SIMULATION 5 EXAM QUESTIONS AND
ANSWERS ALL CORRECT
Which of the following is NOT true regarding a nonqualified retirement plan?
a) Contributions are not currently tax deductible.
b) It can discriminate in benefits and selecting participants.
c) Earnings grow tax deferred.
d) It needs IRS approval. - Answer- d
Which of the following would be required to be licensed as an insurance producer?
a) A person whose activities are limited to producing insurance advertisements
b) A salaried full-time employee who furnishes information for group insurance
c) An insurance company director who performs executive, administrative and
managerial duties
d) A salaried employee who advertises and solicits insurance - Answer- d
All of the following are true about variable products EXCEPT
a) The cash value is not guaranteed.
b) Policy owners bear the investment risk.
c) The premiums are invested in the insurer's general account.
d) The minimum death benefit is guaranteed. - Answer- c
Which of the following would help prevent a universal life policy from lapsing?
a) Corridor of insurance
b) Target premium
c) Face amount
d) Adjustable premium - Answer- b
, If an insurance company makes a statement that its policies are guaranteed by the
existence of the Insurance Guaranty Association, that would be considered
a) A misrepresentation.
b) A required disclosure.
c) A legal representation of the Association.
d) An unfair trade practice. - Answer- d
Which of the following policies would have an IRS required corridor or gap between the
cash value and the death benefit?
a) Universal Life- Option A
b) Universal Life- Option B
c) Equity Indexed Universal Life
d) Variable Universal Life - Answer- a
All of the following are business uses of life insurance EXCEPT
a) Funding business continuation agreements.
b) Funding against general company financial loss.
c) Compensating executives
d) Funding against financial loss caused by death of a key employee## - Answer- b
The paid-up addition option uses the dividend
a) To accumulate additional savings for retirement.
b) To purchase a smaller amount of the same type of insurance as the original policy.
c) To purchase a one-year term insurance in the amount of the cash value.
d) To reduce the next year's premium. - Answer- b
The premiums paid by the employer in a business life insurance policy are
a) Tax deductible by the employee.
b) Always taxable to the employee.
c) Never taxable to the employee.
d) Tax deductible by the employer. - Answer- d
A father purchases a life insurance policy on his teenage daughter and adds the Payor
Benefit rider. In which of the following scenarios will the rider waive the payment of
premium?
a) If the daughter is disabled for more than 3 months
ANSWERS ALL CORRECT
Which of the following is NOT true regarding a nonqualified retirement plan?
a) Contributions are not currently tax deductible.
b) It can discriminate in benefits and selecting participants.
c) Earnings grow tax deferred.
d) It needs IRS approval. - Answer- d
Which of the following would be required to be licensed as an insurance producer?
a) A person whose activities are limited to producing insurance advertisements
b) A salaried full-time employee who furnishes information for group insurance
c) An insurance company director who performs executive, administrative and
managerial duties
d) A salaried employee who advertises and solicits insurance - Answer- d
All of the following are true about variable products EXCEPT
a) The cash value is not guaranteed.
b) Policy owners bear the investment risk.
c) The premiums are invested in the insurer's general account.
d) The minimum death benefit is guaranteed. - Answer- c
Which of the following would help prevent a universal life policy from lapsing?
a) Corridor of insurance
b) Target premium
c) Face amount
d) Adjustable premium - Answer- b
, If an insurance company makes a statement that its policies are guaranteed by the
existence of the Insurance Guaranty Association, that would be considered
a) A misrepresentation.
b) A required disclosure.
c) A legal representation of the Association.
d) An unfair trade practice. - Answer- d
Which of the following policies would have an IRS required corridor or gap between the
cash value and the death benefit?
a) Universal Life- Option A
b) Universal Life- Option B
c) Equity Indexed Universal Life
d) Variable Universal Life - Answer- a
All of the following are business uses of life insurance EXCEPT
a) Funding business continuation agreements.
b) Funding against general company financial loss.
c) Compensating executives
d) Funding against financial loss caused by death of a key employee## - Answer- b
The paid-up addition option uses the dividend
a) To accumulate additional savings for retirement.
b) To purchase a smaller amount of the same type of insurance as the original policy.
c) To purchase a one-year term insurance in the amount of the cash value.
d) To reduce the next year's premium. - Answer- b
The premiums paid by the employer in a business life insurance policy are
a) Tax deductible by the employee.
b) Always taxable to the employee.
c) Never taxable to the employee.
d) Tax deductible by the employer. - Answer- d
A father purchases a life insurance policy on his teenage daughter and adds the Payor
Benefit rider. In which of the following scenarios will the rider waive the payment of
premium?
a) If the daughter is disabled for more than 3 months
