Funeral Prearrangement and Annuity
Insurance: Key Concepts and
Regulations
What happens if the application was taken without a premium payment? - CORRECT ANSWER ✔✔✔
Coverage will become effective when the initial premium is received at the insurer's home office.
What must the agent do if the insured fails to sign a statement of good health at policy delivery? -
CORRECT ANSWER ✔✔✔ The agent must collect payment and deliver the policy as usual, and notify
the insurer.
Which payment from a life insurance company is normally free from federal income taxation? -
CORRECT ANSWER ✔✔✔ The amount paid to a beneficiary because of the insured's death.
What can cause the income tax exempt status of death proceeds to be lost? - CORRECT ANSWER ✔✔✔
If the policy becomes a modified endowment contract.
During the accumulation period of an annuity, when does the insurance company make a payment? -
CORRECT ANSWER ✔✔✔ Payments are made upon the death of the annuitant, cancellation by the
owner, or partial withdrawal by the owner.
What happens to interest earnings during the accumulation period of an annuity? - CORRECT ANSWER
✔✔✔ They are retained in the contract on a tax-deferred basis.
When are purchase payments made in a deferred annuity? - CORRECT ANSWER ✔✔✔ During the
accumulation period.
What occurs when an annuity is annuitized? - CORRECT ANSWER ✔✔✔ Periodic benefit payments
begin.
Who receives funds when a partial withdrawal is made from a deferred annuity? - CORRECT ANSWER
✔✔✔ The owner.
Who can assign a deferred annuity to another person? - CORRECT ANSWER ✔✔✔ The owner.
Which party to an annuity contract must be an individual? - CORRECT ANSWER ✔✔✔ The annuitant.
In a flexible premium deferred annuity, what amount is affected by the annuitant's age? - CORRECT
ANSWER ✔✔✔ The annuity benefit payments.
When will the beneficiary of a deferred annuity receive a payment? - CORRECT ANSWER ✔✔✔ When
the owner/annuitant dies.
What is true for both an annuity contract and a life insurance policy? - CORRECT ANSWER ✔✔✔ A
waiver of premium rider is normally available.
What is NOT found in a single premium deferred annuity contract? - CORRECT ANSWER ✔✔✔ A
purchase payment schedule.
Insurance: Key Concepts and
Regulations
What happens if the application was taken without a premium payment? - CORRECT ANSWER ✔✔✔
Coverage will become effective when the initial premium is received at the insurer's home office.
What must the agent do if the insured fails to sign a statement of good health at policy delivery? -
CORRECT ANSWER ✔✔✔ The agent must collect payment and deliver the policy as usual, and notify
the insurer.
Which payment from a life insurance company is normally free from federal income taxation? -
CORRECT ANSWER ✔✔✔ The amount paid to a beneficiary because of the insured's death.
What can cause the income tax exempt status of death proceeds to be lost? - CORRECT ANSWER ✔✔✔
If the policy becomes a modified endowment contract.
During the accumulation period of an annuity, when does the insurance company make a payment? -
CORRECT ANSWER ✔✔✔ Payments are made upon the death of the annuitant, cancellation by the
owner, or partial withdrawal by the owner.
What happens to interest earnings during the accumulation period of an annuity? - CORRECT ANSWER
✔✔✔ They are retained in the contract on a tax-deferred basis.
When are purchase payments made in a deferred annuity? - CORRECT ANSWER ✔✔✔ During the
accumulation period.
What occurs when an annuity is annuitized? - CORRECT ANSWER ✔✔✔ Periodic benefit payments
begin.
Who receives funds when a partial withdrawal is made from a deferred annuity? - CORRECT ANSWER
✔✔✔ The owner.
Who can assign a deferred annuity to another person? - CORRECT ANSWER ✔✔✔ The owner.
Which party to an annuity contract must be an individual? - CORRECT ANSWER ✔✔✔ The annuitant.
In a flexible premium deferred annuity, what amount is affected by the annuitant's age? - CORRECT
ANSWER ✔✔✔ The annuity benefit payments.
When will the beneficiary of a deferred annuity receive a payment? - CORRECT ANSWER ✔✔✔ When
the owner/annuitant dies.
What is true for both an annuity contract and a life insurance policy? - CORRECT ANSWER ✔✔✔ A
waiver of premium rider is normally available.
What is NOT found in a single premium deferred annuity contract? - CORRECT ANSWER ✔✔✔ A
purchase payment schedule.
