IOWA LIFE INSURANCE AND ANNUITIES EXAM 2025 |160 QUESTIONS
WITH ACCURATE SOLUTIONS
1. All the following are true regarding buy-sell agreement EXCEPT
It makes the business more attractive to creditors.
The number of partners or business owners can impact the decision
on whether to use a cross-purpose or entity-purchase buy sell
agreement.
The agreement guarantees the estate tax value of the decedent's
interest.
It provides for business continuation.
2. Describe the two main features of whole life insurance as mentioned in the
text.
It provides a guaranteed death benefit and includes a guaranteed
cash value that builds inside the policy.
It offers flexible premiums and a variable death benefit.
It provides a guaranteed death benefit and allows for investment in
stocks.
It includes only a cash value with no death benefit.
3. Funds collect within an annuity on a tax-deferred basis. What does this
mean?
Funds accumulated in annuities are exempt from tax.
Funds accumulated in annuities are taxed at lower rates than other
income
, The annuity owner's premiums are not taxed before being paid into
the contract.
Interest earnings and growth are not taxable to the owner while
they accumulate in the contract.
4. What type of insurance and annuity products are used to fund a 412(i) Plan?
Group life insurance and fixed annuities
Universal life insurance and variable annuities
Term life insurance and immediate annuities
Whole life insurance and deferred annuities
5. Describe how the investment of premiums in a fixed life insurance policy
affects the policyholder.
Premiums are invested in the insurer's general account,
providing stability and guaranteed returns.
Premiums are used for high-risk investments that can fluctuate.
Premiums are not invested and only cover administrative costs.
Premiums are returned to the policyholder after a set
period.
6. What legislation requires financial institutions to maintain anti-money
laundering programs?
Gramm-Leach-Bliley Act
Sarbanes-Oxley Act
Dodd-Frank Act
USA Patriot Act
,7. If an individual chooses a level term insurance policy for 20 years, what
financial planning considerations should they keep in mind regarding their
beneficiaries and potential changes in their financial situation?
They should consider the need for coverage during the term,
potential changes in dependents, and the impact of inflation on
the death benefit.
They should assume their financial situation will remain static over the
20 years.
They should prioritize investment returns over the death benefit
provided by the policy.
They should focus solely on the premium costs without regard to
changes in their financial situation.
8. Describe the payment options available for a life income with refund
guarantee annuity.
Payments can only be made to a trust.
Only a one-time payment is allowed.
Lump sum cash payment or continuing monthly installment
payments.
Annual payments only.
9. If a key employee of a company with key person insurance leaves the
company, what can the business do regarding the insurance
policy?
Continue the insurance plan even after the employee quits.
Change the beneficiary to a family member.
Cancel the insurance plan immediately.
, Transfer the policy to the employee.
10. What is the primary benefit of key person insurance for a business?
Tax benefits for the key person
Death benefit to the business if the key person dies
Investment returns for the business
Premiums paid by the key person
11. Describe how the death benefits of a fixed annuity are calculated.
Death benefits are equal to the total premiums paid only.
Death benefits are determined solely by the market value of the
annuity at the time of death.
Death benefits are calculated as total premiums plus credited
interest earnings minus withdrawals and contract charges.
Death benefits are fixed at a predetermined amount regardless of
premiums paid.
12. Two business partners individually agree to buy the business interest of the
deceased partner upon his/her death and own life insurance on each
other in the amount of his/her share of the business' buy-out value. This is
known as a(n):
Cross purchase plan.
Entity plan.
Stock redemption plan.
Stock purchase plan.
WITH ACCURATE SOLUTIONS
1. All the following are true regarding buy-sell agreement EXCEPT
It makes the business more attractive to creditors.
The number of partners or business owners can impact the decision
on whether to use a cross-purpose or entity-purchase buy sell
agreement.
The agreement guarantees the estate tax value of the decedent's
interest.
It provides for business continuation.
2. Describe the two main features of whole life insurance as mentioned in the
text.
It provides a guaranteed death benefit and includes a guaranteed
cash value that builds inside the policy.
It offers flexible premiums and a variable death benefit.
It provides a guaranteed death benefit and allows for investment in
stocks.
It includes only a cash value with no death benefit.
3. Funds collect within an annuity on a tax-deferred basis. What does this
mean?
Funds accumulated in annuities are exempt from tax.
Funds accumulated in annuities are taxed at lower rates than other
income
, The annuity owner's premiums are not taxed before being paid into
the contract.
Interest earnings and growth are not taxable to the owner while
they accumulate in the contract.
4. What type of insurance and annuity products are used to fund a 412(i) Plan?
Group life insurance and fixed annuities
Universal life insurance and variable annuities
Term life insurance and immediate annuities
Whole life insurance and deferred annuities
5. Describe how the investment of premiums in a fixed life insurance policy
affects the policyholder.
Premiums are invested in the insurer's general account,
providing stability and guaranteed returns.
Premiums are used for high-risk investments that can fluctuate.
Premiums are not invested and only cover administrative costs.
Premiums are returned to the policyholder after a set
period.
6. What legislation requires financial institutions to maintain anti-money
laundering programs?
Gramm-Leach-Bliley Act
Sarbanes-Oxley Act
Dodd-Frank Act
USA Patriot Act
,7. If an individual chooses a level term insurance policy for 20 years, what
financial planning considerations should they keep in mind regarding their
beneficiaries and potential changes in their financial situation?
They should consider the need for coverage during the term,
potential changes in dependents, and the impact of inflation on
the death benefit.
They should assume their financial situation will remain static over the
20 years.
They should prioritize investment returns over the death benefit
provided by the policy.
They should focus solely on the premium costs without regard to
changes in their financial situation.
8. Describe the payment options available for a life income with refund
guarantee annuity.
Payments can only be made to a trust.
Only a one-time payment is allowed.
Lump sum cash payment or continuing monthly installment
payments.
Annual payments only.
9. If a key employee of a company with key person insurance leaves the
company, what can the business do regarding the insurance
policy?
Continue the insurance plan even after the employee quits.
Change the beneficiary to a family member.
Cancel the insurance plan immediately.
, Transfer the policy to the employee.
10. What is the primary benefit of key person insurance for a business?
Tax benefits for the key person
Death benefit to the business if the key person dies
Investment returns for the business
Premiums paid by the key person
11. Describe how the death benefits of a fixed annuity are calculated.
Death benefits are equal to the total premiums paid only.
Death benefits are determined solely by the market value of the
annuity at the time of death.
Death benefits are calculated as total premiums plus credited
interest earnings minus withdrawals and contract charges.
Death benefits are fixed at a predetermined amount regardless of
premiums paid.
12. Two business partners individually agree to buy the business interest of the
deceased partner upon his/her death and own life insurance on each
other in the amount of his/her share of the business' buy-out value. This is
known as a(n):
Cross purchase plan.
Entity plan.
Stock redemption plan.
Stock purchase plan.
