Free and New Printable insurance agent exam sample Questions 1-150

Free insurance agent exam samples questions 2012-13

This is 4rth part of my blog on insurance agent exam. You will find all answers in Red.

 

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Free insurance agent exam samples question 28-35

Question 28

All of the following are true regarding Viatical Settlements EXCEPT:

A. Amounts received are taxable to the policy owner

B. They are done by clients who need to raise money to pay medical bills

C. The policy is sold at a discount

D. An absolute assignment of policy ownership is required

Question 29

If an IRA participant dies before distributions begin and his spouse is his beneficiary:

A. All funds must be distributed within 5 years

B. Required minimum distributions must begin when participant would have been age 70 ½

C. The spouse can roll-over all funds to a new IRA

D. All funds must be distributed immediately

Question 30

Which of the following types of annuities will continue to make payments to a beneficiary after the annuitant has died:

A. Pure life

B. Period certain

C. Straight life

D. Life income

Question 31

If not kept in force for a long period of time, which type of Life Insurance is most expensive:

A. Whole life

B. Decreasing term

C. Annual renewable term

D. Level term

Question 32

When an annuitant dies before annuitizing the contract, his beneficiary will receive:

A. Nothing

B. The face amount of the policy

C. The premiums paid in

D. The value of the account

Question 33

All of the following are true regarding Decreasing Term life insurance EXCEPT:

A. It is often used by financial institutions who write Credit Life for debtors

B. The face amount goes down over the term of the policy

C. The premium goes down as the coverage decreases

D. It is often used as Mortgage Protection coverage

Question 34

All of the following are true about Life Insurance provisions EXCEPT:

A. The reinstatement provision applies after a policy lapses for non-payment

B. An absolute assignment is a change in the ownership of the policy

C. A revocable beneficiary may be changed at any time

D. Mutual insurers may pay dividends to stockholders

Question 35

A mutual policyholder who wants to minimize his annual insurance cost should select which of the following dividend options:

A. Interest

B. 1 year term

C. Paid-up additions

D. Apply to premium when due

ANSWERS & RATIONALES- Free insurance agent exam samples question 28-35

28. A When a policy owner with a terminal illness sells their life insurance policy to an investor, it is known as a Viatical Settlement. The policy owner assigns his ownership in his policy to an investor in return for a discounted current payment. The investor names

himself as beneficiary and will receive tax free proceeds upon the death of the insured. Income received is not taxable to the former policy holder.

29. B If the spouse is the IRA owner's sole beneficiary and the owner dies before distributions begin, the surviving spouse can take withdrawals over her life expectancy, but withdrawals must start no later than the date on which the deceased IRA owner would have been age 70 1/2.

Or, the surviving spouse may elect to treat the IRA as being her own and start distributions when she turns age 70 1/2, with required minimum distributions based upon her life expectancy at that time.

30. B Pure life, straight life or life income annuities are all the same thing, and have no beneficiary. If the annuitant dies, payments stop. However, a period certain annuity guarantees a certain number payments, even if the annuitant dies. For example, if an annuitant with a 10 year period certain dies after 5 years, payments would continue on to the beneficiary for another 5 years.

31. A In the long run, Whole Life insurance is the cheapest due to its cash value accumulation. However, since it takes a long time for the cash value to accumulate, it is the most expensive in the short run. Term insurance is the cheapest in the short run, but most expensive in the long run, since it never has a cash value.

32. D When an annuitant dies during the accumulation period of an annuity, the beneficiary will receive the accumulated value of the account, which includes all premiums paid in by the annuitant plus any accumulated interest. Of course, the interest will be taxable to the beneficiary.

33. C On Decreasing Term life insurance, the premium stays the same as the face amount goes down. It is often used in Credit Life and Mortgage Protection insurance. Remember, term life insurance has no cash value.

34. D Mutual insurers might pay dividends to policyholders, not stockholders. Mutuals are owned by their policyholders and do not issue stock. Instead, they issue ‘participating’ policies, where the policyholders might participate in the company profits in the form of dividends, which are never guaranteed.

35. D Mutual policyholders may select from several dividend options, if a dividend is declared. If the policyholder elects to apply his dividend to his annual premium when due, this cash outlay will be reduced. However, dividends may not be guaranteed.