Life Insurance Test

Insurance is a system that provides financial protection to individuals or organizations in the event of a loss or damage. It is designed to safeguard against potential financial hardships that may arise due to unexpected events such as accidents, illnesses, natural disasters, or property damage. Insurance policies are purchased by individuals or companies, and in exchange for regular premium payments, the insurance company agrees to provide compensation or coverage for specified risks outlined in the policy. This helps individuals or organizations mitigate the financial burden that may arise from unexpected events, providing them with peace of mind and financial security.

The death benefit refers to the amount that is paid to the beneficiary upon the death of the insured. This amount can be affected by factors such as outstanding loans or increased by dividend accumulation, riders, or supplemental benefits.

The correct answer is the amount of money required by the insurer to put an insurance policy in force and to keep it in force. This refers to the regular payment made by the policyholder to the insurance company in exchange for coverage. It is necessary to pay the insurance premium to initiate the policy and to maintain it over time. The premium amount is determined based on various factors such as the type of insurance, coverage amount, risk factors, and the individual's profile.

Key-person insurance is the correct answer because it refers to life insurance purchased by a business on a key-employee, owner, or partner who plays a crucial role in the company's financial success. This type of insurance is designed to provide financial protection to the business in the event of the key person's death or disability, helping to cover expenses and potential losses that may arise from their absence.

Universal Life contracts allow flexible premium payments, meaning that policyholders have the option to adjust the amount and frequency of their premium payments. This flexibility allows individuals to adapt their premium payments to their changing financial circumstances, making it easier to maintain the policy over the long term.

The loan rate on Sun Executive UL is 4% for the first 10 years and 3% for years 11 and beyond. This means that the loan rate is guaranteed to be 3% starting from year 11 and will remain at that rate for subsequent years. Therefore, the answer "True" is correct.

When researching a case, it is necessary to provide all of the mentioned pieces of information to Commissions. The social of the agent helps in identifying the specific agent involved in the case, while the agent name provides further clarification. The policy number is crucial for locating the specific policy related to the case. Therefore, all of the mentioned information is required for effective research and investigation.

Life insurance provides protection to family members or business associates from the financial loss that occurs when a person dies. This type of insurance ensures that in the event of the policyholder's death, their loved ones or business partners will receive a payout to help cover expenses and replace any lost income. It serves as a safety net to provide financial stability and support during a difficult time.

The Sun Accumulator UL can be used for all of the designs mentioned in the question, including 162 Bonus Plans, Wealth Transfer, and Deferred Compensation. This suggests that the Sun Accumulator UL is a versatile product that can be utilized in various financial strategies and goals.

A double bonus executive benefit plan is one in which a company not only provides a bonus to the executive but also covers the cost of the insurance premium and the tax on the bonus. This means that the executive receives a bonus that is sufficient to cover these additional expenses, resulting in a higher net benefit for the executive. This type of plan is considered advantageous for the executive as it provides additional financial support and reduces the burden of paying for insurance and taxes out of pocket.

The main point of contact on pending cases in New Business is the New Business Case Coordinator. This individual is responsible for coordinating and managing the new business cases, ensuring that all necessary documents and information are collected and processed in a timely manner. They serve as the primary contact for any inquiries or updates regarding the status of the pending cases.

The basic insurance principle of chance states that for a loss to be insurable, it should be caused by an unexpected event or an event not intentionally caused by the insured person. This means that insurance is designed to protect against unforeseen circumstances and not intentional acts. By insuring against unexpected events, individuals can protect themselves financially from the potential losses that may arise.

The most common reason for delays in 1035 exchanges is when the paperwork is not in good order. This means that there may be missing or incomplete documents, errors in the information provided, or failure to meet the necessary requirements for the exchange. When the paperwork is not in good order, it can cause delays in processing the exchange and may require additional time and effort to correct the issues before the exchange can proceed.

The correct answer is 1. At death of insured and 2. Insured survives past the maturity date in contract. These two times indicate when a policy is considered to reach its maturity. The death of the insured signifies the end of the policy, while the insured surviving past the maturity date ensures that the policy has completed its full term.

A cross-purchase plan is a type of business succession plan where each business owner purchases a life insurance policy on each of the other owners. In the event of an owner's death, the surviving owners use the death benefit from the life insurance policy to buy the deceased owner's share of the business. This plan ensures a smooth transition of ownership and allows the surviving owners to maintain control of the business.

The correct answer is A, B, C & D. This means that all of the products listed (Sun Executive UL, Sun Executive VUL, Sun Accumulator, and Sun Protector Plus) have supplemental insurance rider available.

A Trusteed Cross-Purchase Plan eliminates the need for multiple policies on each stockholder's life. This means that instead of each stockholder having their own individual life insurance policy, the trust purchases a single policy for each stockholder. This simplifies the process and reduces administrative burdens. Additionally, having a single policy for each stockholder may also result in cost savings compared to having multiple policies.

When the policy reaches the deferral year, the face amount of the policy will decrease. However, the activated paid up additions on the policy will typically compensate for the drop in face amount. This means that the policyholder will still receive the expected benefits, even though the initial face amount has decreased.

For proper completion of 1035 exchange paperwork, surrender paperwork must be signed at the time the new app is taken, the complete name and Tax ID of the owner must be included, and the document must be witnessed. However, outstanding loans do not need to be paid off for the proper completion of 1035 exchange paperwork.

If the client does not pay the loan, interest will accrue on the policy and be added to the loan as of the anniversary date. If the loan is not paid back, the policy could overloan and lapse. This means that the policy could become invalid and no longer provide coverage.

The client may take a cash withdrawal as part of the 1035 exchange and use those funds to pay off the loan at the existing company once the 1035 exchange has been completed. This option is not available if a contract has an outstanding loan as part of the 1035 process.

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The statement is true because the interest rate bonus on Sun Accumulator UL is guaranteed in all policy years, regardless of the current interest rate. This means that policyholders will receive an additional bonus on top of the current interest rate, providing them with a higher return on their investment.

A Supplemental Executive Retirement Plan (SERP) is a non-qualified deferred compensation agreement between a company and select key employees. It provides a specified benefit amount at retirement, or in the event of the employee's death, disability, or termination of employment. This plan is designed to supplement the employee's existing retirement plan and provide additional benefits for top executives. It is commonly used to attract and retain key talent by offering enhanced retirement benefits beyond what is provided by traditional retirement plans like a 401(k).

Cost of Insurance Charges are assessed on the Net Amount at Risk. This refers to the difference between the policy's death benefit and the cash value or account value. It represents the amount that the insurance company is exposed to in case of the insured's death. The cost of insurance charges is deducted from the policy's cash value or account value to cover the risk for the insurance company.

Individually Owned MEC policies are no longer subject to the 10% penalty on distributions after age 59 1/2. Corporate Owned and Trust Owned MEC policies are always subject to the 10% distribution penalty. Distributions from MEC policies are taxed on a LIFO (Last-In, First-Out) basis. Therefore, all of the statements regarding Modified Endowment Contracts (MEC) are true.

The correct answer is A, B & C. This means that products A (Sun Executive UL), B (Sun Executive VUL), and C (Sun Accumulator) all have both definitions of life insurance, GPT (Guaranteed Protection) and CVAT (Cash Value Accumulation Test). This indicates that these products provide both protection coverage and a cash value component.

The available products for converting a term policy are Sun Accumulator (only if there is an agent) and Sun Universal ProtectorPlus.

If a client surrenders a Sun Executive policy through a 1035 exchange, they would not receive the enhancement benefit. This means that if the client chooses to exchange their policy for another insurance policy or annuity contract, they will not be eligible for any enhancements or additional benefits that may have been available under the original policy.

A Section 162 Executive Bonus Plan is a type of incentive plan where a business provides an executive with funds to purchase a life insurance policy owned by the employee. This plan allows the executive to receive additional compensation in the form of life insurance coverage, while also providing tax advantages for the business. The executive pays the premiums for the policy, and the business reimburses the executive for the cost. This arrangement helps the executive secure life insurance coverage and provides a tax-efficient way for the business to compensate the executive.

The correct answer states that there is a bonus interest rate on the Sun Accumulator product. It further explains that the bonus interest rate starts in the 11th year and is guaranteed. This means that after the 11th year, customers will receive an additional interest rate on their investment, and this additional interest rate is assured.

The individual insurance commissions team does not handle any of the functions mentioned in the options.

Based on the given scenario, the death benefit switches from B to A in Year 11.

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Dawn Foye manages the Life Insurance Sales Desk.

Sun Life Financial has never sold the life insurance product called Life Protect Plus.

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All of the products listed (A, B, C, and D) have a guaranteed interest rate of 3%.

The correct answer is "Call internal wholesaler to notify them that an application has been submitted." This option is not mentioned as one of New Business' 4 tips for offices submitting new applications. The other options are mentioned as tips, such as emailing the application and requirements, ensuring all attachments are submitted correctly, and including a cover transmittal with key case information.

The correct answer is "Every 5 business days" because it is the only option that indicates a shorter time interval between follow-up calls. The other options suggest longer intervals, which would not be considered "often" in the context of normal processing.

The Sun Life Financial Life Insurance Sales Desk is located in Boston.

The correct answer is entity purchase or stock redemption plan. In this type of plan, the business itself purchases life insurance policies on the lives of the owners. When an owner-employee dies, the business uses the proceeds from the policy to buy the deceased owner's interest from their estate. This allows the business to maintain control and ownership by redeeming the stock or interest of the deceased owner. It is an effective way to ensure a smooth transition of ownership and provide financial security for the heirs of the deceased owner.

The correct answer is that the policyowner must pay back premiums. This means that in order to reinstate the policy, the policyowner must repay any missed premium payments. This is a common requirement for reinstating a lapsed term policy.

Switching from Option B to Option A in the GPT tax test would be the most efficient in terms of the death benefit option. This switch allows the client to maximize the death benefit while still maintaining the tax advantages provided by the GPT tax test. By switching to Option A, the client can ensure that the policy's death benefit is paid out in a tax-efficient manner, ultimately providing the most value for the premium paid.

The Sun Executive product does have wash loans available, but they are only available after the 10th anniversary of the product.

Option C will increase the policy Death Benefit by the amount of Premiums Paid. This means that for every year the policy is active, the Death Benefit will increase by 5% of the total premiums paid. This is a way to provide additional coverage to the policyholder's beneficiaries in the event of their death. The Death Benefit is typically the amount of money that will be paid out to the beneficiaries upon the policyholder's death.

The correct answer is Both Corporate Owned. This means that both the Keyperson and Deferred Compensation Plans are owned by the corporation. In a Keyperson Plan, the corporation purchases and owns the life insurance policy on a key employee to protect against financial loss in the event of their death. Similarly, in a Deferred Compensation Plan, the corporation owns the policy that provides benefits to key employees in the form of deferred compensation.

The correct answer is $48,851. This can be determined by running an illustration based on the given scenario. The scenario involves a male client, age 45, who prefers non-taxable distributions and is located in the state of CA. The client plans to fund $50,000 per year until age 65 and take distributions from age 66 to 80. The agent wants to maximize distributions with GPT and B to A optimal solve and is not concerned with policy continuation as they will exercise the loan lapse protection rider. The objective is to solve for a minimum non MEC face amount of $1 at age 81. By running the illustration, it is determined that the cash surrender value in year 1 is $48,851.

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Products A and B, which are Sun Executive UL and Sun Executive VUL, have a current interest rate of 5.05%.