Life Insurance Quiz MCQ Test!

With life insurance, an insurable interest need exist only at the time the life insurance contract is purchased. It does not have to continue throughout the length of the policy contract, nor does it have to exist at the time of claim.

When the first spouse dies in a joint life policy, the surviving spouse has a conversion right that allows him or her to buy an individual policy with the same or lesser face amount. The surviving insured does not have to prove insurability.

Level term insurance provides a level death benefit and charges a level premium for the duration of the coverage term. At the end of the term, the coverage expires and protection ends.

The viatical settlement provider is the organization that acquires the life insurance policy from the policyholder or Viator. The Viator can then use the money from the policy sale to fund health expenses or end of life care.

Buy-sell agreements are typically designed to enable existing business owners to continue owning the business when the owner dies. The agreements involve the owners, or the business itself, not the owner or partner heirs.

Agents who sell variable products must pass a FINRA Series 6 or 7 exam. Both the insurance company and the agent must also register with FINRa.

Johnson Industries is a self-insurer because it has chosen to retain certain risks and to self-fund to pay any future workers' compensation claims.

A person who is not a North Carolina resident may be licensed as an insurance agent in North Carolina if the person is a licensed agent in good standing in his or her home state.

Mutual companies are owned by their policyholders. Shares of mutual companies are not publicly traded, and when mutual companies declare dividends, they are paid to the policy owners.

Dividend options are ways policyowners of participating policies can use any dividends the insurer has declare.

An admitted insurer is a company that has received a certificate of authority, which allows the company to transact insurance within the state. It certifies that the company has met the state's requirements for conducting the business of insurance. A company not holding a certificate of authority is an unauthorized insurer in that state.

A Section 529 plan is a savings vehicle use to fund future college tuition costs. Although contributions are not tax deductible, the earnings on the investment are tax deferred.

When the first spouse dies in a joint life policy, the surviving spouse has a conversion right that allows him or her to buy an individual policy with the same or lesser face amount. The surviving insured does not have to prove insurability.

Under the spouse/another insured term rider, a person can buy a term life insurance rider to cover the life of a spouse (or another adult). This coverage usually ends sometime before the primary insured reaches the age of 100.

If the payee dies before the principal reaches zero, the insurer pays the contingent payee until the account is depleted. The contingent payee can also choose to receive the present value of the final payments in a lump sum.

The policyowner can borrow the entire cash surrender value less any prior debt against the policy. However, the death benefit is reduced on a dollar-for-dollar basis for the full unpaid loan at the insured's death.

When a policy owner selects the interest-only option, the insurer holds the policy proceeds until a future date and pays the interest that those proceeds earn.

The tax treatment of life insurance and annuity products is determined by various factors such as who owns or controls the product, how the product is designed, and when and how the product benefits are received. However, what the owner does for a living is not a factor in determining the tax treatment. The tax treatment is based on the characteristics and structure of the product, rather than the occupation of the owner.

A group policy may be issued to a creditor to insure debtors, provided all of the creditor's debtors (or classes of debtors) are eligible for insurance.

If a person who pays life insurance premiums on a child's life becomes disabled or dies, a payor benefit rider ensures that the insurance stays in force by waiving the premium payment, typically until the payor recovers (in the case of disability) or until the child reaches a certain age (in the case of the payor's death).

For a plan to be deemed qualified and receive favorable tax treatment, it cannot discriminate in coverage or exist mainly for the benefit of key employees or executives.

Carol is under age 59½, so the withdrawal will be subject to a 10 percent premature distribution penalty tax. The withdrawal is also subject to last-in-first-out (LIFO) income tax treatment and to surrender charges. There are no statutory minimum withholding requirements.

Sally's estate must include $750,000 for the purpose of determining any estate tax liability, although estates valued at less than a certain threshold amount are generally exempt from federal estate tax.

One of the unique features of an annuity is that it can guarantee income will be paid for any period the owner wants. This period can be a set number of years or for the length of ones life.

Under the numerical rating system, credits are added for favorable risk factors. Debits are subtracted for adverse or unfavorable factors. This system has largely replaced the judgment method.