Wisconsin Life Insurance Exam @ 2023
1). Cross purchase plans
Ans: Agreements that provide that upon a business owner's death, surviving owners
will purchase the deceased's interest, often with funds from life insurance policies
owned by each principal on the lives of all other principals.
2). Entity plans
Ans: Agreements in which a business assumes the obligation of purchasing a
deceased owner's interest in the business, thereby proportionately increasing the
interests of surviving owners
3). Human life value approach
Ans: An individuals economic worth, measured by the sum of the individuals future
earnings that is devoted to the individuals family.
4). 403(b) plan
Ans: A tax-deferred retirement plan for certain employees of public schools,
employees of specific tax-exempt organizations, and certain ministers. For example:
teachers, hospital workers, ministers, and some other public employees
5). 1035 contract exchange
Ans: Applies to annuities. If an annuity is exchanged for another annuity, a gain (for
tax purposes) is not realized. This is also true for a life insurance policy or an
endowment contract exchanged for an annuity. However, an annuity cannot be
exchanged for a life insurance policy. This provision in the tax code allows you, as a
policyholder, to transfer funds from a life insurance, endowment or annuity to a new
policy, without having to pay taxes
6). Accumulation period
Ans: The time over which the annuitant makes payments or investments in an annuity,
and when those payments earn interest tax deferred.
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, 7). Accumulation units
Ans: A variable annuity contract owner's interest in the separate account prior to
annuitization.
8). Annuitant
Ans: The person that buys an annuity; may or may not be an annuity's policyowner.
The annuitant's life expectancy determines the annuity payments.
9). Annuity units
Ans: At the time the variable annuity benefits are to be paid out to the annuitant, the
accumulation units in the participant's individual account are converted into annuity
units.
10). Cash refund option
Ans: Provides that, upon the death of an annuitant before payments totaling the
purchase price have been made, the excess of the amount paid by the purchaser over
the total annuity payments received will be paid in one sum to designated beneficiaries.
11). Deferred annuity
Ans: An annuity in which the rents begin after a specified number of periods. May be
purchased on either a single premium or flexible premium basis. Typically do not begin
making payments for at least 1 year after the date of purchase.
12). Equity indexed annuity
Ans: A fixed, deferred annuity that allows the owner to participate in the growth of the
stock market and provides downside protection against the loss of principal and prior
interest earnings if the annuity is held to term.
13). Exclusion ratio
Ans: Fraction used to determine amount of annual annuity income exempt from
federal income tax. Exclusion ratio is the total contribution or investment in the annuity
divided by the expected ratio.
14). Fixed annuity
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, Ans: An annuity that offers fixed payments and guarantees a minimum rate of interest
to be credited to the purchase payment or payments.
15). Immediate annuity
Ans: Provides for payment of annuity benefit at one payment interval from date of
purchase. Can only be purchased with a single payment.
16). Joint and survivor option
Ans: A settlement option which guarantees that benefits will be payed on a life-long
basis to two or more people. This option may include a period certain and the amount
payable is based on the ages of the beneficiaries. When the surviving annuitant dies, no
further payments are made to anyone. A full survivor option pays the same benefit
amount to the survivor. A two-thirds option pays two-thirds of the original joint benefit. A
one-half survivor option pays one-half of the original joint benefit.
17). Life with period certain annuity (life income with term-certain option)
Ans: Designed to pay the annuitant an income for life, but guarantees a definite
minimum period of payments. The life with period certain option provides income to the
annuitant for life but guarantees a minimum period of payments. Thus, if the annuitant
dies during the specified period, benefit payments continue to the beneficiary for the
remainder of that period.
18). Market value adjusment
Ans: A market value adjustment can be attached to a deferred annuity that features
fixed interest rate guarantees combined with an interest rate adjustment factor that can
cause the actual crediting rates to increase or decrease in response to market
conditions. Instead of having the annuity's interest rate linked to an index with as with
the equity-indexed annuity, and MVA annuity's interest rate is guaranteed fixed if the
contract is held for the period specified in the policy. The MVA feature applies only if the
contract is surrendered before the contract period expires. Otherwise, the annuity
functions the same way a fixed annuity does.
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, 19). Period certain annuity
Ans: Annuity that guarantees payments to an ANNUITANT for a particular period of
time. For example, a 10-year period-certain annuity will guarantee annuity payments for
at least 10 years. If the annuitant dies before the 10 years have expired, the payments
will continue to the beneficiaries for the remaining term.
20). Periodic payment annuity (flexible premium)
Ans: Describes an annuity owner making multiple premium payments to accumulate
principal. Typically, after the initial premium, these payments are flexible with frequency
and amount.
21). Principal
Ans: The original sum of money paid into an annuity through premiums.
22). Single premium annuity
Ans: An annuity for which the entire premium is paid in one sum at the beginning of
the contract period. This can be deferred or immediate.
23). Straight life annuity
Ans: An annuity income option that pays a guaranteed income for the annuitant's
lifetime, after which time payments stop.
24). Variable annuity
Ans: Pays a lifetime income, but the income payments vary depending on common
stock prices. Shifts the investment risk from the insurer to the contract owner. These
annuities invest deferred payments in an insurer's separate accounts instead of an
insurer's general accounts. Because these annuities are based on non-guaranteed equity
investments (such as common stocks) a sales rep must be registered with the Financial
Industry Regulatory Authority (FINRA) as well as hold a state insurance license.
25). Which annuity payout option provides for the greatest monthly payment?
Ans: Straight life
26).
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1). Cross purchase plans
Ans: Agreements that provide that upon a business owner's death, surviving owners
will purchase the deceased's interest, often with funds from life insurance policies
owned by each principal on the lives of all other principals.
2). Entity plans
Ans: Agreements in which a business assumes the obligation of purchasing a
deceased owner's interest in the business, thereby proportionately increasing the
interests of surviving owners
3). Human life value approach
Ans: An individuals economic worth, measured by the sum of the individuals future
earnings that is devoted to the individuals family.
4). 403(b) plan
Ans: A tax-deferred retirement plan for certain employees of public schools,
employees of specific tax-exempt organizations, and certain ministers. For example:
teachers, hospital workers, ministers, and some other public employees
5). 1035 contract exchange
Ans: Applies to annuities. If an annuity is exchanged for another annuity, a gain (for
tax purposes) is not realized. This is also true for a life insurance policy or an
endowment contract exchanged for an annuity. However, an annuity cannot be
exchanged for a life insurance policy. This provision in the tax code allows you, as a
policyholder, to transfer funds from a life insurance, endowment or annuity to a new
policy, without having to pay taxes
6). Accumulation period
Ans: The time over which the annuitant makes payments or investments in an annuity,
and when those payments earn interest tax deferred.
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, 7). Accumulation units
Ans: A variable annuity contract owner's interest in the separate account prior to
annuitization.
8). Annuitant
Ans: The person that buys an annuity; may or may not be an annuity's policyowner.
The annuitant's life expectancy determines the annuity payments.
9). Annuity units
Ans: At the time the variable annuity benefits are to be paid out to the annuitant, the
accumulation units in the participant's individual account are converted into annuity
units.
10). Cash refund option
Ans: Provides that, upon the death of an annuitant before payments totaling the
purchase price have been made, the excess of the amount paid by the purchaser over
the total annuity payments received will be paid in one sum to designated beneficiaries.
11). Deferred annuity
Ans: An annuity in which the rents begin after a specified number of periods. May be
purchased on either a single premium or flexible premium basis. Typically do not begin
making payments for at least 1 year after the date of purchase.
12). Equity indexed annuity
Ans: A fixed, deferred annuity that allows the owner to participate in the growth of the
stock market and provides downside protection against the loss of principal and prior
interest earnings if the annuity is held to term.
13). Exclusion ratio
Ans: Fraction used to determine amount of annual annuity income exempt from
federal income tax. Exclusion ratio is the total contribution or investment in the annuity
divided by the expected ratio.
14). Fixed annuity
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, Ans: An annuity that offers fixed payments and guarantees a minimum rate of interest
to be credited to the purchase payment or payments.
15). Immediate annuity
Ans: Provides for payment of annuity benefit at one payment interval from date of
purchase. Can only be purchased with a single payment.
16). Joint and survivor option
Ans: A settlement option which guarantees that benefits will be payed on a life-long
basis to two or more people. This option may include a period certain and the amount
payable is based on the ages of the beneficiaries. When the surviving annuitant dies, no
further payments are made to anyone. A full survivor option pays the same benefit
amount to the survivor. A two-thirds option pays two-thirds of the original joint benefit. A
one-half survivor option pays one-half of the original joint benefit.
17). Life with period certain annuity (life income with term-certain option)
Ans: Designed to pay the annuitant an income for life, but guarantees a definite
minimum period of payments. The life with period certain option provides income to the
annuitant for life but guarantees a minimum period of payments. Thus, if the annuitant
dies during the specified period, benefit payments continue to the beneficiary for the
remainder of that period.
18). Market value adjusment
Ans: A market value adjustment can be attached to a deferred annuity that features
fixed interest rate guarantees combined with an interest rate adjustment factor that can
cause the actual crediting rates to increase or decrease in response to market
conditions. Instead of having the annuity's interest rate linked to an index with as with
the equity-indexed annuity, and MVA annuity's interest rate is guaranteed fixed if the
contract is held for the period specified in the policy. The MVA feature applies only if the
contract is surrendered before the contract period expires. Otherwise, the annuity
functions the same way a fixed annuity does.
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, 19). Period certain annuity
Ans: Annuity that guarantees payments to an ANNUITANT for a particular period of
time. For example, a 10-year period-certain annuity will guarantee annuity payments for
at least 10 years. If the annuitant dies before the 10 years have expired, the payments
will continue to the beneficiaries for the remaining term.
20). Periodic payment annuity (flexible premium)
Ans: Describes an annuity owner making multiple premium payments to accumulate
principal. Typically, after the initial premium, these payments are flexible with frequency
and amount.
21). Principal
Ans: The original sum of money paid into an annuity through premiums.
22). Single premium annuity
Ans: An annuity for which the entire premium is paid in one sum at the beginning of
the contract period. This can be deferred or immediate.
23). Straight life annuity
Ans: An annuity income option that pays a guaranteed income for the annuitant's
lifetime, after which time payments stop.
24). Variable annuity
Ans: Pays a lifetime income, but the income payments vary depending on common
stock prices. Shifts the investment risk from the insurer to the contract owner. These
annuities invest deferred payments in an insurer's separate accounts instead of an
insurer's general accounts. Because these annuities are based on non-guaranteed equity
investments (such as common stocks) a sales rep must be registered with the Financial
Industry Regulatory Authority (FINRA) as well as hold a state insurance license.
25). Which annuity payout option provides for the greatest monthly payment?
Ans: Straight life
26).
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