Colorado Life Exam: Characteristics of Whole Life Policies, Exams of Nursing

Download Colorado Life Exam: Characteristics of Whole Life Policies and more Exams Nursing in PDF only on Docsity! Colorado - Life Exam Colorado - Life Exam Study Guide Review Questions Containing 110 Terms with Certified Solutions 2024 Straight whole life, limited pay whole life, and modified premium whole life all have which one of the following characteristics in common? - Answer: premium amounts that are known in advance Johnson Industries funds its workers' compensation program. It will use these funds to pay employee's claims. What type of insurer is Johnson Industries? - Answer: self-insurer Colorado - Life Exam All of the following distributions from a qualified plan are exempt from the 10 percent penalty tax on premature distributions, EXCEPT: - Answer: distributions made because the participant needs the funds to pay for homeowners insurance premiums Benefits paid through a life insurance policy's accelerated benefits rider: - Answer: can be used for any purpose If a variable universal life policyowner chooses death benefit option 3, what will the benefit equal? - Answer: the policy's specified amount plus the greater of total premiums paid or actual cash value The new Colorado Insurance Commissioner takes very seriously his responsibility for the execution of the insurance laws in the state. As Commissioner, he can be expected to perform all of the following EXCEPT - Answer: establish policy premiums The human life value approach to determining life insurance needs is essentially based on which of the following factors? - Answer: the applicant's estimated net future earnings Assuming they meet the age and financial dependency requirements, each parent of a deceased worker is eligible to receive Social Security survivor benefits equal Colorado - Life Exam Chester and his wife, Nellie, established a 529 plan for their daughter and contributed $5,000 to her account this year. Six months later, they withdrew $20,000 to pay for their daughter's college tuition. Which statement is correct? - Answer: chester and nellie do not have to pay tax on the distribution In calculating their mortality charges, life insurers today generally use: - Answer: the 2001 CSO table the annuity's basic purpose is to - Answer: liquidate a sum of money and protect against outliving one's income what is the standard life insurance policy suicide exclusion period - Answer: two years Which of the following statements about children's term riders is correct? - Answer: if a child converts coverage to a permanent policy, the new policy's face amount can be greater than the term rider coverage Julia has decided to surrender her $250,000 whole life policy, which has a $31,000 cash value. If she elects the extended term nonforfeiture option, Julia will receive a term policy with a face value equal to what amount? - Answer: $250000 Which of the following statements regarding third-party ownership of a life insurance policy is correct? - Answer: the insured has no rights in the policy Colorado - Life Exam When meeting with a prospect to discuss life insurance, a producer makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has the agent committed? - Answer: defamation A life insurance policy matures or endows when its guaranteed cash value equals its face amount. With an endowment contract, when does the policy endow? - Answer: well before age 120, usually at age 65 Pamela owns a fixed deferred annuity that she will annuitize next year when she retires. Which of the following is a key factor in determining the percentage of her monthly annuity payment that will be subject to tax? - Answer: the expected return Belinda owns a $750,000 life insurance policy and received a $200 check for her first dividend payment from Alpha Insurers. How will this dividend payment be treated for income tax purposes? - Answer: not subject to income tax Which of the following presents a situation of pure risk? - Answer: knowing that his family depends o his income, Franklin wants to insure his life For which of the following planning needs would purchasing an insurance policy be LEAST appropriate? - Answer: Tina, who wants to save money for a vacation next year Colorado - Life Exam Carolyn bought a $500,000 five-year renewable term policy with a guaranteed renewal rate. Two years after buying it, she develops cancer and is no longer insurable. If Carolyn is alive at the end of the five-year term, which of the following statements is most correct? - Answer: she can renew the policy but must pay a higher premium based on her age at the time of renewal Indexed annuities allow contract owners to participate in some of the growth in the stock market while avoiding possible losses of principal by which one of the following processes? - Answer: linking the interest to be credited to the contract to the growth of an equity (stock) index, while, at the same time, providing for a guaranteed minimum rate of return for the length of the contract Agent Ross receives an unearned premium belonging to one of his customers when the customer cancels her policy. How must Ross treat the funds? - Answer: he should remit the to the customer as soon as possible Jason, age 27, is single, works for a small computer company, and earns $150,000 a year. Because the company does not have any retirement plan for its employees, Jason set up and contributed to a traditional IRA this year. Which of the following statements is correct? - Answer: Jason can deduct the full amount that he contributes to his traditional IRA If a worker has over 40 OASDI quarters of coverage what is his or her Social Security worker status? - Answer: permanently insured Colorado - Life Exam which of the following statements regarding participating life insurance policies is correct? - Answer: they are eligible for policy dividends Roberta owns a whole life insurance policy and has requested that the beneficiary select a death benefit settlement option "without a life contingency". All of the following would meet this request EXCEPT: - Answer: straight life income option Placement, layering, and integration are steps in what kind of financial activity? - Answer: money laundering Which of the following meets Colorado's regulation of the advertising and sales promotion of life insurance and annuities? - Answer: an advertisement that is truthful and relevant ERISA - Answer: The 1974 federal law that lays the foundation for employer retirement plan qualification. fixed annuity - Answer: Any type of annuity that guarantees both the annuity principal and a specified rate of interest to be credited to the contract. indeterminate premium whole life insurance - Answer: A type of whole life insurance that is issued with two premium rates: a low introductory rate and a guaranteed maximum rate. Premium adjustments may be made as often as once a year, though this varies by insurer Colorado - Life Exam separate account - Answer: An account maintained by variable insurance companies to hold and manage variable life insurance and variable annuity funds. Separate accounts consist of multiple subaccounts that each have a unique investment objective. life settlement - Answer: An arrangement involving the sale of an existing permanent life insurance policy, by a policyowner who is not terminally ill, for more than its cash value but less than its death benefit. guaranteed insurability rider - Answer: This life policy rider guarantees that additional coverage can be added to a whole life policy even if the insured has become uninsurable. statement of continued good health - Answer: Signed by the policyowner upon delivery of a life policy when a premium deposit was not paid with the application, this statement attests that no change in health has occurred since the application was signed. Nonforfeiture Options - Answer: The different ways a policyowner can receive a whole life insurance policy's cash value upon policy surrender. accelerated benefit rider - Answer: This rider permits an insured suffering a terminal illness to access a portion of the life policy's death benefit while alive. Colorado - Life Exam Market-Value Adjusted Annuity (MVA) - Answer: A nonvariable market-linked annuity that adjusts the interest rate when the contract is renewed, annuitized, or surrendered. Level Term Life Insurance - Answer: This popular form of term life features a death benefit and premium that remain level for the term of the policy. Annuity Purchase Rate - Answer: In an annuity, the amount of monthly income provided for every $1,000 of annuitized principal. Renewable Term Life Insurance - Answer: This optional form of level term life insurance lets the policyowner renew the policy without having to prove insurability. Absolute Assignment and Collateral Assignment - Answer: The two ways in which a life insurance policyowner may transfer policy ownership to another party. FINRA - Answer: The Financial Industry Regulatory Authority that regulates insurers and producers that sell variable life insurance and annuity contracts. Consideration clause - Answer: A life insurance policy provision stating that the applicant's consideration consists of both the signed application and payment of the first premium. Colorado - Life Exam Suicide Clause - Answer: This life insurance policy provision excludes coverage if the cause of the insured's death within the first two policy years is suicide. Human Life Value Approach - Answer: An old method of determining life insurance needs based on the discounted value of a person's future income. Long-Term Care (LTC) Rider - Answer: This life policy rider provides funds to help pay the costs of long-term medical and nursing care. Field Underwriting - Answer: Refers to the activities producers undertake when completing insurance applications. These activities provide insurers with additional information that is important to the underwriting process. Legal Policy Delivery - Answer: One of the two types of policy delivery, this one requires personal delivery to the client and an explanation of conditions to be met. Disability Income Benefit Rider - Answer: This life policy rider pays a monthly benefit to the insured if s/he becomes permanently disabled. USA PATRIOT Act - Answer: Created after September 11, 2001, this federal act requires that all financial institutions create, execute, and maintain anti-money laundering (AML) programs. Colorado - Life Exam Backdating Applications - Answer: Dating an application with a past date so that the insured's age is lower, thus qualifying for a lower premium. Spendthrift clause - Answer: A life insurance policy provision that protects policy death benefits from the claims of the insured's or the beneficiary's creditors and gives the policyowner the right to stipulate the settlement option that will be used in distributing policy proceeds. Term Life Insurance - Answer: The most basic type of life insurance. It provides temporary protection for a specified, limited time and does not generate a cash value. Agent's Report - Answer: Written from the producer's perspective, this attachment to a life or health insurance application provides information about the client that would be useful to the underwriter. Indeterminate Premium Term Life - Answer: A form of term life insurance in which the premium starts lower than a standard guaranteed premium term life policy but can increase or decrease between the initial premium and a maximum limit set by the insurer. Primary and Contingent Beneficiaries - Answer: These terms refer to the first and second orders of succession in a beneficiary designation. Colorado - Life Exam Noncontributory Group Life Insurance Plan - Answer: A group life insurance plan in which the plan sponsor (employer) pays the full premium without requiring participant contributions. Delivery Receipt - Answer: A document that must be signed by a new policyowner attesting that a newly issued life insurance policy was received. General Account - Answer: This is the insurance company's asset account into which fixed annuity and whole life insurance premiums are invested. Return of Premium Rider - Answer: This term life policy rider pays a sum equal to a portion of premiums paid if the insured is alive at the end of the policy term. Increasing Term Life Insurance - Answer: This form of term life features a death benefit that rises over time. Roth IRA - Answer: This individual retirement plan is noted for "back-end" tax benefits that allow withdrawals to be made tax free. Policy Ownership provision - Answer: A life insurance policy provision that establishes the rights of the policyowner and the conditions under which those rights can be exercised. Conditional Receipt - Answer: A type of premium receipt that provides coverage that begins when the application is signed and any required medical exams are