Download PSI LIFE: INSIDE THE EDGE and more Exams Finance in PDF only on Docsity!
PSI LIFE: INSIDE THE EDGE
⩥ The taxable portion of a monthly income benefit paid during the annuity phase from a nonqualified annuity is calculated using the Answer: Exclusion ratio ⩥ Unfair claims settlement methods and practices by an insurance company include all of the following acts EXCEPT Answer: failure to pay all claims that are reported within 90 days after a loss occurs ⩥ The settlement option that allows proceeds to remain with the insurer and the earnings to be paid to the beneficiary on a monthly basis is called Answer: Interest only ⩥ Regulations on life insurance advertising apply to which of the following insurance company materials? Answer: A radio commercial that promotes the benefits of a specific company's life insurance products ⩥ An insurance company may contest a life policy within a MAXIMUM of how many years after the policy's effective date? Answer: 2 ⩥ All of the following factors are used in life insurance premium determination EXCEPT Answer: Morbidity
⩥ The authorization used to obtain the applicant's medical information that will be used by the insurer for the primary purpose of determining eligibility must include: Answer: the time frame in which the insurer must release the eligibility decision to the agent ⩥ An intermediary who omits information on an insurance application without the applicant's knowledge and submits the application to the insurer may be guilty of: Answer: Misrepresentation ⩥ Dividends are NOT subject to taxation because Answer: Paying dividends is equivalent to returning a premium ⩥ The XYZ Insurance Company cancels an intermediary's contract. XYZ could be bound by the intermediary's later acts if it: Answer: Continues to pay the intermediary deferred commissions ⩥ Which of the following products is designed to pay benefits that can provide a stream of retirement income to the purchaser? Answer: tax- deferred growth ⩥ Which of the following guarantees that the annuitant CANNOT outlive their benefits? Answer: Guaranteed lifetime withdrawal benefit ⩥ Which of the following statements is CORRECT about an insured's failure to report a claim in a timely manner based on the advice of an intermediary? Answer: It does not affect the insurance company's obligations
⩥ Backdating on a life insurance policy is the practice of Answer: Making the policy effective on an earlier date then the present ⩥ Wisconsin insurance law requires intermediaries to keep policyholder records for at least how many years after termination or lapse of the policy? Answer: 3 ⩥ When underwriting group life insurance, the underwriter Answer: Typically evaluates the group as a whole ⩥ When using the needs approach to determine the amount of life insurance needed, it is necessary to determine all of the following EXCEPT Answer: project lifetime earnings in the stock market, including dividends and growth account ⩥ Which of the following is permitted under the proper exchange of business? Answer: Splitting a commission between two intermediaries licensed in the same line of insurance ⩥ the life insurance illustration rule applies to: Answer: Universal Life ⩥ Which of the following is NOT subject to the Wisconsin annuity suitability law? Answer: Fixed settlement options ⩥ Without written consent, a policyowner CANNOT change the beneficiary if he has named Answer: An irrevocable beneficiary
⩥ What element of a contract does the application represent? Answer: Offer ⩥ An life insurance policy is required to contain which of the following provisions? Answer: A reinstatement provision during which the interest may be charge for late payments ⩥ In which of the following fixed annuity features is the surrender value tied to interest rates? Answer: Market value adjustments ⩥ Which of the following policies allows for partial surrender? Answer: Universal Life ⩥ Any form that becomes part of an insurance contract must be filed at the Office of the Commissioner of Insurance Answer: Prior to its use ⩥ Keogh (HR 10) plans were designed to provide retirement benefits for Answer: Self-employed individuals ⩥ Which statements is NOT a characteristic of Group Life insurance plan? Answer: Individual underwriting ⩥ Insurance applications with an AVERAGE life expectancy without higher than normal risk factors are considered which type of risk? Answer: Standard
⩥ Which of the following is a potential DISADVANTAGE of a fixed annuity? Answer: Annuitants could experience a decrease in the purchasing power of their payments over a period of years due to inflation ⩥ A premium is due on a life insurance policy the first of each month. The policyowner failed to pay the premium and 20 days later the insured died. Under which of the following provisions would the death benefit be paid? Answer: a nonforfeiture clause ⩥ The period after an annuity is purchased but before distributions begin is referred to as the Answer: accumulation phase ⩥ In order to ensure compliance with the law, the Insurance Commissioner may issue Answer: orders ⩥ As a form of level premium permanent insurance, ordinary life insurance accumulates a reserve that eventually Answer: equals the face amount of the policy ⩥ An intermediary is employed by an insurance agency affiliated with a lending institution. As a condition for a loan, the institution requires placement of insurance on the applicant's life with the affiliated agency. In this situation the institution's action is referred to as: Answer: Twisting
⩥ If Term Life is renewable, the policyowner is purchasing the right to renew the policy Answer: without showing proof of insurability ⩥ An important goal of the Interstate Insurance Product Regulation Compact is to Answer: Provide insurers a single point of filling for review and approval of certain policy forms ⩥ Events or conditions the increase the likelihood of an insured's loss are referred to as Answer: hazards ⩥ What type of insurance is the cheapest option to pay off a 30-year mortgage balance? Answer: Decreasing term life ⩥ Under a Universal Life Insurance policy, a corridor represents the Answer: gap between the total death benefit and the policy's cash value ⩥ How many days does a terminated employee have to covert to his group life insurance policy to an individual policy? Answer: 31 ⩥ If an insurer determines the insured is totally disabled, the policyowner is relieved of paying the policy premiums as long as the disability continues. The statement describes the Answer: waiver of premium rider ⩥ The insurance security fund protects insureds from an insurer's Answer: liquidation
⩥ If an annuitant is making premium payments on a periodic basis, which type of annuity have they purchased? Answer: Deferred ⩥ The accumulated cash value of a whole life insurance policy becomes the Answer: amount used to purchase paid up additions to the insured's policy ⩥ The settlement option that pays a specified amount to an annuitant, but pays no residual value to a beneficiary is known as Answer: Life income ⩥ What kind of retirement plan can a 1,500 employee for-profit corporation establish? Answer: 401(k) ⩥ Which of the following authorities is required to examine the business records of domestic insurance companies and licensed rate-services organizations in Wisconsin? Answer: The Office of commissioner of insurance ⩥ Which of the following dividend options will increase the death benefit? Answer: Guaranteed insurability ⩥ Under a executive bonus plan, premiums paid by the employer are Answer: only tax deductible when the bonus is an insurance plan
⩥ An intermediary should determine whether replacement is involved in a transaction no later than when the Answer: Insurance company issues the policy ⩥ In Wisconsin the intermediary holding which of the following licenses is exempt from continuing education requirements? Answer: credit insurance ⩥ Contributions made to a Roth IRA are Answer: Not tax deductible ⩥ Who can surrender an annuity during the accumulation period? Answer: the policyowner ⩥ An annuity that guarantees a given number of income payments, whether or not the annuitant is alive to receive them, is referred to as Answer: a life annuity certain ⩥ Which term describes naming a contingent beneficiary as "all of my children"? Answer: Class designation ⩥ A contract in which the company would be legally obligated to perform is considered Answer: conditional ⩥ Which type of insurance policy is characterized by premiums that are fully paid-up within a stated period, after which no further premiums are REQUIRED? Answer: Limited payment life insurance
⩥ An immediate annuity is designed to make its first benefit payment to the annuitant typically Answer: one month from the annuity's purchase date ⩥ In a policy collaterally assigned, proceeds will be paid upon the death of an insured to the Answer: Beneficiary only ⩥ Once an insurance company's liability on a claim is established, the company MUST Answer: Settle the claim in good faith ⩥ Annuities purchased with a series of premium payments that vary year to year are called Answer: Flexible premium deferred annuities ⩥ An insurance company is deemed to know any facts material to a risk in which of the following situations? Answer: An intermediary learns of a material fact when delivering the policy ⩥ An insured has a policy with a cash value of $1,500 and an outstanding loan of $500. How much money will the insured receive under the cash surrender value option? Answer: $1,500 or $1, ⩥ An intermediary may receive a commission on business written on the intermediary's own life ONLY if the intermediary Answer: Is a licensed life agent in Wisconsin and has sold insurance with the same company during the prior year with total premiums exceeding the premium on the intermediary's own life
⩥ A policy summary MUST contain the Answer: date on which the policy summary is prepared ⩥ Under 18 USC 1033, anyone involved in the business of insurance by willfully embezzling funds intended for payment of interstate insurance transactions is subjected to which of the following penalties? Answer: Fine and/or imprisonment ⩥ A policy may contain provisions excluding or restricting coverage as specified in the event of death under all of the following except Answer: a fare-paying passenger traveling via commercial transport ⩥ An annuity where the policyowner chooses a pre-determined number of benefit payments is referred to as Answer: Period Certain ⩥ Generally, if a life application is NOT prepaid, the effective date of coverage begins on the date the Answer: policy is delivered and accepted ⩥ Two business partners own life insurance on each other. If one partner dies, which of the following contracts allows the surviving partner to use the death benefit to purchase the deceased owner's interest? Answer: Buy-sell agreement
⩥ Under an executive bonus plan, if the employee takes loans from the insurance policy, the funds are: Answer: Reported as taxable income to the employee ⩥ Which is the name of the policy that combines a universal life policy with investment choices? Answer: Variable universal life policy ⩥ What BEST describes a limited pay life insurance policy? Answer: a whole life insurance policy where the premiums are paid up after 20 years ⩥ In order to be insured, you must have a chance of financial loss or financial interest. This is called an Answer: Insurable interest ⩥ An individual who is NOT acceptable by an insurer at standard rates because of health, habits, or occupation is called a Answer: Substandard Risk ⩥ An example of a risk that is NOT a pure risk would be Answer: injury in an accident ⩥ An applicant would be charged a higher premium for a life insurance policy if they were Answer: Older
⩥ A payor benefit rider would be found on which type of policy? Answer: A juvenile life policy ⩥ Under the children term rider, what occurs when a child reaches the specified age? He or she Answer: is eliminated from coverage ⩥ A person who intentionally commits a criminal violation of an insurance law may be subject to a MAXIMUM fine of Answer: $5, ⩥ Which of the following is NOT a settlement option for life policies? Answer: extended term ⩥
