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Life Insurance Basics Exam Practice Questions and Answers
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Life Insurance Basics Exam Practice Questions and Answers Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? A. premiums are not tax deductible as a business expense B. premiums are tax deductible by the key employee C. premiums are ta...

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  • September 1, 2024
  • 19
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • life insurance basics exam practice questions and

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  • Life insurance
  • Life insurance

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©SOPHIABENNETT
2024/2025 ACADEMIC YEAR




©SOPHIABENNETT 9/1/24 2024/2025

,Life Insurance Basics Exam Practice
Questions and Answers


Which of the following is correct concerning the taxation of premiums in a key-person

life insurance policy?

A. premiums are not tax deductible as a business expense

B. premiums are tax deductible by the key employee

C. premiums are tax deductible as a business expense

D. premiums are taxable to the employee - Answer✔️✔️-A - premiums aren't tax

deductible as a business expense

Which of the following is an example of liquidity in a life insurance contract?

A. the death benefit paid to the beneficiary

B. the flexible premium

C. the money in a savings account

D. the cash value available to the policyowner - Answer✔️✔️-D - the cash value available

to the policyowner



Liquidity in LI refers to the availability of cash to the insured.

When is the earliest a policy may go into effect?

A. when the first premium is paid and the policy has been delivered

B. when the insurer approves the application

C. after the underwriter reviews the policy

, D. when the application is signed and a check is given to the agent - Answer✔️✔️-D -

when the application is signed and a check is given to the agent.

Where would the underwriter find relevant info not presented by the applicant but

communicated by the producer?

A. policy summary

B. application

C. statement of continued good health

D. conditional receipt - Answer✔️✔️-A - application



the agent's report is part of the application to allow the agent to communicate with the

underwriter and provide info on the applicant

Which of the following best describes the MIB?

A. its a rating organization for health insurance

B. its a nonprofit organization that maintains underwriting info on applicants for life and

health insurance

C. it is a government agency that collects medical info on the insured from the

insurance companies

D. it is a member organization that protects insured against insolvent insurers -

Answer✔️✔️-B - its a nonprofit organization that maintains underwriting info on applicants

for life and health insurance

Which of the following statements concerning buy-sell agreements is true?

A. buy-sell agreements pay in the event of a medical emergency

B. buy-sell agreements are normally funded with a life insurance policy

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