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ARKANSAS LIFE INSURANCE EXAM

WITH 100% CORRECT ANSWERS 2023

J is a producer who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of? - Correct Answer-Twisting What is implied authority defined as? - Correct Answer-Authority that is not specifically given to an agent contract, but that an agent can reasonably assume to carry out his/her duties A person who is a nonsmoker, average weight, excellent health would fall into what risk classification? - Correct Answer-Preferred Which of the following is considered to be the period when the accumulated value in an annuity is paid out? - Correct Answer-Annuitization phase An insurers claim settlement practices are regulated by the: - Correct Answer-State insurance departments An insurers ability to make unpredictable payouts to policy owners is called: - Correct Answer-Liquidity Which of the following pertains to the analysis of an applicants personal information and determining whether insurance should be issued or declined? - Correct Answer- Underwriting What does the Group Life underwriting risk selection process help protect insurance companies from? - Correct Answer-Adverse Selection The Arkansas Life & Disability Insurance Guaranty Association assures payment of benefits from insurance policies for insolvent insurers, and covers all of the following insured policies, EXCEPT: - Correct Answer-Liability Insurance What would happen if a life insurance applicant is given a conditional receipt from an insurance agent and then dies the next day? - Correct Answer-Claim will be paid if application is approved A life insurance policy owner does NOT have the right to: - Correct Answer-Revoke an absolute assignment An employee under a group insurance policy has the right to name a beneficiary and the right to: - Correct Answer-Convert to an individual policy in the event of employment termination

The two major actions required for a policyholder to comply with the Reinstatement Clause are - Correct Answer-Provide evidence of insurability, past due premiums Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true? - Correct Answer-The policy may be paid up early by using policy dividends Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? - Correct Answer-$4, ($100,000 X .04 = $4,000) Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? - Correct Answer-The face amount and premium will remain constant over the 10-year period What is Arkansas' REQUIRED grace period for a life insurance contract? - Correct Answer-31 days A domestic insurance company in Arkansas MUST - Correct Answer-Be organized under Arkansas Insurance laws Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's - Correct Answer-Income period What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? - Correct Answer-Participating life insurance policy No one is allowed to act as a producer for any insurance company in Arkansas that - Correct Answer-Is unauthorized to do business in Arkansas What MUST the company do prior to conducting an HIV related test? - Correct Answer- Obtain a written consent from the proposed insured Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents? - Correct Answer-Human life value approach If the annuitant dies before the annuity start date, - Correct Answer-The premiums paid plus interest earned will be given to the beneficiary If dividends are illustrated, the advertisement MUST state that the dividends are: - Correct Answer-Not guaranteed

Intentional withholding of material facts that would affect an insurance policy's validity is called a(n) - Correct Answer-Concealment Field underwriting performed by the producer involves - Correct Answer-Completing the application and collecting initial premium Which of the following statements is CORRECT regarding an individual applying for life or health insurance? - Correct Answer-The applicants medical history may be analyzed and reported Life insurance policies will normally pay for losses arising from - Correct Answer- Commercial aviation An example of rebating would be - Correct Answer-Offering a client something of value not stated in the contract in exchange for their business Which type of insurance company allows their policyowners to elect governing body? - Correct Answer-Mutual Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive? - Correct Answer-Endowment policy A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the - Correct Answer-Named living primary beneficiaries A type of group that has a constitution and bylaws and has been organized for purposes other than obtaining insurance is called a(n) - Correct Answer-Association or labor group What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as? - Correct Answer-Representation Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken? - Correct Answer-$5, The _________ must provide an insured with proper disclosure concerning the replacement of a life insurance policy - Correct Answer-Producer Within how many days must a rollover be completed in order to avoid being taxed as current income? - Correct Answer-60 days to complete the rollover to another IRA Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds - Correct Answer- Will no longer provide insurance protection

An insurer may pay commissions directly to any person for services as a producer provided the producer is licensed and ________ - Correct Answer-Appointed The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement? - Correct Answer-Insurable interest can be based on the love and affection of individuals related by blood or law Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement? - Correct Answer-Premiums paid plus interest earned is returned to the beneficiary All of these are considered key factors in underwriting life insurance EXCEPT - Correct Answer-Marital status The promise of a discount in premium as an inducement to purchase insurance is an Unfair Trade Practice known as: - Correct Answer-Rebating Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this? - Correct Answer-Child term rider Which of the following basics is a producer's fiduciary responsibility? - Correct Answer- Collecting premiums and paying them to the insurance company Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider? - Correct Answer-Can be converted to permanent coverage without evidence of insurability In Arkansas, replacement forms are required to be obtained for the replacement of which of the following - Correct Answer-Annual Renewable Term (ART) insurance What is involved when a life insurance policy has been backdated? - Correct Answer- Making the policy effective on an earlier date than the present Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen? - Correct Answer-Fixed amount In Arkansas, which of the following is considered an Unfair Trade Practice? - Correct Answer-Coercion Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive? - Correct Answer-Nothing

Level premium term life insurance policies - Correct Answer-Have premiums that are averaged over the policy period An insured may continue coverage under a group plan during their total disability if the premiums are paid for how long? - Correct Answer-6 months from the date the disability started Which is considered to be misrepresentation? - Correct Answer-A producer guaranteeing a policy's dividends A type of insurer that is owned by its policyowners is called - Correct Answer-Mutual Which is true regarding the annuitant? - Correct Answer-The annuitants life expectancy determines the annuity payments An insurer may pay a commission in which of the following scenarios? - Correct Answer-To a licensed producer who is appointed with the insurer An underwriter's primary responsibility to an insurer is to protect against - Correct Answer-Adverse Selection Which is NOT considered to be a risk factor in life insurance underwriting? - Correct Answer-Number of children A(n) _____ license is issued by the Commissioner of Insurance to allow the personal representative of a deceased producer to provide service to existing policyowners - Correct Answer-Temporary Which is NOT a characteristic of the Accelerated Death Benefit option? - Correct Answer-The benefit can be offered as a rider at a specific extra cost or may be at no cost The coverage, conditions, and limitations in the master policy of a group contract can be found in which document? - Correct Answer-Certificate of coverage and benefits _____ is NOT a source of information that can assist an underwriter in determining whether or not to accept a risk - Correct Answer-National Association of Insurance Underwriters Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT - Correct Answer-The beneficiary The standard grace period for a life insurance policy sold in Arkansas is - Correct Answer-31 days

Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this called? - Correct Answer-Estate conservation An insured's status under Social Security can be described as - Correct Answer-Fully insured Which of the following employers is required to follow ERISA regulations? - Correct Answer-A local electrical supply company with 12 employees Which is an annuity that is linked to a market-related index? - Correct Answer-Equity- indexed annuity Who's signature is not required on an individual insurance application? - Correct Answer-Insurer A policy owner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation? - Correct Answer- Irrevocable beneficiary The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority? - Correct Answer-Implied An example of replacement is: - Correct Answer-Canceling a term life policy to buy a whole life policy Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance? - Correct Answer- Policyowner has the right to select the investment which will provide the greatest return A Roth IRA owner must be at least what age in order to make tax-free withdrawals? - Correct Answer-59 1/2 and owned an account for a minimum of 5 years A professional liability for which producers can be sued for mistakes of putting a policy into effect is called - Correct Answer-Errors and omissions Converting a group plan to permanent life insurance involves - Correct Answer-the conversion being applied within 1 month of termination How are contributions made to a Roth IRA handled for tax purposes? - Correct Answer- Not tax deductible Within how many days must a Traditional IRA be rolled over to another IRA to avoid tax consequences? - Correct Answer-60 days Which describes the result of a modified endowment contract that failed to meet the seven-pay test? - Correct Answer-Pre-death distributions are typically taxable

An insurance company needs to obtain personal information from a third party concerning an applicant. Which law do all insurers and their producers need to comply with? - Correct Answer-Fair Credit Reporting Act Which does a life insurance policy summary normally include? - Correct Answer-The policy's cash value Insurance premium is determined by each of the following factors EXCEPT - Correct Answer-Liquidity Which situation accurately describes a reduced paid-up nonforfeiture option? - Correct Answer-Policy has a decreased face amount How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability? - Correct Answer-12 months To qualify, the disability must be expected to last, or have lasted, at least 12 months, or it must be expected to result in death An applicant's character and personal habits can be obtained for underwriting purposes from which source? - Correct Answer-Investigative consumer report *detailed report that contains information on a consumer's character, general reputation, personal characteristics, or mode of living and is obtained through personal interviews with neighbors, friends, or associates of the consumer A foreign insurance company is defined as one that is - Correct Answer-Formed under the laws of a state other than Arkansas A policy owner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? - Correct Answer-Reduction of premium dividend option Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? - Correct Answer-Interest only Which is NOT an example of a Business Continuation Plan - Correct Answer-Deferred Compensation A limited payment whole life policy provides - Correct Answer-Lifetime protection A whole life insurance policy accumulates cash value that becomes - Correct Answer- The policy loan value which the insured may borrow against

The Do Not Call Registry offers exemptions for everything EXCEPT - Correct Answer- Insurance sales calls Which is true about an insurer's right to screen applicants for HIV? - Correct Answer-An insurer can require a blood test for HIV Which is NOT considered to be a nonforfeiture option available to a policy owner? - Correct Answer-Reduction of Premium How does life insurance create an immediate estate? - Correct Answer-After first premium is paid, the face amount may be available to the beneficiary Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue? - Correct Answer-Accumulation at Interest Option *invests the policyowner's money and adds interest earnings to the initial amount of the dividends In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered - Correct Answer-Unilateral Which type of life insurance is normally associated with a Payor Benefit rider? - Correct Answer-Juvenile insurance *a Payor Benefit rider waives the premium ONLY in connection with juvenile insurance A beneficiary charge can occur - Correct Answer-Normally at any time during the policy term An insurance producer must notify the Commissioner within how many days of conviction of a crime? - Correct Answer-within 30 days of any administrative action taken against him/her A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n) - Correct Answer-Collateral assignment *allows a person to temporarily give up a portion of their ownership to secure a loan Which is NOT a legitimate insurance company in the same state? - Correct Answer- Domestic and foreign The Commissioner MUST give a MINIMUM of how many days' notice of a disciplinary hearing? - Correct Answer-10 days

*notice of hearing must be given to the person cited at least 10 days prior to the designated date A life policy loan in Arkansas cannot charge a fixed rate of interest higher than - Correct Answer-8% All of these are settlement options for life insurance policies EXCEPT - Correct Answer- Extended term What is the purpose of the Medical Information Bureau (MIB)? - Correct Answer-To help underwriters evaluate risk A producer's license CANNOT be revoked without - Correct Answer-A hearing given to the producer What will the beneficiary receive if an annuitant dies during the accumulation period? - Correct Answer-The greater of the accumulated cash value or the total premium paid Advertising records are subject to examination by the Arkansas Insurance Department, and must be maintained for at least - Correct Answer-4 years or until the next regular examination by the Department, whichever is longer Defamation occurs when a producer makes a false statement intended to - Correct Answer-Malign another insurer *producers making false statements intended to malign another insurance company may be found guilty of defamation Which is considered to be a document that describes the critical segments of a life insurance policy? - Correct Answer-Policy summary What factors would an insurer consider when determining whether to accept a group life plan? - Correct Answer-Average age A producer who knowingly submits FALSE statements in support of a claim may be found guilty of - Correct Answer-Fraud A licensee who is required to take continuing education must complete _____ hours of continuing education coursework? - Correct Answer-24 hours *3 of which must be related to ethics What is a corridor in relation to a Universal Life insurance policy? - Correct Answer-The gap between the total death benefit and the policy's cash value

In what part of an insurance policy are policy benefits found? - Correct Answer- Declarations *declaration page is like a quick guide to the insurance policy, providing all the basic information the policyholder needs to know Which of the following is a reinstatement condition? - Correct Answer-Proof of insurability Which is NOT part of an insurance contract? - Correct Answer-Certificate of Authority *allows an insurer to conduct business in a state Who were Keogh plans designed to provide pension benefits for? - Correct Answer- Self-employed individuals The period in which there are no Social Security benefits for the surviving spouse is called the - Correct Answer-Blackout period A guaranteed issue insurance policy has no - Correct Answer-Medical underwriting Under a Traditional IRA, interest earned is taxed - Correct Answer-Upon distribution When a producer is replacing an existing ordinary life insurance policy, the producer must do all EXCEPT: - Correct Answer-Obtain the beneficiary's signature Which is NOT considered to be a common life insurance nonforfeiture option? - Correct Answer-Life income annuity A producer must complete continuing education every ____ years in order to maintain their license in Arkansas - Correct Answer- An example of a tax-qualified retirement plan would be a(n) - Correct Answer-Defined contribution plan Which would NOT be a factor that is taken into account when determining an applicant's life insurance needs? - Correct Answer-Automobile Which is NOT a reason for the commissioner to deny or refuse a producer license application? - Correct Answer-Unintentionally misrepresented a material fact on the application Under a contract of adhesion, - Correct Answer-The terms must be accepted or rejected in full

*the applicant "adheres" to the terms of the contract on a "take it or leave it" basis when accepted Mike has inherited his father's traditional IRA. As beneficiary, he will pay ____ taxes on any money withdrawn. - Correct Answer-Income *when a beneficiary inherits a traditional IRA, an income tax is paid when money is withdrawn Which retirement plan does NOT qualify for a federal income tax deduction? - Correct Answer-Roth IRA An insurance producer agrees to pay the first monthly premium for an insurance applicant. This is called a(n) - Correct Answer-Rebate, which is illegal When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable? - Correct Answer-Gains How does one qualify as a fully-insured individual under Social Security disability coverage? - Correct Answer-Individual has been credited with the appropriate number of quarters of coverage A policy owner may change two policy features on what type of life insurance? - Correct Answer-Adjustable life *allows for changes on premium and face amount Making a statement that is false or maliciously critical of the financial condition of an insurer is known as - Correct Answer-Defamation If an agent has a combined agent/broker license, and recommends a particular insurer to a customer in which he/she is not appointed, in what capacity is the agent acting? - Correct Answer-As a broker In order to save on premiums, a life insurance policy can be backdated up to: - Correct Answer-6 months Of the following dividend options, which of these is taxable? - Correct Answer- Accumulation at interest Tim is covered under a group plan and would like to change his group coverage to an individual policy with the same insurer because of employment termination. Which of these describes the change that will take place? - Correct Answer-Conversion

*when an insured individual changes his or her group insurance to an individual policy with the same insurer at the termination of employment In regards to a life insurance contract, which is NOT true regarding the concept of insurable interest? - Correct Answer-Insurable interest can be established sufficiently by sentimental attachment alone Under a group life policy, the insurer will issue an individual _____ to the policyowner for delivery to each person insured. - Correct Answer-Certificate If the insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies? - Correct Answer-A prorated death benefit based on the amount of insurance the insure's premiums would have been if purchased at the correct age Which is NOT a characteristic of a Group Life Insurance Plan - Correct Answer- Individual underwriting *based on group underwriting Which would limit a company's liability to provide insurance coverage? - Correct Answer-Exclusion Fraternal Benefit Society has each of the following characteristics EXCEPT - Correct Answer-Exists for profit Rob has an benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits this description? - Correct Answer-Deferred compensation option *enables an employee to defer current receipt of income and have it paid at a later date, when presumably the employee will be in a lower income tax bracket Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity? - Correct Answer-During periods of inflation, annuitants will experience a decrease in purchasing power of their payments Which Unfair Trade Practice involves a producer suggesting that an insurance policy is like a share of stock? - Correct Answer-Misrepresentation What are premium payments for a Universal life policy NOT used for? - Correct Answer- Separate account investments

Naming a contingent beneficiary as "all surviving children" is described by which term? - Correct Answer-Class designation Legal purpose is a term used in contract law meaning - Correct Answer-There must be legal reasons for entering into the contract Which is NOT considered to be an act of fraud? - Correct Answer-Collecting a charge for insurance that is less than the charge applicable to that insurance What is present when an applicant stands to lose value if the insured dies? - Correct Answer-Insurable interest Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt: - Correct Answer-Dies instantly from a car accident Which of these riders will pay a death benefit if the insured's spouse dies? - Correct Answer-Family term insurance rider Which is NOT exempt from a 10% tax penalty for early qualified plan withdrawals? - Correct Answer-Stock purchase With whom may a producer legally share commissions? - Correct Answer-Another producer who is licensed in the same line of insurance If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if - Correct Answer-The insured outlived the beneficiary *allows the proceeds to go to the contingent beneficiary Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - Correct Answer-Interest only An example of rebating would be - Correct Answer-Returning a portion of a premium as inducement to purchase insurance These are typically sources of underwriting information for life or health insurance EXCEPT - Correct Answer-Disclosure authorization response Which Unfair Trade Practice involves a producer telling a prospective client that a policy's dividends are guaranteed? - Correct Answer-Misrepresentation A stock insurance company - Correct Answer-is owned exclusively by its shareholders

Which of the following correctly describes a certificate of authority? - Correct Answer- Permits an insurance company to transact business in Arkansas All riders can increase the death benefit amount EXCEPT - Correct Answer-Waiver of Premium Which will have the highest monthly payout upon annuitization? - Correct Answer- Straight life Erica is 35 years old and owns an IRA. At what age can she begin to receive distributions without a tax penalty? - Correct Answer-59 1/ An interest-sensitive life insurance policy owner may be able to withdraw the policy's cash value interest free. The provision that allows this is called - Correct Answer-Partial surrender A Renewable Term Life insurance policy can be renewed - Correct Answer-At a pre- determined date or age, regardless of the insured's health Which does NOT correctly describe the purpose of Social Security? - Correct Answer- Provides a source of income for a meaningful standard of living during retirement *SS enhances, but does not replace, a sound personal insurance plan Index whole life insurance contains a securities component that acts as a(n) - Correct Answer-Hedge against inflation Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits? - Correct Answer-Common disaster clause In Arkansas, an insurance company cannot contest a death benefit claim from suicide if it occurred after the policy was in force for a minimum of _____ years(s) - Correct Answer- *incontestability period An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? - Correct Answer-Grace period Which type if rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? - Correct Answer-Payor benefit

Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this? - Correct Answer-Universal Life policy How do interest earnings accumulate in a deferred annuity? - Correct Answer-On a tax- deferred basis How many months can a life insurance policy normally be backdated from the date of application? - Correct Answer-6 months Which is correct concerning Traditional IRAs? - Correct Answer-Earnings are taxable when withdrawn When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach? - Correct Answer-The family's financial objectives if the income earner were to die or become disabled Which scenario would most life insurance policies exclude coverage for? - Correct Answer-An individual who has a hobby racing cars once a month A person must be at least ____________ years of age to enter into an insurance agreement in the state of Arkansas - Correct Answer- What types of life insurance are normally used for key employee indemnification? - Correct Answer-Term, whole and universal life insurance In an insurance contract, the element that shows each party is giving something of value is called - Correct Answer-Consideration An insurance company appoints a(n) _______ to transact insurance - Correct Answer- Producer What guarantees that the statements supplied by an insurance applicant are true? - Correct Answer-Warranty Which of the following would be considered an underwriting duty of an agent? - Correct Answer-Collecting all applications and initial premiums Which is NOT considered rebating? - Correct Answer-Sharing commissions with a producer licensed in the same line of business Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be - Correct Answer-$500,000 face amount

Lapsed individual life insurance may be reinstated at any time within: - Correct Answer- 3 years Failing to promptly provide a reasonable explanation for the denial of a claim is considered to be a(n) - Correct Answer-Unfair Claim Settlement practice Which of the following provisions is NOT required to be included in life insurance policies sold in Arkansas? - Correct Answer-Extended Term A producer may begin to solicit insurance ONLY when - Correct Answer-Appointed by insurer *a producer may not sell, solicit, or negotiate insurance on behalf of an insurer unless the producer has an appointment from the insurer The beneficiary of any life insurance policy or annuity contract is protected from the _____ of the insured - Correct Answer-Creditors Preferred risk policies with reduced premiums are issued by insurance companies because the insured has - Correct Answer-Better than average mortality or morbidity experience A non-contributory health insurance plan helps the insurer avoid - Correct Answer- Adverse selection Contingent Beneficiary - Correct Answer-entitled to the proceeds if the primary beneficiary dies before the insured Tertiary Beneficiary - Correct Answer-The third in line to receive the benefits of a life insurance policy. Revocable Beneficiary - Correct Answer-means that the policyholder reserves the right to change the beneficiary designation without the beneficiary's consent Irrevocable Beneficiary - Correct Answer-one that cannot be changed without the beneficiary's consent Dividends - Correct Answer-Payments of cash from a corporation to its stockholders Reduction of premium Option - Correct Answer-The insurer uses the dividend to reduce the next year's premium One-Year Term Dividend Option - Correct Answer-This option allows the policyowner to purchase a term insurance plan for a period of one year equal to the cash value of the original insurance.

Paid-Up Additions Option - Correct Answer-Additional single-premium Life insurance paid for by policy dividends and added to the face amount. For example, your mutual insurer declares a $100 dividend, which you could have taken as cash. Instead, you ask them to use the money to buy you an additional Whole life policy, which is paid up to age 100. Although this additional policy is small, no physical exam is required, so this option is very popular with clients who have health problems. Over a period of time, you can obtain substantial additional coverage. Accumulation at Interest Option - Correct Answer-A dividend option under which the policy owner allows dividends to accumulate at interest with the company. Only the interest on the dividends is taxable as income (participating policies only). Insurable Interest - Correct Answer-Any financial interest in life or property such that, if the life or property were lost or harmed, the insured would suffer financially. indemnity - Correct Answer-a payment for damage or loss Annuity - Correct Answer-payment received every year Roth IRA/401k - Correct Answer-A personal savings plan; contributions are not tax- deductible; earnings are tax-free Renewable Term Insurance - Correct Answer-term insurance renewable without physical examination Blackout Period - Correct Answer-The period of time between the youngest child turning 16 and the widow(er) reaching retirement age during which no Social Security Survivor Benefits are paid to the surviving spouse. Elimination Period - Correct Answer-amount of time that lapses after a disabling event before the insurance company begins to pay benefits Ineligible Period - Correct Answer- Dependency Period - Correct Answer-The period until the youngest child reaches age 18 SIMPLE retirement plan - Correct Answer-Can be either a 401(k) plan or an IRA Traditional IRA - Correct Answer-Individual Retirement Account - A personal qualified retirement account through which eligible individuals accumulate tax-deferred income up to a certain amount each year, depending on the person's tax bracket. Tax-deferred income - Correct Answer-Income that is taxed at a later date

Keogh Plans (HR-10) - Correct Answer-- Allows unincorporated business owners to participate in the retirement plan - as an employee

• Can be either defined contribution or defined benefit plans Nonforfeiture Options - Correct Answer-cash value, reduced paid-up insurance, extended term insurance Reduced Paid-Up Insurance - Correct Answer-- the policyowner may request the cash value of the policy to be used to pay for itself.
• It's the same type of insurance as the original policy except all riders, including those for disability and accidental death Insurance Rider - Correct Answer-written form attached to an insurance policy that alters the policy's coverage Guaranteed Insurability Rider - Correct Answer-Optional rider that enables the policyowner to purchase additional amounts of coverage at predetermined times without proof of insurability. Accidental Death Rider - Correct Answer-pays some multiple of the face amount if death is the result of an accident as defined in the policy Waiver of Premium Rider - Correct Answer-Optional rider that requires an insurer to assume payment of premiums should the insured become totally disabled for six months for the duration of the disability. Family Income Benefit Rider - Correct Answer-In case the insured dies, a family income benefit rider will provide a steady flow of income to family members. When buying this rider, you need to determine the number of years your family is going to receive the benefit. The merit of having this rider is obvious—in case of death, the surviving family will face fewer financial difficulties thanks to the regular monthly income from the rider. accelerated death benefits rider - Correct Answer-allows insureds who are terminally ill to collect part or all of their life insurance benefits before they die Child Term Rider - Correct Answer-used to purchase term insurance on a life of a child Long-term care Rider - Correct Answer-A type of accelerated benefit which is used to pay long-term care costs. Return of Premium Rider - Correct Answer-Refund of 50-80% of premium (minus claims paid) every 5-10 yrs. OR age 65; expensive! Discreet Authority - Correct Answer-

Apparent Authority - Correct Answer-occurs when the powers of the agent are created by law or circumstance. Implied Authority - Correct Answer-Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Express Authority - Correct Answer-the authority of an agent, stated in the document or agreement creating the agency Consumer Reports - Correct Answer-Written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. equity compensation plan - Correct Answer- defined contribution plan - Correct Answer-retirement plan in which the employer sets up an individual account for each employee and specifies the size of the investment into that account executive index plan - Correct Answer- 1035 exchange plan - Correct Answer- Term life - Correct Answer-Greatest coverage, lowest premiums