The face amount is increased At what point are death proceeds paid in a joint life policy? - ✔✔When the first insured dies What is considered a valid reason for small businesses to insure the lives of its major shareholders? - ✔✔Fund a buy-sell agreement Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)? - ✔✔Policy loans Dividends from a mutual insurance company are paid to whom? - ✔✔Policyowners Traditional individual retirement annuity (IRA) distributions must start by - ✔✔April 1st of the year following the year the participant attains age 70 1/2 How are Roth IRA distributions normally taxed? - ✔✔Distributions are received tax-free How can an insurance company minimize exposure to loss? - ✔✔Reinsurance All of the following statements about traditional individual retirement accounts are false EXCEPT - ✔✔10% penalty is applied to withdrawals before age 59 1/2 All of these statements concerning universal life insurance are false EXCEPT - ✔✔Policy indicates how much of the premium is used toward company expenses A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds were rolled over? - ✔✔Income taxes plus a 10% penalty tax on $30,000 For insurance purposes, similar objects which are exposed to the same perils are referred to as - ✔✔Homogeneous exposure units In an individual retirement account (IRA), rollover contributions are - ✔✔Not limited by dollar amount What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan? - ✔✔100 Which statement concerning a decreasing term life policy is accurate? - ✔✔Face amount decreases over time All of these are considered features of whole life insurance EXCEPT - ✔✔Initial premium is lower than for an equivalent amount of term insurance An employer that offers a qualified retirement plan to its employees is eligible to - ✔✔Make tax-deductible contributions to the plan The insurance coverage in a variable life insurance policy may fluctuate based on the value of - ✔✔Its underlying investments How long is a person covered for under a limited pay whole life policy? - ✔✔Until age 100 When does an insured stop making payments under a thirty-payment whole life policy? - ✔✔When the insured dies or 30 years from the policy's inception, whichever comes first What does a fixed life annuity offer protection against? - ✔✔Savings depletion because of longevity When does interest income in a deferred annuity get reported for federal income taxes? - ✔✔When the distributions are received Which statement regarding the cash value of a whole life insurance policy is correct? - ✔✔Payable to the policy owner when policy has been surrendered The following are all elements of a legal contract EXCEPT - ✔✔Recorded evidence An insurance policy that can also be classified as a securities product is called - ✔✔Variable life Which of these do NOT indicate the presence of insurable interest in a life insurance contract? - ✔✔Lifelong friendship The owner of a single premium deferred annuity is entitled to do all of these EXCEPT - ✔✔Make multiple premium payments An insurance company's voluntary refusal to enforce a contract's provision is called a(n) - ✔✔Waiver What happens when an initial offer is answered with a counteroffer? - ✔✔Initial offer is void When determining the accumulation value of a deferred annuity, the total is calculated by taking the premiums paid plus interest, and then subtracting the - ✔✔Withdrawals and expenses What determines how much an annuitant is paid for a variable annuity? - ✔✔Fluctuates according to the market value of the underlying securities in a separate account Which tax is normally associated with death? - ✔✔Federal estate tax Which of these is true regarding the exchange of consideration among parties involved in an insurance contract? - ✔✔Can be unequal A policyowner fell behind on the premium payments of a whole life policy and it is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan? - ✔✔Face amount minus the loan balance and past-due premium An owner's cost basis for a deferred annuity is typically the same as the - ✔✔Premiums paid into the annuity Which life insurance settlement option pays lifetime benefits to two or more people? - ✔✔Joint and survivor Which statement concerning a deferred annuity is correct? - ✔✔The owner can be the beneficiary, annuitant, or neither Based on age criteria only, which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and survivor annuity? - ✔✔Ages 71 and 73 Taking a sum of money and decreasing it in size would fit the description of - ✔✔Capital liquidation Under which circumstance is the interest rate guaranteed within a market value adjusted annuity? - ✔✔When the contract has been in force for a stated time period A terminally ill policyowner decides to sell his life insurance policy to help support his family. This sale is called a(n) - ✔✔Viatical settlement An annuity which starts paying benefits within a month after issuance is called a(n) - ✔✔Immediate annuity What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual? - ✔✔Management of proceeds would be provided What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up? - ✔✔Decreases Which statement regarding a fixed period settlement option is correct? - ✔✔The installment payment amount is determined by the total number of installments When an annuity contract has been surrendered, how will the surrender charges affect the final contract settlement? - ✔✔Settlement will be reduced The beneficiary of a life insurance policy is normally chosen by whom? - ✔✔Policyowner An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true? - ✔✔Applicant has a right to receive a copy of the report Which of these documents is signed by an applicant at policy delivery that certifies no change in health has occurred since the original application date? - ✔✔Good health statement Mike applied for life insurance and was issued a conditional receipt. He is later found to be an acceptable risk and is issued a policy. What is considered to be the effective date of this insurance contract? - ✔✔Date the conditional receipt was issued [Show More]

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