MN State Insurance Exam All Answers Correct

MN State Insurance Exam All Answers Correct FICA Taxes How are employee FICA taxes collected? Options: a. The employee withholds the tax and pays it along with the employer's portion; b. The employer withholds the tax and pays it only; c. The employee pays the tax separately; d. The employer pays the tax only Answer: a. The employee withholds the tax and pays it along with the employer's portion; Insurance Premiums What is the adequate consideration for a monthly premium payment of $100 for an insurance policy? Options: a. $50; b. $100; c. $260; d. $1,000 Answer: b. $100; Non-Forfeiture Options Which non-forfeiture option provides the least amount of coverage? Options: a. Reduced paid-up; b. Extended term insurance; c. Cash surrender value; d. Paid-up life insurance Answer: a. Reduced paid-up; Insurance Application What document must always be submitted for review by an insurance company to determine if it will issue a policy? Options: a. The application; b. The proposal form; c. The policy form; d. The declaration page Answer: a. The application; Certificate of Authority What is required before an insurer can operate in this state? Options: a. Certificate of Authority issued by the state Insurance Department; b. License issued by the state Insurance Department; c. Permit issued by the state Insurance Department; d. Registration issued by the state Insurance Department Answer: a. Certificate of Authority issued by the state Insurance Department; Prelicensing Education How many hours of education are required per line of authority for prelicensing education? Options: a. 10 hours; b. 15 hours; c. 20 hours; d. 25 hours Answer: c. 20 hours; Guardianship Who signs the application if an applicant is a minor? Options: a. The applicant themselves; b. Their guardian; c. A parent or legal representative; d. A trusted friend Answer: b. Their guardian; Dividend Options Which option is NOT a dividend option? Options: a. Reduced paid-up; b. Paid-up life insurance; c. Extended term insurance; d. Reduced paid-up Answer: d (Reduced paid-up is not a dividend option); Tax Consequences What are the tax consequences if an insured takes the cash value of $15,000 from a universal life policy after contributing $12,000 in premiums? Options: a. $3,000 is taxable as ordinary income; b. $12,000 is taxable as ordinary income; c. $3,000 is not taxable as ordinary income; d.$12,000 is not taxable as ordinary income Answer: a.$3,000 is taxable as ordinary income; Policy Features Which policy feature refers to death benefit, level, decreasing, and increasing term? Options: a. Face amount; b. Death benefit; c. Insurance policy features such as death benefit, level, decreasing, and increasing term refer to _______________________. Death benefit Which of the following is NOT a taxable event for a Modified Endowment Contract (MEC)? Lump sum death benefit paid to the beneficiary When a policy lapses due to nonpayment of premium, which nonforfeiture option is the automatic option? Extended term is the process of selection, classification and rating, and determining if someone is insurable. Home office underwriting The nonforfeiture option that provides the most amount of coverage is Extended Term All of the following are reasons why a new policy issued through a term conversion costs more, except: The insured's health has changed for the worse The Guaranty Association's Notice of Policyholder Rights does NOT include which of the following information? The Guaranty Association's limits of liability Some traditional whole life policies offer a(n) __________ feature to keep the policy in force if there are sufficient cash values to do so. Automatic premium loan The _________ settlement industry has increased awareness of STOLI/IOLI. Life Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent? Irrevocable If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens? Unless specified otherwise, the cash values buy extended term Choose the TRUE statement about commissions. Deferred commissions may be paid to a person who is not licensed, but was at the time the policy was sold Misrepresentation is which of the following? Forcing a person to lapse an existing policy by not stating the correct policy terms Which of the following is TRUE about the termination of an insurance license If a license has been revoked, the producer may not reapply earlier than 2 years from the revocation date A Variable Universal Life (VUL) is a combination of: Universal and Variable Life Variable Universal Life should only be sold to those clients who are: More investment savvy The underwriter's greatest concern when underwriting a group plan is ____________ Adverse selection What happens to the cash values in a whole life policy if an insured is on claim with a waiver of premium rider? Cash value and dividends continue as if normal premium payments have been made If a policyowner of a life insurance policy accidently pays in premiums in excess of the MEC guidelines, the insurer can refund the excess within ______ days of the end of the contract year. 60 Instead of waiting to receive her payments over time, Jeanne decides to obtain the greatest amount of money out of her annuity immediately. Which option did she choose? Lump Sum The __________ provision specifies what an insured must do, if a policy has lapsed, in order to put it back in forc Reinstatement All of the following would be reasons why a policyowner would sell their policy in a life settlement transaction, except: There are no alternative ways to obtain needed cash If, as the result of an injury or illness, the insured is deemed to be terminal (i.e., expected to die within 1 or 2 years), what rider added to a life insurance policy would advance a portion of the face value? Accelerated Benefit (Living Need) Alice finds she no longer is able to pay premiums on her $50,000 Whole Life Policy, but needs that amount of protection for her family. Which Nonforfeiture Option provides this protection? Extended Term